Amid the 'Buy Canadian' fervor, Canada's top pension funds remain heavily invested in the United States, despite the fear and uncertainty surrounding the U.S. trade war and President Donald Trump's threats to Canadian sovereignty. The Canada Pension Plan (CPP), the largest pension fund in the country, has grown to a record $780.7 billion in assets, with 47% invested in the U.S. compared to only 13% in Canada. This level of U.S. ownership has remained unchanged since Trump's re-election, according to third-quarter results. The CPP's U.S. assets have steadily grown since 2005, when Ottawa removed the cap on foreign holdings in Canadian pensions and RRSPs. The CPP now has $366 billion invested in the U.S., compared to $98 billion in Canada. A CBC analysis found that 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% of the portfolio held by OMERS (the Ontario Municipal Employees Retirement System) is American, as is 40.5% 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 about its U.S. holdings, CPP spokesperson Michel Leduc acknowledged investors' concerns about geopolitical risks, but emphasized that the CPP invests long-term. Leduc says the CPP is 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. Calls for domestic investment have been made, with Daniel Brosseau, president of Letko Brosseau Global Investment Management in Montreal, stating that pension funds have many impacts on the economy, including investing in plants, equipment, and economic activity. 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. Senator Clément Gignac, an economist, says concerns over uncertainty in the U.S. and new opportunities to invest in Canada are prompting Canadian pension funds to rethink their U.S. holdings. Managers of the Maple Eight funds met with Canada's finance minister in January to discuss new ventures for the $2.6 trillion in assets they have amassed and to encourage more domestic investment. However, the government has made no moves to regulate or force pension funds to 'Buy Canadian'. Keith Ambachtsheer of the International Center for Pension Management at the University of Toronto's Rotman School of Management was among those who fought to remove foreign investment caps. He says he's not surprised by the large U.S. holdings, citing the size of the U.S. capital market. The CPP reported on Friday that it had averaged 8.4% annualized returns over the last 10 years, despite recent geopolitical tensions. Looking long-term, the CPP is interested in low-risk investments that deliver predictable returns, such as infrastructure, utilities, and airports. The fund is not managed according to any whims, but based on clear objectives in the Canada Pension Plan Act.
