Wealth manager expresses concerns over Canadian pension investments

Wealth management exec 'disappointed' in industry's inclination towards investing outside of the country

Wealth manager expresses concerns over Canadian pension investments

In an interview with BNN Bloomberg, wealth management executive Peter Letko voiced his disappointment regarding the investment choices made by Canadian pension funds. Despite potential economic challenges on the horizon, Letko, co-founder of Letko Brosseau Global Investment Management, remained optimistic about Canada's economic prospects.

Letko shared his outlook for the Canadian economy, lauding the nation's “excellent” infrastructure and the continuous growth of its well-educated population.

“Canada is a place that has what people need and want,” Letko said. “I think we added something like a million people to a 40 million base last year, it’s extraordinary. I can't help but be very optimistic about how Canada is moving along.”

Amidst concerns of high inflation and rising living costs, Letko highlighted Canada's nominal GDP growth as an indicator of a resilient economy. He explained that while real growth had stagnated, nominal growth had continued steadily.

“When we speak of nominal growth, that's what flows through Walmart's cash registers, and we've been through a period that has continued to show very nice growth,” he said. “It's clearly slowing, and as things slow, there may be a risk of slipping into recession, but by and large, we've had a wonderful economy, and the stock market's been helping us along.”

Letko encouraged other investors to share his optimism about Canadian companies, expressing his disappointment with the Canadian pension industry's increasing tendency to invest outside the country. He highlighted the shift from investing nearly 30% in Canadian stocks in 2000 to just 3% at the end of the previous year.

“It’s a pool of capital that's ideally suited to make investments in equities, and so much of that is being done outside of Canada,” Letko said.

Letko argued that Canadian companies represent the best of the country and noted the reputation of Canada's banks and insurance firms, offering attractive returns on investment.

“There's nothing of that in some of these pension portfolios,” he said. “I don't quite understand what the logic is there.”