Foreign investors return to Canadian bonds as cross-border flows reverse in late 2025
Canada’s net asset position has nearly tripled since the pandemic, a shift that reflects how deeply Canadian investors have become tied to US financial markets.
Statistics Canada reported that Canada’s net international investment position (IIP) increased from $691bn just before COVID-19 to $1.86tn, with all cumulative growth tied to net claims on US financial assets.
As per Statistics Canada, Canada has maintained a net asset position for more than a decade as international financial assets outpaced liabilities.
The agency stated that equity price fluctuations and the depreciation of Canada’s exchange rate supported upward revaluations in foreign assets, particularly those in the United States.
In the second quarter of 2025, 58.9 percent of Canada’s foreign financial assets were located in the United States, while US investors held 52.5 percent of Canada’s international liabilities.
Portfolio investments in US securities accounted for about one-half of all US asset holdings, and their growth represented over two-thirds of the increase in Canada’s net US position since late 2019.
Statistics Canada noted that the shift intensified in early 2025 as trade tensions escalated.
Canadian investors increased exposure to US portfolio assets, while foreign investors reduced their exposure to Canadian securities.
Lovely (2025) said Canadian investors “have loaded up on US securities at an entirely unprecedented pace”, while “foreign investors have cooled on Canada”.
According to Statistics Canada, Canadian investors added $61bn in US securities during the first half of 2025. Over three-quarters of these acquisitions occurred in February and March.
Investors added $38.1bn in US equities and investment fund shares and $22.3bn in US corporate and government bonds.
Investment in non-US foreign securities totalled $1.3bn.
Foreign investors moved in the opposite direction.
Statistics Canada reported a $22.4bn net decrease in foreign holdings of Canadian securities during the first half of the year, including divestments of Canadian equities and investment fund shares (-$43.6bn) and money market instruments (-$20.8bn), partly offset by $42bn in Canadian bond purchases.
The second-quarter net divestment (-$16.5bn) was the largest since 2007.
These cross-border flows produced a net outflow of $84.7bn during the first six months of 2025, according to Statistics Canada.
This contrasted with a net inflow of $80.6bn the previous year.
More recent data from Statistics Canada showed a reversal during July and August.
Canadian investors added $31.9bn in US assets, and foreign investors purchased $49bn in Canadian securities, largely bonds.
After net outflows of $96.6bn between February and June, international transactions generated a $13.5bn net inflow during the summer.
Statistics Canada reported that this trend continued in September as both Canadian purchases of US securities and foreign investment in Canadian securities increased.
