This piece was also published on Medium.

For decades, Americans were evenly divided in their relative support of labor unions and big business, but that’s no longer the case. Now, Americans are more likely to side with labor than at any time in the past 60 years. For people whose instincts about economic and political conflicts between unions and big business were honed more than a decade ago, it’s time to update your understanding.

According to newly released American National Election Studies (ANES) data from late 2024, analyzed and reported here for the first time, Americans feel more positively toward labor unions and more negatively toward big business than any time since ANES began asking the question in 1964. Using consistent methods to allow comparability over time, ANES uses representative samples of Americans and asks them to rate their feelings toward labor unions and big business on a 0–100 scale.

Trends broke after 2012

Between 1964 and 2012, Americans’ sentiments toward labor unions and big business moved together, surging and dipping in tandem. The figure below shows how average feelings toward each group changed over time. For instance, during mid-1970s stagflation, Americans cooled to both unions and big business. 

In 2016, Americans’ sentiments toward labor and business split. Feelings toward big business stayed flat while feelings toward labor unions warmed to nearly a record high. In 2020, warmth toward labor unions kept climbing to a record high while sentiment toward big business fell to a record low. 

Just-released data from late 2024 reveal that warmth toward labor unions climbed even higher while sentiment to big business fell even further, setting new records for warmth to labor unions and coolness to big business.

A simple way to summarize this is to compute the sentiment difference between labor and big business for each individual who answers both questions. If the person rates both labor and business the same, this difference equals zero. If they rate labor 70 and business 30, the difference equals 40. The more positive the difference, the more pro-union the person is relative to big business. A negative difference expresses more pro-business than pro-labor sentiment.

The trend in the average sentiment difference illustrates just how unprecedented the current situation is. Labor unions have huge sympathy from Americans relative to big business right now, far more than any time on record. The largest gap between 1964 and 2012 was about +5 pro-union in 1974. Now, we are at +16.

Digging deeper

Looking at subgroups where the changes are bigger and smaller can offer insight into what might be driving this recent change. While Gallup has published similar high-level trends on unions and major corporations over the years, the ANES data enable analysis by subgroup. Also, the ANES survey is more recent than the latest Gallup ones.

The changes for men and for women are similar. This change is not driven by differential attitude changes by gender.

In contrast, recent trends do differ by education group. Until 2012, Americans with the most formal education (Bachelor+) were the most pro-business. By 2024, they became the most pro-union. On the other hand, Americans with the least formal education (less than high school) were historically among the most pro-union but recently became the least pro-union. High school graduates, some college, and bachelor-plus all expressed record-high pro-union sentiment in 2024. Even those without a high school degree remained near their record high.

People who identify with different political ideologies experienced similar changes since 2012. Liberals, conservative, moderates, and “don’t knows” are more pro-union than ever.

Pro-union shifts occurred among both union members and nonunion workers, stronger among nonunion.

Different race and ethnic groups had similar trends, with all groups becoming more pro-union in rough parallel since 2012.

Between 2012 and 2024, sentiment moved most in a pro-union direction in Alaska, Delaware, and Vermont, with average difference shifts over 40 points pro-union in each of these states. Substantial increases also occurred in some surprising places, in the South (Tennessee, Mississippi, and Louisiana) and in the Southwest and Mountain West (Arizona, Colorado, and Utah). Sentiment became more pro-business only in Wyoming and Montana.

There are several possible explanations for the public’s increasing support for unions. First, broad campaigns by low-wage worker organizations such as the Fight for $15, Starbucks Workers United, and Amazon Labor Union have become increasingly visible. Second, populist politics surged in Bernie Sanders’s presidential campaigns and the rise of “the Squad” in Congress. President Trump sought to soften the GOP’s conventional labor policy agenda with labor-friendly rhetoric during his first term and 2024 campaign. Then-President Biden’s clear pro-union positions made union support more prominent inside the Democratic coalition. Third, wealth concentration and dissatisfaction with it has continued to rise. Fourth, some bosses’ reactions to the pandemic — layoffs and forcing workers to take on more risks—made clear to many Americans that their boss would use power against them. This seems to have left Americans looking for more control over their job and working conditions.

The rise in public sympathy has not yet translated into a higher share of workers forming unions. While an increasing share of nonunion workers want a union in their workplace, unlawful management opposition to workers’ organizing campaigns remains fierce. 

The National Labor Relations Act treats white-collar, strategic, and repeat violators of U.S. workers’ rights the way we treat children who stole something for the first time, requiring them only to give back what they took and say they are sorry. The law, written 90 years ago, provides no possibility of fines or penalties—only back pay—and so provides little incentive for compliance.

Regardless of the cause of the split, in fights between organized labor and organized capital, Americans are likely to support labor more now than any time on record.

About the authors: Sojourner is a labor economist at the W.E. Upjohn Institute for Employment Research. Reich is a professor of sociology at Columbia University and co-director of the Columbia Labor Lab.

While still lagging the rest of the country regarding workers’ access to paid leave, several states in the South—including Alabama and Mississippi this year—have begun to take the small but welcome step of ensuring paid parental leave to some public employees. While these laws cover only certain groups of workers and solely provide the paid parental portion of Paid Family and Medical Leave, they nevertheless represent an important step toward achieving more comprehensive paid leave access across the South.

Paid Family and Medical Leave (PFML) and paid sick leave are essential benefits that help workers maintain their livelihoods while taking care of themselves and their families. Paid sick leave allows workers to take time off from work, while still being paid, to recover from illness or injury. This is not only good for the welfare and productivity of workers but also for employers (and the public at large) because it helps reduce the spread of infectious disease. 

PFML is generally paid leave provided to workers for the birth or adoption of a child, or when they must take more extended time away from work to recover or provide care to loved ones. Studies show that access to PFML improves outcomes for parents and children, workforce participation, and job retention, and that this a beneficial policy for both employees and employers. Access to paid leave also bridges racial gaps in care and pay.

Still, the United States Congress has yet to codify a universal PFML program into law. While the 1993 Family and Medical Leave Act (FMLA) provides job protection for workers who need time off for some medical and family circumstances, it does not guarantee pay during leave. Only 27% of workers have access to comprehensive PFML and access is uneven across income levels, occupations, and regions; for example, management and professional occupations are more than twice as likely to have access to this benefit than service workers. Researchers estimate that workers are losing $22.5 billion annually in wages due to a lack of access to PFML.

In the absence of federal action, many states have adopted PFML and paid sick leave policies that have proven to be both effective and popular. But access to PFML and paid sick leave remains especially scarce in the South, reflecting a long history of low wages and limited benefits that are rooted in racist efforts to exploit Black and brown workers and suppress labor costs. Seven of the 10 states with the lowest rates of paid sick leave access are in the South. Within those states, fewer than 70% of workers had access to paid sick days compared with roughly 78% of workers nationwide. Currently, 13 states and the District of Columbia have PFML programs for all workers in the state. As of 2026, along with D.C., the only two states in the South (as defined by the Census) with comprehensive PFML programs will be Delaware and Maryland—neither of which are in the Deep South.

Expanding paid leave access in the South has important equity implications. Workers are paid lower wages in the South than in other regions of the country—even after adjusting for regional cost-of-living differences. And Black and brown workers—who make up a disproportionate share of the low-wage workforce nationally and in the South—are less likely to be offered paid time off than their higher-paid counterparts and less likely to be able to afford unpaid leave. To address this deficiency, 21 Southern organizations affiliated with EPI’s EARN in the South initiative have prioritized paid leave as part of a shared pro-worker agenda Agenda for a Thriving South, advocating for expanded paid leave across several Southern states over the past two years.

This year, in a near breakthrough for Southern paid leave, the Virginia legislature passed comprehensive PFML legislation, but it was vetoed by Governor Youngkin (R). While state employees in Virginia have had access to paid parental leave since 2018 (achieved via gubernatorial action), this still leaves a large share of Virginia workers without access to PFML benefits.  The Commonwealth Institute (a member organization of EPI’s EARN network) reports that over 40% of Virginia workers do not have access to paid family and medical leave. Federal FMLA provides unpaid leave to 56% of workers, but taking time off without pay is not an option for many—particularly for Black and brown workers. According to the Commonwealth Institute, only 34% of Black workers and 23% of Hispanic workers in the state say they could afford to take unpaid leave if it was available to them, emphasizing the need for a comprehensive paid leave program that would support all Virginia workers.

States in other regions of the country are making progress on paid sick leave laws. Currently,18 states plus D.C. have paid sick leave policies. This includes the three states (Missouri, Nebraska, and Alaska) where voters approved ballot initiatives in 2024 to enact paid sick days in states where legislatures had resisted the policy. Workers still need a national paid sick leave policy as court challenges and legislation threaten new state paid sick leave initiatives, even after they were approved by majorities of voters.

Paid parental leave policies covering some public employees are gaining traction in the South

Two Southern states (Mississippi and Alabama) passed laws this year, bringing the total number of states (plus D.C.) that currently provide paid parental leave for certain public employees to 39. Many of the newest Southern paid parental leave policies solely cover state employees, making this limited benefit easy for states to enact as a direct employer. Prior to 2025, several Southern states—including Florida, Georgia, Louisiana, North Carolina, South Carolina, Tennessee, Texas, and Virginia—had passed paid parental leave laws for state employees.

Some states are now looking to build upon their initial law. Notably, a South Carolina bill to expand the definition of covered state employees who would qualify for six weeks of paid parental leave passed the state Senate this year and is making its way through the House Ways and Means Committee. If the bill is enacted, employees of technical colleges and four-year institutions in South Carolina would also receive paid parental leave. In addition, legislation to double the number of weeks of paid leave for state employees passed the House. This bill would guarantee 12 weeks of paid leave for eligible state employees.  

Several other paid parental leave bills have made progress in Southern states in the 2025 legislative cycle. The types of public employees covered include workers in state government, educators in public and charter schools, and employees of public universities or community colleges.

Table 1 shows the status of paid parental leave laws for certain public employees in the deep South. To provide a benchmark for how these paid parental leave bills compare with a strong comprehensive PFML program, the first row of the table lists the key components that comprise a strong PFML law.

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Newly passed legislation in both Alabama and Mississippi had broad and bipartisan support. In Alabama, advocates such as Alabama Arise noted the strong benefits of paid parental leave for workers, the state economy, and for improving maternal health—which were emphasized by Alabama’s governor, Kay Ivey (R) in her State of the State address.  

Advocates for the Mississippi legislation also uplifted the maternal health gains associated with paid parental leave. As in Alabama, the support of a state-level elected official, Mississippi Attorney General Lynn Fitch, helped propel the bill forward.

Guaranteeing paid parental leave to state employees is a modest step, but it will motivate private-sector employers to provide similar benefits

Southern state lawmakers have historically been opposed to establishing new requirements for private businesses—particularly around job quality and workplace rights. Yet expanding parental leave access to a significant share of public employees will have the effect of raising standards and expectations for individual employers’ paid leave policies across the broader labor market. Private employers who compete with the state to attract and retain staff will feel compelled to offer at least comparable benefits.

As shown in Table 2, state employees represent a meaningful share of the workforce in the Southern states that now provide paid parental leave for state employees. The percentage of state employees in each state’s workforce ranges from 2–9%, with a median of 5.4%.

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Focusing on paid parental leave for public employees has allowed Southern states to take a small step toward comprehensive paid leave access. This added benefit can also help improve employee recruitment and retention in state agencies. Since paid leave is widely regarded as a family-supporting policy, recent instances of Southern legislation on parental leave for public employees have encountered little opposition and garnered support across party lines and a wide array of constituencies. It is also one of the easiest forms of paid leave for states to enact; paid parental leave for state employees can in most cases be implemented without legislation, via executive action or state agency personnel policy.

After a state employee paid parental leave bill failed to pass the Kentucky legislature in 2024, Governor Andy Beshear (D) initiated the process to update administrative regulations to provide six weeks of paid parental leave to state employees (with a target date of summer 2025 for implementation). Analysis from the Kentucky Center for Economic Policy research showed that instituting paid parental leave for state employees would help align Kentucky’s employment practices with others in the region and would have minimal fiscal impact on the state budget.1

Other limited expansions of paid leave for public employees have advanced this year in other Southern states. For example, a bill increasing the number of paid sick days for school personnel passed both legislative chambers in Georgia. Also, Tennessee and Arkansas passed paid bereavement leave bills for state employees this year. The Arkansas legislation guarantees 40 hours of leave, while Tennessee provides up to 10 days of leave for grieving state employees depending on the familial relationship.

A good start but a long way to go

Paid leave is an important policy that helps workers, families, and the economy thrive. Yet on paid leave and many other pro-workers policies, the South continues to lag behind other regions of the country. In this context, new Southern laws extending paid parental leave to state employees are a promising development that could help open the door to more expansive paid leave proposals. State employees covered by new paid parental leave policies make up a nontrivial portion of the workforce, and new paid leave policies will allow state governments to demonstrate the positive benefits of one type of paid leave for Southern workers and employers alike. Building on this recent progress, Southern lawmakers should consider more comprehensive paid family and medical leave policies covering all workers in their states.

1. Because this regulation has not yet been confirmed, the author did not include it in Table 2.

Late last Wednesday night, the Missouri Republican-controlled legislature overrode the will of the state’s voters by repealing the paid sick leave portion of Proposition A, a ballot measure passed with 58% support in the 2024 election. This short-sighted decision is a step backward for Missouri’s working families and a violation of the democratic process.

Workers will briefly enjoy the benefits of paid sick leave before it is taken away. On May 1, workers started earning one hour of paid sick leave for every 30 hours worked, and they will continue to accrue leave until the repeal takes effect on August 28. Within this period, someone working a full-time schedule would have earned 24 hours of sick leave. It is not immediately clear if those hours will be available for a workers’ use after August 28. Additionally, the legislation also amends the part of Proposition A that raised the minimum wage to $15 an hour and indexed it to inflation. While the minimum wage will remain at $15 an hour (where it has been since January 1), it will no longer be indexed to inflation—meaning inflation will eat away at the value of the state minimum wage in future years unless lawmakers (or voters) take action.

This legislation will cause meaningful harm to working families in Missouri. The Missouri Budget Project estimated that 728,000 Missouri private-sector workers did not have paid sick leave prior to the passage of Proposition A. Workers without paid sick days are mostly working in low-wage jobs, and Black and Hispanic workers are disproportionately overrepresented in the low-wage workforce.

The lack of paid sick leave erodes working families’ economic security and needlessly spreads illness. As EPI noted earlier this year, paid sick leave laws improve public health by reducing the spread of illness, and their costs to businesses are extremely modest—generally requiring no measurable change to business practices. Paid sick leave reduces job separation rates among women, which is good for family stability and suggests paid leave creates a more level playing field for all workers. EPI reports that “paid sick leave policies allow workers to not only maintain their employment but also add work hours, suggesting that such policies function as work support for workers earning low wages.”

This is not the first time Missouri’s legislature has rolled back benefits for workers that were already in place. In 2017, legislators undid St Louis’s local minimum wage, which had been set at $10 an hour, meaning the minimum wage reverted to the state minimum of $7.70 an hour after four months. Additionally, in 2021, Missouri legislators tried to block a voter-approved expansion of Medicaid only to be blocked by a judge.

The Missouri legislature’s repeated efforts to thwart the clearly expressed will of the voters is an example of the increasingly common practice of GOP-led states attempting to limit the capacity of voters to enact pro-worker changes through ballot measures. This follows a slew of progressive policy measures passed by referendum in 2024, including minimum wage increases and paid sick leave measures in Alaska and Missouri, expanded abortion rights in seven states (also including Missouri), and rejections of school vouchers in Colorado, Kentucky, and Nebraska.

This decision is a slap in the face to the 1.7 million Missourians who voted for the ballot measure in November 2024, and to all working families in the state. It is bad policy that will harm Missourians, provide no help to businesses, and further demonstrate that the Missouri legislature is not enacting policies that support working people’s interests.  

