A sovereign wealth fund makes sense if fund with profits from exploiting our natural resources.
That is how Norway did it
Canada's first sovereign wealth fund
41–50 of 120 posts
Re: Canada's first sovereign wealth fund
#42If 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.
That seems fine as long as they can show lower volatility than market while still being close in return? Did they?
"We achieved superior risk-adjusted returns" as an excuse for sovereign fund underperformance is nonsense. PE (depending on how levered it is) inherently has lower volatility than buying public stocks.
If your fund gets consistently lower returns than if you had just stuck everything in a 60/40 portfolio, the whole endeavor has failed.
Re: Canada's first sovereign wealth fund
#43This makes sense once you see the list of Canadian companies
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.
Re: Canada's first sovereign wealth fund
#44A sovereign wealth fund makes sense if fund with profits from exploiting our natural resources. That is how Norway did it
And Norway has north of 2 trillion in that fund for about 5M people...
Like, well done. Impressive financial planning at that scale
Re: Canada's first sovereign wealth fund
#45Earlier quoted context omitted.
Over the last decade (and even prior to that) CPPIB has been the best performing fund of its kind. National pension funds have different risk tolerances and investment guidelines that someone's personal portfolio or a family office. Thanks to CPPIB, Canada does not have have a giant unfunded pension liability (unlike our neighbors to the south). It has been an enormous success story.
Yes, far better than how the UK runs its state pension system. The Australians seem to have the best model overall though. Mandatory payments in to private investments has made them very wealthy. The UK system takes the national insurance contributions of workers but doesn’t invest them in anything on behalf of the individual. So despite decades of payments you technically have nothing at the end and survive on the g…
>The UK system takes the national insurance contributions of workers but doesn’t invest them in anything on behalf of the individual. So despite decades of payments you technically have nothing at the end and survive on the goodwill of the government and current taxpayers. That works right now because of the population pyramid.
That's how Social Security works in the United States as well.
Re: Canada's first sovereign wealth fund
#46Earlier quoted context omitted.
Why is HN so pessimistic?
The 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.
I 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.
Re: Canada's first sovereign wealth fund
#47Re: Canada's first sovereign wealth fund
#48Earlier quoted context omitted.
Over the last decade (and even prior to that) CPPIB has been the best performing fund of its kind. National pension funds have different risk tolerances and investment guidelines that someone's personal portfolio or a family office. Thanks to CPPIB, Canada does not have have a giant unfunded pension liability (unlike our neighbors to the south). It has been an enormous success story.
Yes, far better than how the UK runs its state pension system. The Australians seem to have the best model overall though. Mandatory payments in to private investments has made them very wealthy. The UK system takes the national insurance contributions of workers but doesn’t invest them in anything on behalf of the individual. So despite decades of payments you technically have nothing at the end and survive on the g…
>That works right now because of the population pyramid.
Is it really a pyramid if the base is less wide than the top? I guess it would be an upside down pyramid, but not very useful for the intended purpose then.
Re: Canada's first sovereign wealth fund
#49Usually 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?
>Usually a sovereign wealth fund is funded by excess profits, like Norway for example. If Canada ran resources like Norway does, it would have an enormous "excess profit". Norway's royalty rates and "profits" are dramatically higher than Canada where decades of American psyops fooled a bunch of very foolish people that the primary purpose of Canada is to ensure maximum profits for US orgs. But really, international e…
>But really, international economics is just mostly made up, and if enough people go along with it then it's as real as real can be.
What is not made up is that if you need to import things from other countries, then you need to export things from your country in proportional value, or else the country as a whole loses purchasing power (i.e. gets poorer). In this case, if Canada is increasing its money supply, then the purchasing power of the currency will go down unless it correspondingly increases demand for its currency (usually by increased demand for its goods and services, including land or businesses in Canada).
Re: Canada's first sovereign wealth fund
#50Earlier quoted context omitted.
That seems fine as long as they can show lower volatility than market while still being close in return? Did they?
"We achieved superior risk-adjusted returns" as an excuse for sovereign fund underperformance is nonsense. PE (depending on how levered it is) inherently has lower volatility than buying public stocks. If your fund gets consistently lower returns than if you had just stuck everything in a 60/40 portfolio, the whole endeavor has failed.
I really like the ideal of just chucking it all in VTI (or, since it's Canada, some other equivalent). But does it still work at that scale? Or does the fund exert its own gravitational field on the index in question?