Canada’s largest pension fund, the Canada Pension Plan (CPP), reported a record $780.7 billion in assets this week, with 47 per cent of that capital invested in the United States. The figure, representing $366 billion, has remained consistent despite ongoing trade tensions and political rhetoric from the U.S., according to results released Friday.
The CPP’s U.S. Holdings, which contrast with just 13 per cent invested in Canada, are not unique among Canada’s largest pension funds, collectively known as the “Maple Eight.” A CBC analysis found that these funds hold a combined $1 trillion in U.S. Assets. OMERS, the Ontario Municipal Employees Retirement System, has 55 per cent of its portfolio in American investments, while the Public Service Pension (PSP) holds 40.5 per cent in U.S. Assets. Only three of the Maple Eight – the Healthcare of Ontario Pension Plan, the Ontario Teachers’ Pension Plan, and the Alberta Investment Management Corp. – have a larger share of their investments within Canada.
The continued investment in U.S. Markets comes despite calls for increased domestic investment. In 2024, a letter signed by 90 investment leaders urged the federal government to create incentives for the Maple Eight to allocate more capital within Canada, citing approximately $3 trillion in available funds.
CPP spokesperson Michel Leduc acknowledged growing investor concerns regarding geopolitical risks but emphasized the fund’s long-term investment horizon. “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,” Leduc said. He further noted that the CPP’s U.S. Allocation is actually below the average for global investment diversification, citing indices like the MSCI World Index and the Financial Times Stock Exchange 100, which hold approximately 65 per cent U.S. Content.
Daniel Brosseau, president of Letko Brosseau Global Investment Management, argued that pension funds have a significant impact on the Canadian economy beyond simply providing retirement income. “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.”
Senator Clément Gignac, an economist, suggested that the changing environment south of the border and emerging opportunities within Canada are prompting pension funds to re-evaluate their U.S. Exposure. “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.”
In January, managers from the Maple Eight met with Finance Minister François-Philippe Champagne in Toronto to discuss potential domestic investment opportunities. Champagne stated that the government is seeking ways to collaborate with the funds, respecting their independence while exploring avenues for increased Canadian investment. “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,” he said. However, Champagne indicated that the government has no plans to reinstate regulations forcing pension funds to prioritize Canadian investments, a practice that was in place before 2005.
Keith Ambachtsheer of the International Center for Pension Management at the University of Toronto’s Rotman School of Management, who previously advocated for the removal of foreign investment caps, expressed no surprise at the significant U.S. Holdings. “If you put the global portfolio together and glance at it, it’s got a massive chunk of the U.S. In it, just due to the fact that it’s a big country with a big capital market,” he said. He pointed to the CPP’s 10-year annualized returns of 8.4 per cent, despite recent geopolitical tensions, as evidence of the success of this diversification strategy.
Several of the Maple Eight funds have indicated they are closely monitoring developments in the U.S. And actively seeking new ventures in Canada, particularly in light of recently announced mega-projects by various governments. OMERS spokesperson Don Peat stated the fund is “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 focused on low-risk investments that deliver predictable returns, citing infrastructure, utilities, and airports as potential areas of interest.
