OTTAWA — Prime Minister Mark Carney announced on Monday morning the creation of Canada’s first national sovereign wealth fund, starting with an initial endowment of $25 billion.
While Carney’s so-called Canada Strong Fund will be the first Canada-wide fund of its kind, he won’t be starting completely from scratch.
Five Canadian provinces and territories
— Alberta, Ontario, Quebec, Newfoundland and Labrador and the Northwest Territories — already have subnational sovereign wealth funds.
The largest of these by far is Alberta’s Heritage Savings Trust Fund, commonly known as the Heritage Fund.
The Heritage Fund, established in 1976, collects and reinvests a portion of Alberta’s oil and gas royalties. It had some $31.9 billion in net financial assets as of Dec. 31, 2025, making it relatively modest in comparison to funds in other oil-rich jurisdictions.
The Alberta fund’s five-decade history has been one of missed targets and iffy management. Despite an initial target of 30 per cent of provincial non-renewable resource revenues, less
of these revenues have been deposited into the fund over its lifetime. The fund has also been vulnerable to external shocks, notably
during the 2008-2009 Great Recession.
In November 2024, Finance Minister Nate Horner fired the entire board of Alberta Investment Management Corp. (AIMCo), the provincial Crown corporation that manages the Heritage Fund and other government investments. Horner said
that the management team wasn’t giving Albertans value for their tax dollars.
“We expect responsible management of those dollars, but in recent years, AIMCo’s operating costs, management fees and staffing have increased significantly without a corresponding increase in returns for its client funds,” wrote Horner. “This is unacceptable.”
AIMCo is currently overseen by
former prime minister Stephen Harper
, who has declined to take a salary.
Here’s what you need to know about Canada’s biggest sovereign wealth fund, and a potential cautionary tale for the Carney government.
What was the Heritage Fund’s initial purpose?
Conceived at the height of the
, the Heritage Fund was set up to ensure the oil and gas royalty revenues flowing into Alberta’s coffers supported economic diversification and the prosperity of future generations.
Revenues captured by the fund initially went into three buckets: capital projects (e.g., hospitals, schools), economic growth and diversification and loans to other provinces.
Over time, the fund’s focus has moved away from direct investments in Alberta to maintaining a diversified portfolio of assets, including stocks, bonds and real estate.
How has the fund actually worked?
In practice, the Heritage Fund has been more ATM than generational endowment.
Since 1976,
$45.8 billion has been withdrawn
from the fund into general revenues, while less than half of that, $18.7 billion, has been put into the fund.
The initial 30 per cent non-renewable resource revenue target was lowered to 15 per cent in 1983 and dropped altogether in 1987. Resource revenue contributions
of the fund’s first 48 years.
Why has it been so hard to keep revenues in the fund?
The simple answer is politics.
“I think the Alberta Heritage Fund is the perfect example of political intervention,” said Jack Mintz, an economist at the University of Calgary.
“There have always been political decisions about whether to leave money in the fund or take it out,” said Mintz.
Mintz said the fund failed its first major stress test when a deep recession hit Alberta in the early 1980s. Then-premier Peter Lougheed, the fund’s creator, announced in 1982 that
, diverting more than $850 million from the fund to protect farms, households and businesses.
The fund annual growth rate fell into the red by the end of the decade.
“There wasn’t necessarily a lot of discipline in how the fund was managed, pretty much the start. If the government was short of money, they would take money out of it,” said Mintz.
Why has it underperformed relative to other Western oil funds?
Politics is a strong but not insurmountable obstacle to growing sovereign wealth funds in oil-rich democratic jurisdictions.
The Norway Oil Fund, established in 1990 with a US$300-million endowment, has since grown to US$2.2 trillion, making it the world’s largest sovereign wealth fund. Critically, the fund invests almost exclusively outside Norway to tie its own hands.
Mintz said the prospect of
declining Norwegian oil production
underpinned a political consensus behind the fund.
“Norway had a specific issue, and their oil was running out,” said Mintz. “The public seemed to buy this idea that they needed to fund public services for the long run, and they were willing to take a short-term hit for that.”
Mintz
led a government-sponsored study in 2008
that found Alberta could grow its Heritage Fund to $100-billion by 2030, if it adopted managerial practices similar to those used in Norway.
Closer to home, Albertans can look to the example of the Alaska Permanent Fund. The Alaska fund, also founded in 1976, was valued at over US$89 billion in early 2026.
The Alaska fund has a built-in accountability mechanism of a $1,600 cash dividend per resident. This dividend gets smaller when the fund performs poorly, an outcome managers obviously want to avoid.
Will a national sovereign wealth fund look any different?
Details so far have been sparse about how Canada’s new sovereign wealth fund will be funded. One factor already working against it is that the country won’t be starting with a massive windfall surplus, but a historic national debt.
“(The $25 billion) is going to come from the taxpayers, we always have to remember that,” said Mintz.
National Post
rmohamed@postmedia.com
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