On Monday, we mentioned we were digging into the Big Beautiful Bill’s potential impact on capital flows, given the potential for dividends from U.S. holdings to be taxed at up to 50%.

We looked at the 13F filings of eight of the largest Canadian pension funds to get a sense of how their cumulative ~$225B of U.S. equity exposure is allocated.

While the majority sits in no/low-yield securities (tech, healthcare, discretionary, etc.), roughly $65B (25-30%) sits in more exposed high yield sectors.

Of that $65B, ~$15B sits in US-listed Canadian names, leaving $50B of potential net capital flows back into the country.

To be conservative and account for the fact that not all names in these sectors are high yield, let’s handicap that U.S. exposure by 50%, leaving us with ~$25B:

Where would that money go?

Should some portion of that $25B move north, deployment options are limited. Given the size and liquidity difference in Canada, it’s more likely to see pensions funds size up existing positions than start new ones.

Within financials that likely means banks, given their discount to American peers…

… and to the Canadian life insurers, a typical substitute for bank exposure.

Within energy the infrastructure names could benefit given their size, stability, yield and valuation relative to the historical average.

The large cap producers could see inflows as well, given discounted valuations and a stronger financial footing than in the past, as we highlighted in our look at the Canadian oil patch.

Utilities could see some love too, though rising yields and above average valuations could temper the enthusiasm of the more typical long-only pension flows.

Real Estate is the one yield-heavy sector unlikely to benefit, given they’re generally small and illiquid and most pension funds have private vehicles for taking exposure.