Key Takeaways
- • Ontario Teachers' Pension Plan (OTPP), managing C$279bn ($206bn), posted minus 5.3 percent private equity returns in 2025—its worst PE performance since 2009—while Ontario Municipal Employees Retirement System (OMERS) reported minus 2.5 percent returns, marking its weakest showing since 2020.
- • La Caisse, Quebec's C$517bn state pension fund, delivered only 2.3 percent PE returns in 2025, significantly underperforming its benchmark index by 1,030 basis points, with listed stock holdings capturing 12.6 percent gains by comparison.
- • Healthcare of Ontario Pension Plan reported 3.6 percent private equity returns against 11.7 percent for listed holdings, underscoring systemic weakness in buyout sector performance across Canada's largest institutional investors.
- • Major Canadian pension funds are actively reducing direct private equity exposure; La Caisse is executing a five-year plan to scale back direct PE holdings from 75 percent to 65 percent, while OMERS has already pivoted sharply away from the asset class.
- • The downturn reflects a broader buyout sector slowdown impacting even Canada's most sophisticated PE investors, with OTPP's PE portfolio declining in value from C$60.4bn to C$50.8bn, partly through full or partial dispositions.
Summary
Canada's largest pension funds experienced significant private equity underperformance in 2025, with several recording their worst results in years as the buyout sector faced persistent headwinds. Ontario Teachers' Pension Plan, one of the country's most sophisticated institutional investors managing C$279bn in assets, posted a minus 5.3 percent return on its private equity portfolio—the weakest outcome since the 2009 financial crisis. OMERS, managing C$145bn, similarly struggled with minus 2.5 percent PE returns, marking its poorest performance since 2020. These results are particularly notable given these institutions' extensive experience and expertise in private equity investing.
La Caisse, Quebec's state pension fund with C$517bn under management, reported 2.3 percent returns on its PE holdings during 2025, substantially trailing its benchmark index by over 1,000 basis points. The performance gap highlights the relative strength of listed equity markets compared to the private buyout sector; La Caisse's benchmark index, half-composed of listed stocks, achieved 12.6 percent returns. Healthcare of Ontario Pension Plan similarly underperformed, posting 3.6 percent PE returns while generating 11.7 percent from public equity holdings.
The weakness extends beyond single-year volatility. OTPP's private equity portfolio contracted from C$60.4bn to C$50.8bn during the period, with declines driven partly by full or partial exit sales from insurance sector investments and other holdings. This portfolio contraction reflects both valuation pressure and active de-risking decisions by pension fund managers.
In response to deteriorating PE fundamentals, major Canadian pension funds are implementing structural shifts in asset allocation. La Caisse is midway through a five-year strategic plan to reduce direct private equity holdings from 75 percent to 65 percent of its PE exposure. OMERS has undertaken even sharper tactical repositioning, signaling a more pronounced pivot away from direct PE commitments. These strategic pivots underscore that Canada's largest institutional investors—typically among the most committed PE practitioners globally—are reassessing the risk-reward profile of traditional buyout exposure amid the current market environment.
La Caisse, Quebec's state pension fund with C$517bn under management, reported 2.3 percent returns on its PE holdings during 2025, substantially trailing its benchmark index by over 1,000 basis points. The performance gap highlights the relative strength of listed equity markets compared to the private buyout sector; La Caisse's benchmark index, half-composed of listed stocks, achieved 12.6 percent returns. Healthcare of Ontario Pension Plan similarly underperformed, posting 3.6 percent PE returns while generating 11.7 percent from public equity holdings.
The weakness extends beyond single-year volatility. OTPP's private equity portfolio contracted from C$60.4bn to C$50.8bn during the period, with declines driven partly by full or partial exit sales from insurance sector investments and other holdings. This portfolio contraction reflects both valuation pressure and active de-risking decisions by pension fund managers.
In response to deteriorating PE fundamentals, major Canadian pension funds are implementing structural shifts in asset allocation. La Caisse is midway through a five-year strategic plan to reduce direct private equity holdings from 75 percent to 65 percent of its PE exposure. OMERS has undertaken even sharper tactical repositioning, signaling a more pronounced pivot away from direct PE commitments. These strategic pivots underscore that Canada's largest institutional investors—typically among the most committed PE practitioners globally—are reassessing the risk-reward profile of traditional buyout exposure amid the current market environment.
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