 

Key takeaways:

• Some state lawmakers are abetting Trump’s far-right, anti-worker agenda laid out in Project 2025 by proposing legislation that intentionally conflicts with federal worker protection laws.
• State-by-state efforts to erode workers’ rights—including protections against hazardous or exploitative child labor, the right to a minimum wage, and a safe workplace—build pressure for eventual relaxation or elimination of standards for the whole country.
• These attacks are not new, but they are an increasing threat under an administration that has launched an all-out war on workers and the federal agencies that safeguard their rights.
• State lawmakers have a responsibility and opportunity to resist such attacks and strengthen state worker protections.

Following a growing trend, Republican lawmakers this year proposed legislation in Florida, Kentucky, and Ohio that would undermine federal laws on child labor, minimum wage, and worker health and safety protections. These proliferating state challenges to federal law are laying the groundwork for more extreme and dangerous Project 2025 proposals to allow employers across the country to hire children for hazardous jobs or to allow states to “opt out” of various federal labor standards like the minimum wage.

Multiple states have enacted or proposed legislation to weaken state child labor and minimum wage protections in ways that conflict with federal law

The Trump administration’s first 100 days have closely followed the Project 2025 policy roadmap. Mass firings of federal civil servants, closures of field offices with labor enforcement roles, and deep cuts have quickly imperiled the federal government’s capacity to ensure U.S. workers get paid what they’re owed, stay safe at work, have the freedom to form a union, and work in environments free from discrimination.

Meanwhile, many states have weakened child labor protections in recent years, and some states like Iowa have openly defied long-standing federal laws like the Fair Labor Standards Act (FLSA), which has set a national floor for minimum wages, overtime pay, and child labor standards since 1938. State laws can provide more protection than the federal statute mandates, but they cannot provide less. Where state standards are weaker than those provided in FLSA, federal law preempts the state standard.

This year, legislation in both Ohio and Florida attempts to weaken state child labor standards in ways that challenge federal law. In Ohio, Republicans have reintroduced a proposal to extend the hours employers can schedule 14- and 15-year-olds to work during the school year, conflicting with FLSA guardrails in place to ensure that young teens can enter the workforce without jeopardizing their health or education. A concurrent resolution introduced with the child labor bill calls on Congress to amend the FLSA to align with weaker hours guidelines proposed for Ohio. As of this publication, the legislation has passed the state Senate and is now being considered in the House.

As Ohio’s concurrent resolution illustrates, state legislators have often been clear that they understand these weaker standards conflict with FLSA rules (and therefore only apply in non-FLSA-covered employment contexts)—and that such conflict is in fact part of the point. In 2024, an Indiana lawmaker speaking in support of a child labor bill that would have violated federal law promised that, if elected to Congress, he would “throw out all the book of regulation of employing our youth.” In 2023, Iowa Governor Kim Reynolds signed an unprecedented package of rollbacks to child labor standards, over many public objections that the extreme changes conflicted with federal law and would create confusion and increased legal liability for employers. A year later when some Iowa employers were fined for FLSA violations after following the state’s weakened child labor laws, Governor Reynolds enlisted the state’s congressional delegation in protesting the federal fines and published her own editorial arguing that the U.S. Department of Labor (DOL) should “look to Iowa as an example” of how to relax child labor standards and enforcement.

In Florida, lawmakers are seeking to treat minors like adults with regard to work hours while paying them a subminimum wage. Proposed legislation would eliminate all hours of work guidelines for 16- and 17-year-olds, allowing employers to schedule these teens for unlimited hours year-round, including overnight shifts during the school year. The House version of the bill initially proposed also allowing employers to schedule 13-year-olds to work during the summer of the calendar year in which they turn 14, even though federal law has set 14 as the minimum age for employment in most jobs. In response to concerns raised by youth advocates, the provision to allow 13-year-olds to be gainfully employed was amended out of the bill.

Meanwhile, a separate bill in Florida would allow employers to pay youth “interns” or work-study participants an hourly wage lower than the constitutionally mandated state minimum wage, attempting to reestablish a subminimum wage loophole that was closed by a Florida ballot measure in 2020. FLSA rules are clear that individual workers cannot legally be induced to waive their right to a minimum wage, and employers may only pay subminimum wages under narrow special circumstances that require DOL certification. Yet, this long-standing FLSA protection has faced repeated challenges. An Arkansas legislator, for example, suggested in 2023 that the state should allow high school students to complete required community service hours by working for free for local businesses.

Fortunately, after significant public opposition, both Florida bills are expected to fail this session. While the child labor rollback bill passed in the House, as of this publication it was not slated to be taken up by the Senate before Florida’s legislature adjourns this year.

However, by repeatedly proposing and—in some cases—implementing standards that conflict with federal law, these states are chipping away at the already fragile federal floor for workplace protections. At the same time, they are shifting the entire burden of enforcing worker protections to chronically underfunded federal agencies that, amid Trump administration attacks, are now facing even more pronounced staffing shortages that will limit enforcement capacity.

Some states are already modeling Project 2025 proposals to allow states to “opt out” of federal labor laws

While Project 2025 proposes allowing all states to seek exemptions from the FLSA, some states have already adopted systems for employers to sidestep child labor laws. Florida has long maintained a system to grant individual employers approval to schedule minors to work beyond the limits of state child labor laws. Legally, the only state child labor protections that a state could legitimately “waive” would be those that exceed federal standards, but Florida’s statute on granting waivers does not spell out this limitation, leaving the system ripe for abuse by employers who may see it as an opportunity to gain state sanction to ignore federal law with little oversight (Florida’s labor department was dismantled in 2002).

In 2023, Iowa lawmakers created a system that even more explicitly violates federal law, allowing the state to grant “waivers” to employers seeking to employ minors in violation of federal hazardous occupations orders. Under the new system, the agency has begun to grant such waivers despite objections raised by the state’s department of inspections and state Occupational Safety and Health Administration (OSHA).

State lawmakers are also challenging federal workplace health and safety protections

Beyond child labor laws, some states have proposed legislation that conflicts with federal OSHA standards that set a floor for workplace safety for workers of all ages.

This year, Kentucky enacted legislation that could be in violation of federal requirements that states with their own OSHA plans must maintain standards and enforcement that is “at least as effective” as provided by federal OSHA. The new law prohibits the state from enforcing any worker health and safety regulations that are more protective than federal standards—effectively dismantling existing state standards—and also makes it harder to file complaints and hold employers accountable (making fines “optional” for violations, for example) in ways that fall below the minimum threshold of expectations set by federal OSHA.

In 2021, Florida Governor Ron DeSantis proposed creating a state OSHA agency, but only because he did not want the state to be subject to federal OSHA standards and falsely believed that a state agency would allow Florida to enact weaker health and safety protections for Florida workers.

Lawmakers can resist these threats by strengthening state worker protections

Many aspects of these current attacks bear close resemblance to past industry-backed attempts to block or dismantle federal worker protections, from the New Deal to OSHA. For example, today’s conservative calls to weaken federal child labor laws hearken back to 1982 proposals from Ronald Reagan’s labor department to extend maximum daily and weekly work hours for minors, expand youth subminimum wages, and roll back hazardous occupations orders that protect minors from being employed in particularly dangerous jobs. And arguments for rolling back child labor laws (re)surfacing in states today often closely echo those used by the business interests that aggressively fought passage and implementation of the FLSA from the 1930s up to the present.

Most of these past assaults on federal minimum labor standards were largely defeated, but not without persistent, coordinated responses from workers, unions, advocates, and policymakers. As Project 2025-style threats to workplace rights continue to mount today, it is particularly urgent to defend against state-level attacks on labor standards and seize opportunities to shore up state worker protections—at a minimum to ensure more states are equipped to maintain and enforce basic protections should at-risk federal standards disappear or go largely unenforced under the Trump administration. The crisis also presents opportunities for states to do much more, such as remedying long-standing gaps and exclusions in weak or outdated employment and labor laws that leave millions of workers without coverage; advancing new policies that address the economic challenges of growing income inequality, persistent racial and gender wage gaps, and declining job quality; and reasserting states’ roles in raising the floor for labor standards rather than driving a race to the bottom.

Sammy Hudes of the Canadian Press reports BCE cuts quarterly dividend, signs fiber deal with PSP Investments:

BCE Inc. cut its quarterly dividend payment to shareholders and announced a partnership deal with the Public Sector Pension Investment Board to help accelerate the development of fibre infrastructure in the U.S.

BCE chief executive Mirko Bibic said Thursday the dividend cut comes as the company faces intense price competition against a backdrop of macroeconomic and geopolitical instability.

The company said it will now pay a quarterly dividend of 43.75 cents per share, down from 99.75 cents per share. The decision cuts BCE’s annualized dividend to $1.75 per common share from $3.99.

“As we debated this, deliberated at the board, certainly having taken and having listened to the perspectives of investors over the last few months, we decided that resetting the dividend ... was the most responsible way to address our capital allocation strategy,” Bibic said in an interview.

“Essentially the new dividend level allows us to de-lever and invest for growth.”

Inflation and the prospect of a global recession are weighing on consumer confidence, the company said, while reductions in BCE’s share price have resulted in higher capital costs. BCE’s board also considered factors such as an “unsupportive regulatory environment given recent CRTC decisions” and a slowdown in immigration to Canada.

Bibic said there have been “significant changes” in the economic and operating environments since the fall of 2024 that the company needs to address.

While last quarter began with wireless prices stabilizing, the latter half of that period saw more fluctuations. That, along with the “overall macro environment” affected Bell’s ability to boost subscriptions, Bibic said.

BCE had a net loss of 9,598 postpaid mobile phone subscribers in its first quarter, compared with 45,247 net activations during the same period a year earlier.

The company cited a “less active market,” slowing population growth due to federal immigration policies, and its own focus on “higher-value subscriber loadings.” Bibic said there were 25,000 net new customers on the main Bell brand in the quarter, which was down 9,000 year-over-year.

The company said customer churn — a measure of subscribers who cancelled their service — was stable at 1.21 per cent. BCE’s mobile phone average revenue per user was $57.08, down 1.8 per cent from the prior year.

The dividend cut came as BCE reported net earnings attributable to common shareholders of $630 million or 68 cents per diluted share for its first quarter, up from $402 million or 44 cents per diluted share a year earlier.

On an adjusted basis, BCE says it earned 69 cents per share in its latest quarter, down from an adjusted profit of 72 cents per share in the same quarter last year.

Operating revenue totalled $5.93 billion, down from $6.01 billion a year ago.

Meanwhile, Bibic told analysts on a conference call that BCE’s previously announced deal to buy U.S. fibre internet provider Ziply Fiber for about $5 billion in cash is expected to close in the second half of 2025.

Under a plan announced Thursday, Ziply Fiber will become a long-term partner to Network FiberCo, jointly owned by PSP Investments and BCE, as the exclusive internet service provider to locations passed by Network FiberCo.

BCE through Ziply Fiber will hold a 49 per cent equity stake in Network FiberCo, while PSP Investments will own 51 per cent. PSP Investments has agreed to a potential commitment in excess of US$1.5 billion.

“We anticipate that more institutional investors will now consider investing in BCE to diversify their Canadian telecom positions, which should provide support and counterbalance the selling pressure from dividend seekers selling over the coming weeks,” said Desjardins analyst Jerome Dubreuil in a note.

Network FiberCo will be focused on “last-mile fibre deployment” outside of Ziply incumbent service areas in the Pacific Northwest, enabling Ziply to potentially reach up to eight million total fibre passings.

Bibic said that would make BCE the third-largest fibre internet provider in North America, essentially doubling the number of locations where it already serves fibre customers in Canada.

“There’s clearly long-term growth potential in this critical space,” Bibic said.

Earlier this year, BCE said it would scale back plans for the build of its fibre internet footprint in Canada, as a response to regulatory rules implemented by the CRTC surrounding internet resell access.

Bibic said Thursday the company will continue to advocate to the telecom regulator and new federal government when it comes to competition policy. He reiterated that BCE’s largest competitors should not have the ability to resell fibre services through Bell’s network.

“We’re continuing to build fibre, we’re just doing it at a slower pace than we anticipated,” he said in an interview.

“Large players should invest in their own networks. That increases competition and it increases network resiliency, and it’s the best way to ensure that all Canadians, including rural, are connected.”

Earlier today, BCE and PSP Investments issued a press release announcing a strategic partnership to create Network FiberCo:

MONTRÉAL, May 8, 2025 – BCE Inc. (TSX: BCE) (NYSE: BCE), Canada’s largest communications company1, and Public Sector Pension Investment Board (PSP Investments), one of Canada’s largest pension investors, today announced the formation of Network FiberCo, a long-term strategic partnership to accelerate the development of fibre infrastructure through Ziply Fiber, in underserved markets in the United States. 

As a premier wholesale network provider, Network FiberCo will be focused on last-mile fibre deployment outside of Ziply Fiber’s incumbent service areas, enabling Ziply Fiber to potentially reach up to 8 million total fibre passings.  

PSP Investments has agreed to a potential commitment in excess of US$1.5 billion.

Leadership Perspectives 

“Today’s announcement represents a pivotal step in BCE’s fibre growth strategy. By bringing PSP Investments’ financial resources and acumen to Ziply Fiber, we are creating a scalable, capital-efficient platform to fund U.S. fibre footprint expansion. This strategic partnership will improve free cash flow generation and strengthen EBITDA accretion over the long term, reinforcing our commitment to delivering long-term value for shareholders while maintaining financial discipline.” 

• Mirko Bibic, President and CEO, BCE and Bell Canada 
  

“PSP Investments is pleased to partner with BCE, a long-standing Canadian champion of innovation and connectivity, to support the development of fibre infrastructure in Ziply Fiber’s target markets, which benefit from secular tailwinds. This commitment by PSP Investments will generate inflation linked and downside protected returns, which will contribute to fulfilling our mission to support the retirement of people who protect and serve Canada. PSP Investments has been an investor in Ziply Fiber, and this partnership, leveraging our global infrastructure experience, aligns perfectly with our strategy and strengthens our diversified portfolio.” 

• Deborah Orida, President and Chief Executive Officer, PSP Investments 
  

“This strategic partnership aligns perfectly with Ziply Fiber’s mission to improve connectivity in the communities we serve. We’re combining our operational expertise with BCE’s scale and PSP Investments’ financial strength to accelerate fibre deployment, enhance customer experiences, and drive sustainable growth.” 

• Harold Zeitz, CEO, Ziply Fiber 
  

Key Highlights of the Strategic Partnership 

• Ownership Structure: BCE through Ziply Fiber will hold a 49% equity stake in Network FiberCo, with PSP Investments owning 51% through its High Inflation Correlated Infrastructure Portfolio (HICI), contingent on closing of BCE’s acquisition of Ziply Fiber.  

• Fibre Expansion Goals: Network FiberCo will develop approximately 1 million fibre passings in Ziply Fiber’s existing states and will target development of up to 5 million additional passings, which will enable Ziply Fiber to reach up to 8 million total fibre passings. 

• Optimized Capital Efficiency: Network FiberCo will have its own non-recourse debt financing, which is anticipated to be the majority of its capital over time. BCE and PSP Investments will proportionately fund equity required by Network FiberCo to support fibre expansion. 

• Complementary Skill Set: The operational capabilities of BCE combined with PSP Investments’ significant infrastructure investing experience will enable Network FiberCo to capture the substantial growth anticipated and deliver the target fibre passing for Ziply Fiber.  
  

Strategic Rationale 

The U.S. fibre broadband market represents a transformative growth opportunity, with penetration rates well below Canada’s and efficient construction costs enabling large-scale deployment. Network FiberCo’s scalable platform supports both organic fibre expansion and potential acquisitions while enhancing returns through its capital-efficient structure. 

