Amid concerns about trade tensions and political threats, Canadian pension funds are heavily invested in the United States, according to the latest figures released by the Canada Pension Plan (CPP), the country’s largest pension fund. The CPP’s assets have reached a record high of $780.7 billion, with 47% allocated to U.S. investments, significantly more than the 13% invested in Canada.
The percentage of U.S. holdings has remained stable since President Donald Trump’s inauguration, reflecting a trend that began in 2005 when Canada lifted restrictions on foreign investments in pensions and RRSPs. Currently, the CPP has $366 billion invested in the U.S. compared to $98 billion in Canada.
An analysis by CBC revealed that other major Canadian pension funds, collectively known as the “Maple Eight,” also have substantial investments in the U.S. For instance, 55% of OMERS’ portfolio and 40.5% of PSP’s assets are in American holdings. However, only three of the Maple Eight have more assets in Canada than in the U.S.
Despite growing concerns about geopolitical risks, CPP spokesperson Michel Leduc emphasized the fund’s long-term investment strategy. Leduc noted that the CPP’s U.S. holdings are below the global average indicated by indices like the MSCI World Index and the Financial Times Stock Exchange 100.
There have been calls for increased domestic investments by pension funds, with experts like Daniel Brosseau advocating for incentives to promote more capital allocation within Canada. Senator Clément Gignac highlighted shifting market dynamics and the need for Canadian pension funds to reassess their exposure to the U.S. market due to uncertainties stemming from the Trump administration’s policies.
Recently, managers of the Maple Eight funds met with Canada’s finance minister to explore new investment opportunities and encourage more domestic investments. While there have been discussions on increasing investments in Canada, there are no regulatory measures forcing pension funds to prioritize Canadian investments as was previously the case.
Keith Ambachtsheer, an advocate for global diversification, emphasized the benefits of broadening investment horizons. Despite the significant U.S. holdings, pension funds have demonstrated strong returns over the years, with the CPP reporting an average annualized return of 8.4% despite geopolitical challenges.
Looking ahead, pension funds are closely monitoring developments in the U.S. while exploring potential ventures in Canada. With a focus on low-risk investments and predictable returns, funds like CPP are seeking opportunities in infrastructure, utilities, and airports to ensure long-term financial stability.