Public markets drive big-plan returns as private bets post rare losses
Canadian stocks, not private deals, have quietly become the main engine of returns for several major pension plans – even as policymakers and industry voices keep talking up private assets and venture capital.
According to Bloomberg, stock portfolios at least four of Canada’s largest pension funds drove overall returns for three consecutive years, while private equity struggled to recover from a prolonged deal drought.
A volatile but resilient equity market delivered double‑digit gains and outpaced private equity as an asset class.
Bloomberg said Ontario Teachers’ Pension Plan’s public equities returned 15 percent last year, while its private equity portfolio posted its first loss since 2009.
Ontario Municipal Employees Retirement System’s stock holdings returned 12 percent in 2025 as its buyout portfolio ended in the red.
Caisse de dépôt et placement du Québec’s stock portfolio gained 18 percent last year, compared with a 2.3 percent return from its private equity portfolio.
Since the 2008 financial crisis, Canadian pension funds have piled into private equity, infrastructure and real estate in search of higher returns, but that shift left them underexposed to a prolonged global equity rally just as private markets became crowded, expensive and difficult to exit.
The recent environment has been particularly challenging for private equity.
Higher borrowing costs since 2022 slowed dealmaking and curtailed cash distributions to investors, while public markets advanced.
Bloomberg reported that the S&P 500 rose about 50 percent from the time the US Federal Reserve began raising interest rates just over four years ago.
That experience has prompted some Canadian plans to adjust their asset mix.
According to Bloomberg, Ontario Teachers’ increased its exposure to public markets to 18 percent at the end of 2025, its highest level since 2020, while its private equity allocation shrank after asset sales and valuation markdowns.
Ontario Teachers’, which oversees $279.4bn, is warehousing capital in public markets after selling several assets in its private markets portfolio last year until it finds opportunities on the private side, Chief Executive Officer Jo Taylor said.
Healthcare of Ontario Pension Plan, which manages $132bn and has historically leaned more toward public markets than many peers, boosted its stock exposure again last year after it saw a buying opportunity amid volatility triggered by US President Donald Trump’s so‑called Liberation Day tariffs.
Not everyone sees this as a simple case for loading up further on equities.
“Valuations are high so there is a risk of investing in listed equities at the peak,” said Sebastien Betermier, an associate professor of finance at McGill University in Montreal.
The assumptions behind private‑asset allocations are also under pressure.
In an email cited by Bloomberg, Eduard van Gelderen, the former chief investment officer of the Public Sector Pension Investment Board, said “most allocators have relied on this idea that private markets would generate an illiquidity premium on top of the returns in public markets,” but concluded that “this is clearly not the case.”
