Should you buy shares in Canada’s new sovereign wealth fund? | About That

All right, Carney, show me the money.The Canada Strong Fund, Canada's first national sovereign wealth fund.

This is a new thing, just announced.And now you're wondering if it might be a good money -making opportunity for you, since apparently we'll all be able to invest in it directly once it's online.Well, clue number one, when the prime minister was announcing it, did you notice the giant train behind him?That backdrop was meant to evoke those grand nation -building efforts of the past.This is important because the fund, as Mark Carney has laid it out, isn't a typical fund that's invested in globally diversified stocks.It's strictly to invest in Canadian infrastructure of some kind.

Exact Projects, TBD.The Canada Strong Fund will invest alongside the private sector in nation -building projects on a fully commercial basis.

If I can translate, it's the government creating a new crown corporation that'll use $25 billion of taxpayer money at the start to backstop risk, like a big billion -dollar cushion.So the private sector feels safe helping chip in for new bridges, mines, windmills, data centers, whatever, in the hopes that there's an investment payoff for everyone down the road.That's a public -private partnership.Canada having an equity stake in these projects is what Carney says makes it a real investment.

Essentially a national savings and investment account.It's designed to grow wealth for future generations of Canadians.

Okay, how much wealth are we talking?The gold standard for sovereign wealth funds, the biggest one in the world, belongs to Norway.In just over 25 years it has amassed the equivalent of just over two trillion dollars U .S.But a big difference between how Norway does it and how Canada plans to do it is You see how Norway is globally diversified?But look over here.

one very particular country they refuse to invest in themselves.What they're leery of is meddling too much in the local economy, splashing billions of public dollars around in this business here, that sector there.That could really muck things up, and it also frames very clearly a central tension with Canada's sovereign wealth fund.Is it going to be about supporting projects in the public interest, like that train that's the backdrop for all this, or is it going to be about making money?

Generating strong financial returns for future generations of Canadians and investing in major infrastructure projects that are in the national interest but have nevertheless not received private sector backing.Those two goals do not go hand in hand.In fact, I think they're more or less diametrically opposed.