Investment funds that are designed to entice Canadian institutional investors to allocate more capital in domestic assets could open up conversations regarding the most effective way to boost investments at home, says Colin Busby, director of policy engagement at the C.D. Howe Institute.
In September, the Globe and Mail reported there was little interest among institutional investors in a proposed fund dedicated to Canadian assets. Brookfield Asset Management Ltd.’s proposal sought more than $35 billion from investment organizations and a $10 billion contribution from the federal government, said the report, noting institutional investors may be hesitant because raising such a large fund wouldn’t expand the pool of large-scale, investable assets in Canada that meet the funds’ risk tolerance for investing plan members’ money.
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However, Busby says such funds could create a roadmap to unlocking key domestic assets for institutional investors. At the federal level, this could mean increased investment in airports, railways and seaports and at the provincial level, investments in projects such as roads and electrical utilities. “I think it’s very valid for the Canadian federal government, as well as the provinces, to examine the kind of assets that they’re making available to pension funds . . . and whether or not those can be made private and purchasable.”
Earlier this year, the Global Risk Institute issued a study that agreed with Busby’s recommendations to open up Canadian investment organizations’ capacity to invest in domestic infrastructure assets.
Brookfield’s proposed fund comes after the federal government tasked former Bank of Canada governor Stephen Poloz with identifying opportunities to increase institutional investors’ allocations to domestic assets. Poloz recently said he wasn’t interested in mandating such investments.
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