Canada's New Sovereign Wealth Fund (SWF): WTH?

by: Jeffery A. Keill, CFP, CIM, FMA, FCSI, CEA

Portfolio Manager and Senior Wealth Advisor

Canada has joined a club- well sort of. This club includes the likes of Norway, Abu Dhabi, and Australia. All these countries have sovereign wealth funds (SWFs) that invest for the long term. I say sort of because these countries generally have excess funds and are not a bleeding victim of financial overspending and mismanagement. Ottawa’s newly announced Canada Strong Fund is positioned as a “nation-building” investment vehicle. Canada’s SWF aims to earn exceptional returns while helping finance large Canadian projects. My big question is the same one I have with every SWF: “Can it generate strong returns, consistently, while staying insulated from short-term politics, conflicts of interest, and typical bureaucracy of Crown Corporations?” Canadians will be presented with this option soon, but I remain highly skeptical as to its ability to deliver on its promises. 

What we know so far: Canada Strong Fund

• The government describes it as Canada’s first national federal-level Sovereign Wealth Fund. Which is true, but there exists other SWF within Canada. Alberta has its Heritage Fund as an example, although not exactly the same, Canadian’s do already have the crippled Canada Infrastructure Bank (CIB) as well. 

• An initial $25 billion contribution is intended to seed the fund and grow over time through reinvested returns and potentially other deposits. 

• With a stated objective of achieving market-rate returns, the fund is expected to invest alongside private and institutional capital, primarily through equity-style investments: albeit Canadian only.

• The mandate emphasizes investing in Canadian “nation-building” opportunities—such as infrastructure, energy (clean and conventional), critical minerals, agriculture, and advanced manufacturing.

• It is intended to operate as an independent, professionally managed Crown Corporation—at arms-length. Can you say Brookfield?  

• The government has also signalled a retail investment product so individual Canadians can invest alongside the public seed capital.

Those design choices, arm’s-length governance, a long-term mandate, and a clear commercial-return objective—mirror the ingredients behind many of the world’s better-regarded sovereign funds. Outcomes will depend on the fine print: what qualifies as “strategic” as well as how performance is measured, how risk limits are set, and how truly transparent reporting will be once investments begin will all be factors in the outcome.

How have sovereign wealth funds performed globally?

Well, that is tricky to answer for many reasons. My reading and research over the last few days were limited, and finding data consistent with what is being proposed was difficult. This is because various existing SWFs have different mandates (National Savings, Economic Stabilisation, or National Development) and therefore very different portfolios. 

Still, many SWFs disclose long-term return metrics, and they offer a useful reality check. Over long horizons, well-governed, diversified SWFs have typically generated mid-single-digit to high-single-digit annualised returns, with meaningful year-to-year swings. Nothing exceptional when compared to private investment choices especially when viewed through a risk lens.

Here are a few examples:

• Norway’s Government Pension Fund Global (GPFG) is one of the most transparent SWFs. Norwegian government reporting shows an annualised geometric average return of about 8.5% over the last 10 years (through 2025), and roughly 6.9% over the last 20 years.

• Abu Dhabi Investment Authority (ADIA): ADIA reports long-term point-to-point annualised returns; as of 31 December 2024, it cited about 6.3% over 20 years and 7.1% over 30 years.

• Australia’s Future Fund: While it’s often described as Australia’s Sovereign Fund, its mandate is tied to meeting future public liabilities. Public updates have reported a 10-year average annual return around the low-to-mid 8% range in recent years. 

The Bottom Line (so far)

I will grant Prime Minister Carney the Canada Strong Fund is an ambitious initiative. The use of a professionally managed at arm’s-length vehicle to help finance big Canadian projects and aim for market returns so Canadians share in the upside could be advantageous. Everyone, including the SWF’s listed above, knows of his experience with this approach given his widely held belief of a conflict with Brookfield. Global experience suggests this can work, although none of the existing SWF have really outperformed what investors could achieve on their own. It will be successful only if the fund’s mandate is tight, its governance is genuinely independent, and its performance reporting is rigorous and transparent. The jury is out if this can be accomplished when our existing programs have failed and we are not investing excess cash but drawing more taxpayer blood to seed it. 

I am sure I will be writing more about this topic as the Liberals try to get this SWF off the ground. Grand announcements are one thing. With the recent grounding of Ontario Premier Doug Ford’s plane due to constituent blowback, it is possible this federal initiative could also see a failure to launch for the same reason.

Posted April 2026