Structural shifts in private capital raise questions about long-term fund design
Canadian institutional investors are reassessing their strategies in private markets and scrutinizing their heavy US allocations as global turbulence rattles the sector, even as pension giants say they remain committed to long-term discipline over short-term reaction.
The caution comes in the wake of high-profile redemption pressures at major private market managers. Partners Group capped withdrawals from its $8.6 billion private equity fund after redemption requests in its Luxembourg-based Partners Group Global Value SICAV reached 9.8% of assets held, The Globe and Mail reported. Days later, Blackstone restricted withdrawals from its flagship Blackstone Private Credit (BCRED) fund after redemption requests hit 10% during the second quarter, rattling markets and intensifying scrutiny of the broader asset class.
Swiss pension fund consultants told Reuters that the episodes are prompting institutional investors to take a closer look at private market products, particularly their liquidity terms. Stephanie Spozio of consultancy Prevanto said institutional investors have so far maintained their allocations but, in some cases, could delay new commitments. Romano Gruber of PPCmetrics said sentiment is growing more cautious and that investors are examining products more closely.
The strain has been driven largely by retail investors. Retail investors have sought to redeem their money amid growing concerns over liquidity mismatches and deteriorating asset quality in private fund structures, CNBC reported. Swiss consultants noted that outflows have been driven mainly by retail investors, who generally react faster to volatility and short-term performance, while institutional investors are not exiting but are becoming more selective in their strategies.
Canadian pensions focus on long-term results
In Canada, that measured tone is echoed across the country’s largest pension funds, collectively known as the Maple Eight. Jennifer Shum, senior managing director of structured and private credit at the Healthcare of Ontario Pension Plan, said geopolitical and economic volatility would not change the way the fund invests. “We look for the best opportunities anywhere, risk-return wise,” she said.
CPP Investments, which manages $793.3 billion as of March 31, 2026, has signaled a similarly steady posture. Manroop Jhooty, senior managing director and head of total fund management at CPP Investments, emphasized the fund’s long-term orientation while acknowledging the need to stay nimble. “We are a long-term investor. Our objective is to maximize returns on behalf of the CPP over the long term to ensure planned sustainability,” he said.
Even so, the composition of Canadian pension portfolios has come under fresh scrutiny. CPP Investments has $366 billion invested in the US, representing 47% of its total portfolio, while holding $98 billion, or 13%, in Canada. OMERS has a portfolio that is 55% US investments, and PSP Investments is 41% invested in the US Clément Gignac, an economist, told CBC the environment has changed significantly. “The economic policies from the Trump administration” have made the US market more unpredictable, he said, adding that the risk-return calculation has shifted and that Canadian pension funds are re-evaluating their US exposure.
At the same time, a broader reorientation is under way. Research from Crisil Coalition Greenwich shows that 25% of Canadian institutional investors intend to significantly reduce holdings in both active and passive Canadian equities, with around 30% indicating plans to substantially increase allocations to passive global equities.
Mark Buckley, Crisil Coalition Greenwich’s global co-head of investment management, said that “many of the assets shifting out of Canadian equities will move to alternative asset classes.”
Private credit governance questions rise
Private investments now account for 25% to 30% of assets under management at major Canadian pension funds. The sector’s ongoing structural shifts — including the rapid expansion of large asset managers into retail channels — are raising governance questions. Analysts have flagged that private market funds with a large retail investor base will be increasingly exposed to the risk of investor runs, prompting questions about whether pension funds should remain limited partners in large private market funds or find niche areas where they retain a competitive edge as direct or co-investors.
Benita von Lindeiner of consultancy c-alm warned that some private credit funds were sold on the basis of easy liquidity terms despite doubts over their feasibility. As performance differences among private market managers become more visible, she said: “In the coming weeks, the wheat will be separated from the chaff.”
