Canada's CPPIB pension fund concerned over rising protectionism

By Matt Scuffham

TORONTO (Reuters) - The Canada Pension Plan Investment Board, one of the world's biggest investors, is concerned about the rise of protectionist trade policies, its chief executive told business leaders in Toronto on Friday.

The CPPIB, which manages Canada's national pension fund and invests on behalf of 20 million Canadians, has become one of the world's biggest global infrastructure and real estate investors as it seeks to diversify from public equity and fixed income markets.

Chief Executive Mark Machin told the Toronto Region Board of Trade that the pension fund had benefited from globalization and would suffer from policies that make international trade more difficult.

"We worry about it," Machin said. "Our investment strategy benefits from open markets. Open markets for investment, open markets for trade, open markets for people and impediments to that are not helpful."

U.S. President Donald Trump is planning to reform a trading agreement between the United States, Mexico and Canada while Britain has voted to leave the European Union and candidates with sceptial views of free trade are running in elections in France and Germany in 2017.

"You can understand some of the concerns that have led to these policies. Not everybody has been a beneficiary of globalization," said Machin. "Ultimately I hope that pragmatism will reign in the end and we won't see too profound an impact, whether it's in Europe or North America, of these policies."

At the end of 2016, CPPIB had only 13 percent of its assets of over C$300 billion ($226 billion) invested in Canada.

About 44 percent of the investments were in the United States, with about 19 percent in Europe, around 19 percent in the Asia-Pacifc, and about 5 percent in South America and other regions.

Although CPPIB has grown to be one of the world's biggest infrastructure investors with assets worth C$27.6 billion, it has a relatively modest stake in infrastructure projects in its own country.

Machin said he hoped plans by Canada's Liberal government to set up an infrastructure bank to facilitate private financing for projects could lead to opportunities to invest in more large-scale projects in Canada.

"We're hoping that the initiatives the federal government is taking will lead to a better flow of sizeable opportunities," he said. "We focus on markets where there's a consistent flow of projects that are investable by institutional money. Canada's not had too many of those."

(Reporting by Matt Scuffham; Editing by Richard Chang)