Driving Sustainable Growth 

BCE’s proposed acquisition of Ziply Fiber marks a strategic entry into the U.S. broadband market, securing a leading management team and operating platform with significant long-term growth potential. This disciplined reinvestment unlocks value through an expanded and diversified fibre footprint while benefiting from economies of scale.  

Ziply Fiber has achieved significant fibre broadband subscriber growth and adjusted EBITDA growth in 2024, validating the strategic rationale and demonstrating its ability to generate meaningful and sustainable long-term cash flow. 

Ownership and Operations 

Upon, and contingent on, close of the previously announced acquisition of Ziply Fiber, BCE will assume 100% ownership of Ziply Fiber’s existing operations. Ziply Fiber, as a BCE subsidiary, will continue to operate its existing network and execute its in-footprint fibre-to-the-home build strategy. Ziply Fiber will become a long-term partner to Network FiberCo, jointly owned by PSP Investments and BCE, as the exclusive Internet service provider to locations passed by Network FiberCo.

Additional Transaction Details 

The transaction is expected to close in the second half of 2025, subject to customary closing conditions and the closing of BCE’s previously announced acquisition of Ziply Fiber.  

Analyst Call Details 

BCE will hold a conference call with the financial community at 8:00 AM ET today, May 8, 2025 to discuss its Q1 2025 results and speak to the Network FiberCo strategic partnership. Media are welcome to participate on a listen-only basis. To participate, please dial toll-free 1-844-933-2401 or 647-724-5455. A replay will be available until midnight on June 8, 2025 by dialing 1-877-454-9859 or 647-483-1416 and entering passcode 7485404. A live audio webcast of the conference call will be available on BCE's website at BCE Q1-2025 conference call.   

About BCE 

BCE is Canada’s largest communications company1, providing advanced Bell broadband wireless, Internet, TV, media and business communication services. To learn more, please visit Bell.ca or BCE.ca. 

Through Bell for Better, we are investing to create a better today and a better tomorrow by supporting the social and economic prosperity of our communities. This includes the Bell Let's Talk initiative, which promotes Canadian mental health with national awareness and anti-stigma campaigns like Bell Let's Talk Day and significant Bell funding of community care and access, research and workplace leadership initiatives throughout the country. To learn more, please visit Bell Let’s Talk. 

About PSP Investments 

The Public Sector Pension Investment Board (PSP Investments) is one of Canada's largest pension investors with C$264.9 billion of net assets under management as of 31 March 2024. It manages a diversified global portfolio composed of investments in capital markets, private equity, real estate, infrastructure, natural resources, and credit investments. Established in 1999, PSP Investments manages and invests amounts transferred to it by the Government of Canada for the pension plans of the federal public service, the Canadian Forces, the Royal Canadian Mounted Police and the Reserve Force. Headquartered in Ottawa, PSP Investments has its principal business office in Montréal and offices in New York, London and Hong Kong. For more information, visit investpsp.com or follow us on LinkedIn. 

Earlier today, Charles Bonhomme, Senior Advisor External Communications and Media Relations, sent me a few background points on this deal:

• This strategic partnership with BCE, a long-standing Canadian champion of innovation and connectivity, will enable PSP to capitalize on the transformative growth opportunity presented by Ziply Fiber’s target broadband markets.
• Aligned with PSP’s investment strategy, this partnership will generate inflation-linked, and downside protected returns, helping PSP Investments to meet its mission to support the retirement of people who protect and serve Canada. 
• PSP Investments brings significant global infrastructure investing experience to this partnership, and combined with BCE’s operational capabilities, forms a complimentary skillset that will enable Network FibreCo to capture the substantial growth anticipated and deliver the target fibre passing for Ziply Fiber.
• Investing in high-quality, essential infrastructure like transportation, communications, and energy is a core part of our strategy. We look for reliable assets that generate steady returns, and this partnership aligns perfectly with our strategy and strengthens our diversified portfolio.
• PSP Investments has been an investor in Ziply Fiber, and this strategic partnership supports the development of fibre infrastructure in Ziply Fiber’s target markets, while achieving our mandate.

Recall that BCI, CPP Investments and PSP Investments exited Ziply Fiber back in November 2024 when BCE acquired it.

At the time, I provided a background on Ziply Fiber and explained how the syndicate put in US$2.45 billion in total (including debt) and sold Ziply to BCE for US$3.6 billion (CAD $5 billion) five years later for a decent return.

In this latest deal, BCE and PSP Investments announced the formation of Network FiberCo, a long-term strategic partnership to accelerate the development of fibre infrastructure through Ziply Fiber, in underserved markets in the United States.  

On LinkedIn, PSP Investments posted these comments from CEO Deborah Orida:

She notes how this commitment by PSP will generate inflation linked downside protected returns and that they have been an investor in Ziply Fiber and therefore know the company well.

The press release states PSP Investments has agreed to a potential commitment in excess of US$1.5 billion. 

That's a significant commitment and I think it's a wise one as Network FiberCo will help Ziply Fiber accelerate its growth in US broadband markets it is serving.

Keep in mind, both the US and Canada are experiencing strong growth in fiber-to-the home-adoption, driven by increased demand for faster internet speeds and the need to modernize infrastructure.

Think about how often you stream movies or shows from Netflix, Disney or another provider and think about how all that demand for streaming gets through to households.

That is why Ziply Fiber is growing very rapidly, providing fast fiber speeds to meet this growing demand.

A lot of analysts criticized BCE's acquisition stating it was too risky but I think they did the right long -term move here and now with PSP Investments as its strategic partner in Network FiberCo, they will provide the needed support for Ziply Fiber to accelerate its growth. 

Again, this mega deal shows how Canada's large pension funds can work with large strategic corporations to help them grow and the telecom sector is a great area because it requires a massive amount of capital.

What does BCE get? A strategic partner in PSP that will provide significant and stable capital and strong knowledge of the communications infrastructure space. It can use its balance sheet more effectively with PSP as a partner to accelerate the growth of this strategic asset in the US.

And despite the big cut in the dividend, BCE shares had a strong day:

That tells me most investors were expecting the cut and are happy about it.

Now, I realize a lot of investors, especially retired seniors, aren't happy to hear the dividend has been chopped in half (14% to 6%) but BCE CEO Mirko Bibic said the new dividend will allow them to "de-lever and invest for growth."

With the decline in immigration and the stock way off its 5-year high, I don't think BCE has much of a choice because growth will be hard to come by.

As far as PSP Investments, I foresee more strategic partnerships with large corporations in areas like this where they can realize stable inflation-linked, downside-protected returns and commit significant capital.

This deal definitely fits in their mandate and in a slowing economy, it makes a lot of sense.

Below, Mirko Bibic, president and chief executive officer of BCE and Bell Canada, joins BNN Bloomberg to discuss Q1 2025 earnings results.

Bibic discusses the joint venture with PSP to accelerate last mile fiber at Ziply Fiber and explains why this will drive subscription revenue and EBITDA growth at Ziply and increase free cash flow profile at Bell by over a billion dollars over next three years.

Also, Dan Rohinton, portfolio manager at iA Global Asset Management, shares his analysis of BCE Inc. earnings results and the decision to cut its dividend. 

Listen to his comments on how PSP has bought in for the majority of the fiber buildout with this new joint venture and how it stands to gain significantly on this deal.

Nina Kienle and Adria Calatayud of the Wall Street Journal report Veolia to Buy CDPQ's Stake in Water Technologies and Solutions for $1.75 Billion:

Veolia said it agreed to buy Caisse de Depot et Placement du Quebec's minority stake in its Water Technologies and Solutions subsidiary for $1.75 billion, taking full ownership.

The French utility and resource-management company said Wednesday that the acquisition of the investment group's 30% stake will allow it to achieve cost savings and accelerate earnings growth at the business.

It now aims to achieve an annual growth rate in earnings before interest, taxes, depreciation and amortization of at least 10% for its water-technologies division over the 2023-27 period, it said.

The business generated an Ebitda of 612 million euros ($695.8 million) in 2024 with an organic growth rate of 16%. Sales in the first quarter of 2025 were stable on year.

The deal, due to be completed by the end of June, is expected to lead to annual cost synergies of 90 million euros by 2027, the company said.

This in turn should serve as an important new growth driver in achieving its medium-term Ebitda target, RBC Capital Markets analysts said in a note to clients.

Whilst additional synergies are a positive, Jefferies analyst Yi Shu Ho notes that the transaction is part of Veolia's GreenUp plan and not incremental. "Market will likely be concerned over balance sheet headroom," he said.

JPMorgan analysts find the acquisition to be strategic, but note results for the first quarter were only neutral.

The company posted sales for the three-month period that fell to 11.51 billion euros from 11.57 billion euros the prior-year period. The figure missed analysts' expectation of 11.62 billion euros, according to consensus estimates provided by Visible Alpha.

Earnings before interest, taxes, depreciation and amortization, however, rose to 1.70 billion euros from 1.62 billion euros with a margin expansion of 14.7% from 14.1%, it said.

Current earnings before interest and taxes also rose, amounting to 915 million euros, up from 843 million euros, it added.

Veolia backed its guidance for the year, targeting organic Ebitda growth at around 5% to 6% and current net income growth of around 9%, it said.

Shares trade 2.5% lower at 31.63 euros.

Dimitri Rhodes and Etienne Breban of Reuters also report Veolia to take full ownership of water management unit in $1.75 billion deal, gets $750 million in new contracts:

May 7 (Reuters) - French group Veolia said on Wednesday it will buy the 30% of shares in Water Technologies and Solutions (WT&S) that it does not already own from Quebec Deposit and Investment Fund (CDPQ) for $1.75 billion.

The waste and water management company also announced $750 million in three new contracts to supply water to clients in the energy and semiconductor sectors. Veolia also estimated that gaining full control of WT&S will help it extract 90 million euros ($102.3 million) of additional cost synergies by 2027. "This (deal) will allow us to take full control of all our water technology branches, and thus deliver the full potential of this activity, which is at the heart of our strategic business," CEO Estelle Brachlianoff told Reuters. Over half of WT&S's business is in North America, the CEO added in a press call, consistent with Veolia's plan to strengthen its presence in water technologies activities and in the United States, both identified as priority growth boosters. It expects the WT&S deal to close by the end of June. Veolia said the new contracts included a $550 million deal with a very large microelectronics factory in the American Midwest, and smaller contracts in San Francisco, Brazil and the UAE. "By 2027, we want to increase our turnover in the United States by 50%, and we want to double the size of our business in the United States by 2030," Brachlianoff said in the press call. Veolia reported 20% of group sales in France, 60% of group sales in Europe, including France, and 40% of group sales outside Europe, including $5 billion in the U.S. in 2024, the CEO said. The company posted earnings before interest, taxes, depreciation and amortisation (EBITDA) of 1.7 billion euros for the first quarter, up from 1.62 billion euros a year ago. It also reiterated its guidance for 2025. ($1 = 0.8814 euros)

Veolia issued a press release stating it has acquired CDPQ’s 30% stake in Water Technologies and Solutions, achieving full ownership to accelerate value creation:

Veolia has signed an agreement with CDPQ for the acquisition of its 30% stake in Veolia’s subsidiary Water Technologies and Solutions (“WTS”), allowing Veolia to achieve full ownership of WTS, enabling to unlock more value potential, simplify further its structure and extract additional run-rate cost synergies of ~€90m.

This acquisition is a logical step in the deployment of Veolia’s GreenUp strategic roadmap, with an efficient capital allocation to strengthen the Group’s anchoring in Water technologies activities and in the United States, both identified as priority growth “boosters”.

The acquisition of CDPQ’s minority interests will further strengthen Veolia's unique positioning as a global leader in Water Technologies. The Group is perfectly positioned to take advantage of the growing demand for innovative water treatment technologies and solutions, fueled by macro-trends such as water scarcity, adaptation to climate change, health concerns and the development of strategic industries such as semiconductors, pharmaceuticals and data centers.

The acquisition of the remaining 30% of Veolia’s subsidiary WTS will allow full operational control, enabling it to enhance operational performance and seize all opportunities for development and innovation, through a complete integration process. Following the acquisition, the Group will be able to unlock additional ~€90m of run-rate cost synergies by 2027. Those synergies are already well-identified and benefit from a very low execution risk, given the deep and intimate knowledge of the asset and Veolia’s proven track-record in synergies extraction. The acquisition is expected to be accretive from 2026 and will contribute to improve Group ROCE.

The purchase price for the acquisition will be $1.75bn (~€1.5bn), corresponding to ~11x EV/post-synergies 2025e EBITDA. Post-transaction, Veolia will still maintain headroom compared to its Net Debt / EBITDA target of 3x, allowing the Group to retain strategic flexibility to continue to deploy its GreenUp strategic plan.

Veolia confirms all 2025 guidance and GreenUp targets previously communicated both at Group level and at Water Technologies level, and now aims to achieve an EBITDA CAGR of at least +10%(1) over the 2023-2027 period for its Water Technologies division.

“This acquisition marks a pivotal step in unlocking the full value potential of Water Technologies, a growth booster identified as a priority in our GreenUp strategic plan, and a segment where we are already a market leader. Full ownership will enable us to accelerate growth, enhance operational efficiency and synergies as well as deepen the alignment with strategic priorities. This move is especially crucial given the urgent and rapidly evolving needs of the market, allowing us to respond faster and more effectively to emerging opportunities and challenges," said Estelle Brachlianoff, Veolia’s Chief Executive Officer.

“We are proud of WTS’ achievements since our investment in 2017, as it has grown into a global market leader in water technologies. Through our partnership, we helped strengthen the company’s foundations and position it for sustained growth and long-term value creation. We are grateful for the close collaboration with the management teams at WTS and Veolia, and we wish them every success in this next chapter," said Albrecht von Alvensleben, Managing Director, Head of Private Equity Europe at CDPQ.

The closing of the transaction is expected by the end of June 2025.

Veolia Water Technologies segment

• In FY2024, Veolia Water Technologies segment achieved revenues of €4.97bn (41% North America, 25% Europe, 13% Asia Pacific, 13% Africa Middle-East and 8% Latin America) and EBITDA of €612M. The business serves over 8,000 clients in 44 countries, with 38 technological sites and 11 dedicated R&I laboratories.
• Veolia Water Technologies activities include both Veolia WT, 100% owned and Water Technologies and Solutions “WTS” subsidiary, 70% Veolia-30% CDPQ.

Water Technologies and Solutions “WTS” subsidiary;

• WTS was formed as a 70%-30% joint venture between Suez and CDPQ in 2017, before becoming a subsidiary of Veolia following the Veolia–Suez merger in 2022, with CDPQ keeping its 30% minority stake. In FY2024, WTS achieved revenues of €3.3bn ($3.6bn) and EBITDA of €472M ($511M).

ABOUT VEOLIA

Veolia group aims to become the benchmark company for ecological transformation. Present on five continents with 215,000 employees, the Group designs and deploys useful, practical solutions for the management of water, waste and energy that are contributing to a radical turnaround of the current situation. Through its three complementary activities, Veolia helps to develop access to resources, to preserve available resources and to renew them. In 2024, the Veolia group provided 111 million inhabitants with drinking water and 98 million with sanitation, produced 42 million megawatt hours of energy and treated 65 million tonnes of waste. Veolia Environnement (Paris Euronext: VIE) achieved consolidated revenue of 44.7 billion euros in 2024.

It is worth going back to the 2017 press release when CDPQ teamed up with SUEZ in a joint venture to acquire GE Water:

Today Caisse de dépôt et placement du Québec and SUEZ announced that they have entered into an agreement with General Electric Company to acquire its Water & Process Technologies business (“GE Water”), a leading provider of water treatment solutions. The transaction values GE Water at approximately USD 3.4 billion. As part of the transaction, CDPQ will invest over USD 700 million for a 30% stake. SUEZ will have a 70% stake and will contribute its industrial water business to GE Water to create a new self-standing business unit within SUEZ encompassing all industrial water activities with a global focus.

