Canada's first sovereign wealth fund
cbc.ca
cbc.ca
https://en.wikipedia.org/wiki/List_of_largest_companies_in_C...
#1 is Brookfield Corporation.
The now prime minister of Canada headed the ESG there. He is also an international central banker.
If you invest anything in the Canadian market you probably hold some Brookfield.
Carney’s investments are in a blind trust.
What more could be done, in your view?
Your quality of comment is what I expect from conservatives who think their feelings are reality and complain about shit without making solid inferences or connections.
It’s a sovereign wealth fund and you’re complaining that one of the larger Canadian companies is included in it because Carney worked there. Then when pressed you say you wish someone else represented your(presumably you’re Canadian) people.
That’s just kvetching.
This was in reference to Carney. I dont think Carney represents the people very well.
It is not a sovereign wealth fund. The name is intended to clash with a real sovereign wealth fund like say Norway has. Basically you need wealth and Canada has the inverse of wealth it has deficits.
The fund was created (of course) by debt. It is a bit like borrowing to invest in the stock market rather than trying to invest your savings/income. Canada already has massive federal debt due to insane levels of mismanagment.
So why would Canada create such a bizarre 'fund'. Well it is what happens when you put a banker in charge of a country. You get banking solutions to country problems.
So now you see why Carney's career path matters. This is just the tip of the iceberg. If you want to know more I can link you to many facets that you might find interesting.
Nah I don't. So far I'm batting 11/12 for going down the rabbit hole with anti Carney Canadians before i find out they were in support of the trucker convoy.
Benefit of the doubt is gone if you don't open up with actual thought out critique.
I'm your huckleberry.
You agree with a group of people that I generally disagree with.
There is the possibility that you are the rare mark that has consistent principles backing these thoughts, but the fact that you are aligned with a group that has consistently shown no consistent principles means I give you zero benefit of the doubt, and you opened the thread with an argument not backed by your later comment about wanting someone else to represent your country.
If you want to convince the other side of your beliefs then you need to start with a solid argument instead of doing a motte and bailey.
It is not my role to convince someone of anything. I have to much respect for the human for that.
You, as human, should seek out the truth in your time and not turn away from it.
So you mentioned the 'truckers'. Here [0] is the truth in your time. I will make no attempt trick you into holding position.
Finally to complete the picture you should understand that the Carney government was recently formed in opposition to the democratic voice of the people. It was formed by nullifying the votes of the electorate. Everyone on all sides know this was a deeply immoral act. One has to ask what kind of leader is this?
I knew Carney was great, but I didn't know he was so well-qualified too.
There are justifiable question about whether he will be a good PM but he is probably one of the most successful central bankers of all time.
Hopefully turns out better than BCRIC.
also why all the love for Canadian Pacific rail?
And Canada is unrecognizable these days. Why should I think past performance is indicative of future success?
Sorry, not optimistic enough I suppose :(
That has unfortunately been very common internet culture since 2020. It was there before the pandemic, but post-pandemic internet never recovered its full whimsy and veered headfirst into a depressive state. Probably says something about everyone's general mood.
The Canadian Pacific rail connected the country east to west, was a major milestone in the country's history: <https://en.wikipedia.org/wiki/History_of_the_Canadian_Pacifi...>
Amazing accomplishment, but now CP is CPKC and is just another giant megacorp that answers to the US FRA or Mexican rail authorities as much as it does the Canadian government.
Carney is a bankster and he's not going to be throwing stuff out there to help the common man first.
Whether its perfect or not, it almost has to be better than the current status quo.
Are they going to fund their "wealth" with debt?
This is an oxymoron.
You aren't "rich" if you have $1M and you owe $4M. You're a con-man living a lie that will crush you eventually.
And by the way, if you have -$3M, sorry, but you're the last person I want to invest money with...
Norway gets to have a wealth fund because they have a small population with a massive amount of oil revenue, and they aren't run by morons.
Canada only produces about 2x as much oil as Norway, but it's got 10x the population. Sorry, you can't all be rich like Norwegians unless you start pumping 5x more oil.
Things like this should be laughed off the world stage.
We live in an upside down world.
https://en.wikipedia.org/wiki/Canadian_public_debt this article says it's 57% of GDP. Where are you getting your 300% from?
This seems to be incorrect. Including federal, provincial and local, the debt is about 110% of the GDP.[1]
The US has 3x more debt per citizen than Canada.
[1] https://www.imf.org/external/datamapper/GG_DEBT_GDP@GDD/CAN/...
I'm not sure the simile lands. If that $1M is financing a lavish lifestyle, then you are for all intents and purposes rich. As for the crushing down part, the modern economy shows us one can stay solvent longer than the market is irrational (especially true the more zeros are added to the numbers above).
That is how Norway did it
Like, well done. Impressive financial planning at that scale
This is not a wealth fund at all. This is a debt fund. It doesnt even try to hide the debt that's drowning the federal government.
