Canada Pensions Invest 6x More in Infrastructure Than U.S. Peers, Study Finds

Canada’s pension funds invest a significantly higher portion of their assets in infrastructure than their U.S. counterparts, according to a Preqin study that examined the investing habits of pension funds on both sides of the border.

The average Canadian fund boasts an infrastructure allocation of 5.3 percent; meanwhile, U.S. funds invest about 2 percent of their assets in the class. Further, Canadian funds were far more likely to invest directly.

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Nearly 70 private and public plans in the Great White North—with an average of $14.6 billion in assets under management—reported a current average allocation of 5.3%, or $1.08 billion, of total assets to infrastructure. Some 61% said they invested at least 5% of their total assets.

This figure was slightly lower than the average target allocation of 8.4%, or $1.17 billion.

US funds, on the other hand, only had an average exposure of 2% to infrastructure, leaving room to meet the target allocation of 4%. The current average allocation was just $172 million from an average of $17.6 billion of total assets. The vast majority—80%—of US funds allocated less than 5% of their portfolio to infrastructure.

While an overwhelming majority—97% of Canadian and 93% of US funds—chose unlisted funds, there was a significant portion (35%) of Canadian plans directly investing in infrastructure. Only 1% of US funds directly invested, Preqin found.

The way infrastructure allocations were reported was also markedly different north of the border: Three-quarters of Canadian plans had separate infrastructure allocations, while US funds largely preferred to invest through broader private equity and real assets allocations.

Read a portion of Preqin’s report here.