Canada's largest pension plan invests nearly 50% of assets in the US

Canada's largest pension plan invests nearly 50% of assets in the US

Canada's largest pension plan, the Canada Pension Plan Investment Board (CPPIB), has significantly increased its exposure to the US market. As of the end of March 2025, US assets accounted for nearly half (47%) of its C$714 billion portfolio, according to the latest annual report [1]. This represents a substantial increase from 36% two years earlier. Meanwhile, Canadian assets make up only 12% of the fund.

The CPPIB's total return for the fiscal year ended March 31, 2025, was 9.3%, driven by double-digit gains in credit, private equity, and stocks. This period saw significant market volatility due to geopolitical and trade-related headwinds, notably the unveiling of new global tariff policies by the US President. Despite these challenges, the fund's long-term strategy has remained resilient.

The shift towards US investments has drawn criticism from some Canadian business leaders who argue that the country's pensions should invest more domestically. Last year, over 100 Canadian business leaders, including Montreal-based asset management firm Letko Brosseau, signed an open letter urging the finance minister to change pension fund rules to encourage domestic investment [1].

The CPPIB has also made organizational changes, such as reducing its exposure to emerging markets and creating a new group, the Integrated Strategies Group, to oversee mature assets and potentially incubate new strategies. The fund has transferred C$24.5 billion of net assets to this new platform, with around 75% coming from the private equity arm [1].

Additionally, the pension plan's allocation to real estate has decreased, falling to 7% of the portfolio from 11% in 2020. Exposure to the office sector has also declined, from 9% of total real-asset holdings two years ago to 6% currently. In a recent move, CPPIB sold its stake in seven office buildings to Oxford Properties Group Inc., valuing the portfolio at C$1.5 billion [1]. The pension plan is also moving its head office to CIBC Square, a new upscale complex in Toronto's financial district.

References:
[1] https://www.bloomberg.com/news/articles/2025-05-21/canada-pension-fund-piles-into-us-despite-buy-canada-pressure