In spite of concerns surrounding the U.S. trade war and President Donald Trump’s stance on Canadian autonomy, Canadian pension funds continue to have significant investments in the United States. The Canada Pension Plan (CPP), the largest pension fund in Canada, recently reported a record $780.7 billion in assets, with 47 percent allocated to U.S. investments, compared to only 13 percent in Canada. This percentage of U.S. holdings has remained unchanged since Trump’s return to office, according to third-quarter results released on Friday. Since 2005, when Canada lifted restrictions on foreign investments in pensions and RRSPs, the CPP’s U.S. assets have steadily increased. Currently, the CPP has $366 billion invested in the U.S. and $98 billion in Canada.
An analysis conducted by CBC revealed that the CPP is not alone in having significant U.S. investments among the “Maple Eight,” the leading pension funds in Canada, which collectively hold $1 trillion in U.S. assets. For instance, 55 percent of OMERS’s portfolio and 40.5 percent of PSP’s assets are in American investments. Only three of the Maple Eight have more assets in Canada than in the U.S. – the Healthcare of Ontario Pension Plan, the Ontario Teachers’ Pension Plan, and the Alberta Investment Management Corp.
Amid questions about its U.S. investments, CPP spokesperson Michel Leduc acknowledged growing investor concerns about geopolitical risks but emphasized the fund’s long-term investment approach. Leduc highlighted that despite the percentage allocated to the U.S., it is below the average compared to global investment diversification measures like the MSCI World Index and the Financial Times Stock Exchange 100, both of which have 65 percent U.S. content.
Daniel Brosseau, president of Letko Brosseau Global Investment Management, emphasized the broader economic impact of pension funds beyond retirement funding. Brosseau, along with 90 investment leaders, advocated for incentives to encourage the Maple Eight to invest more capital domestically. Senator Clément Gignac noted that uncertainty in the U.S. and new investment opportunities in Canada are prompting Canadian pension funds to reconsider their U.S. holdings.
Recently, managers of the Maple Eight funds met with Canada’s finance minister to explore new investment opportunities and promote more domestic investments. While the government has not mandated Canadian investments, Finance Minister François-Philippe Champagne has encouraged pension funds to invest more in Canada. Keith Ambachtsheer, from the International Center for Pension Management, emphasized the importance of global diversification for pension funds.
Looking ahead, pension funds are closely monitoring developments in the U.S. while seeking new ventures in Canada. They aim for low-risk investments with predictable returns, focusing on assets like infrastructure, utilities, and airports, to align with their long-term investment goals.