John Graham, CPPIB's chief executive, told the Globe and Mail's editorial board on Tuesday that the pension-fund manager is 'getting calls' from global investors as U.S. President Donald Trump moves ahead with his signature tax legislation.Sean Kilpatrick/The Canadian Press
Canada and other countries have a chance to attract new capital as U.S. market turmoil has investors hunting for safe havens, the head of Canada’s largest pension-fund manager says.
The $714-billion Canada Pension Plan Investment Board is “getting calls” from global investors looking to take part in Canadian investments, chief executive officer John Graham said Tuesday at a meeting with The Globe and Mail’s editorial board.
Tariffs, political tensions and concerns over tax policy have caused many investors to hit pause on new U.S. investments as they decide where their next dollar can earn the best return.
Capital, Mr. Graham said, “is pretty mercenary.” Investors have viewed the U.S. market as the destination of least resistance for years, but the sudden friction created by U.S. policy has opened a window of opportunity for other countries, including Canada, to draw in more foreign direct investment.
“Right now, people are sitting on the fence trying to figure out, is the U.S. unpredictable or is it unreliable?” Mr. Graham said.
That doesn’t mean investors are selling U.S. assets or withdrawing from its capital markets, which are still the world’s deepest and most sophisticated. “But the marginal dollar is hunting around the world right now,” he said.
That has burnished Canada’s reputation for relative regulatory stability, while still having close proximity and ties to the U.S. market.
Mr. Graham said he met Monday with executives from a foreign sovereign wealth fund that he declined to name, who asked about potential Canadian investments on which they could partner with the CPPIB.
“There is an opportunity now for other countries to attract capital that hasn’t been there for the past 10 years,” he added.
That shift could intensify if the United States presses ahead with contentious tax provisions outlined in a draft of President Donald Trump’s signature legislation, called the “One Big Beautiful Bill.”
A version of the bill that passed the U.S. House of Representatives contains a provision – Section 899, known informally as the “revenge tax” – that threatens significant tax hikes for Canadian corporations and investors from countries deemed to have taxes of their own that hurt U.S. companies.
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Senate Republicans have proposed changes that would reduce the tax increase and delay enforcement until 2027.
Already, however, the CPPIB is pricing the potential changes into its investment decisions. “We have to,” Mr. Graham said. “We buy things for 10 years and it’s not in our control.”
As advertised, the tax provisions would drive up the cost of capital when buying a U.S. asset, pushing investors to look for better deals elsewhere.
“If there’s an additional cost that has to be borne, I think you should expect that investors will drop their allocation” to the U.S., Mr. Graham said.
The CPPIB has 47 per cent of its assets invested in the U.S., and 12 per cent – or roughly $86-billion – in Canada. Mr. Graham is not currently looking to cut the pension-fund manager’s U.S. exposure, but “for domestic investors, Canada’s becoming just a little bit more attractive,” he said.
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“We have an appetite for Canadian assets. We have an appetite, actually, for more Canadian dollars in the portfolio,” he added, to avoid risks from currency fluctuations and geopolitical disputes.
That said, the CPPIB and other major pension funds have mandates to chase the best return for beneficiaries without taking undue risks, anywhere in the world. And some of them have lamented what they see as a lack of big-ticket infrastructure and other investment options at home.
Prime Minister Mark Carney has signalled a desire for Canada to make major investments in defence, energy and infrastructure to reshape its trading relationships and reduce economic dependency on the U.S.
If those big bets materialize, Mr. Graham said, the fund is ready to invest its capital in projects that meet its criteria. But he cautioned that the CPPIB itself doesn’t put shovels in the ground.
“We invest in companies that build things,” he said, adding that when projects start getting off the ground, “we’re open for business and we want to look at them.”