As calls continue for a true Indigenous sovereign wealth fund, a new force in Canadian investing has emerged

As Canada races to unlock new sources of growth, Indigenous communities – through land, resources, financial settlements and commercial partnerships – are emerging as a powerful economic engine for the country. But with growing economic clout comes new challenges around how this wealth can be governed, invested and deployed to deliver lasting benefits. 

Indigenous communities have largely been sidelined in the conversations around a new national sovereign wealth fund, which was announced this spring with much fanfare by Prime Minister Mark Carney. As those conversations evolve, calls for an Indigenous sovereign wealth fund, which I wrote about last year, will continue.  

In the meantime, to meet these challenges, a new area of investment management is taking shape: Indigenous-owned asset management firms designed to not only grow capital, but to reflect community values and anchor long-term economic self-determination. 

The amount of money flowing to Indigenous communities is significant. Since Canada established the Comprehensive Land Claims Policy in 1973, Ottawa has paid out nearly $22 billion in compensation to settle 771 Indigenous claims. More than $15 billion of those settlements have been awarded in the past five years alone, funds that are now being invested back into vital infrastructure projects and other community-building initiatives.  

To put the scale of that capital into perspective, the collective value of the settlements since 2020 is roughly on par with the cost of British Columbia’s Site C Hydroelectric Dam, a project that’s already created thousands of jobs and contributed billions to the provincial economy.  

Land claim settlements tell only part of the story. Indigenous communities are also increasingly generating revenue through ownership stakes in land and natural resources, as well as through commercial agreements with governments and private companies. Together, these forces are reshaping how Indigenous wealth is built and underscore why Indigenous asset management firms are emerging as a way to steward capital that aligns financial performance with community priorities. 

Sovereign wealth funds

While some Indigenous-owned asset management firms are emerging as stewards of this capital, there are still barriers in expanding their role within asset management. For one, attracting initial capital and building credibility is an obstacle, in what remains a highly relationship-driven industry with a bias towards established firms. 

A shallow talent pool is another challenge. Historically, relatively few Indigenous professionals have pursued careers in investment management, limiting the number of asset managers who can apply the shared community experience to investment decision‑making. That dynamic, however, is beginning to shift, as more Indigenous professionals pursue and earn CFA accreditation. 

But perhaps the biggest barrier is the lack of a clear federal framework to support the next phase of Indigenous asset management. While Indigenous communities use structures like trusts, corporations, limited partnerships and joint ventures, these structures are not ideal for where these communities want to go. Ultimately, starting a sovereign wealth fund (SWF), modelled after successful examples in Norway and elsewhere, would be a more optimal structure. 

Although some First Nations communities already describe their trusts as SWFs, there is no legal framework in Canada to support the creation of a true SWF. The issue here is that the trust structure is limited. Trusts lack the governance framework or capacity required to manage the growing capital being accumulated in these communities.  

Indigenous community and business leaders, including me, have long advocated for Indigenous sovereign wealth funds, and the creation of the legal framework to support them. When Carney announced the new national SWF in April, however, there was no mention of a separate Indigenous SWF, nor was there mention of how Indigenous communities would be consulted or included in projects that this national fund supports. The reaction from Indigenous communities was, understandably, swift and highly critical. 

Assembly of First Nations National Chief Cindy Woodhouse Nepinak noted a lack of badly needed infrastructure investment allocated specifically for First Nations communities, and called for more “clarity and engagement” as planning for the fund moves forward. Other leaders echoed her concerns, and some called for an equity stake in the fund. 

Plans for an Indigenous SWF may not be forthcoming, but such a framework would help insulate long-term capital from short-term political decisions while supporting wealth generation for the future.  

Having a SWF framework in place would also make it easier for hundreds of communities to pool their resources, attract top-tier talent and investment management while also deploying capital on a much larger scale than what can be accomplished on their own.  

The evolution of Indigenous investing

The way Indigenous communities have managed funds has changed significantly over the years. They’ve gone from entrusting an advisor with large sums of capital to placing settlements into professionally managed trust-style funds. These funds mimic sovereign wealth funds that can preserve capital and generate long-term income. Indigenous communities have also established themselves as pioneers in values-based investing, where every investment is seen through the lens of its social and environmental impacts.  

As part of this evolution, we’re now seeing the creation of Indigenous-led asset managers like Longhouse Capital and broker-dealers like Cedar Leaf, which formed to manage capital in ways that reflect distinct Indigenous worldviews. This approach recognizes that each Nation has distinct needs and cash-flow requirements. 

These are far from single-purpose institutions created to preserve the money from land claim settlements. While that may be part of their mandate, they’re also broadening their reach to serve other Indigenous communities and even global institutional and high-net-worth investors that care about their money having a positive impact. Notably, these firms are increasingly investing capital into infrastructure projects located on – or directly affecting – Indigenous lands, driving economic development far beyond their communities. 

Impact on Canada

With Indigenous trusts now controlling significant pools of capital, these communities have become active financial partners capable of helping fund not just major infrastructure, but also mixed-use commercial developments often including housing, hotels and retail complexes in urban centres.  

As well, as First Nations leverage billions in institutional capital to secure meaningful ownership stakes in nationally significant developments, they now have a far greater voice in how these projects are structured, governed and delivered. 

This comes at a critical time, both for these communities and the country as a whole, as leaders try to find ways to boost productivity and economic growth. Indigenous peoples represent one of Canada’s fastest-growing and youngest cohorts. While population growth in Canada is stagnant, Canada’s Indigenous population rose 9.4 percent to 1.8 million between 2016 and 2021, which is nearly double the national growth rate for the same period. The average age in Indigenous communities is approximately 33 years, nearly 8 years younger than the rest of the population.  

Beyond settlements and the money generated through business partnerships, the economic power of Indigenous communities continues to expand as well, rising to $63 billion in 2023, up from $50 billion five years earlier. Yet, while Indigenous-owned businesses are a growing and important component of Canada’s economic landscape, research shows that these communities do best when they retain control over investment decisions.  

Data from Statistics Canada shows that Indigenous-owned businesses are significantly more likely to employ Indigenous workers than non-Indigenous-owned firms. For example, Indigenous people make up about a quarter of the workforce at Indigenous-owned businesses in sectors like construction and agriculture, compared to less than five percent of employees at non-Indigenous-owned businesses operating in the same industries.  

What comes next

While Indigenous community assets are rising rapidly, the tools they need to manage and leverage that wealth continue to lag. As I wrote last year, “Sovereign wealth funds would effectively strengthen the fiscal powers of Indigenous peoples – allowing them not only to exercise their right to self-government but providing the tools to leverage their assets to invest in their own communities. 

“It also makes a lot of economic sense for all Canadians. Such a vehicle would unlock billions of capital to be invested in Canada, rather than in global financial markets – amplifying benefits across the country.” 

By the same token, and with the right support from governments and financial institutions, the growth of Indigenous asset managers can be a transformative milestone towards intergenerational prosperity for First Nations communities and unlock major economic potential for the country. 

The next decade will hinge on partnership, policy and the continued growth of Indigenous leadership within the industry.