Beaver bucks

Norway has one. So does China and the dudes running the UAE. Now Canada is about to get a sovereign wealth fund. But the Canada Strong Fund, unveiled yesterday, will be uniquely weird (of course). You might end up with a hunk of it in your RRSP.

First, what’s a sovereign wealth fund?

A national savings account, basically. The fund is state-owned, financed with excess government revenue and used to invest for long-term returns that grow and stabilize the economy while hopefully creating wealth for your grandkids.

So Norway salted away a couple of trillion in oil revenues. China’s fund has over $3 trillion. The Saudis play with just under a trillion and little Singapore has $800 billion. The funds grow money, buy assets globally and give government cash to throw into opportunities or solve problems.

In Canada we have two notable pots of state-run money. In Alberta the Heritage Fund holds $30 billion, which is dwarfed by Quebec’s Caisse de dépôt et placement du Québec (commonly called La Caisse) which has more than $500 billion –  and invests 80% of it outside the province,

Well, here’s the skinny on the Canada Strong Fund.

First, it will be funded with $25 billion in fed money over three years.

Second, we don’t actually have that money, so we’re going to Harold The Loan aRanger to get it (aka the bond market). Yeah, debt,

Third, it won’t be run by the government or politicians, but a CEO and board of directors, presumably from the private sector. It’s highly unlikely to be what PP immediately labelled it – ‘a Liberal slush fund’.

Fourth, it’s meant to build stuff. Mines. Ports. Pipes. Maybe a data centre or two. Rail extensions. Roads. Irrigation. Useful things meant to bolster and diversify the economy, lessen our dependence on the now-unreliable Americans and make more of our abundant resources and awesome land mass.

Fifth, you’ll be able to buy in. There will be a retail component to this fund allowing individual Canadians to invest. All we know so far is this will function like a bond – your principal will be guaranteed, meaning zero capital loss no matter what dumb things are built. The rate of return is clearly unknown, but it’s worth nothing Alberta’s fund has earned that province about 7% a year. That rivals the long-term performance of a B&D portfolio.

Sixth. This will be independent. The prime minister says so. Arms-length from the government. Non-political. Honest.

Seventh, this will look, feel and taste like an equity-linked GIC. “As the Canada Strong Fund succeeds, investors will be able to share in the upside, while their initial invested capital will be protected,” says Ottawa. Given the long-term nature of infrastructure projects, real returns could be relatively far off. Inflation could be a risk, but capital loss will not be. So, odds are the feds will make this RRSP and TFSA-eligible in order to boost the attractiveness for retirement funding.

And why would something paying GIC-level of returns be seductive?

Because the Beaver Bucks fund will have an unlimited potential upside over time. Just like the equity-linked bank products, which track stock market gains.

The Canada Strong Fund will have some unique advantages, however. Besides capital preservation there’ll be a huge amount of diversification in the assets owned. Investors would get exposure to national-scale infrastructure as well as industrial projects and (presumably) leading-edge technology. Unitholders would also benefit from the kind of world-class portfolio management and oversight that the CPP Investment Board provides.

BTW, that public pension fund is already a quasi sovereign pot, but with investments across the world. These days it contains $781 billion in assets and last year earned 9.3%, on top of the 2024 performance of over 14%. The decade-long return is a none-too-shabby 8.4%.

So would you buy a hunk of this thing? Do you believe the feds, that it can be run without diddling from politicians who want largesse in their regions? Or do you agree with the oppo guys who said it will be another inefficient boondoggle government-run sop meant to enrich the Liberal elites and their corporate buddies while hard-working Canadians are screwed and hollowed-out to lead miserable lives of penury? (I may have paraphrased.)

We’ll see. There could be more details revealed in the economic statement coming today after the markets close.

But let’s hope for the best. For altruism and the intrinsic interests of Canada.

How refreshing that would be.

About the picture: “Both of my dogs (Jasper on the left and Charlie on the right) have graced your blog already individually,” admits Ken.  “However they haven’t yet appeared as a duo, attached is recent picture of both them.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

Source: https://www.greaterfool.ca/2026/04/28/beaver-bucks/