Canada’s largest pension plan invests nearly half of its assets in the U.S. and its share of investments has grown since U.S. President Donald Trump threatened to annex Canada.
The Canada Pension Planning Investment Committee confirmed on Wednesday that 47 per cent of its portfolio was invested in the U.S. as of the end of March, maring a 5 per cent increase compared to March of last year.
Over 90 Canadian business executives signed an open letter urging the government to direct the national pension fund toward increased domestic investment in the last year.
However, their pleas fell on deaf ears.
The U.S., the U.K., Scandinavian countries, and others mandate that their pension plans invest in domestic innovation economies.
Canada eliminated the foreign property rule that restricted pension fund investments in foreign assets in 2005 under former Liberal prime minister Paul Martin.
“Geopolitical developments moved the markets throughout the year, and we expect these conditions to persist,” reads the President’s Message Fiscal 2025 Annual Report.
“Our long-standing risk management frameworks are designed to address political and regulatory risks and opportunities across jurisdictions. In times of heightened volatility, the value of disciplined diversification becomes even more evident.”
The pension manager posted a return of 9.3 per cent return on its $714 billion portfolio for the fiscal year ending March 31, just days before Trump announced his global tariff policy.
“Our portfolio – diversified across sectors, themes, asset types and geographic markets – is built for the long term,” said chief executive officer John Graham in a statement.
“And while we’re not immune to short-term market shifts, our strategy is designed to remain resilient despite periodic fluctuations.”
According to CPPIB, U.S. returns have produced a net profit of 9.6 per cent compared to the 5.8 per cent of Canadian holdings over the last five years.
The fund’s allocation to private equity has been the largest driver over that same period, accounting for 23 per cent of its core portfolio.
CPPIB’s investments partner with companies such as Blackstone, Silver Lake and across a variety of sectors.
Graham noted that “conditions have become more difficult” as tensions grown between Canada and the U.S.
However, public equities in the U.S. and China performed particularly well in the fourth quarter, despite escalating trade tensions.
CPPIB’s credit holdings also increased by 14.4 per cent during the fiscal year, while private equities and stocks returned 11.8 per cent and 10.6 per cent, respectively.
Additionally, the Canada Pension Plan Investment Board announced it was dropping its target of achieving net-zero emissions by 2050 last week, only three years after the board made the pledge.
“Forcing alignment with rigid milestones could lead to investment decisions that are misaligned with our investment strategy,” reads a segment of CPPIB’s sustainability approach.
The CPPIB cited recent legal developments as the reason for walking away from its net-zero target, calling its investment portfolio “too complex for the standardized emissions metrics and interim targets.”
“Recent legal developments in Canada have introduced new considerations around how net-zero commitments are interpreted,” reads a statement on their website.
“In particular, there is increasing pressure to adopt standardized emissions metrics and interim targets, many of which don’t reflect the complexity of a global investment portfolio like ours.”