Good morning. The new sovereign wealth fund announced yesterday by Mark Carney adds another layer to Canada’s funding ecosystem. Where it fits – and what we know so far – is in focus today. Plus, how long can consumers “look through” price shocks?

Telecoms: Rogers Communications Inc. is offering voluntary buyouts to half of its work force – excluding those in its Maple Leaf Sports & Entertainment division – as revenue growth slows.

Deals: Shell is set to buy Canadian producer ARC Resources in a US$16.4-billion deal.

Trade: Quebec furniture maker South Shore is shutting down as tariffs bite into business.

At a glance: “Canada Strong” is a sovereign wealth fund – a state-owned investment account that is independently managed.

How it works: The fund is linked to planned federal support for what the government describes as nation-building projects, including ports and natural resources projects.

Where the money comes from: The fund will open with an initial budget of $25-billion, seeded by the government over three years.

• Carney said the fund will then grow through “asset recycling” – building projects like power lines or data centres, selling them once they mature, and ploughing the money into the next round of projects.
• The size of the fund will grow over time through returns and “other assets” the government may allocate to it.
• Canadians will also be able to invest – a direct option that would be “something consistent with buying a government bond,” Carney said. Maybe they’re still workshopping that pitch.
• Sovereign wealth funds of resource-rich nations are typically seeded with windfall earnings, Campbell Clark notes. Canada will have to borrow more to invest more.

In announcing the fund, Carney cited the Scandinavian country as among similar countries that are “blessed with natural resources” – but which run successful sovereign funds.

How Norway is the same: Norway, like Canada, has a massive oil and gas sector. Its “Government Pension Fund Global” – often just called “the Oil Fund” – invests surplus petroleum revenues on behalf of the state, and at roughly US$2-trillion is the largest sovereign wealth fund in the world.

How it’s different: Norway runs consistent surpluses, built on oil revenues that seeded its sovereign wealth fund. Canada, meanwhile, is projected to run a deficit flirting with $80-billion. (Although Carney has suggested it will come in lower in today’s revised outlook. ) The BBC reported in 2024 that some Norwegians are feeling a sense of guilt over their relatively comfortable lives.

In any event, The Globe’s Andrew Willis argues Carney shouldn’t look to Norway as a blueprint for success, but to Quebec.

Next up for the Canada Strong Fund is the Canada Strong Fund Transition Office, which will lead months-long consultations on how it will work. The announcement comes just a couple of years after the launch of the Canada Growth Fund.

You can see how this might give opposition ammo to argue Carney is creating more layers of consultation even as he vows to run a more responsive and austere government.

But the other tools at Canada’s disposal are meant to absorb political and logistical risks markets won’t take. In theory, at least, each of the acronyms you might see tossed around represent investment devices with nominally distinct roles to play in financing the projects governments want built.

Canada Strong Fund: Introduced yesterday, the Canada Strong Fund is meant to give Ottawa a larger ownership stake in projects it helps finance – after years of public support for major projects, including pipelines and LNG facilities, left Canadians without a share in long-term profits.

Canada Growth Fund: Designed in 2023 to absorb risk after climate and regulatory uncertainty stalled investment, the CGF is an arm’s-length government fund with $15-billion at its disposal to invest in clean Canadian technologies in the resource sector.

Canada Infrastructure Bank: Created in 2017 after project delays and cancellations, such as the collapse of the Energy East pipeline and repeated stalemates over major urban projects. Its mandate is to invest $35-billion in revenue-generating public infrastructure projects. In 2020, The Globe’s editorial board asked: “What is the Canada Infrastructure Bank? And why?”

CPPIB: Probably the least likely to be caught up in the acronym soup, given it isn’t in the business of coaxing investors, but the Canada Pension Plan Investment Board could play a key role down the road. (Depending, of course, on whether the road is built.)

The fund, which manages nearly $800-billion on behalf of the Canada Pension Plan, is fixated purely on achieving a “maximum rate of return without undue risk of loss” for its millions of Canadian contributors. About 47 per cent of its investments are in the United States, compared with 12 per cent in Canada.

CPPIB chief executive John Graham said last week that he’s encouraged that Canada is creating more large-scale opportunities to invest, and the fund is “open for business” to the defence sector as the country ramps up spending on national security.