Amid ‘Buy Canada’ enthusiasm, Canada’s top pension funds still heavily invested in the US

Despite fears of a US trade war and President Donald Trump’s threats to Canada’s sovereignty, the country’s largest pension funds remain heavily invested in the US.

The country’s largest pension fund, the Canada Pension Plan (CPP), announced this week that its assets had grown to a record $780.7 billion, with 47 per cent of its investments in the US, compared to just 13 per cent in Canada.

That level of US ownership has remained unchanged since Trump took office again, according to third quarter results Released on Friday.

CPP’s U.S. assets have grown steadily since 2005, when Ottawa lifted limits on foreign holdings of Canadian pensions and RRSPs.

The CPP has now invested $366 billion in the US, while $98 billion has been invested in Canada.

The CBC analysis found that the CPP is not alone among the “Maple Eight” Canada’s largest pension funds, which collectively hold $1 trillion in U.S. assets.

For example, OMERS (Ontario Municipal Employees’ Retirement System) has 55 per cent of its portfolio in the US, while PSP (Public Service Pension) has 40.5 per cent.

Only three of the Maple Eight have more Canadian assets than American – Healthcare of Ontario Pension Plan, Ontario Teachers’ Pension Plan and Alberta Investment Management Corp.

When CPP spokesman Michel Leduc was asked about its US stake this week, he acknowledged that investors are concerned about geopolitical risks. But he emphasized that CPP makes long-term investments.

“We are not easily influenced by current events or any economic or even electoral cycle, even though we keep a very careful eye on turmoil to avoid excessive risks,” he said.

Leduc says CPP is actually below average in the size of its US holdings when compared to key measures of global investment diversification, such as MSCI World Index and this Financial Times Stock Exchange 100.

“All of those global indices have 65 percent American content,” Leduc said. “So yes, I think Canadians are wondering, ‘Why so much in the US? Why not more in Canada?’…47 per cent is actually well below (average).”

call for domestic investment

Daniel Brosseau, president of Letco Brosseau Global Investment Management in Montreal, said pension funds don’t just sign checks for people to support them in retirement. These have many effects on the economy.

“They’re also investing in things, investing in plants, equipment and economic activity,” he said. “They can affect the wages of people in Canada, they can affect the wealth of Canadians in Canada through their investments.”

In 2024, Brosseau 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,” Brosseau said.

Senator Clement Gignac, an economist by profession, says uncertainty south of the border and concerns over new investment opportunities here are prompting Canadian pension funds to reconsider their U.S. holdings.

“The environment has changed a lot. It’s still a liquid market but it’s very unpredictable, given the economic policies of the Trump administration,” Gignac said. “I think the risk/return has changed with respect to the U.S., and that’s why, in fact, I think Canadian pension funds are currently reevaluating their exposure to the U.S. market.”

Pensions, Fed meeting held on Bay Street

Managers of the Maple Eight fund met with Canada’s finance minister in Toronto in January to discuss new ventures for the $2.6 trillion in assets they have acquired and encourage more domestic investment.

“We have discussed with all of them recently … whether we can do more together, respecting that they are independent, but also looking at the opportunities,” Finance Minister François-Philippe Champagne told CBC News.

“We have created a meeting place every quarter where we will sit together … look at projects that can inspire them to invest more in Canada.”

But the government has taken no steps to regulate or force pension funds to “buy Canadian,” which was the case before 2005, when Ottawa imposed foreign ownership limits on RRSPs and pension funds.

“There are tools in the toolbox, but I would say at this stage, I think (large pension funds) have realized the interest in investing in Canada,” Champagne said.

Keith Ambachtshir of the International Center for Pension Management at the Rotman School of Management at the University of Toronto was among those who fought to remove the foreign investment limits.

“I was part of a long campaign to say, ‘This is a really bad idea. We have to get rid of it.’ Pension funds have to be able to diversify globally,” Ambachtshir said.

He says he is not surprised that his US stake is larger.

“If you look at the global portfolio put together, the US has a big portion of it, just because it’s a big country with a big capital market,” he said. “The good news is that when you measure how we’ve actually performed over the last 10, 20 years, it’s very good.”

For example, CPP reported Friday that despite recent “geopolitical tensions,” its average annual return over the past 10 years has been 8.4 percent.

looking long term

CBC requested comment from each of Maple’s eight pension funds. Many did not respond.

Others emphasized that their fund managers are closely watching developments in the US and exploring new ventures in Canada given the recent mega-projects announced by various governments. Ottawa has earmarked $264 million to be allocated by its new Office of Major Projects.

“We recognize this is an important time for Canada, and we see significant opportunities to pursue transformative, nation-building projects,” OMERS spokesperson Don Peet said in an email. “We are engaging with all levels of government and other partners and are reviewing a number of opportunities at this time.”

CPP’s Michel Leduc said the fund is ultimately interested in low-risk investments that deliver predictable returns.

“We are very closely monitoring the public policies that are being implemented at the federal and provincial levels to provide opportunities… We are looking for assets that provide predictable, long-term sources of returns that are free from risk,” he said, citing things like “infrastructure, utilities, airports.”

“The fund is not managed arbitrarily. We are operating on very clear objectives in the (Canada Pension Plan) Act, not based on sudden, impulsive, unpredictable desires.”