We are borrowing money to play the stock market.
Calling it a "sovereign wealth fund" doesn't seem honest at all. (coming from a lifelong Liberal / NDP voter)
Did they?
> Where 20 years ago the CPPIB had just 150 employees and total costs of $118-million, it now has more than 2,100 employees and total expenses (not including taxes or financing costs) in excess of $6-billion.
But...they don't appear to be terrible v. their peers, but that might be an indictment of pension funds.
Future payments in the short term are covered by inflows.
You might as well maximize the returns now so that in the future when it's not covered by inflows you've acrewed a larger return.
is that similar to the Ponzi scheme pattern, though?
Whereas having individual years when the fund pays out more than it collected in interest is not a problem as long as that's not what happens on average.
Because I can trivially beat the market by ~100% by going long on 3:1 margin.
The volatility is why that's a bad idea. One time out of five, the consequence of that investment strategy is 'The market had a crash and I lose everything'.
'Lol, YOLO' is not a great investment strategy for a well-ran country.
Which is why that strategy doesn't actually beat the market. Keep using it for 30 years and you're bankrupt.
Whereas if you put your money in a major index 30 years ago and left it there, or even 50 or more years ago, what result? Are you even in a bad place if you put all your money into the market in 1926 and left it there for 100 years?
Going full index is a great strategy for an individual person aged 20-50, but not a strategy for a pension fund which needs to continuously pay out.
It's OK for a person in their 70s that has a few million in the bank.
This person (CPPIB) has 780 billion and has a sustainability rating for 75 years.
While your metric is common to compare pensions, it's not relevant for debunking ability to survive a recession.
6 million x $100k is 600 billion.
Whereas the annual benefits paid is ONLY 1/10th that at 60 billion/year.
Turn off 80 billion/year in contributions and the investment income (50-60 billion/year) can sustain.
It's still going back to the same assumptions that you're not only timing a depression but also
(a) don't have pre-funding (i.e., millions for an individual at the start of the depression),
(b) don't have CPPIB guardrails and auto-adjustment mechanisms,
(c) and it's not a partial income replacement scheme.
> It will only last 5-10 years without inflows
Without inflows? That's not realistic because people would still be contributing. In fact, CPPIB has triannual resets of contributions and in a recession, they'd up the contribution rate. In a recent actuarial audit, they found that if real returns dropped to 2.5%, then they'd only need to boost contributions from 9% to 11% to keep their 75-year sustainability target.
The advice that you need to taper off your investment portfolio risk as you get older doesn't really apply to people that have a nest egg. I know a lot of people that aren't necessarily living frugally and are told by their financial advisors that they might as well upgrade their cars, travel more, etc. They can cover their costs and don't have net worth > ~$3 million.
Clearly, I am aware of the CPPIB's structure even citing the Office of Chief Actuary's report regarding downside scenarios and health scores. [0]
[0] https://www.osfi-bsif.gc.ca/en/oca/actuarial-reports/actuari...
edit:
> if a retirement fund had put all their money into a stock index in 1926, it wouldn’t have been able to pay out pensions throughout the 1930s and 1940s
Point was that this/your rationale doesn't apply to CPPIB's situation.
That wouldn’t work in a major depression when there is high unemployment and inflows drop.
Let's not forget, CPPIB underperformed a passive benchmark during the Great Financial Crisis and lost 18.8% in FY09.
If your fund gets consistently lower returns than if you had just stuck everything in a 60/40 portfolio, the whole endeavor has failed.
The risk is nominally that if you ever wanted to move a fund that large into some other investments, the act of selling would lower the price of the assets in the fund. But that's what happens no matter what you invest that amount of money in. But then widely distributed whole-market indexes would tend to mitigate that.
The real problem with this is that it disconnects what people invest in from the fundamentals of the companies. Promising companies don't get as much investment if they're not in an index, and mismanaged companies get too much if they are.
I'm confused because my question was whether a sovereign wealth fund could move an index by too much. Not about the issues with index investing (which IMO are mostly overblown).
Thanks to CPPIB, Canada does not have have a giant unfunded pension liability (unlike our neighbors to the south). It has been an enormous success story.
The Australians seem to have the best model overall though. Mandatory payments in to private investments has made them very wealthy.
The UK system takes the national insurance contributions of workers but doesn’t invest them in anything on behalf of the individual. So despite decades of payments you technically have nothing at the end and survive on the goodwill of the government and current taxpayers. That works right now because of the population pyramid.
Canada definitely has a better system than that.
That's how Social Security works in the United States as well.
I also have a number of qualifying years in the UK when I didn’t work, and for decades you could buy a year contribution for about £150. The payout is £12,500 per year.
Is it really a pyramid if the base is less wide than the top? I guess it would be an upside down pyramid, but not very useful for the intended purpose then.
