Invest in Canada

Dear Client,

You have undoubtedly seen our firm’s name linked to the current debate regarding whether Canadian pension funds should be investing more in Canada. A much-needed discussion has started on how Canada can reverse its declining prosperity, and we welcome such an important conversation. We are especially grateful to the business and union leaders who signed their names to the Open Letter recently published in several Canadian newspapers.

At the heart of this discussion is a trend in recent years whereby Canadian pension funds have reduced their allocation to Canadian assets. By way of example, publicly traded stocks have declined from 28% of total assets in the year 2000 to less than 4% today.(1)

You might think this has occurred because Canadian returns have been subpar.

However, for the last 5, 10, 15, 20, 25, and 30 years, the Canadian stock market has done better than those of the average foreign market, except for the United States. When we exclude the Magnificent 7, Canadian returns have even been competitive with those offered by the rest of the S&P 500.(2)

According to a recent UBS study of world stock market returns over the last 100 years, Canada has the second-best risk-return ratio, ahead of the United States and every other developed country, except Australia.(3) These numbers may come as a surprise, but Canada is a great place to invest.

The Canada Pension Plan (CPP) is a $570 billion fund with 57% invested in private and public equities, but only one twenty-ninth of that is invested domestically. Therefore, for every $1 the CPP invests in a public and private Canadian company, they have $29 invested in a foreign one.(4)

This lack of domestic investment is typical of the Canadian pension industry today. Investments in Canada are about 30% of pension assets across all categories for the industry in its entirety, but for the Maple Eight, the largest of our pension funds, total domestic exposure is 25%.(4,5)

The Maple Eight control approximately 70% of Canada’s total pension assets.(5) Excluding fixed income and credit, their holdings in Canadian real estate, infrastructure, public and private equity is only 10% of assets, a sixth of their similar foreign holdings.(4)

Might this be having an impact on our economic growth? We believe this is the case.

Pension assets are as large as bank deposits and 50% larger than life insurance deposits.(6) Each of these pools of savings invests differently due to the nature of their deposits. Banks invest in short-term loans and insurance companies invest in bonds of various terms to match the life expectancy of their policyholders. Pension funds are unique in that they represent long-term obligations of a stable nature and tolerate volatility and risk well. Therefore, they are well suited for investing in the equity capital of businesses which is essential for growth.

We have brought attention to this issue to our political leadership and policymakers. The federal Minister of Finance acknowledged the topic in her Fall Economic Statement and we are now hoping she follows up in some measure in her next budget to encourage pension funds to invest more in Canada.

We recommend that you read our analysis to help you understand our arguments and we hope you will share our view on the vital role pension savings play in our economy.

Letko Brosseau



  1. Pension Investment Association of Canada (PIAC), Letko Brosseau estimates.
  2. Bloomberg, FactSet, Letko Brosseau
  3. UBS Global Investment Returns Yearbook 2024, geometric returns from 1900-2023
  4. Letko Brosseau estimates, 2022/2023 public fillings, PSP*/HOOP* total Canadian exposure estimated, asset classes normalized, and geographic exposure approximated to best of public disclosure. Sources: HOOPP, AIMco, OTPP, BCI, CPDQ, OMERS, CPP, PSP.
  5. PIAC, Letko Brosseau, total Canadian exposure estimated across all asset classes based on C$2.7T of assets.
  6. Statistics Canada, Letko Brosseau
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Where the information contained in this presentation has been obtained or derived from third-party sources, the information is from sources believed to be reliable, but the firm has not independently verified such information. No representation or warranty is provided in relation to the accuracy, correctness, completeness or reliability of such information. Any opinions or estimates contained herein constitute our judgment as of this date and are subject to change without notice.
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