Amid 'Buy Canadian' fervour, Canada's top pension funds still heavily invested in U.S.
CBC
For all the fear over the U.S. trade war and President Donald Trump's threats to Canadian sovereignty, this country's biggest pension funds remain heavily invested in the U.S.
The Canada Pension Plan (CPP), the largest pension fund in the country, announced this week that it has grown to a record $780.7 billion in assets, with 47 per cent invested in the U.S., compared to only 13 per cent in Canada.
That level of U.S. ownership hasn’t budged in the year since Trump retook office, according to third-quarter results released on Friday.
The CPP’s U.S. assets have grown steadily since 2005, when Ottawa removed a cap on foreign holdings in Canadian pensions and RRSPs.
The CPP now has $366 billion invested in the U.S., compared with $98 billion in Canada.
A CBC analysis found the CPP is not alone among the "Maple Eight," the biggest pension funds in Canada, which collectively hold $1 trillion in U.S. assets.
For example, 55 per cent of the portfolio held by OMERS (the Ontario Municipal Employees Retirement System) is American, as is 40.5 per cent held by the PSP (Public Service Pension).
Only three of the Maple Eight have more Canadian assets than American — the Healthcare of Ontario Pension Plan, the Ontario Teachers' Pension Plan and the Alberta Investment Management Corp.
When asked this week about its U.S. holdings, CPP spokesperson Michel Leduc acknowledged investors are increasingly concerned about geopolitical risks. But he emphasized that the CPP invests long-term.
“We are not easily whipsawed by current events or by any economic or even electoral cycles, even as we monitor turmoil very carefully to avoid excessive risks,” he said.
Leduc says CPP is in fact below the average for the size of its U.S. holdings when compared to leading measures of global investment diversification, such as the MSCI World Index and the Financial Times Stock Exchange 100.
“All of those global indices are 65 per cent U.S. content,” Leduc said. “So yes, I understand Canadians are wondering, 'Why so much in the U.S.? Why not more in Canada?'... 47 per cent is actually well below [the average].”
Daniel Brosseau, president of Letko Brosseau Global Investment Management in Montreal, said pension funds don't just sign people’s cheques to support them in retirement. They have many impacts on the economy.
“They are also investing in things, investing in plants, equipment and economic activity," he said. "They can influence people's wages in Canada, they can influence the wealth of Canadians in Canada through their investments.”
