Capital has always reflected the world it exists within as a barometer of risk and confidence, its movements an early warning system leading the march before the politics and policy catch up.  

This is particularly the case for long-term investors navigating mega-trends such as decarbonisation and reorienting global trade and investment flows.  

For countries such as Australia and Canada – countries that by necessity have open and outward-looking economies – there is no alternative but to work closely with like-minded and aligned nations.  

Building partnerships is not just a role for government but also for businesses and communities.  

That is why IFM Investors has signed a memorandum of understanding (MoU) alongside Australian and Canadian pension funds. 

Australia and Canada are home to the world’s fourth and second-largest pension systems respectively. By 2040, superannuation assets under management are expected to reach $11 trillion in Australia and $9 trillion (C$8.7 trillion) in Canada. 

That level of scale gives pension funds and their managers the capacity to invest through cycles, to absorb short-term volatility, and to commit capital to assets that underpin long-term economic growth. 

The MoU will facilitate dialogue with governments on policy settings to improve the business environment for investment in each jurisdiction and to unlock greater long-term capital for private investment.  

It will also help build awareness of investment models that leverage the expertise of long-term and reliable pension capital with the objective of delivering risk-adjusted returns for working and retired people and value for investee companies.  

IFM is demonstrating its confidence when it comes to Canadian investment opportunities. With the right policy settings, IFM Investors sees an opportunity to deploy a further AUD$10 billion into the Canadian market over the next decade.

Step-change

It’s a step-change but our relationships with our Canadian counterparts are not new. Australian and Canadian pension funds have been co-investing for years across ports, roads and energy systems – the type of assets that require long-term stewardship rather than short-term trading. 

At the Port of Vancouver, pension-backed investment has supported projects that significantly reduce emissions like the implementation of ship-to-shore power, the electrification of trucks and conversion to renewable diesel. 

At the Port of Brisbane, long-term capital has helped deliver lower-carbon logistics infrastructure at one of Australia’s fastest-growing trade gateways. In roads across North America, Australian and Canadian pension funds have jointly funded capacity expansions, safety upgrades and modernisation programs that support economic activity and community connectivity. 

There is also a broader strategic context for managers like IFM Investors, as we see that cooperation between like-minded partners with governments on policy barriers will improve the business environment, unlocking greater long-term capital and building support for pension capital investment.  

Super funds are also deepening their presence in the US, and this week are meeting business leaders and State and Federal politicians to discuss how to unlock greater investment opportunities for millions of working Australians through their industry super fund. 

The US is the world’s largest economy and presents super funds with significant investment opportunity across asset classes and sectors.  

Scouring the world

This is IFM and other funds each scouring the world for the best investments on behalf of their members. It is recognition of the importance of super both to the quality of retirement for every Australian and to Australia’s future economic wellbeing. 

Prime Minister Carney described Canada and Australia’s respective pools of retirement savings in his address to Parliament on 5 March as “a strategic asset for our citizens and future generations, particularly in a riskier world where it will increasingly matter who owes whom and who owns what.”  

It is also recognition that “pension capital” is set apart from the rest not because of its size alone, but its unique purpose. Funds are investing on behalf of working and retired people, with an obligation to deliver long-term returns while managing risk across decades, not quarters.  

Pension capital is well-suited to assets that require long-term thinking – and to partnerships that endure beyond short-term volatility and political bluff and bluster. 

The MOU between Canadian pension funds, Australia’s industry funds and IFM Investors is an example of long term, sophisticated investors navigating today’s complex geo-political environment on behalf of, and in the interests of, millions of working and retired people. 

David Whiteley is global head of external relations for IFM Investors.