With operations in 130 countries and over 7,500 employees, GE Water is a global leader in the provision of equipment, chemicals and services for the treatment of water and wastewater. In order to address its industrial clients’ increasingly complex needs, GE Water invests heavily in research and development of unique solutions. Its innovative technology has made it one of the most sophisticated players in its industry.

Long-term demand for water treatment equipment, chemicals and services are expected to remain strong both as a consequence of growing water scarcity and the impact of global warming on the water cycle. Furthermore, there are increasing global concerns related to industrial wastewater and its impact on the environment which make advanced treatment of water an absolute necessity. In this context, CDPQ is looking to increase its exposure to the water sector and views this investment as a way to generate long-term value.

“With an emphasis on industrial applications, GE Water has positioned itself as a key player in the water treatment industry thanks to its cutting-edge technology and a management team that has proven itself highly skilled at leveraging that competitive advantage,” said Michael Sabia, President and Chief Executive Officer at CDPQ. “Operating in a core industry, GE Water has built a premier business with recurring revenues and a high-quality and diversified customer base. This investment is therefore highly aligned with CDPQ’s long-term vision and its strategy of increasing its emphasis on stable assets anchored in the real economy, alongside a world-class operator such as SUEZ.”

Jean-Louis Chaussade, CEO of SUEZ, said: “I am very proud to announce the acquisition of GE Water, which will accelerate the implementation of SUEZ’ strategy by strengthening its position in the promising and fast-growing industrial water market. This combination will create further value for both our clients and shareholders. Clients will benefit from the combined knowledge, expertise, geographic footprint and leading edge products and services available. The transaction will also deliver strong value to our shareholders by enhancing SUEZ’ profitable growth profile. I look forward to integrating GE Water’s highly skilled staff to our teams to form an unparalleled industrial water platform. We are also thrilled to join forces with CDPQ, a financial investor which shares our long term vision for our business.”

SUEZ is a French, publicly-listed industrial services and solutions company focused on water optimization and waste recovery. By teaming with SUEZ, CDPQ gains a strong partner which can help accelerate the growth and success of GE Water.

In 2017, GE Water was rebranded as SUEZ Water Technologies & Solutions after it was acquired and SUEZ and Veolia finally merged in 2022 and the company became known as Water Technologies and Solutions.

CDPQ acquired a 30% stake for $700 million and exited selling it to Veolia for $1.75 billion (all USD figures) after eight years.

The key here is what Veolia’s CEO Estelle Brachlianoff and CDPQ's Managing Director, Head of Private Equity Europe lbrecht von Alvensleben stated in the press release:

“This acquisition marks a pivotal step in unlocking the full value potential of Water Technologies, a growth booster identified as a priority in our GreenUp strategic plan, and a segment where we are already a market leader. Full ownership will enable us to accelerate growth, enhance operational efficiency and synergies as well as deepen the alignment with strategic priorities. This move is especially crucial given the urgent and rapidly evolving needs of the market, allowing us to respond faster and more effectively to emerging opportunities and challenges," said Estelle Brachlianoff, Veolia’s Chief Executive Officer.

“We are proud of WTS’ achievements since our investment in 2017, as it has grown into a global market leader in water technologies. Through our partnership, we helped strengthen the company’s foundations and position it for sustained growth and long-term value creation. We are grateful for the close collaboration with the management teams at WTS and Veolia, and we wish them every success in this next chapter," said Albrecht von Alvensleben, Managing Director, Head of Private Equity Europe at CDPQ.

Apart from cost savings, full ownership will enable Veolia to accelerate growth, enhance operational efficiency and synergies as well as deepen the alignment with its Green Up strategic plan.

CDPQ exits at a nice return and can redeploy that capital elsewhere.

This is what I call a successful joint venture that went well for all parties.

In other related CDPQ news, La Presse reports that CEO Charles Emond appeared before the Quebec National Assembly to state there are no plans to export the REM to the United States.

He also said the Azure India bribery scandal that plagued the organization last year was isolated to three former employees and that the toll road projects in India are profitable. 

You can read the entire article here and I will just say that CDPQ needs to focus on the REM here to make sure it addresses all operational glitches as there are too many issues that impact service.

As far as the India bribery scandal, well, let's hope it is an isolated case that never repeats itself ever again.

Charles Emond stated this at the National Assembly: "There is no perfect system for detecting the behavior of three former employees who decided to act through collusion outside of the Caisse's systems." 

That may be true but there should be checks and balances all the time to detect and prevent fraud.

To be blunt, no pension fund can afford to be embroiled in any bribery scandal anywhere, especially a global investor like CDPQ.

Below, Veolia CEO Estelle Brachlianoff celebrates 170 years of innovation (as you will notice, video uses AI to communicate in many languages, turn on closed captioning for translation). 

Very impressive company cleaning water all over the world.

Harrisson Connery of PERE reports that Ares’ Arougheti sees tariffs will boost real estate values, transaction activity:

As tariff-related uncertainty casts a shadow over global property markets, Ares Management chief executive Michael Arougheti said his firm’s real estate strategies stand to benefit from the disruption. 

“We continue to believe that this is an opportune time for continued growth in our real estate business,” said Arougheti on the Los Angeles-based manager’s first-quarter earnings call this week. “Tariffs should drive up construction costs, which might constrain supply in markets that are already supply-constrained. This, coupled with a decrease in cost of capital and lower interest rates should improve values of real estate held and spur transaction activity.”  

Arougheti’s comments came as Ares reported $3.9 billion in fundraising for its real estate strategies in the quarter, up from just $400 million for the same period last year.  

It was Ares’ first quarterly update since finalizing its $3.7 billion acquisition of Singapore-based logistics and data center specialist GLP Capital Partners’ non-China business, and Ares’ revised portfolio metrics reflect the scale of that transaction. Its real assets platform now manages $124.2 billion in assets, Ares reported, up from $75.3 billion at the end of 2024. 

The GLP deal significantly boosted Ares’ regional footprint as well, particularly in Japan and Southeast Asia, and the manager’s first Japanese data center development fund attracted $1.5 billion in commitments in the first quarter, Arougheti said, adding that he anticipates a final close “in the near term.”  

Ares’ American real estate equity real estate funds produced returns of 1.8 percent for the quarter and 7.3 percent over the past 12 months, and its European real estate equity strategies produced returns of 0.2 percent last quarter and 1 percent over the prior year. It deployed $3.3 billion into real estate assets in the quarter, up from $500 million in the first quarter of 2024. 

Arougheti’s optimism stands in contrast to some of the prevailing concerns held by other private real estate managers that tariffs will bring further pain to the industry. Investors and managers alike have told PERE that Trump’s on-again, off-again policies would make underwriting all but impossible in the near term. The potential for prolonged transaction paralysis helped contribute to a record secondaries fundraise for New York-based StepStone Group last week, according to Jeff Giller, the manager’s head of real estate.   

Arougheti said the macro-environment has not impacted his outlook on logistics and data center assets, for which he believes there is strong demand, and added that US tariffs could drive more volume towards Ares’ distribution businesses in Japan.  

“There is a modest shift of investor interest and appetite away from the US markets,” he said. “So I could envision that if we continue to be in that type of environment, that the opportunity to offer non-US product in Japan and in our European distribution business could actually catch a stronger bid here and be a net beneficiary.”

Ares's co-founder Michael Arougheti is optimistic on real estate, private equity and private credit and believes his firm stands to benefit from any severe dislocation.

Speaking from the Milken Institute conference, he also stated that tariffs are unlikely to trigger a sharp uptick in private-equity-owned companies failing to repay their loans.

Things are going very well for Ares Management. Silas Sloan of Secondaries Investor reports the firm is looking to close its third infrastructure fund and its secondaries fund is attracting a lot of capital too:

Ares Management is looking to close its third infrastructure fund soon with its secondaries business continuing to “generate significant investor interest”, chief executive Michael Arougheti said on the firm’s recent earnings call.

Ares Secondaries Infrastructure Solutions III crossed $2 billion in total commitments, doubling its predecessor, Arougheti said during the firm’s Q1 2025 earnings call on 5 May. The fund is expected to hold a final close this summer.

Arougheti’s comments mean the fund launched in 2023 has also hit its target, which is $2 billion, according to Secondaries Investor data. The infrastructure fund collected about $400 million in the first quarter, according to slides prepared for the earnings call.

In addition to the infrastructure fund, Ares Credit Secondaries I raised $475 million in Q1 and $700 million in April, bringing the total equity commitments in the strategy to $3 billion and exceeding the fund’s target, Arougheti said on the call.

Ares raised about $2.3 billion in Q1 across PE, credit, infrastructure and real estate. Overall, the firm raised more than $20 billion in the first three months of the year, which Arougheti said was the strongest first quarter of fundraising ever for the firm.

“As we think about fundraising for 2025 and how it could be impacted by the current market uncertainty, we believe that we’re well-positioned due to the strength in the institutional channel and the global diversity of our investor base,” Arougheti said on the call. “We have deep relationships with our LPs who tend to be repeat investors across our funds and strategies as they seek to consolidate with key relationships.”

Fundraising got off to a blazing start in 2025, collecting a total of $50.7 billion in Q1, according to Secondaries Investor data. It was a massive step up from the $10 billion raised in Q1 2024.

However, there’s more than meets the eye when it comes to that Q1 total, as nearly 60 percent came from Ardian’s $30 billion close on Ardian Secondary Fund IX in January. Without the behemoth fund, Q1 2025 secondaries fundraising would have seen its fourth-largest tally for total closed commitments across the first three months of the year since 2020.

Ares is a strategic partner to Canada's large pension funds and institutional funds all over the world. Therefore I would pay attention to what this firm is doing and what its CEO and co-founder is saying. Below, Ares Management CEO and co-founder Michael Arougheti discussed the market impact of trade tariffs, investment in China markets, investors taking shelter in credit markets and where he sees “massive opportunity” for private equity. Arougheti spoke with Sonali Basak on the sidelines of The Milken Institute Global Conference in Beverly Hills, California.

Also, Michael Arougheti joins CNBC's 'Squawk on the Street' to discuss macro outlooks, growth expectations for Ares, and more.

Lastly, Blackstone President Jon Gray says he expects some countries will strike trade deals with the US “fairly soon,” and the effective tariff rate will be around 10%. Gray says the uncertainty around a trade war is likely to slow down GDP growth. He also talks about the AI revolution, real estate and inflation in the US. He speaks to Bloomberg's Sonali Basak at the Milken Conference. 

All great interviews, worth listening to their views.

CDPQ's Executive Vice-President and Head of CDPQ Global and Global Head of Sustainability, Marc-André Blanchard, received the 2025 Testimonial Dinner Award on April 24 in Toronto. 

In his acceptance speech, Mr. Blanchard reflected on the urgent need for engagement, trust and partnership in solving the most pressing challenges of our time.

The former diplomat shared insights from his time at the United Nations, and called for public institutions to refocus on results, for silos to be broken across sectors and for trust to be rebuilt — drop by drop — through collaboration and engaged action:

I want to begin with just one word — gratitude, but gratitude in three parts. First, the five distinguished Canadians with whom I have the privilege of being honored tonight, they each inspire me.

Anil Arora. Anil is a legend amongst the global statistician community, I saw it with my own eyes at the UN.

The honourable Elizabeth Dowdeswell, a life dedicated to building and strengthening resilient local communities in Canada and around the world.

Chief Crystal Smith, your focus on economic reconciliation and building innovative partnerships is exactly what we need, not only for our national reconciliation, but also globally, for a more sustainable world.

Steve Paikin, last week’s debate reminded us how lucky we have been to have had you as a pillar in journalism and in our country for so long.

And Alfred, well, your optimism and generosity and focus on action will bring all of us somewhere else.

Second, gratitude to this room, to this community, to the Public Policy Forum. And allow me a special thanks, that’s never easy to do, to my wife Monique, merci.

Our sons, Adrian and Laurent, who are here tonight. This is my family. (In French: I would never have been here without you. You are my north star.) Thanks also to all of my friends here and my former colleagues, whether from McCarthy or from the public service or at CDPQ, or all of the organizations, my alma mater. Thank you. I’ve been so lucky in my life that my life has crossed your paths, and thank you for being here.

And third, I’m grateful for the opportunity to share some of my thoughts. And don’t worry, they’re not that long. It’s a gift, and I’m deeply thankful to all of you for giving me the reason and the space to pause, reflect and share.

The first thing I recognize is this — despite our deeply troubling times, like most of you, I’m certain I stand before you as someone who remains deeply, deeply hopeful in our future. To state the obvious, the challenges that brought me into public policy and public service, the kind that shaped my purpose, are today even more complex, more urgent and more intertwined than ever before. Never has the distance between our ideals and our actions been so radically exposed, so consequential, and so necessary to bridge.

Well, I happen to know a thing or two about idealism. You know, after all, I served in the halls of the United Nations for nearly five years. And when I arrived in the spring of 2016 there was so much hope. The world had just adopted the sustainable development goals and the Paris Accord, the world would finally get to work on two of its biggest and most pressing challenges — inequality and climate change. Then, within a few months, Brexit, President Trump, a few years later, the pandemic, Syria, Ukraine.

So, I’ve lived through the great declarations and stirring speeches. I’ve also lived through the disappointments left by our institutions’ inability to deliver what is being promised to citizens. This disappointment is felt in Canada and almost everywhere else in the world. Throughout the world, it has eroded the trust in our democratic institutions. And globally, the multilateral institutions so dear to Canada are being sidestepped without much reaction by the populations.

A friend of mine, Baroness Valerie Amos, the Master of University College of Oxford, recently said people need to see the difference that institutions make in their lives, and they need to have a mechanism that enables them to have an influence on those institutions. So how do we get our institutions to deliver for the people on the ground? How do we get from our idealism and our values to results?

Well, to me, a big part of the answer is about engagement. We need results. To get results, we need people invested in the kind of change they want to see. I can think of three rules of engagement that if applied, would deliver results faster, and of scale.

First, as I mentioned, engagement must be focused on results. Populism is not an anomaly. It’s a symptom, a warning sign of deeper democratic fatigue. Populism can only thrive in the void left by a lack of real results, in the absence of meaningful, visible change in people’s lives. To succeed in delivering faster, we need to remember that excellence in public policy does not require perfection. It requires progress, delivery and results.

Engagement, therefore, must be redefined, not as dialog alone, or even worse, a process, but as a deliberate, measurable pursuit of relentless impact.

Second, engagement must break down the silos and lead to innovative partnerships of the kind we heard just before. Well, this is tougher than it sounds. And to my dear friends of the public sector, my public sector colleagues, let me tell you a well-kept secret of the private sector. The private sector has silos, too.

In today’s world, with this climate, this economy, this global uncertainty, the real breakthroughs, the ones that will shape the next generation, will come when both sectors, public and private, start truly collaborating.

Well, let me brag a little bit. So I promise, I’ve been a citizen of Toronto, I promise not to make any explicit comparison with the Eglinton line here in Toronto. But I can offer no better example than the REM (Réseau express métropolitain) in Montreal, a very innovative partnership between CDPQ and three levels of government, various Crown corporations and the private sector, involved in delivering in a very short time — started the construction in 2018, first line going up in 2023 at reasonable cost — 67 kilometers of light rail train. If there had been no trust, there would have been no REM.

Which leads me to my third and final rule. Engagement must be built and rebuilt on trust. They say that trust is earned in drops and lost in buckets. And in recent years, here at home and around the world, we’ve watched too many of those buckets spill over. There is no shortcut to trust. There is only the steady, honest, often uncelebrated, work of listening, of engaging with people who disagree with us, not thinking we know better, of standing in someone else’s shoes, of doing the right thing and the right thing is often not theoretical perfection, but a good old Canadian compromise, even when it’s hard. Drip by drip. Act by act.

