Tariff war challenges Canadian pension funds to maintain their momentum

Pension funds that were buoyed by soaring stock markets and growing economies that helped produce double-digit returns last year are now being challenged by the escalating trade war between the United States and Canada that is spilling out globally.

“The U.S. economy has been very strong for so long,” Jeff Wendling, chief executive of the Healthcare of Ontario Pension Plan (HOOPP), said. “Will that continue? What will happen with inflation? We run a lot of scenarios.”

Some economists are predicting the U.S. could enter a recession amid the trade war with Canada, Mexico and China, as well as steep cuts to its federal workforce and potentially rising inflation. U.S. stock markets, meanwhile, have been falling amid the turmoil after a strong 2024.

HOOPP, which provides retirement benefits for Ontario health-care workers, reported a 9.7 per cent return on Wednesday for the year ending Dec. 31, 2024. Net assets rose to $123 billion. With the exception of real estate and fixed income, all segments, including private equity and credit as well as infrastructure, turned in double-digit returns last year.

“We do try to build a portfolio that we think is well exposed to different factors and can be resilient,” said Wendling, who has announced he will retire in April.

His successor, Annesley Wallace, will inherit a different set of circumstances than Wendling did five years ago, though he took the reins at HOOPP just as the economic impacts of the COVID-19 pandemic were setting in.

Michael Wissell, HOOPP’s chief investment officer, said the fund’s diversification by asset class and geography positions it to manage upheaval, from pandemics to the current trade-driven uncertainty.

For example, he said the fund is invested in European