Prime Minister Mark Carney announced on Monday the creation of Canada’s first national sovereign wealth fund, the Canada Strong Fund, with an initial endowment of $25 billion. While this marks a historic step for the country, it is not without precedent: five Canadian provinces and territories already operate subnational sovereign wealth funds. The largest of these is Alberta’s Heritage Savings Trust Fund, commonly known as the Heritage Fund, which offers valuable lessons—and warnings—for the federal government.
The Heritage Fund's Origins and Purpose
Established in 1976 during the global oil shock, the Heritage Fund was designed to channel a portion of Alberta’s oil and gas royalty revenues into long-term savings, economic diversification, and intergenerational prosperity. Initially, revenues were allocated to three areas: capital projects such as hospitals and schools, economic growth and diversification, and loans to other provinces. Over time, the fund shifted from direct provincial investments to a diversified portfolio of stocks, bonds, and real estate.
Performance and Challenges
Despite its noble intentions, the Heritage Fund’s five-decade history has been marked by missed targets and management issues. Originally aimed at capturing 30% of non-renewable resource revenues, less than 5% has actually been deposited. The fund has also been vulnerable to economic shocks, losing $3 billion during the 2008-2009 Great Recession. As of December 31, 2025, it held approximately $31.9 billion in net financial assets—modest compared to similar funds in other oil-rich jurisdictions.
In November 2024, Alberta Finance Minister Nate Horner dismissed the entire board of the Alberta Investment Management Corp. (AIMCo), the Crown corporation managing the Heritage Fund. Horner criticized AIMCo for rising operating costs, management fees, and staffing without corresponding returns. AIMCo is now overseen by former prime minister Stephen Harper, who has declined a salary.
Key Lessons for the Canada Strong Fund
The Heritage Fund’s experience underscores several risks for Carney’s new fund. First, political interference can divert savings: since 1976, $45.8 billion has been withdrawn from the Heritage Fund into general revenues, while only $18.7 billion has been deposited. Second, governance and cost control are critical to maintaining public trust. Third, external shocks can erode value if the fund is not managed prudently. As Carney launches the Canada Strong Fund, these cautionary tales highlight the importance of clear rules, independent oversight, and long-term discipline.
