Canada - FR
U.S. - ENThe Canary in the Coal Mine
In 1990, Canadian pension funds allocated close to 80%* of their equity investments to Canadian public equities. By 2020, this had fallen to barely 10%*. This decline has important policy implications for Canada. Who will determine Canada’s future if Canadian savings do not play their essential economic role in funding Canadian investments? What will be the impact on growth, jobs, and incomes? This is only one of several issues that have risen in importance as a result of the shortening of the investment horizon that has been imposed on pension funds by changes to regulations.
Canada is rich with opportunity
With favourable demographics; a tolerant, well-educated and diverse population; an expanding economy with moderate debt levels;
abundant natural resources; modern infrastructure; world renowned educational institutions, we are bullish on Canada.
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Canadian equities have generated strong long term returns
Since inception of the firm in 1988, our Canadian portfolios have generated $18 billion in net gains[1] by investing in Canadian equities, equivalent to a 14.4 per cent compounded annualized return. This is almost double the 8.3 per cent annualized return delivered by international markets[2] over the same period.
Canadian Equity Carve-out[4][5]
Compounded Annualized Returns as at December 31, 2022
| 1 yr | 3 yrs | 5 yrs | 10 yrs | Since Inception | |
| Gross Return | 1.1% | 9.9% | 6.1% | 10.3% | 14.4% |
| Benchmark return | -5.9% | 7.5% | 6.8% | 7.7% | 8.3% |
Value of $1 million invested in the Canadian Equity Composite since 1995 [3][5]
![Value of $1 million invested in the Canadian Equity Composite since 1995 <sup>[3][5]</sup>](https://www.lba.ca/wp-content/uploads/2023/08/en-invest-in-canada-chart-2022-12.png)
[1] Represents the net gains on Canadian equities for all mandates under management from January 1, 1988 to December 31, 2022.
[2] MSCI World Total Return Net Index
[3] The value graph represents the excess return of the Letko Brosseau Canadian Equity Composite over the benchmark gross of fees from October 1, 1995 to December 31, 2022.
The benchmark since inception is 2% FTSE Canada 91 Day T-Bill Total Return Index and 98% S&P/TSX Composite Total Return Capped Index.
[4] The returns are gross of fees and are derived from a carve-out of total firm assets made up of Canadian Equities for the period from January 1, 1988 to December 31, 2022. The benchmark is the S&P/TSX Composite Total Return Capped Index.
[5] Returns reflect the reinvestment of dividends, income and other earnings. Reclaimable withholding tax refunds are recognized when received. The benchmark is fully invested, and its returns include the reinvestment of dividends, income and other earnings.
Gross-of-fees returns are presented before management fees and custodial fees but after trading expenses.
This information is for informational purposes only and is not intended to provide, and should not be relied upon for, accounting, legal or tax advice or investment recommendations. It should not be considered a solicitation to buy or an offer to sell a security. It does not consider any investor’s particular investment objectives, strategies, tax status or investment horizon. There is no representation or warranty as to the current accuracy of, nor liability for, decisions based on such information.
Past performance is not a guarantee of future returns. All investments pose the risk of loss and there is no guarantee that any of the benefits expressed herein will be achieved or realized.
The returns do not represent those of a Canadian Equity mandate but do provide an indication of our ability to select and manage securities in this segment. The choice of securities and their returns could have been different when managing a Canadian Equity mandate.
Pension System’s Divestment of Canadian Equities. The Policy Implications for Canada
Canadian Pension System’s Divestment of Canadian Equities. This situation has many implications for economic growth and should be a major policy concern for Canadians and our government.
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Invest in Canada - Press Release
LetkoBrosseau, a leading Canadian investment manager, today announces its concerns about the significant reduction of investment in Canadian publicly traded equities by the country’s pension fund industry […]
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LaPresse: "L’inquiétante érosion du marché des actions canadiennes"
“La Caisse de dépôt est la caisse de retraite canadienne qui maintient un pourcentage d’actions canadiennes parmi les plus élevés au Canada, avec près de 20 % d’actions canadiennes dans son vaste portefeuille de 191 milliards. Chez LetkoBrosseau, le pourcentage d’actions canadiennes atteint 40 %.”
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The Star:
“We should be laser focused on building the next made-in-Canada global success story — the next Shopify. If Canadians don’t invest in our own country to support the development of these businesses, who will?”
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BNN:
“While we understand the need for international diversification, a principle we have followed for many years, balance is required. That said, the strength of the Canadian economy and self-sustaining benefits of investing in our own industries should be an equally important priority.” – Peter Letko, Senior Vice President at LetkoBrosseau, comments on the firm’s recent press release in this BNN interview.
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The Suburban:
Private pension funds should invest more in Canadian businesses “Research conducted by the Montreal-based global investment management firm Letko-Brosseau recently revealed that Canadian-listed equities accounted for nearly 80% of Canadian pension fund equity investments in 1990. By 2020, this proportion had fallen to only 10%.”
READ MOREConcerned about your portfolio?
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