> But the CPP fund didn’t just underperform the indexes last year. It has done so, on average, ever since it switched to active management. That’s the admission you find buried on page 41 (it was on page 39 last year): since fiscal 2007, “the Fund generated an annualized value added of negative 0.2 per cent.” Compound that 0.2 per cent annual shortfall over 19 years, and it adds up to more than $70-billion in forgone income, on assets that now total $714-billion. [0]
[0] https://www.theglobeandmail.com/opinion/article-cppib-pensio...
Now it's not the Federal government and taxpayers propping up the oil industry by buying yet another oil pipeline, but rather a "sovereign wealth fund" (funded by Canadian taxpayers).
To me it sounds less like a "sovereign wealth fund" and more like a domestic infrastructure bank wrapped in populist messaging. I expect plenty of boomers to invest to "stick it to Trump", elbows up!
If Canada ran resources like Norway does, it would have an enormous "excess profit". Norway's royalty rates and "profits" are dramatically higher than Canada where decades of American psyops fooled a bunch of very foolish people that the primary purpose of Canada is to ensure maximum profits for US orgs.
But really, international economics is just mostly made up, and if enough people go along with it then it's as real as real can be.
What is not made up is that if you need to import things from other countries, then you need to export things from your country in proportional value, or else the country as a whole loses purchasing power (i.e. gets poorer). In this case, if Canada is increasing its money supply, then the purchasing power of the currency will go down unless it correspondingly increases demand for its currency (usually by increased demand for its goods and services, including land or businesses in Canada).
So the US is the world's poorest nation, by far, right? Country has a two trillion dollar+ deficit, a one trillion dollar trade deficit, absolutely no end in sight of spiralling to bankruptcy (it's only getting worse), and lets the money printer go brrrr.
Most of international economics are made up, and often are nonsensical. There is no master book of records that dictates cause and effect (there simply isn't, so at best we get "but if you do this...that maybe will happen...or maybe it won't", but mostly it's people looking around and trying to figure out what other people will go along with.
Considering the USD still has decent purchasing power, no? The demand for US goods and services relative to other nations' might have dropped from its peak, but still considerably higher than other nations.
>There is no master book of records that dictates cause and effect
There is for simple stuff, like supply and demand. There is no way of getting around that executing a successful peaceful trade requires both parties to have something that the other wants.
On a nation state level, debt denominated in a nation's currency is more like a claim on the future productivity of a nation (since any nation can always print money or edit a digital database to satisfy its debts).
When you buy a US Treasury, you are betting that at some point in the future, the US is going to be be selling things worth having. You are not worried that your loan to the US will default, because it is trivial for the US government to repay you in USD. Your risk is that when it gets paid back, what will you be able to buy with it?
You understand I was applying your logic, right? The US has the worst trade deficit on the planet, by a long shot. It buys far, far more than it sells. Its primary role on the planet is money printer.
>When you buy a US Treasury, you are betting that at some point in the future, the US is going to be be selling things worth having.
Again, this almost sounds sophomoric. When you buy US treasuries, you are betting that the US will still be printing money when it matures, or when you unload it earlier. It is not based on sound rational logic -- if so the country with the $40 trillion dollar debt and $2 trillion dollar deficit with the massive trade deficit -- would be already bankrupt.
I feel like I'm arguing with someone who is arguing rational economics when someone points out how farcical a stock like TSLA is. All of the hot air in the world doesn't change the fact that it relies upon a shared delusion, and everyone is playing a bit of a game of chicken.
I am not sure what logic you are referring to. My first reply was to point out that no matter what economics are "made up", when push comes to shove, there has to be delivery of real goods and services for the charade to continue. "Enough" people won't go along with someone that doesn't result in them getting what they want, and no one wants a currency if they don't think it will get them what they want.
My second post is responding to the claim that America is the poorest country, to which it obviously isn't, since it can still buy almost whatever it wants.
Regardless of the technical details, someone who can buy something is richer than someone who cannot buy something. Maybe that is due to a shared delusion, and maybe everyone is playing a bit of chicken. Obviously, that will only be revealed in the future, but in general, that's what all sovereign nations' debt is, a "delusion" (or assumption) that the fruit of the nation's productivity will be worth having in the future.
I guess it benefits my kids though
Both aim to take today's windfall and spend it on something other than hookers and blow.
Norway still does have some totally unjustifiable passion projects, like the coastal highway it's building, but it's doing this from general funds to keep the wealth fund separately managed as a giant pile of investment money that just happens to belong to an investor called 'Norway', while in Saudi Arabia it is an instrument of policy.
Historically, this just ends up with Toronto and Montreal (and to a more limited extent, Vancouver) treating the rest of the country as a resource colony. The pretense that consent of the governed is equally geographically distributed is, naturally, very useful to you.
If you do that again, as you did in the '60s, Canada will only be Toronto and Montreal.
So, where most Canadians live?
No country requires business growth or an economy /s.
The market economy is brilliant.