Despite concerns surrounding the U.S. trade conflict and President Trump’s assertions about Canadian sovereignty, Canada’s largest pension fund continues to make significant investments in the United States.
This week, the Canada Pension Plan (CPP) announced that its assets have reached an all-time high of $780.7 billion, with 47% of these assets allocated to the U.S., contrasting sharply with just 13% in Canada.
Interestingly, this proportion of U.S. investment has remained consistent over the past year since Trump took office again. The quarterly results were made public on Friday.
The CPP’s investments in the U.S. have gradually increased since 2005, following the government’s removal of restrictions on foreign investments in Canadian pensions and RRSPs.
Currently, the CPP holds about $366 billion in U.S. assets, while its Canadian holdings amount to $98 billion.
A recent analysis by CBC revealed that the CPP isn’t alone in this trend; Canada’s largest pension funds, the “Maple 8,” collectively possess $1 trillion in U.S. assets.
For instance, OMERS (Ontario Municipal Employees Retirement System) has 55% of its portfolio in American assets, while PSP (Public Service Pension System) has 40.5% in the U.S.
Only three of the Maple Eight funds have greater investments in Canada than in the U.S.: Ontario Health Pension Plan, Ontario Teachers’ Pension Plan, and Alberta Investment Management Corporation.
This week, CPP spokeswoman Michel LeDuc acknowledged that investors are increasingly worried about geopolitical risks but emphasized that the CPP focuses on long-term investments.
“We aren’t easily influenced by current events or election cycles, although we monitor disruptions to manage risks,” he remarked.
LeDuc also mentioned that CPP’s U.S. holdings are comparatively lower than the average when measured against key global investment diversification indicators.
“These global indexes show that 65% of their holdings are in the U.S.,” he stated. “I know Canadians are curious about why there’s so much investment in the U.S. compared to Canada, but 47% is actually below average.”
Call for Domestic Investment
Daniel Brosseau, president of Letko Brosseau Global Investment Management in Montreal, noted that pension funds do more than simply disburse retirement benefits; their investments significantly influence Canada’s economy.
“They invest in goods and infrastructure, which can affect Canadian wages and wealth,” he explained. In 2024, Brosseau co-wrote a letter signed by 90 investment leaders urging the government to create incentives for the Maple Eight to invest more domestically.
“We have plenty of capital—around $3 trillion—to invest in Canada,” Brosseau added.
According to economist Sen. Clement Gignac, the unpredictable landscape in the U.S. and apprehensions about new domestic opportunities are leading Canadian pension funds to reassess their U.S. investments.
“The situation has evolved significantly. While markets remain fluid, the economic policies from the Trump administration are tough to predict,” Gignac observed. “The risk-return dynamic has shifted, prompting Canadian pension funds to re-evaluate their U.S. exposure.”
Pension and Federal Officials Meet on Bay Street
In January, fund managers from the Maple Eight met with Canada’s finance minister in Toronto to explore ways to leverage their $2.6 trillion in assets and to encourage greater domestic investment.
Finance Minister François-Philippe Champagne remarked, “We just discussed with various countries about respecting each nation’s independence while also exploring collaborative opportunities.”
“We have regular meetings to discuss potential projects that could encourage further investment within Canada.”
However, the government hasn’t implemented any regulations compelling pension funds to “buy Canadian,” a practice that was more common before 2005 when restrictions on foreign ownership were loosened.
“I possess the means to influence this area, but as of now, it appears that the major pension funds have an interest in investing domestically,” Champagne stated.
Keith Ambachtshea from the Center for International Pension Management at the University of Toronto was part of the campaign to eliminate limits on foreign investment.
“I advocated that those restrictions were counterproductive; diversification is essential for pension funds,” he mentioned, adding he’s not surprised by the substantial U.S. allocations.
“From a global perspective, the U.S. represents a significant part of the capital market given its size,” he said. “Looking back over the last couple of decades, our performance has been quite strong.”
CPP reported on Friday that its average annual return over the last decade was 8.4%, even amid recent geopolitical tensions.
In the Long Run
CBC has reached out to the Maple Eight funds for comments, but some have yet to respond.
Fund managers are staying alert regarding developments in the U.S., especially with various government megaproject announcements, while some stress they are also looking into new opportunities in Canada. For instance, the City of Ottawa has earmarked $264 million for a new Major Projects Authority.
“We see this as a pivotal moment for Canada and believe there are major opportunities to pursue transformative nation-building projects,” OMERS spokesperson Don Peet noted in an email. “We’re collaborating with different government levels and other partners to explore several opportunities.”
CPP’s Michel LeDuc indicated that the fund primarily seeks low-risk investments that promise stable returns.
“We’re observing public policies at various levels to spot worthwhile opportunities, targeting assets that reduce risk while delivering reliable long-term revenue streams,” he said, mentioning sectors like infrastructure and utilities as key interests.
“This fund operates under specific objectives; it’s not impulsive; we take measured actions.”
