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Canada’s largest pension plan has almost half of all its assets invested in the US, sharply increasing its exposure despite pressure from government officials to invest more in its home market.
The Canada Pension Plan Investment Board, which manages C$714bn ($516bn) pension assets for 22mn Canadians, said on Wednesday that 47 per cent of its portfolio was invested in the US at the end of March.
That marked an increase from 42 per cent in 2024, when Canadian executives launched a campaign to force the country’s big pension schemes to invest more in domestic assets, and just 36 per cent in 2023.
The surge in the CPPIB’s US investments comes as tensions between Washington and Ottawa have flared this year over tariffs and President Donald Trump’s suggestions that Canada should become the US’s 51st state.
The CPPIB, which underperformed its benchmark to return 9.3 per cent in the year to March, has a higher proportion of its assets invested in the US in part because American investments have performed better than their rivals.
The CPPIB said its US returns delivered a net return of 9.6 per cent over the past five years, compared with 5.8 per cent for its Canadian holdings.
Chief executive John Graham said: “We are proudly Canadian and remain confident that this country is one of the best places in the world to invest.”
He added that since the end of the fiscal year in March, conditions had become “more challenging” as “threatened and implemented tariffs have diminished growth expectations, inflation remains a concern, and the market is pricing in a higher probability of recession”.
Allocations to Canadian assets dropped to 12 per cent of the fund in March, from 14 per cent two years earlier, although the total value of Canadian assets still increased.
In March 2024, more than 90 Canadian corporate executives signed an open letter calling on the government to amend the rules governing the country’s pension funds and have them increase their domestic investment — claiming that the amount they allocated to Canadian equities had dwindled from 28 per cent in 2000 to 4 per cent by 2023.
The CPPIB said its allocation to private equity — which makes up 23 per cent of the core portfolio — had been the biggest drag on its performance over the past five years.
The fund’s overall exposure to private equity fell to C$146bn in March from C$156bn the previous year. Its investments span a range of sectors with partnerships with firms such as Silver Lake, Carlyle and Blackstone.
Last year the fund changed its leadership structure as part of a “strategy evolution”, appointing long-standing employee Caitlin Gubbels as global head of private equity.