As we look to the future, please remember this. Every grand plan, every vision to reinvigorate our democracy, to renew our economy or realign our world will demand deep collaboration and even deeper trust. Without that trust, we’re left with talk, with the illusion of progress and none of the results. The reality is that listening builds trust and relationships. Trust and relationships accelerate action. And engagement leads to impact.

So thank you from the bottom of my heart for this honour, really. And let’s never forget that there is no challenge that we cannot overcome. After all, together we’ve built the best country in the world.

Vive le Canada et merci beaucoup.

Great speech by Marc-André Blanchard, eloquent, short, optimistic, striking the right balance between idealism and realism.

He cites the example of the REM where three levels of government were involved and nothing would have gotten done if there was no trust. 

He correctly notes:

“In today’s world, with this climate, this economy, this global uncertainty, the real breakthroughs, the ones that will shape the next generation, will come when both sectors, public and private, start truly collaborating.” 

And ends on this note:

As we look to the future, please remember this. Every grand plan, every vision to reinvigorate our democracy, to renew our economy or realign our world will demand deep collaboration and even deeper trust. Without that trust, we’re left with talk, with the illusion of progress and none of the results. The reality is that listening builds trust and relationships. Trust and relationships accelerate action. And engagement leads to impact.

Well, Marc-André Blanchard and his team at CDPQ are certainly doing their part to engage and lead to impact on responsible investing.

I recently covered CDPQ's 2024 Sustainable Investing Report where they exceeded their targets here.

Below, Marc-André Blanchard accepts the 2025 Testimonial Dinner Award. Great speech, well done.

Sean Conlon and Hakyung Kim of CNBC report Dow jumps 500 points, S&P 500 posts longest win streak in 20 years as stocks claw back tariff losses:

Stocks rose on Friday as Wall Street digested a better-than-expected nonfarm payrolls report for April, which eased recession fears and lifted the S&P 500 for its longest winning streak in just over two decades.

The S&P 500 advanced 1.47% and closed at 5,686.67. This marked the broad market index’s ninth consecutive day of gains and its longest winning run since November 2004. The Dow Jones Industrial Average jumped 564.47 points, or 1.39%, to end at 41,317.43. The Nasdaq Composite gained 1.51% and settled at 17,977.73.

With Friday’s surge, the S&P 500 has now recovered its losses since April 2, when President Donald Trump announced his “reciprocal” tariffs. This comes a day after the tech-heavy Nasdaq accomplished the same feat.

Payrolls grew by 177,000 in April, above the 133,000 that economists polled by Dow Jones had anticipated. That figure was still down sharply from the 228,000 added in March but much better than feared after recession worries ramped up last month. The unemployment rate stood at 4.2%, in line with expectations.

“Markets breathed a sigh of relief this morning as the jobs data came in better than expected,” said Chris Zaccarelli, chief investment officer at Northlight Asset Management. “While recession fears are still simmering on the back burner, the buy-the-dip dynamic can continue – at least until the tariff pause runs out.”

Investors were already upbeat prior to the strong jobs report after China said that it is evaluating the possibility of starting trade negotiations with the U.S. Still, Chinese authorities reaffirmed their belief that the U.S. should remove all unilateral tariffs, saying in a statement that “if the U.S. wants to talk, it should show its sincerity and be prepared to correct its wrong practices and cancel the unilateral tariffs.” Later in the day, a report from The Wall Street Journal suggested that Beijing is open to trade talks.

The Street was also mulling over earnings reports from two “Magnificent Seven” members. Apple slid 3.7% after posting fiscal second-quarter revenue from its services division that fell short against analyst estimates. Additionally, the iPhone maker said it expects to add $900 million in costs in the current quarter due to tariffs. Amazon shares, meanwhile, were marginally lower after the company issued light guidance, highlighting “tariffs and trade policies” as factors.

“We’ve already seen how financial markets will react if the administration moves forward with their initial tariff plan, so unless they take a different tack in July when the 90-day pause expires, we will see market action similar to the first week of April,” Zaccarelli also said.

Stocks have made an incredible comeback since Trump announced last month that’s he’s temporarily reducing his new tariff rates for most countries to 10% for 90 days. The market has especially picked up steam lately, leading to the S&P 500′s winning streak, as solid earnings have come out.

All three major averages posted their second positive week in a row. The S&P 500 added 2.9%, sitting more than 7% below its February high after at one point being down nearly 20%. The Dow posted a 3% advance on the week, while the Nasdaq added 3.4%.

‘We’ve passed peak tariff tantrum,’ InfraCap’s Jay Hatfield says

The recent sell-off spurred by worries around President Donald Trump’s tariff plans may be over, said Jay Hatfield of Infrastructure Capital Advisors.

“We think we’ve passed peak tariff tantrum,” the firm’s chief executive said in an interview with CNBC, adding that he has a year-end target on the S&P 500 of 6,600. That implies nearly 18% upside from Thursday’s close.

Hatfield also thinks there’s going to be a summer rally once the market gets through a “seasonally weak” May-to-June period. That said, he doesn’t believe the S&P 500 will rally past the 6,000 level until most concerns among investors have been resolved.

“We think there’s three areas of uncertainties, not just tariffs but also Fed policy and tax policy,” he added. “We don’t think we’re going to bust significantly above 6,000 until we get at least two of those three pretty well defined.”

It was a very strong week in the stock market led by mega cap tech stocks like Microsoft and Meta which posted solid earnings:

But the real story again this year is Palantir which was up over 300% last year and is flying high once again this year:

Incredibly, Palantir shares hit a low of $66 on April 7th and have since ripped higher and are right on the cusp of making a new 52-week high.

All this action spurred the Nasdaq higher this week but it's still off its 52-week high:

 Nonetheless, all the talk of tariffs, recession, the end of American exceptionalism looks silly when you look at the S&P 500 which has now recovered all its losses since Liberation Day (April 2nd). 

However, the US dollar remains weak and some claim there's more downside to go (I'm not in that camp and believe the selloff in the US dollar was way overdone):

More worrisome, long maturity US Treasuries are also struggling to rally as investors weigh the real possibility of stagflation ahead: 

Also, despite the recent selloff which I foresaw, gold shares remain in a solid uptrend:

Not surprisingly, when you look at the top performing US large cap stocks, gold shares figure prominently (a few Canadian gold companies there) but it's a mixed bag with Palantir and biotechs I track closely like Verona Pharma, Summit therapeutics and TG Therapeutics. 

 

Apart from a few stocks however, biotech shares remain well off their 52-week high even after rallying massively the last couple of weeks:

Still, I see a few great opportunities in biotech as long as RISK ON markets gain traction but you really need to dig deep, pick your spots and know the companies and risks very well.

The big question that still persists is whether there is a slowdown in the US economy and are we in a recession.

This week, the US economy contracted for first time since 2022 as imports surged but today's US jobs report showed defied expectations as nonfarm payrolls increased a seasonally adjusted 177,000 for the month, slightly below the downwardly revised 185,000 in March but above the Dow Jones estimate for 133,000. 

The unemployment rate, however, stayed at 4.2%, as expected, indicating that the labor market is holding relatively stable.

The jury is still out in terms of recession but some indicators like housing activity are already pointing to one and I would encourage my institutional readers to listen to Francois Trahan's latest conference call entitled "It's Different This Time...Legitimately!".

Francois thinks all roads lead to stagflation and things will come to fruition in the second half of the year. 

Alright, let me wrap this up and post some great interviews below.

First, Nicolai Tangen, the head of Norway’s $1.8 trillion sovereign wealth fund, discusses the outlook for global markets amid recent trade policy upheaval and what that means for the fund's US investments. He talks with Bloomberg's Francine Lacqua in Oslo.

Tangen also spoke to CNBC International discussing investments in the US at the Norwegian sovereign wealth fund's annual investment conference.

Third, Mike Wilson, Morgan Stanley, joined 'Closing Bell' on Thursday to discuss what markets need to see to indicate a more sustained recovery from April's lows, if the equity rally is sustainable, and much more.

Fourth, Adam Parker, Trivariate Research founder, joins 'Closing Bell' to discuss the most recent news that sticks out to Parker the most, investor's attitude towards equity markets, and much more.

Fifth, David Zervos, Jefferies chief market strategist, joins CNBC's 'Squawk on the Street' to discuss outlooks on tech.

Sixth, Bob Elliott, Unlimited CEO and Adam Kobeissi, The Kobeissi Letter editor-in-chief, join 'Closing Bell: Overtime' to discuss market rally, their outlook for stocks and Fed day.

Seventh, Jeremy Siegel, Wharton School professor of finance, joins CNBC's 'Closing Bell' to discuss market outlooks.

Lastly, Bill Smead, Smead Capital Management, joins 'The Exchange' to discuss the mood in Omaha ahead of Berkshire Hathaway's annual investor meeting, the market opportunities, and much more.

Jasmine Kilman of Connect CRE reports Hoffman & Associates, Madison Marquette sell The Wharf to PSP Investments:

Hoffman & Associates and Madison Marquette have sold their stakes in The Wharf, a mile-long 3.5 million-square-foot megadevelopment waterfront neighborhood in Washington, D.C., to Public Sector Pension Investment Board (PSP Investments).

PSP Investments, which has been a financial equity partner in the development since 2014, will own The Wharf in its entirety. Hoffman & Associates and Madison Marquette developed the $3.6 billion riverfront neighborhood located along the Potomac River, just south of downtown D.C.

“Since 2006, we’ve led The Wharf’s transformation from vision to reality, creating a dynamic, world-class neighborhood that includes everything from concert venues and homes to restaurants, parks, piers, and unparalleled waterfront access,” said Monty Hoffman, Founder & Chairman of Hoffman & Associates. “We have full confidence in our partner to carry forward our shared vision for The Wharf as we continue expanding communities across the DMV and beyond.”

With this sale, The Wharf marks the successful completion of its evolution from a transformative development to a nearly fully leased neighborhood offering residential, office, retail, and public space. 

In an exclusive interview, Monty Hoffman (featured above) discusses the sale of the project conceived two decades ago. You can read that Washington Business Journal article here (subscription required).

You can also read a lot more about The Wharf here and see many pictures of this exclusive waterfront property.

 As stated above, PSP Investments, which has been a financial equity partner in the $3.6 billion development since 2014, will own The Wharf in its entirety. 

That's quite an impressive asset to own and I guess the developers are exiting the project after many years of developing it.

In other recent news, Freschia Gonzales  of Benefits and Pensions Monitor reports PSP and partner exit as offshore wind company changes hands: 

Havfram, an offshore wind installation company established in 2021 by Sandbrook Capital and PSP Investments, is set to be acquired by global dredging and marine engineering group DEME. 

The transaction, valued at approximately €900m, is expected to close by the end of April, subject to customary closing conditions. 

Sandbrook Capital and PSP Investments formed Havfram to address growing demand for Wind Turbine Installation Vessels (WTIVs) among major energy companies.  

Since its founding, the company has developed into a key player in the offshore wind sector, with two state-of-the-art WTIVs under construction and a strong contract backlog to support some of the largest offshore wind projects. 

“We partnered with PSP Investments to build Havfram because we saw a unique market opportunity to provide the state-of-the-art vessels required to build today’s enormous offshore wind farms,” said Christopher Hunt, partner at Sandbrook Capital.  

He added that DEME will take over as the company enters its next phase. Hunt also noted that Havfram has grown significantly in recent years and generated financial returns for investors. 

Sandiren Curthan, managing director and global head of Infrastructure Investments at PSP Investments, said the investment demonstrates the firm's broader capabilities and its commitment to investing in essential assets within the renewables value chain.    

Goldman Sachs acted as financial advisor, while Thommessen served as legal advisor to Sandbrook Capital and PSP Investments. 

PSP investments issued this press release on this deal:

London, UK; Montreal, QC; Oslo, Norway — April 9, 2025 — Sandbrook Capital, a private investment firm focused on building leading climate infrastructure companies, and the Public Sector Pension Investment Board (PSP Investments), one of Canada’s largest pension investors, today announced the signing of an agreement to sell Havfram, an international offshore wind infrastructure company, to DEME (Euronext: DEME), a global leader in offshore energy and marine engineering. 

Established in 2022 through a strategic partnership between Sandbrook Capital and PSP Investments, Havfram was created to provide critical offshore wind installation capacity to the world’s leading energy companies. Under their ownership, Havfram has evolved into a world-class operator of Wind Turbine Installation Vessels (WTIVs), with two state-of-the-art vessels currently under construction and a strong contract backlog to build some of the largest offshore wind farms. 

“We partnered with PSP Investments to build Havfram because we saw a unique market opportunity to provide the state-of-the-art vessels required to build today’s enormous offshore wind farms” said Christopher Hunt, Partner at Sandbrook Capital. “In just a few years, Havfram has become one of the most important players in the offshore wind industry. We are proud of what the team has achieved and the positive financial returns delivered to our investors.  DEME will be an outstanding steward of the company in its next phase of growth.” 

“Our investment in Havfram reflects our broader capabilities and commitment to invest in assets essential to the renewables value chain, while generating strong risk-adjusted returns,” said Sandiren Curthan, Managing Director and Global Head of Infrastructure Investments, PSP Investments. “We are proud to have partnered with Sandbrook Capital and with the Havfram team to build a fleet of next generation WTIVs.” 

“The support and long-term vision of Sandbrook Capital and PSP Investments have been instrumental in building Havfram into what it is today,” said Ingrid Due-Gundersen, CEO of Havfram. “We’re incredibly excited to join forces with DEME, a global leader with a shared mission to accelerate offshore wind deployment. Together, we will play a major role in enabling the energy transition around the world.”  

The transaction, valued at approximately € 900 million, is expected to close by the end of April 2025, subject to customary closing conditions. 

Goldman Sachs served as financial advisors and Thommessen served as legal advisor to Sandbrook Capital and PSP Investments. 

About Sandbrook Capital
Sandbrook Capital is a private investment firm dedicated to building the next generation of climate infrastructure companies. Founded by a team of seasoned investors and operators, Sandbrook partners with exceptional management teams to grow sustainable businesses that deliver attractive financial returns and meaningful climate benefits. For more information, visit www.sandbrook.com.

About PSP Investments
The Public Sector Pension Investment Board (PSP Investments) is one of Canada's largest pension investors with C$264.9 billion of net assets under management as of 31 March 2024. It manages a diversified global portfolio composed of investments in capital markets, private equity, real estate, infrastructure, natural resources, and credit investments. Established in 1999, PSP Investments manages and invests amounts transferred to it by the Government of Canada for the pension plans of the federal public service, the Canadian Forces, the Royal Canadian Mounted Police and the Reserve Force. Headquartered in Ottawa, PSP Investments has its principal business office in Montréal and offices in New York, London and Hong Kong. For more information, visit investpsp.com or follow us on LinkedIn.  

About Havfram
Havfram is a Norwegian offshore wind installation company providing critical services to the global renewable energy industry. With two newbuild WTIVs under construction and a robust backlog, Havfram is positioned as a leading player in enabling the deployment of next-generation offshore wind farms. For more information, visit www.havfram.com. 

I vaguely remember this deal but clearly PSP and Sandbrook Capital did a great job developing Havfram into a world class offshore wind installation company and are now selling it to DEME, a global leader in offshore energy and marine engineering. 

The transaction, valued at approximately € 900 million, is expected to close by the end of April 2025, subject to customary closing conditions.

Ingrid Due-Gundersen, CEO of Havfram states: “We’re incredibly excited to join forces with DEME, a global leader with a shared mission to accelerate offshore wind deployment. Together, we will play a major role in enabling the energy transition around the world.”  

I'd say this was a strategic win-win for all parties involved. 

In other related PSP news, David Casey, Editor in Chief of Routes, reports AviAlliance plans to invest £350M In AGS Airports overhaul:

AviAlliance plans to invest £350 million ($465 million) over the next five years to modernize AGS Airports, which includes Aberdeen, Glasgow and Southampton airports. 

