The largest pension fund in Canada, the Canada Pension Plan (CPP), has reached a new milestone with total assets valued at $780.7 billion, as per recent reports. Despite concerns surrounding the U.S. trade war and threats to Canadian sovereignty by President Donald Trump, the CPP continues to have a significant portion of its investments in the U.S., standing at 47 percent, compared to only 13 percent in Canada. This percentage has remained steady since Trump’s return to office.
Since the removal of a cap on foreign holdings in Canadian pensions and RRSPs back in 2005, the CPP’s U.S. investments have been steadily increasing. Currently, the fund has $366 billion invested in the U.S. and $98 billion in Canada. An analysis by CBC revealed that other major pension funds in Canada, collectively known as the “Maple Eight,” also have substantial investments in the U.S., with a total of $1 trillion in U.S. assets.
Despite growing concerns about geopolitical risks, CPP spokesperson Michel Leduc emphasized the fund’s long-term investment approach, stating that they are not easily swayed by short-term events. He pointed out that the CPP’s U.S. holdings are actually below the average compared to leading global investment diversification measures such as the MSCI World Index and the Financial Times Stock Exchange 100.
Daniel Brosseau, president of Letko Brosseau Global Investment Management, highlighted the broader economic impact of pension fund investments, stating that they can influence various aspects of the economy, including wages and economic activity in Canada. Brosseau and other investment leaders have called for new incentives to encourage the Maple Eight to invest more domestically, given the significant capital available for investment in Canada.
Sen. Clément Gignac noted a shift in the investment landscape, with Canadian pension funds reconsidering their exposure to the U.S. market due to uncertainties and new investment opportunities in Canada. Managers of the Maple Eight funds recently met with Canada’s finance minister to explore new ventures and promote more domestic investment.
While there have been discussions around encouraging more domestic investments, the government has not imposed regulations forcing pension funds to solely invest in Canada. Experts argue that diversifying globally is essential for pension funds, and despite their substantial U.S. holdings, the overall performance has been positive in recent years.
Looking ahead, pension funds are closely monitoring developments in the U.S. and exploring new opportunities in Canada, especially with major projects on the horizon. The focus remains on low-risk investments with predictable returns, aligning with the long-term objectives set out in the Canada Pension Plan Act.
