Canada’s government pension plan is investing $285m in the riskiest securities of collateralised loan obligations, or CLOs, as large institutions start funneling more cash into a market that has received record sums in 2018.

The Canada Pension Plan Investment Board, or CPPIB, will buy equity in CLOs managed by Sound Point Capital Management, a New York-based credit hedge fund founded by former Bank of America investment banker Stephen Ketchum. It is the first such partnership for the pension, which sees CLO equity as an attractive way to boost returns on its leveraged loan investments, a plan spokesman said. CPPIB independently manages funds for 20 million Canadians who contribute to the plan.