(Bloomberg) — Canada’s biggest pension funds increased their ownership of US assets in recent years to tap into strong economic growth. President Donald Trump’s agenda now has some eyeing Europe as an attractive spot for capital.
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Trump has launched a global trade war without precedent, imposing 10% tariffs on dozens of countries and putting 145% levies on goods from China, while also upending longstanding security and trade alliances with European nations and other allies, including Canada. That has forced countries like Germany to ramp up spending on defense and other areas, which may buoy Europe’s economic prospects over the long run — even if there’s a high level of economic uncertainty today.
“I think there’s been some interesting reinvigoration of the range of possibilities and outcomes that could happen in Europe,” Aaron Bennett, chief investment officer of Ontario’s University Pension Plan, said in an interview. As the continent’s economy moves from “relatively slow growth to higher growth,” certain asset classes may become more appealing, such as infrastructure, real estate and private credit, he said.
UPP is exploring corners of private credit in Europe that are “less tapped and less accessible” by larger funds, said Bennett, whose pension oversees C$11.7 billion ($8.4 billion) of assets. He said UPP’s investment team is thinking about certain parts of the asset-backed lending sphere, such as real estate.
Ontario Teachers’ Pension Plan is also hunting for opportunities in Europe, Chief Executive Officer Jo Taylor said in a recent interview.
“I quite like the idea of being brave and bold and investing in areas where other people don’t want to go because that means there’s less competition and potentially the chance to make better choices at lower prices,” he said. “We are looking at places in Europe to invest across all of our asset categories.”
The Teachers’ plan is one of Canada’s largest, with C$266.3 billion under management as of the end of December. It had 33% of its assets in the US and 17% in Europe, the Middle East and Africa.
Though private credit has been around for a long time, its growth has been so rapid in recent years — it’s now worth some $1.6 trillion globally — that parts of it have yet to go through a full credit cycle, UPP’s Bennett said.
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