Canada’s largest pension funds are often lauded as some of the most sophisticated institutional investors in the world. But five of the so-called Maple Eight that have reported performance for the 2025 calendar year have revealed either steep losses or weak growth in their private equity portfolios.
Alexander Beath, founder of the Toronto-based consulting firm Alex Beath & Associates, thinks this may have less to do with pension managers’ performance than with what they measure it against. “I’m not a short man, as far as things go ... But when I hang around my Dutch basketball friends, I’m decidedly short,” he wrote in a report. “What if the benchmarks for PE are the equivalent of Dutch basketball players?”
The returns announced so far do not make for happy reading. For calendar year 2025, the Ontario Teachers’ Pension Plan, which has $279.4 billion in assets under management, recorded a 5.3% loss on its PE portfolio, underperforming its 18.0% benchmark and logging the worst PE returns among the pension plans that have reported so far.
Meanwhile, Ontario Municipal Employees Retirement System logged a 2.5% loss on its PE portfolio for the year ending Dec. 31, 2025. The buyout portfolio at Caisse de dépôt et placement du Québec, the province’s $517.3 billion pension fund, generated a 2.3% return, missing its benchmark by over 10 percentage points. The Healthcare of Ontario Pension Plan saw a measly 0.6% gain. And Alberta Investment Management Corporation’s PE portfolio saw a 3% return, the pension manager announced last week.
The losses and underperformance are products of headwinds across the PE industry. Slow dealmaking, valuation declines, and muted distributions have dragged down the asset class’s returns for years now.
Beath argues that the way these pensions benchmark makes the relative performance of their private equity portfolios seem worse than it actually is. His argument is focused on two elements: size and timing.
Caisse de dépôt et placement du Québec, like the other pension funds on the list, measures its PE performance against an internal benchmark that compares buyout returns to a combination of indexes that measure private and public equities. Beath says these indexes—including 50% of the SSPEI Adjusted (Unhedged), 25% of the MSCI ACWI Index (Unhedged), and 25% of the Morningstar National Bank Quebec Index—are more heavily weighted toward large-cap stocks than the private equity coverage. Large-cap stocks, particularly the Magnificent Seven, saw massive returns in 2025. That made PE look bad by contrast.
Beath thinks Canadian pension funds should instead measure their PE performance against indexes of companies with market capitalizations below $5 billion, more in line with the valuations of PE-backed companies. “Comparing yourself against Nvidia is stupid if you’re a small business,” he told PitchBook. “Microsoft might be an American company, but they don’t do all their business in the US. It’s a global company. But if you’re a smaller PE-backed software company, maybe your business is all US. That’s a very different business.”
Timing is also important, Beath points out. Typically, PE benchmarks have a three-month lag, meaning GPs send their final performance report for the year to limited partners in late September. The LP then compares this with the benchmark’s full calendar-year performance. Beath thinks this introduces inaccuracy into the LP’s custom benchmark. Even though managers timestamp their reports as Sept. 30, the analysis is usually done about a month prior. If you’re off by a month in your comparison to the public market, it can introduce deviations that can skew relative performance to a degree that represents the difference between “very good and very bad” performance.
With these factors in mind, Beath analyzed the performance of the S&P SmallCap 600 Index, which tracks smaller companies. He averaged the index’s performance during a week in late August/early September 2025 to make up for PE’s reporting lag. Here, he calculated an average return of 4.1%. If Canadian pensions used that 4.1% figure as their benchmark, their performance wouldn’t look so bad.
Ultimately, Beath says this isn’t about defending the Canadian pension funds. Manager selection, underwriting, and market conditions are equally to blame for their underperformance. Instead, he argues that this dynamic calls for more accurate measures of portfolio success, particularly at public institutions, where governance dynamics and politics can quickly take precedence over a portfolio’s long-term nature.
“Having one negative year isn’t a reason to blow up your portfolio,” he says. “In private equity, you get a negative 3% return, and everyone thinks it’s the end of the world. It’s not. And making decisions on that would be a mistake, but it is what I expect to happen. People are going to cut their portfolios.”
