CEO says 40% of total fund may be the peak
by Mathieu Dion
The head of Caisse de Dépôt et Placement du Québec said it’s time for the fund to scale back on US investments after years of growth and great returns.
“It’s been 10 years of US exceptionalism,” Chief Executive Officer Charles Emond said. “Obviously, you got to a point where we reached sort of a higher percentage than usual. We’re at 40% of our total fund in the US. I’d say that’s kind of the peak, like to trim a bit.”
CDPQ had C$473 billion ($346 billion) of assets under management at the end of last year, making it Canada’s second-largest public pension manager. Half of its stock portfolio and 46% of its real estate was in the US as of that date, including New York’s Stuyvesant Town-Peter Cooper Village, a major residential property it owns with Blackstone Inc.
Emond told a business audience in Montreal on Wednesday that he’s concerned about a tax measure in President Donald Trump’s fiscal bill. The so-called Section 899 provision takes aim at nations such as Canada, the UK and France that have digital services taxes or other corporate tax rules the US deems unfair.
If it passes into law, investors and companies from those countries may see higher tax rates on income they earn from US assets. Section 899 has been called a “revenge tax” by some analysts.
“It’s dangerous because it could bring in revenue automatically, which would be a big win, but it would also undermine investor confidence,” said Emond. The provision is “still something that you have to figure out” and there are “ways to go around it to a certain extent if you keep the capital there.” Infrastructure assets are likely to be the most impacted, he said.
The pension fund CEO also cited Trump’s tariffs as a “potentially stagflationary shock.” The economy looks resilient for now, but there may be trouble ahead, Emond said — some companies brought forward their orders earlier this year to avoid tariffs.
