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.”
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In 2024, Brosseau co-wrote a letter signed by 90 investment leaders calling on Ottawa to create new incentives for the Maple Eight to invest a greater share of their capital domestically.
“We have a lot of dry powder, about $3 trillion that can be invested in Canada,” said Brosseau.
Sen. Clément Gignac, an economist by profession, says concerns over uncertainty south of the border and new opportunities to invest here are prompting Canadian pension funds to rethink their U.S. holdings.
“The environment has changed a lot. It’s still a liquid market but it’s very unpredictable, the economic policies from the Trump administration,” Gignac said. “I think the risk/return has shifted regarding the U.S., and that’s the reason that, in fact, I think that Canadian pension funds are currently re-evaluating their exposure to the U.S. market.”
Managers of the Maple Eight funds met with Canada’s finance minister in Toronto in January to discuss new ventures for the $2.6 trillion in assets they have amassed, and to encourage more domestic investment.
“We have had a recent discussion with all of them to say … can we do more together, respecting that they are independent but at the same time looking at opportunities,” Finance Minister François-Philippe Champagne told CBC News.
“We have created a meeting point every quarter that we’re going to be sitting together … looking at the kind of projects that could lead them to invest more in Canada.”
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But the government has made no moves to regulate or force pension funds to “Buy Canadian,” which was the case prior to 2005, when Ottawa imposed foreign ownership limits on RRSPs and pension funds.
”There’s tools in the toolbox, but I would say at this stage, I think that [the big pension funds] have realized themselves the interest of investing in Canada,” Champagne said.
Keith Ambachtsheer of the International Center for Pension Management at the University of Toronto’s Rotman School of Management was among the people who fought to remove those foreign investment caps.
“I was part of a long campaign to say, ‘That’s a really bad idea. We’ve got to get rid of this.’ Pension funds have to be able to diversify globally,” Ambachtsheer said.
He says he’s not surprised their U.S. holdings are large.
“If you put the global portfolio together and look at it, it’s got a big chunk of the U.S. in it, just because it’s a big country with a big capital market,” he said. “The good news is when you measure it as to how we’ve actually done the last 10, 20 years, it’s pretty good.”
As an example, CPP reported on Friday that it had averaged 8.4 per cent annualized returns over the last 10 years, despite recent “geopolitical tensions.”
CBC requested comment from each of the Maple Eight pension funds. Several didn’t reply.
Others stressed that their fund managers are watching developments in the U.S. closely and are seeking new ventures in Canada, given the mega-projects that have recently been announced by various governments. Ottawa earmarked $264 million to be allocated by its new Major Projects Office.
“We recognize that this is a pivotal time for Canada, and we see significant opportunities to advance transformative, nation-building projects,” said Don Peat, spokesperson for OMERS, in an email. “We are engaged with all levels of government and other partners and are reviewing several opportunities at this time.”
CPP’s Michel Leduc said the fund is ultimately interested in low-risk investments that deliver predictable returns.
“We’re monitoring very closely the public policies that are being put in place at the federal and provincial levels to supply opportunities…. we’re looking for assets that provide predictable, long-term sources of returns that are de-risked,” he said, citing things “like infrastructure, utilities, airports.”
“The fund is not managed according to any whims. We are acting on very clear objectives in the [Canada Pension Plan] Act, and not based on sudden, impulsive, unpredictable desires.”
