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Canada's first sovereign wealth fund
- red-iron-pine 6mo agolaudable goal. I suspect it will end up like most other Canadian procurement projects. also why all the love for Canadian Pacific rail?
- nish__ 6mo agoWhy is HN so pessimistic?
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- kirubakaran 6mo agoIs setting expectations based on track record considered pessimism?
- nish__ 6mo agoIncessant nit picking, negativity and doubt casting is my issue. And Canada is unrecognizable these days. Why should I think past performance is indicative of future success?
- slopinthebag 6mo agoYou're right, it is unrecognisable, and past performance is not indicative of future success. It will be much worse than past performance. Sorry, not optimistic enough I suppose :(
- dacox 6mo agoAs a Canadian I see little reason for optimism
- jsbisviewtiful 6mo ago> Incessant nit picking, negativity and doubt casting is my issue. 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.
- pie_flavor 6mo agoThe parent comment just says it'll perform similar to how past similarly-shaped things performed, without saying what that past performance is. If that implies pessimism, that's not HN's fault.
- nish__ 6mo agoGive me a break.
- visceralasonia 6mo agoI think they missed "laudable." My first read I thought it said laughable too—it's an easy misread that set a completely different tone for the rest of the comment.
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- visceralasonia 6mo agoThat says "laudable" not "laughable." They were actually complimenting the effort, even if some folks misread it
- lbrito 6mo agoIt's the default for any non USA story.
- 1over137 6mo ago>also why all the love for Canadian Pacific rail? 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_Pacific_Railway https://en.wikipedia.org/wiki/History_of_the_Canadian_Pacifi...>
- brailsafe 6mo agoWhile that's true, it does seem to be a strange thing to glamorize now, since as much as it was an engineering accomplishment, it was also arguably a genocidal pursuit, and it's doubtful the sort of projects the government has in mind now will be as "nation building" as expropriating the entirety of Western Canada and letting a single private entity have as much power as CPR does.
- red-iron-pine 6mo agoyeah that ^ was kinda my point. 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.
- Fire-Dragon-DoL 6mo agoDoesn't that has the problem of over exposing canadians to canada economics from an enormous an investment perspective? I guess it benefits my kids though
- scosman 6mo agoI think the thesis is it's not solely about returns. Get a 7% return investing a dollar domestically, plus add a taxable dollar to economy (and some recurring benefit to tax base) beats getting a 9% one-time return investing internationally.
- mapt 6mo agoThere are multiple types of sovereign wealth fund associated with taxes on resource extraction. The type you see in Norway is used to shelter the economic diversity, currency, and labor force from the steamrolling impact of the extractive industry. The type you see in Saudi Arabia, which has no such diversity and where basically all employment is tied to oil through few degrees of separation, is basically a slush fund for long-term infrastructure projects that would not otherwise be approved because of their size in relation to the secular economy, whether those are profit-generating enterprises like harbors or not-for-profit ones like roads. 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.
- WorkerBee28474 6mo agoIf this is run anything like the CPP, it will underperform both the market and their own benchmarks yet lead to executives awarding themselves huge bonuses.
- cherioo 6mo agoThat seems fine as long as they can show lower volatility than market while still being close in return? Did they?
- WorkerBee28474 6mo agoNo lol https://youtu.be/DQgqEFOc894?t=267 https://youtu.be/DQgqEFOc894?t=267
- caminante 6mo agoThis youtuber appears to be anti-active management. CPPIB is underperforming their own benchmarks and charging substantial active fees. > 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.
- lesuorac 6mo agoWhy does it matter if volatility is lower than the market? 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.
- jjtheblunt 6mo ago> Future payments in the short term are covered by inflows. is that similar to the Ponzi scheme pattern, though?
- _whiteCaps_ 6mo agohttps://en.wikipedia.org/wiki/British_Columbia_Resources_Investment_Corporation https://en.wikipedia.org/wiki/British_Columbia_Resources_Inv... Hopefully turns out better than BCRIC.
- slopinthebag 6mo agoUsually a sovereign wealth fund is funded by excess profits, like Norway for example. In this case, it's being seeded by $25 billion dollars of debt. Can anyone more financially gifted explain how this is any different from, well, regular government spending and money printing?
- WorkerBee28474 6mo agoOnly in that it's in a private equity fund, not one-time spending.
- Tiktaalik 6mo agoYea really. Feels like a bit of a communications exercise and effort to create arms length distance from the Federal government and spending on major projects. 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).
- slopinthebag 6mo agoYeah and like, if they want to use it for infrastructure, mining, and LNG development, isn't that at odds with retail investors who require more liquidity? Doesn't it require the fund to either hold massive cash reserves to manage redemptions or rely on government bailouts if retail sentiment sours before projects mature? 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!
- Tiktaalik 6mo agoAnd we already have an infrastructure bank! Trudeau started it. And Carney was the financial advisor to Trudeau, so it was probably his idea too! lol.