The company also appointed Charles Hammond, former CEO of Forth Ports, as the new chairman of AGS.​

The investment marks the largest capital program since AGS was formed in 2014 and follows AviAlliance’s £1.53 billion acquisition of the airport group from Ferrovial and Macquarie in January. The funds will support terminal upgrades, airfield infrastructure improvements and energy efficiency initiatives across all three airports.​

Scotland's Glasgow Airport will undergo a transformation of its main terminal, expanding floor space to accommodate more airline gates and enhance retail and dining options. Aberdeen Airport, also in Scotland, will see airfield infrastructure enhancements, while Southampton Airport's terminal will be redeveloped.​

“This significant investment will not only enhance the fabric of our airports, it will enhance the role they currently play in facilitating trade and tourism and, importantly, in generating meaningful employment across the country,” AGS CEO Kam Jandu says.

Glasgow is the largest airport in the AGS portfolio, handling approximately 8 million passengers in 2024. Aberdeen followed with 2.3 million, while England's Southampton Airport served around 850,000 passengers during the year.

AviAlliance, a subsidiary of Canada’s PSP Investments, entered the UK airport sector for the first time with the AGS deal, part of a strategic pivot following its exit from Budapest Airport and amid ongoing challenges in Germany’s aviation market. The company maintains holdings in Düsseldorf and Hamburg airports in Germany, as well as Athens, Greece, and San Juan, Puerto Rico.

Soon after finalizing the acquisition, AviAlliance sold a 22% stake in AGS to U.S.-based Blackstone for £235 million, retaining a 78% majority share and full operational control. The deal provides AGS with a new financial partner while keeping AviAlliance as the lead on strategy and operations.

Despite the investment, AGS’ three airports face headwinds. Glasgow has struggled to keep pace with Scottish capital Edinburgh, now Scotland’s main international gateway. Aberdeen, long reliant on oil and gas traffic, is adjusting to a shifting energy landscape. Southampton, meanwhile, faces competition from nearby Bournemouth and Bristol airports.

However, AviAlliance stressed the long-term potential. “AviAlliance takes a long-term view across all the airports within our portfolio, and this investment will assist AGS in accelerating its plans for delivering a superior passenger experience and growing connectivity,” AviAlliance Managing Director Gerhard Schroeder says.

“We are looking forward to working with AGS’ regional and national partners over the coming years to realize the full and undoubted potential of Aberdeen, Glasgow and Southampton airports.”

Recall, back in January, PSP announced the completion of its acquisition of AGS Airports, the operator of Aberdeen, Glasgow and Southampton airports from Ferrovial and Macquarie for an enterprise value of £1.53 billion.

More recently, Blackstone announced that Blackstone’s infrastructure strategy for individual investors has agreed to acquire a minority stake of 22% in AGS Airports (“AGS”), a platform of high-quality freehold airports providing access to key UK markets, from AviAlliance for £235 million:

Blackstone’s investment, together with AviAlliance and PSP Investments, is intended to support the continued growth of the travel and tourism industries across the United Kingdom.

AviAlliance, one of the world’s leading airport investors and operators, will remain the majority shareholder in AGS with a 78% stake.

AGS handles over eleven million passengers annually and is the owner and operator of three critical UK airports: Glasgow and Aberdeen in Scotland and Southampton in England.

If Blackstone is getting an important minority stake, that's quite an endorsement of this deal.

What else? PSP took part in the C$7 billion equity investment into Rogers managed by Blackstone and also took part in the the restructuring of capital led by Temasek of  Ceva Animal Health (Ceva), the world's fifth-largest animal health company. See details of that here.

Lastly, on the organizational front, at the end of March, PSP announced a new CFO and CRO:

Montréal, Québec (March 27, 2025) – The Public Sector Pension Investment Board (PSP Investments) today announced the appointment of Caroline Vermette as Senior Vice President and Chief Financial Officer (CFO) of PSP Investments. PSP Investments also announced the appointment of Alexandre Roy as Senior Vice President and Chief Risk Officer.  

Caroline Vermette joins PSP Investments from National Bank of Canada, where she most recently served as Senior Vice President, Internal Audit, providing independent assurance to the Board and senior management on the effectiveness of the Bank’s risk management, governance, and internal controls. She brings over 20 years of experience in financial leadership roles, demonstrating a proven track record of strategic financial planning, risk management, and driving efficiency through technology and innovation. 

“The appointment of Caroline Vermette as CFO marks an exciting new chapter for PSP Investments", said Deborah K. Orida, President and Chief Executive Officer, PSP Investments. "Her wealth of experience in financial reporting, internal audit, and risk management, combined with her deep understanding of complex financial transactions and international accounting standards, will be instrumental in ensuring the continued financial strength and strategic direction of PSP Investments. Caroline will strengthen PSP Investments ability to navigate an increasingly complex global investment landscape and deliver on our mandate for our beneficiaries."

Alexandre Roy joined PSP Investments in 2007 and has long played a critical role in strengthening the organization's risk management function and portfolio construction process. Through progressively senior roles, culminating in his position as Senior Managing Director, Total Fund Management, where he developed and implemented the Total Fund approach. This approach treats all asset classes and investment activities as a cohesive unit and as such has optimized the investment process, enhanced portfolio performance, and improved risk management across the organization. Most recently, he also assumed interim responsibilities of the Chief Investment Office.  

“Alexandre’s exceptional talent and leadership has long been instrumental to PSP Investments in delivering value for our beneficiaries and advancing our strategic objectives. His appointment as Chief Risk Officer reflects his deep understanding of our business, his proven ability to develop and implement new approaches to strengthen our organization, and his unwavering commitment to safeguarding the integrity of our investment portfolio. I am delighted to welcome Alexandre to our Executive Committee and look forward to the valuable insights he will bring. I am confident that in this role, he will continue to strengthen our risk management framework and contribute to the long-term success of PSP Investments," added Ms. Orida. 

I've heard nothing but good things about Alexandre Roy and I'm sure Caroline Vermette is highly qualified and will be a great CFO. 

You can view all of PSP Investments' senior managers here including Arun Bajaj, the new Senior Vice President, Chief People and Corporate Development Officer.

Alright, I started off discussing The Wharf and morphed this into a PSP Investments' latest deals and organizational changes comment.

Below, a virtual tour of The Wharf, one of the most popular areas for visitors and tourists to check out during a trip to Washington.

Wendy Lee, Local 575 of the Ontario Public Service Employees Union (OPSEU/SEFPO) posted updates in the Healthcare of Ontario Pension Plan (HOOPP):

The Healthcare of Ontario Pension Plan (HOOPP) is one of the strongest defined benefit pension plans in Canada, helping Ontario’s healthcare workers build the foundation for a financially secure retirement since 1960. Serving over 475,000 members and 700 employers, they are committed to providing members with the lifetime pension members have earned and the peace of mind members deserve.

Annesley Wallace became President & Chief Executive Officer of HOOPP on April 1, 2025.  It’s exciting to see that a significant, high performing pension plan is now being led by a female executive.  The predominant membership of HOOPP contributors are female.

Prior to joining HOOPP Annesley was Executive Vice-President, Strategy and Corporate Development and President, Power and Energy Solutions at TC Energy. In her role, Annesley was responsible for leading and executing the development of TC Energy’s corporate strategy, corporate development activities and capital allocation process, as well as for all aspects of the Company’s power generation and unregulated natural gas storage businesses.

Before joining TC Energy in May 2023, Annesley served as Executive Vice-President and Global Head of Infrastructure at OMERS, overseeing a global team and portfolio of approximately C$34 billion in assets across sectors including energy, digital, transportation and government-regulated services. Previously, Annesley also spent time at SNC-Lavalin, focused on engineering, procurement, project controls and project management for their energy, infrastructure and power businesses.

Annesley holds a Bachelor of Science and Master of Science in Engineering from Queen’s University, and a Master of Business Administration from the Schulich School of Business, York University. Annesley is also a registered Professional Engineer in Ontario and a former recipient of Canada’s Top 40 Under 40.

On a more personal level, she grew up in Ontario.  She is also a mother of two twin boys – a working mother who understands the impact pensions has on all of us, for all of us.

During today’s discussions, Annesley stated her leadership belief is that “health care is a fundamental right that we must defend” and as such, she indicated that HOOPP is “uniquely positioned” to be “flexible and adaptable” in these uncertain economic times as HOOPP has “a strong foundation with significant expertise”.

The four key focal points of HOOPP moving forward are the following:

• Focus remains on long-term success to ensure pension security for members by maximizing the over value of HOOPP.
• Be well positioned to navigate a challenging geopolitical and economic landscape by increasing adaptability.
• Continue to prioritize that enable HOOPP to be both flexible and adaptive in less certain economic times.
• Maintain the belief that when Canadians have access to a secure retirement, all will benefit. There is an acknowledgement that our members’ pension dollars are a huge spending component of the economy.  Thereby pension incomes can lead to the creation of jobs.

HOOPP has not had to increase member contributions since 2004.  This is an important to highlight that there has been stable contributions for over 20 years.  HOOPP has also improved the online tool for survivors’ benefit plan.  The strength of HOOPP’s stance, is what a member accrues, it belongs to the member.  The two items that are revisited on an annual basis is the Cost of Living Adjustments (COLA) for pensioners.  HOOPP provided a COLA increase on April 1, 2024 of 3.40% and 1.83% on April 1, 2025. The contribution rates may also change from year to year.

There are currently 478,879 members and 134,000 retired members.  The average annual pension is $32,000 for a total of $3,3 billion benefits being distributed to retired workers annually.  There were 5,965 members who started their monthly pensions in 2024.

HOOPP is a very well diversified portfolio where the intention “is not to outperform the market” but ensure that funds are maintained for ongoing pension pay outs, shared by Annesley.  The HOOPP pension reviews potential investments and enter the right risk(s) in a very calculate for the long-term view.  Based on its firm foundation, HOOPP is able to take advantage of good investment opportunities, thereby making the plan more adaptable to change.

For those that interested in speaking with someone about HOOPP for their workplace, please feel free to connect with Bobby Argiropoulos, Public Relations at 416-459-5384 or via email at bargiropoulos@hoopp.com.

On LinkedIn, HOOPP's new CEO Annesley Wallace posted this five days ago:

I note the following:

This week, I had the opportunity to speak with leaders from Ontario Public Service Employees Union (OPSEU/SEFPO)’s Hospital Professionals Division at its 2025 Convention, discussing HOOPP (Healthcare of Ontario Pension Plan)’s commitment to providing healthcare workers in Ontario a reliable, stable pension for life. 

HOOPP is proud to serve the 25,000 OPSEU/SEFPO members under the Hospital Professional Division, who provide critical public health support across 84 hospitals every day. Thank you for having me!

So what's the big deal? Annesley Wallace meeting with members of HOOPP who are part of the Ontario Public Service Employees Union.

To me it is a big deal because Annesley Wallace officially started as the new CEO at the beginning of the month (she was there before to get the lay of the land as Jeff Wendling prepared to retire) and one of her first big presentations is with plan members to inform and reassure them.

Take note, if you want to be a great leader of a pension plan, always remember whose money you're managing and show them the respect they deserve.

And actions speak louder than words.

OMERS CEO Blake Hutcheson who Annesley worked with in the past once told me the part of the job he loves the most is talking to members and I believe him.

Anyway, time to watch the Montreal Canadiens and hope they win tonight.

Below, a reminder from five years ago of how dedicated HOOPP's members are and why it's important to safeguard their pensions. It's eerie watching this video, can only imagine how HOOPP's members felt back then.

Also, CNBC's Steve Liesman, Raymond James’ Ed Mills, Nationwide Mutual’s Kathy Bostjancic, and Fundstrat’s Tom Lee join 'The Exchange' to discuss what investors know about the economy and the markets.

The Canadian Press reports CPP Investments sells portfolio of private equity fund interests:

TORONTO — The Canada Pension Plan Investment Board says it has sold a portfolio of 25 private equity fund interests in North American and European buyout funds for $1.2 billion in net proceeds.

The board says the buyers are Ares Management Private Equity Secondaries funds and CVC Secondary Partners, the secondaries business of CVC.

Ares is a global alternative investment manager, while CVC is a global private markets manager focused on private equity, secondaries, credit and infrastructure.

The portfolio sold included primary commitments and secondary purchases made by CPP Investments in funds over 10 years old.

Dushy Sivanithy, CPP Investment’s head of secondaries, says the deal was part of its active portfolio management.

CPP Investments’ net assets totalled $699.6 billion at Dec. 31, 2024. 

CPP Investments recently issued a press release on this transaction:

London, U.K. (April 17, 2025) – Canada Pension Plan Investment Board (CPP Investments) today announced it has completed the sale of a diversified portfolio of 25 limited partnership fund interests in North American and European buyout funds to Ares Management Private Equity Secondaries funds (Ares) and CVC Secondary Partners, the Secondaries business of CVC.

Ares is a leading global alternative investment manager offering primary and secondary investment solutions across asset classes with over US$525 billion of assets under management, and CVC is a leading global private markets manager focused on private equity, secondaries, credit and infrastructure with €200 billion of assets under management.

CPP Investments’ net proceeds from the transaction, after certain costs and adjustments, were approximately C$1.2 billion. The transaction completed on 31st March 2025.

“This transaction was undertaken as part of our active portfolio management activities. As a systematic buyer and seller in the secondaries market, we see this sale as an attractive opportunity to optimize the construction of our portfolio,” said Dushy Sivanithy, Managing Director & Head of Secondaries, CPP Investments. “Ongoing management of our private equity commitments continues to realize strong returns for the CPP Fund.”

The portfolio of interests represents various primary commitments and secondary purchases made by CPP Investments in funds over 10 years old.

CPP Investments’ net investments in private equity totalled C$151.2 billion at December 31, 2024. The portfolio is invested in a wide range of private equity assets globally, focusing on long-term value creation through commitments to funds, secondary markets and direct investments in private companies.

About CPP Investments

Canada Pension Plan Investment Board (CPP Investments™) is a professional investment management organization that manages the Fund in the best interest of the more than 22 million contributors and beneficiaries of the Canada Pension Plan. In order to build diversified portfolios of assets, investments are made around the world in public equities, private equities, real estate, infrastructure and fixed income. Headquartered in Toronto, with offices in Hong Kong, London, Mumbai, New York City, San Francisco, São Paulo and Sydney, CPP Investments is governed and managed independently of the Canada Pension Plan and at arm’s length from governments. At December 31, 2024, the Fund totalled C$699.6 billion. For more information, please visit www.cppinvestments.com or follow us on LinkedIn, Instagram or on X @CPPInvestments.

So what's this all about? Why is CPP Investments, one of the largest allocators in private equity, selling stakes in private equity funds?

Dushy Sivanithy, Managing Director & Head of Secondaries at CPP Investments (featured above) states the following:

“This transaction was undertaken as part of our active portfolio management activities. As a systematic buyer and seller in the secondaries market, we see this sale as an attractive opportunity to optimize the construction of our portfolio. Ongoing management of our private equity commitments continues to realize strong returns for the CPP Fund.” 

What does he mean by active portfolio management? These aren't liquid stocks which you can trade in and out of, these are illiquid stakes in private equity funds that invest in private companies.

True but this is where the burgeoning secondaries market in private equity comes into play.

Back in 2004 when I was helping Derek Murphy set up private equity as an asset class at PSP Investments, the secondaries market in private equity was nowhere near as large and liquid as it is nowadays.

And when you sold stakes back then, it was because you were desperate and sold at deep discounts (10-20%).

Fast forward to 2025, a huge investor like CPP Investments calls top private equity funds like Ares and CVC to unload over $1 billion in fund stakes and this deal can get done in a few weeks and at a very reasonable discount (typically 5%).

But why is CPP Investments selling old fund stakes in private equity?

There are many reasons but my best guess is they are shoring up liquidity and diversifying vintage year risk.

