Canadian pension funds count cost of private equity slump

Canadian pension funds face significant losses in 2026 due to a prolonged slump in private equity investments, driven by rising interest rates that have depressed buyout activity and portfolio valuations. The downturn follows years of aggressive private equity expansion, with funds now struggling to exit investments or secure favorable returns amid higher borrowing costs and economic uncertainty. Major institutional investors, including public pension plans, report underperformance in private equity holdings, forcing reassessments of asset allocation strategies and risk exposure. Analysts attribute the decline to central bank policies tightening liquidity, reducing leverage availability for buyouts and lowering multiples paid for acquisitions. The crisis highlights vulnerabilities in alternative investments, prompting calls for greater diversification and transparency in pension fund portfolios to mitigate future market volatility.