- slopinthebag 6mo ago
- hirako2000 6mo agoIf I understand democracies, the private sector get easy access to credit via the creation of debt. You win you win. You win we lose. but also get money invested on behalf of the tax payer. The market economy is brilliant.
- somewhereoutth 6mo agoI believe wealth taxes (really, wealth restitution) should go into sovereign wealth funds - not least as then the public can see how that money is working for them, and so support the continuance and expansion of such taxes.
- vizzier 6mo agoAgreed, we should also nationalise resource extraction and put the funds in there. Canadian resources should be for Canadians.
- sefrost 6mo agoThere’s a reconciliation dimension that complicates that framing, at least in BC.
- qball 6mo agoNo. 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.
- contagiousflow 6mo ago> this just ends up with Toronto and Montréal (and to a more limited extent, Vancouver) So, where most Canadians live?
- triceratops 6mo agoMore importantly - revenues from the funds should be used for reducing income taxes. That's how you get broad-based public support for wealth taxes.
- robocat 6mo agoSubmarine nationalisation/communism. Just use a wealth tax until the wealthy don't own anything. Please ensure you simultaneously destroy any self-made businesses. No country requires business growth or an economy /s.
- boringg 6mo agoOne of the biggest challenges is finding investable projects these days. If they put this money in as a hold to time projects well than could be a good future asset for Canada. If it ends up actually being more of a jobs production vehicle for political gain then probably less successful.
- dahdum 6mo agoThis is a great way to sidestep the political process to fund popular projects. The political constraints will ensure returns are middling, so unless they subsidize with tax breaks on dividend income I think it would be a poor commercial investment. Whether its perfect or not, it almost has to be better than the current status quo.
- onlyrealcuzzo 6mo agoHow are you going to have a Sovereign Wealth Fund when you're in debt ~300% to GDP? 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.
- badc0ffee 6mo agoGDP isn't wealth. This is closer to making $1M/year and owing $4 million.
- triceratops 6mo ago> How are you going to have a Sovereign Wealth Fund when you're in debt ~300% to GDP? https://en.wikipedia.org/wiki/Canadian_public_debt https://en.wikipedia.org/wiki/Canadian_public_debt this article says it's 57% of GDP. Where are you getting your 300% from?
- roncesvalles 6mo ago>How are you going to have a Sovereign Wealth Fund when you're in debt ~300% to GDP? 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/FRA/DEU/ITA/JPN/GBR/USA https://www.imf.org/external/datamapper/GG_DEBT_GDP@GDD/CAN/...
- incomingpain 6mo agoA sovereign wealth fund requires surpluses to be run. 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.
- rapind 6mo agoThis is exactly what I was thinking when I heard him speak about it. Borrowing for a slush fund for the projects (probably many of them American) they want to push... which in a way just means another future tax. Calling it a "sovereign wealth fund" doesn't seem honest at all. (coming from a lifelong Liberal / NDP voter)
- pyrolistical 6mo agoA sovereign wealth fund makes sense if fund with profits from exploiting our natural resources. That is how Norway did it
- hvb2 6mo agoAnd Norway has north of 2 trillion in that fund for about 5M people... Like, well done. Impressive financial planning at that scale
- unixhero 6mo agoYep. Long term greedy nation taught by the best at Goldman Sachs. Thank you guys!
- kreyenborgi 6mo agoYeah, why doesn't Norway spend the oil money on soccer teams and golden airplanes like a respectable and proper oil nation, instead of squandering it on reprobate socialist pension funds? Those lefse-eaters will just waste it on EV's and sensible woolen sweaters.
- unixhero 6mo agoDon't worry you're not missing out. The country is infatuated with the idea of destroying the entrepreneurial and business running class which creates tax income and jobs. And also the middle class is being eviscerated by inflation and insane levels of government costs and taxes.[0] 0, https://www.youtube.com/watch?v=PKn1FrthKwU https://www.youtube.com/watch?v=PKn1FrthKwU
- hvb2 6mo agoIt's so bad, they're ranked 7th happiest country in the world...
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- petermcneeley 6mo agoThis makes sense once you see the list of Canadian companies https://en.wikipedia.org/wiki/List_of_largest_companies_in_Canada 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.
- lwansbrough 6mo agoI guess we shouldn’t do anything because Brookfield exists.
- weirdmantis69 6mo agoI guess we should do stupid corrupt things because Trump exists.
- lwansbrough 6mo agoWhat’s Trump got to do with this? 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?
- petermcneeley 6mo agoPerhaps I would have simply had someone different represent Canadians. Is this too much to ask?
- lwansbrough 6mo agoApparently!
- givemeethekeys 6mo agoYes, considering everyone else was either utterly incompetent, didn't want the job, or screwed the pooch under pressure.
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