In order to properly manage a huge C$151.2 billion private equity portfolio where funds make up 40% to 50%  and rest is co-investments, directs and secondaries, you really need to manage your liquidity and properly diversify your vintage year risk.

If you do not properly diversify vintage year risk, you can get killed on a bad year and good luck making up the shortfall.

Also worth noting that CPP Investments isn't the only large Canadian pension investment manager selling PE stakes.

Late last year, PSP and OTPP sold $1 billion plus in PE stakes.

I noted this when I wrote that comment:

Go back to read my comments on BCI's Jim Pittman on staying focused, liquid and agile in private equity and it selling $1 billion of PE holdings to Ardian as well as my comments on CDPQ's head of PE on vintage year diversification and managing liquidity and how it used secondaries market to address overallocation.

Jim Pittman, Martin Longchamps and the heads of private equity across Canada's large pension funds have been quietly selling underperfoming stakes at a small discount to free up monies to invest in better opportunities going forward.

The reason they are able to do this is because the secondaries market has matured and is widely used now to manage portfolio liquidity.

And it's been a tough couple of years in private equity and everyone is feeling the pinch.

These are tough times in private equity, exits are challenging, rates remain stubbornly high, costs are going up, and so on and so on.

It's still a great asset class but now more than ever, you better get the approach right by investing with top strategic partners and co-investing alongside them to reduce fee drag and really lean into them to leverage your size to get the best terms.

Canada's large pension investment managers are cutting back on purely direct investments and doing exactly that.

There's not much of a choice, you either do that or risk severe underpeformance in one of the most important asset classes to capture long-term returns.

So, trust Dushy Sivanithy, he's a smart guy, has tons of great experience having worked at Rede Partners, CDC Group and Pantheon before joining CPP Investments.

Earlier this year, he was named one of Private Equity News' most influential figures in secondaries:

Very talented guy who is also working for a more inclusive and diverse private equity landscape.

Alright, let me end it there, just remember this, the secondaries market is now huge and a lot more liquid, and top PE firms like Ares and CVC are great partners to have to unload fund stakes at a reasonable discount when these large allocators are diversifying vintage year risk.

Below, Cari Lodge, head of secondaries at CF Private Equity joins the Private Equity Podcast to discuss the astronomical growth in the secondaries market. 

Great discussion, listen to her insights."Being in the secondaries business, we see a lot of funds and we see a lot of what goes wrong in the private equity market that makes people want to sell things. One of the most common mistakes PE firms make is holding on to assets too long. If you look at the average holding period in the private equity market, it's gone from 5.7 years to 6.7 years. The secondary market exists because people want liquidity and we see it all the time."

Also, private credit secondaries has the potential to surpass private equity in deal volume over the longer term as more secondaries investors pursue yield and diversification amid market volatility.

Over the past year, several billion-dollar-plus deals have emerged in the credit secondaries space, including Coller Capital's recent acquisition of a $1.6 billion portfolio from American National and TPG Angelo Gordon's $1.5 billion continuation fund. Firms like Coller, Pantheon, Apollo Global Management and Ares Management have also launched dedicated credit secondaries strategies..

In this episode, Michael Schad, head of secondaries at Coller Capital, and Gerald Cooper, global co-head of secondaries advisory at Campbell Lutyens, speak with Americas Correspondent Hannah Zhang about the evolution of the private credit secondaries market and where the next opportunities may emerge.

"Most of the asset managers are sitting on tens of billions of NAV. So it lends itself to a secondary opportunity that is inevitably going to continue to grow and be of scale," Cooper said in the podcast. "I think as we look five to 10 years down the road, we are hopeful that we are going to see more specialised pockets of capital come into the space."

This too is a fantastic discussion and I agree, the private credit secondaries market will eventually eclipse the private equity secondaries market and this market is evolving very quickly. 

Listen carefully to both podcasts. I can assure you CPP Investments is a huge investor in both markets.

Layan Odeh and Paula Sambo of Bloomberg News report Omers’ Eric Haley retires in latest change within private equity:

The head of buyouts at Ontario’s pension fund for local government workers, Eric Haley, will retire and leave the firm at the end of the year in the latest change to the plan’s private equity business.

Haley will continue to lead the North American buyout team until the end of 2025, Don Peat, spokesperson for the Ontario Municipal Employees Retirement System, said in an email. “We are deeply grateful to Eric for his commitment to delivering on the Omers pension promise and his significant contributions to our private equity business and team culture.”

Omers has been revamping its private equity unit under Ralph Berg, who became chief investment officer in 2023. Last year, the Toronto-based fund halted direct private equity investments in Europe and opted to shift its strategy by investing alongside partners and external managers. The pension also launched a global funds strategy within a new group called Private Capital.

The $27.5 billion (US$20 billion) private equity portfolio was split, with Michael Block leading the global funds strategy and Haley overseeing the North American buyout program, the firm said at the time. It’s unclear whether Omers will replace Haley.

Haley’s departure continues a period of employee change within Omers’ private equity business. In March, Alexander Fraser, a former partner of a Temasek-backed fund, joined as global head of its private equity arm. He succeeded Michael Graham, who retired in February. Jonathan Mussellwhite, who had led private equity in Europe since 2018, left a few months before that.

For decades, the so-called Maple Eight have built up their deal teams to take a leading role in some private equity transactions. Now, some of them want to lean more on partners, as higher borrowing costs choked deal activity and diminished the allure of controlling portfolio firms.

Last month, Ontario Teachers’ Pension Plan said it’s re-examining its buyout unit, aiming to work more with partners rather than owning large or controlling stakes in private businesses as it seeks to mitigate risk. And Caisse de Depot et Placement du Quebec said in February that it will scale back its direct investing and team up with third-party managers.

I'll keep my comments brief as it's Election Day in Canada and I want to see coverage as results start coming in.

I'm hoping for sweeping change coast-to-coast but the polls suggest another minority government is on its way (sigh!).

Speaking of sweeping change, OMERS is rejigging its private equity unit.

The change has accelerated since Ralph Berg took over as CIO in 2023.

Berg has recently refocused the investment programs and in Private Equity he decided fund investments was the best route for Europe and Asia and stuck to buyouts in North America with more co-investments:

Private equity is the final piece of the puzzle with investments dominated by the buyout program. In September last year, after analysing performance and deal flow, Berg decided to switch to fund investing in Asia and Europe and to focus on buyouts in North America.

“I came to the view based on data and performance we don’t have the scale to afford the quality origination and asset management required to efficiently do control deals in Asia or Europe,” he says. “We decided to focus on our buyout efforts in North America.” That group employs around 65 people across New York and Toronto.

The fund also recently formed a new external funds management group within private equity, called private capital headed by Michael Block. This is where the historical group of OMERS Ventures, which had some success in financing pharma in particular, and a legacy portfolio in green tech, will now be housed. Through this new group it will continue to invest in life sciences and venture capital and invest with external partners in funds and co-invest.

OMERS also recently hired Alexander Fraser, a former partner of a Temasek-backed 65 Equity Partners to run its private equity arm. 

Well, to be blunt the writing was on the wall for Eric Haley who was promoted in 2022 to head the North American direct buyout group. 

Clearly there is an important shift in strategy going on, less purely direct buyouts, more co-investments with large strategic partners.

It's going on all over, not just OMERS, and I wrote about it last week when I covered why Canadian pension funds are cutting back on pioneering PE investments.

In short, I don't care if you're OMERS, OTPP, CDPQ or whoever, you are not going to compete with the top private equity funds in the world so it makes more sense co-investing alongside them on larger transactions to reduce fee drag.

OMERS' CIO Ralph Berg hinted at this to the Financial Times when he said: “[we] evolved our investment strategy over the last couple of years to explore different models and use funds where it is complementary”. 

I suspect they'll be using more and more funds where it makes sense and start curtailing their purely direct deals, especially in Europe and Asia.

Even in North America, it's a challenging environment.

One thing is clear, however, Ralph Berg is running the show at OMERS when it comes to investments and he's very performance driven and expects results.

CEO Blake Hutcheson doesn't get involved in these investment decisions but he too expects results and wants to make sure all departments are producing what is expected of them. 

Alright, let me wrap it up there but before I forget a few items related to OMERS.

First, Anca Drexler, former Head of Total Portfolio Management there is now the new CIO of Building Ontario Fund:

I congratulate her and think she'll be a superb CIO at Building Ontario Fund.

And OMERS CFO & CSO Jonathan Simmons is back it again this year, walking to raise funds for MS research:  

Jonathan raised more than $500,000 last year in cumulative funds for his 25th anniversary and if you'd like to support him, please do so by clicking here.

I was diagnosed with MS back in June 1997 right in the middle of writing my Masters' thesis in Economics at McGill. 

Back then, I flew to New Jersey to meet Dr. Stuart Cook who edited The Handbook of Multiple Sclerosis (my late aunt worked with him and arranged a meeting). 

At the time, there were only three drugs available to treat MS (Betaseron, Avonex and Rebif) and Dr. Cook convinced me to go on Avonex which lasted for eight years till I stopped using it because I saw no meaningful benefits.

Amazingly, the progress in research and new drugs over the last 28 years has been spectacular (especially for relapsing remitting MS, less so for progressive MS although there too there's progress). 

The good thing about MS is after many years, the disease stabilizes, there are a lot less or no inflammatory attacks but neurological deficits remain.

After almost 30 years, I can write my own handbook on MS but count myself lucky.

My biggest preoccupation these days is addressing my chronic SI joint pain which is debilitating and I am prepared to do radiofrequency nerve ablation which will cost me a pretty penny (there is no free healthcare in Canada, that's a myth).   

Anyways, I wish Jonathan all the best again this year, please feel free to donate here to help him raise his target funds.

Below, Blake Hutcheson, President and CEO of OMERS, recently addressed the Canadian Club Toronto for a discussion on today’s turbulent economic and political landscape.

Blake is a terrific speaker and I highly recommend you take the time to watch this.

Let me also wish him a happy belated birthday and wish him many more healthy years ahead.

I celebrated mine with my wife and 19-month toddler over the weekend but unlike Blake and my friends, I was jumping in and out of a playpen but did get to watch the Habs with some buddies last night eating pizza (too bad they lost).

Lisa Kailai Han and Sean Conlon of CNBC report S&P 500 closes higher for a fourth day in a row, notches 4% gain for the week:

The S&P 500 rose on Friday, adding to its strong gains for the week, as investors continue to navigate an evolving global trade landscape while major tech names got a boost.

The broad market benchmark ended 0.74% higher at 5,525.21, while the Nasdaq Composite added 1.26% to end at 17,282.94. The Dow Jones Industrial Average lagged, but managed to close 0.05%, or 20 points higher, at 40,113.50.

Alphabet rose 1.5% after the Google parent and “Magnificent Seven” name reported a beat on the top and the bottom lines for the first quarter. Tesla, meanwhile, popped 9.8%, while fellow megacap names Nvidia and Meta Platforms advanced 4.3% and 2.7%, respectively.

The major averages rose on the week, notching their second positive week out of three. The S&P 500 gained 4.6%, while the Nasdaq climbed 6.7%. The Dow has underperformed but still cinched a one-week advance of 2.5%. With these latest gains, Nasdaq is now slightly positive for the month, but the S&P 500 is down 1.5% month to date. The Dow has fallen 4.5% so far in April.

Stocks have been taken for a wild ride in recent weeks, as traders try to make sense of the severity of President Donald Trump’s tariffs first unveiled on April 2. Mixed messaging around trade has added to the volatility.

China said Thursday that there were no talks with the U.S. on a potential trade deal. This came after the U.S. appeared to soften its stance on trade relations with China.

On Friday, Time magazine published comments from Trump that said he would consider it a “total victory” if the U.S. has high tariffs of 20% to 50% on foreign countries a year from now. But his Tuesday comments published Friday also said the president expects announcements on many deals to be coming “over the next three to four weeks.”

Adding to the confusion, Trump told reporters from Air Force One that he would not drop tariffs on China unless “they give us something.”

Still, going forward, Jay Hatfield, founder and chief investment officer of InfraCap, is optimistic that the worst of the tariff-induced uncertainty is over.

“The confusion about whether there’s really talks going on with China or not took some steam out of the market,” he told CNBC in an interview. “Our view is that we’ve reached peak tariff tantrum and so it’s likely to be more positive than negative.”

Hatfield believes the key driver for markets next week will be earnings from big hyperscaler firms such as Microsoft and Amazon.

Amalya Dubrovsky , Brett LoGiurato and Ines Ferré of Yahoo Finance also report Tesla surges 9%, S&P 500 gains for 4th-straight day in longest win streak since January:

US stocks rose on Friday, led by Big Tech, as President Trump's latest comments on tariffs kept trade tensions in focus.

The Dow Jones Industrial Average rose slightly. But the S&P 500 gained 0.7%, closing out its longest winning run since January. The Nasdaq Composite gained nearly 1.3%.

Tech stocks led a four-day rally on the S&P 500 and Nasdaq. AI chip maker Nvidia (NVDA) rose nearly 4%. EV maker Tesla (TSLA) jumped nearly 10% amid optimism that entry into the Indian market is near, and as the US said it would ease rules around self-driving technology.

The S&P 500 gained more than 4% for the week as investors focused on Trump's generally optimistic tone on trade talks and Fed officials hinted at possible rate cuts as early as this summer.

On Friday afternoon, Trump told reporters he won't drop tariffs on China unless "they give us something" in return. He also said another tariff pause is unlikely.

Meanwhile, reports circulated that China may pause its 125% tariff on some US goods, boosting market sentiment. Trump has claimed progress in negotiations with China, but China denied the existence of negotiations and demanded that the US lift its tariffs.

In individual movers, Alphabet (GOOG, GOOGL) stock rose after the company beat on earnings and announced a dividend hike and a $70 billion stock buyback. Intel's (INTC) stock fell despite beating earnings estimates. T-Mobile (TMUS) and Skechers (SKX) tumbled too, with both companies flagging the early effects of the tariffs.

Next week investors will hear from software giant Microsoft (MSFT) and social media platform Meta (META) as they report earnings on Wednesday. Tech giant Apple (AAPL) and e-commerce platform Amazon (AMZN) will also report earnings on Thursday.

It was a strong week in markets led by mega cap tech shares and other hyper growth stocks (performance below for the week): 

 Are we past peak tariff tantrum? Most likely but with Trump, you never know.

One thing is for sure, the US economy is a lot more resilient than most analysts think and all this nonsense on the "end of American exceptionalism" and the "death of the US dollar" was way overblown.

In my opinion, the US dollar which has been hammered this year, especially after tariffs were announced, is due for a big bounce up:

As far as the Nasdaq, it bounced big this week but remains below its 10 and 50-week exponential moving average:

It was really semiconductor shares (SMH) which propelled tech stocks higher this week but there too, hard to read more than a bounce for now:

 

There are a lot of bounces from deeply oversold levels but it doesn't mean new uptrend has resumed.

Having said this, if economic data and earnings prove to be better than expected in Q2,  this might be a decent quarter in the market.

I'm more concerned about Q3 and Q4 when delayed effects of tariffs kick in.

Interestingly, Reuters reports a JPMorgan survey shows consensus over weak dollar, US stagflation: 

There is a much higher risk of stagflation than recession in the U.S. economy over the next year, while the asset class most expected to outperform in 2025 is cash, according to the results of a JPMorgan survey published on Friday.

The trade war started by the U.S. administration of Donald Trump is seen by the majority as the policy with the most negative impact on the world's largest economy.

Three in five respondents believe U.S. economic growth will stall and inflation will remain above the 2% Federal Reserve target, with one-in-five respondents expecting inflation above 3.5%.

There is also consensus on the weakness of the U.S. dollar, with a majority expecting the euro at or above $1.11 to end the year, at least an 8% decrease for the U.S. currency this year.

"Our meetings were noteworthy for the differences in views between US investors compared to global investors on the consequences and market implications" of the regime change in the United States, JPMorgan said.

