Key Takeaways
- • Canada's Maple 8 pension funds have an estimated US$6.6 billion invested in public data center and digital infrastructure firms, up from US$2.3 billion before the rise of ChatGPT, according to a report from The Logic.
- • TD Asset Management's Carl Elia describes data as "the new commodity" and says AI-driven demand is a structural shift, not a passing fad, with growth shifting toward smaller, localized, co-located facilities and tower assets.
- • PBI Actuarial Consultants' Bradley Hough warns that power supply, not construction capacity, may be the binding constraint, with gas turbines facing a four-year wait according to Elia.
- • Managers are diversifying cautiously and demanding higher returns to compensate for emerging technology risk, with fiber networks tied to retail-focused models drawing criticism.
- • TDAM's Hussein Allidina says power generation faces inelastic supply and inflationary pressure from demand for copper, aluminum and energy inputs.
Summary
Canada's largest pension funds, known as the Maple 8, are increasing allocations to AI-driven digital infrastructure. According to a report from The Logic, roughly US$6.6 billion is invested in public data center and digital infrastructure firms across these pensions, up from about US$2.3 billion before the rise of ChatGPT.
Carl Elia, vice president and director of global infrastructure investments at TD Asset Management, argues that data has become an essential infrastructure asset class. He said the first wave of investment focused on massive hyperscale facilities, while demand is now shifting toward smaller, co-located data centers and tower assets closer to population centers. Elia characterized the appeal in traditional infrastructure terms: steady income, inflation protection, and diversification, with many assets backed by long-term contracts with high-quality counterparties.
Bradley Hough, consultant at PBI Actuarial Consultants, said managers had previously viewed data centers as possibly overbuilt with low returns, a view that changed abruptly with the emergence of generative AI. He cautioned that power is the key complication. US electricity demand had trended downward for two decades before data centers and AI reversed that trend, and Hough said the limiting factor for some facilities could be power supply rather than construction capacity. Managers are weighing renewables against gas-powered generation and are demanding higher returns to compensate for emerging technology risk.
Hussein Allidina, managing director and head of commodities at TDAM, said data center construction requires substantial copper, aluminum and energy inputs, and that power generation has seen little meaningful investment in decades. He described supply as inelastic and said the process is inflationary. Elia noted gas turbines have a four-year wait.
Hough said digital infrastructure such as fiber and communication towers is common in institutional infrastructure portfolios, while each sub-sector carries distinct risks. Elia acknowledged that some fiber networks with retail-focused, less reliable revenue have drawn criticism. Elia also said he does not expect Canada to match US scale in this sector, making US-based infrastructure a likely route to scale for Canadian pensions.
Carl Elia, vice president and director of global infrastructure investments at TD Asset Management, argues that data has become an essential infrastructure asset class. He said the first wave of investment focused on massive hyperscale facilities, while demand is now shifting toward smaller, co-located data centers and tower assets closer to population centers. Elia characterized the appeal in traditional infrastructure terms: steady income, inflation protection, and diversification, with many assets backed by long-term contracts with high-quality counterparties.
Bradley Hough, consultant at PBI Actuarial Consultants, said managers had previously viewed data centers as possibly overbuilt with low returns, a view that changed abruptly with the emergence of generative AI. He cautioned that power is the key complication. US electricity demand had trended downward for two decades before data centers and AI reversed that trend, and Hough said the limiting factor for some facilities could be power supply rather than construction capacity. Managers are weighing renewables against gas-powered generation and are demanding higher returns to compensate for emerging technology risk.
Hussein Allidina, managing director and head of commodities at TDAM, said data center construction requires substantial copper, aluminum and energy inputs, and that power generation has seen little meaningful investment in decades. He described supply as inelastic and said the process is inflationary. Elia noted gas turbines have a four-year wait.
Hough said digital infrastructure such as fiber and communication towers is common in institutional infrastructure portfolios, while each sub-sector carries distinct risks. Elia acknowledged that some fiber networks with retail-focused, less reliable revenue have drawn criticism. Elia also said he does not expect Canada to match US scale in this sector, making US-based infrastructure a likely route to scale for Canadian pensions.
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