Cash is expected to remain expensive as yields on the U.S. 10-year note are not seen declining much from current levels. Over half of respondents believe the benchmark yield will be at or above 4.25% by the end of 2025.

Almost half of the respondents expect Brent oil prices to stabilize not far from the current price of $66 per barrel, while 3 in 10 foresee prices dropping to or below $60.

At 13%, more investors bet that emerging market equities will outperform other asset classes than the 9% who think developed stocks will.

Fifty-seven percent of respondents expecting Wall Street stocks to be the asset class with the largest outflows this year.

ESG investing was out of favor with 30% committed to maintaining their strategies while 42% showed no interest.

JPMorgan's survey was conducted on April 1-24 and 495 investors responded, according to the bank.

Note when this survey was conducted and the only reason I'm sharing it is because it will likely turn out to be spectacularly wrong.

Lastly, my friend and trading mentor Fred Lecoq who now lives in beautiful France sent me a Wall Street Journal article from Jason Zweig on the mistakes you're making in the stock market -- without even knowing it:

If you’re young, you know stocks and bitcoin can lose money at lightning speed. Just think of March 2020 or 2022. But your experience also tells you they will bounce back even faster and go on to new highs.

If you’re a middle-aged bond investor, you lived through almost nothing but falling interest rates and bountiful returns from 1981 through early 2022. In an earlier generation, the stock-market crash of 1929 haunted many investors, who shunned stocks for decades after.

Peter Bernstein, a financial historian and investment strategist who died in 2009, liked to say that investors have memory banks: the market returns collectively earned by people of similar age. Experience shapes expectations.

The problem is that your memory bank can deceive you in dangerous ways. Your experience of the past is a reasonable guide to the future only if the future turns out to resemble the portion of the past that you’ve lived through. And it often doesn’t.

Given the markets’ wild oscillations amid the uncertainty over President Trump’s trade policy, it’s worth looking at a few investing beliefs that your memory bank might hold—and asking whether they’re still valid.

Growth crushes value

For most of the past decade-and-a-half, value stocks—companies with lower share prices relative to their earnings and assets—have limped along, far behind higher-priced growth stocks like Apple, Nvidia and Tesla.

So far this year, though, Warren Buffett’s Berkshire Hathaway, the standard-bearer for bargain-hunting in the stock market, has gained 17.3%, bolstered by its $330 billion in cash. The technology-laden Nasdaq Composite Index is down 10.9%.

No matter how much the chaos over trade policy upsets the global economy, “the underpinnings of value will still matter,” says Rob Arnott, chairman of investment firm Research Affiliates. 

Value stocks should be less vulnerable to the market turmoil than growth stocks. “History shows that during times of turbulence, value beats growth,” says Arnott.

And for most of the past century, cheaper stocks outperformed more glamorous growth stocks—not the other way around, as your memory bank might suggest. If most of your stock portfolio is in growth, consider adding some value stocks.

The U.S. is the only place to be

For most of the past two decades, international markets ate U.S. dust as the dollar strengthened and American technology companies boomed.

That was then, this is now. In 2025, the MSCI ACWI ex USA Index, which tracks markets outside the U.S., is beating the S&P 500 by more than 14 percentage points.

If you’re a younger investor, your memory bank can’t tell you that international markets excelled for much of the past half century. From 1971 through 1990, the MSCI EAFE index of developed international markets outperformed the S&P 500 by an average of 4.2 percentage points annually, according to T. Rowe Price. For part of that period, overseas investments benefited from the tailwind of a declining dollar, which makes earnings in other currencies more valuable to American investors.

Even after their recent run-up, international stocks are relatively cheap, trading at less than 16 times earnings over the past 12 months and under two times book value, or net worth; U.S. stocks are at roughly 24 times earnings and more than four times book value.

If the dollar continues to weaken, that will strengthen overseas stocks; even if it doesn’t, the U.S. isn’t the only game in town. There’s a whole planet out there.

Buy the dips, and time will bail you out

The 1994 book “Stocks for the Long Run,” by finance professor Jeremy Siegel of the University of Pennsylvania’s Wharton School, argued that there’s rarely been a period of at least 20 years when stocks didn’t beat bonds after inflation.

Recent research by Edward McQuarrie, a business professor emeritus at Santa Clara University, shows that isn’t true. After spending years meticulously correcting the historical record of U.S. asset returns back to 1793, McQuarrie found numerous 20-year periods in which bonds beat stocks after inflation, most recently over the two decades ended in 2012.

None of this means you shouldn’t buy stocks or hold them for the long term. It does mean stocks aren’t guaranteed or foreordained to beat bonds, even over long periods.

Their returns are a function of interest rates, inflation and how expensive stocks are relative to bonds. Right now, stocks are far from cheap. Temper your expectations and focus on saving more, in case stocks don’t earn more.

Cash is trash

Many investors can’t forget the period from 2009 through 2021, when cash often earned less than nothing after inflation. It couldn’t even play defense.

In 2025, however, cash is playing offense. With yields exceeding 4%, Treasury bills and money-market funds are clobbering stocks so far this year. They’re also outpacing the official measure of inflation.

Gold always glitters

If you’ve recently invested in gold, you know it shines during times of crisis. Your memory bank might not include gold’s historically dull performance after rapid peaks in its price. Gold didn’t surpass its January 1980 record closing price of $834 until nearly 28 years later and didn’t rise above its August 2011 closing high of $1,892 for almost nine years after that. Even at its recent price of about $3,300 it has yet to exceed its 1980 closing high after adjusting for inflation, according to Dow Jones Market Data. Gold is gleaming now, but it could tarnish when calm returns.

As you examine your beliefs, be sure to consult the longest-term data available, to capture periods you didn’t experience personally.

Testing the validity of what’s in your memory bank won’t prevent you from being guided by your investment experience. It might help prevent you from being its prisoner.

 Great insights but this time is different, or is it?

At this point it’s not a question if we are in a recession, it’s a question how severe it will be, and how long will it last. pic.twitter.com/OpnzGbUrPo

— Michael A. Arouet (@MichaelAArouet) April 24, 2025

US stocks are barely pricing in an economic slowdown, let alone a recession. pic.twitter.com/98q5K7C6VW

— Peter Berezin (@PeterBerezinBCA) April 25, 2025

Alright, have great weekend everyone.

Below, Atlanta Fed President Dennis Lockhart joins 'Squawk Box' to discuss the state of the economy, impact on the Fed's inflation fight, impact of policy uncertainty, rate path outlook, and more.

Next, Craig Fuller, FreightWaves CEO, joins 'The Exchange' to discuss what's going on with freight activity.

Third, on a more positive note, Ira Robbins, Valley Bank CEO, joins 'Power Lunch' to discuss consumer sentiment, lending and the regional banking environment.

Fourth, Nouriel Roubini, chair and CEO of Roubini Macro Associates, says US exceptionalism will remain despite bad trade and immigration policies. He speaks during an interview on "Bloomberg The Close."

Firth, Adam Parker, Trivariate Research CEO, joins 'Squawk on the Street' to discuss earnings, Trump's trade war and the choppy market.

Sixth, 3Fourteen Research's Warren Pies, JPMorgan’s Stephanie Aliaga and Truist’s Keith Lerner, join 'Closing Bell' to discuss Trump's trade wars, the technical levels of a market bottom and their overall outlook. Take the time to watch this discussion.

Lastly, Aswath Damodaran, NYU Stern school of business, joins 'Closing Bell' to discuss his valuation of the Mag 7. Damodaran isn't throwing in the towel on Mag-7 stocks and I think he's right.

Today, CDPQ published its 2024 Annual Report:

CDPQ today released its Annual Report for the year ended December 31, 2024, titled “Investing for future generations”.

In addition to the financial results published on February 26, CDPQ presents an overview of its activities over the last year, which include:

• A presentation of CDPQ’s depositors and their respective net assets as at December 31, 2024
• A detailed analysis of the returns for the global portfolio and for the different asset classes
• A risk management report
• A portrait of CDPQ’s activities in Québec, including its main achievements to support company growth and projects that contribute to economic development, as well as a summary of its investments in Québec
• A section on governance, including reports from the Board of Directors and its committees covering audit, governance and ethics, investment and risk management, human resources management and compensation for senior management and employees, as well as compliance activities
• The Sustainable Development Report
• Our financial report and the organization’s consolidated financial statements
• Report on compliance with the Global Investment Performance Standards (GIPS).

The Annual Report Additional Information for the year ended December 31, 2024, was also published today.

ABOUT CDPQ

At CDPQ, we invest constructively to generate sustainable returns over the long term. As a global investment group managing funds for public pension and insurance plans, we work alongside our partners to build enterprises that drive performance and progress. We are active in the major financial markets, private equity, infrastructure, real estate and private debt. As at December 31, 2024, CDPQ’s net assets totalled CAD 473 billion. For more information, visit cdpq.com, consult our LinkedIn or Instagram pages, or follow us on X.

Take the time to read CDPQ's 2024 Annual Report here.

The Annual Report Additional Information for the year ended December 31, 2024, was also published today.

Recall, I already went over the 2024 results with Vincent Delisle, CDPQ's Head of Liquid Markets. You can read that comment here. 

The annual report comes out later than the release of the results because it needs to be approved by the Quebec National Assembly.

It is beyond the scope of this post to go over the entire annual report, it takes at least a week to go over it in fine detail.

Still, I'd like to quickly go over a few things.

First, the message from Chair Jean St-Gelais:

 

I note the following: 

In light of these achievements, the Board has a positive view of the 2024 financial year, during which CDPQ was able to improve its depositors’ financial health and position its portfolio well for continued success. On behalf of the members of the Board, I would like to thank all CDPQ employees for the commitment they demonstrate every day. 

I will come back to this below because as always, CDPQ has some critics who claimed bonuses were outrageous this year.

I also noted this:

Throughout the year, the Board of Directors and its committees oversaw the implementation of CDPQ’s strategic orientations, as well as sound governance and the maintenance of the highest standards in all areas. We also ensured that the activities complied with the Act respecting CDPQ, as well as the depositors’ and its own investment policies. 

There was obviously no mention of CDPQ being rocked by a major bribery scheme in India but I can assure you the Board had to shore up governance to make sure this never happens again.

Next, let's quickly go over CEO Charles Emond's message below:

I note the following:

Despite the turbulence, our net assets have grown by $133 billion over five years, reaching $473 billion at the end of 2024. Over this period, we generated $6 billion in value added and $17 billion over ten years. The results that CDPQ obtained over the last ten years have also helped improve the financial health of the plans of our clients: 48 depositors, each with their own investment policy and specific risk tolerance.

For 2024, the Québec Pension Plan, the pensions for more than six million Quebecers, posted a return of 11.0%. Our total portfolio generated a return of 9.4% over one year. Its performance was driven by our activities in the public equity markets, which stood out against indexes that are more concentrated than ever. Among other drivers, our private equity investments rebounded strongly and our infrastructure assets have once again delivered solid performance. The year proved to be more difficult in real estate due to our longstanding exposure to the U.S. office sector, which faces persistent challenges. Lastly, the rise in long-term rates weighed on our fixed income activities, which  nevertheless present attractive prospects due to a high current yield. The financial health of our main depositors’ plans therefore improved in 2024.

Rising asset values and higher yields which lower future liabilities improves the financial health of CDPQ's depositors.

Next, let's look at 2024 highlights:

 

Next, I want to discuss long-term performance:

 Important items worth noting so pay attention here:

•  Over five years, the annualized weighted-average return on depositors’ funds was 6.2%. Over the period, the total portfolio outperformed its benchmark portfolio, which posted an annualized return of 5.9%, representing $6 billion in value added. 
• Over ten years, the annualized return on the total portfolio was 7.1%, surpassing the benchmark portfolio’s 6.5% return. This has enabled the portfolio to generate $17.1 billion in value added during this time.

Now, why am I bringing this up? Because critics focused on the fact that CDPQ generated 9.4% last year, below the benchmark portfolio’s 11.8% gain or -$10.1 billion in value added.

As I've stated many times on my blog, all of Canada's large pension investment managers underperformed their benchmark last year mostly owing to the relative performance of private equity relative to a public equity index dominated by Mag-7 dynamics.

This is why it's more important to look at 5 and 10-year annualized returns relative to benchmark to gauge value added and keep in mind, compensation is based mostly on 5-year relative performance.

I think a few people commenting on Julien Arsenault's La Presse article got it all wrong here, focusing way too much on one-year return.

I also noted his in the annual report:

It is also worth noting the significant impact that the customized rate exposure product—a tool depositors have been using increasingly in the last two years—had on the overall portfolio’s performance. This product allows them to be more exposed to the interest rate factor, in particular to ensure a better match with their long-term liabilities and greater diversification of their funds. The result is more stable funding of their plans, but the return on funds is more sensitive to rate fluctuations.

With interest rates rising as they have in recent years, the use of this product limited the performance of CDPQ’s total portfolio (see Table 21, page 42). Conversely, depositor plan liabilities saw a general  decrease, which, combined with the return on assets, improved their financial health.

Keep all this in mind as you analyze results properly.

Next, have a look at CDPQ's asset mix and how it shifted in 2024 relative to the previous year:

There was a slight increase in Equities due to the strong performance there and a slight decrease in Real Assets due to the underperformance in Real Estate:

The outperformance in all the Public Equities mandates was particularly striking last year and I doubt they will be able to keep that up this year but I'm rooting for them.

And Private Equity's 17.2% return underperformed its benchmark return of 20% but again, this is an exceptionally strong performance and benchmark was driven by a handful of tech stocks last year.

The same goes for Infrastructure which gained a solid 9.5% last year, underperforming its benchmark which gained 15% (lots of beta in that benchmark!).

Anyway, the main thing to remember is even though CDPQ didn't outperform its benchmark last year, it posted a solid year.

I would invite you to read the entire annual report here to fully appreciate all the activities at the organization.

Lastly, on compensation which is a hot topic in the media, some tables:

Again, compensation is based mostly on five-year results and yes, all these people are extremely well compensated not just by Quebec standards but by any standard and they know it.

As Derek Murphy once told me when I was working at PSP: "This is the best gig in the world".

Tell me about it, at least he was honest about that.

By the way, I will give credit to Julien Arsenault of La Presse for writing an article earlier this month where he went over the huge severance packages given out at CDPQ over the last two years.

But even there, I caution my readers, the longer someone is at an organization and the higher up they are, the more expensive their severance package will be.

The table below is available through CDPQ's answers to access to information (only available in French):

Helen Beck and Marc Cormier obtained the highest severance packages in 2023 and 2024 because they were there the longest and had very senior positions.

Alright let me end it there, it depresses me seeing how much money all these people are making even if it's justified.

Below, CNBC’s Steve Liesman and Cleveland Fed President Beth Hammack joins 'Squawk Box' to discuss the state of the economy, impact of policy uncertainty, recession concerns, the Fed's inflation fight, rate path outlook, and more.

Update: Jacob Serebrin of the Montreal Gazette reports big bonuses for CDPQ Infra executives despite REM outages:

Despite the Réseau express métropolitain suffering repeated service outages, executives at the Quebec public pension fund subsidiary that built and manages the system received hundreds of thousands of dollars in bonuses last year. 

Jean-Marc Arbaud, the president and CEO of CDPQ Infra, received “variable compensation” of $775,000 in 2024, the CDPQ disclosed Thursday in an annual report, bringing his total salary for the year to more than $1.25 million.

The driverless light-rail system suffered several service outages during the winter of 2024 and it has continued to struggle this winter, with a series of disruptions following major snowstorms in February. 

The CDPQ said the compensation paid to executives at CDPQ Infra has declined this year, in part, due to the REM’s service issues. 

In 2023, Arbaud was paid $1,784,930, including a bonus of $1.3 million. 

“As for Mr. Arbaud’s compensation, it reflects the technical issues and service challenges experienced by the REM, for which clear solutions and commitments were demanded from suppliers Alstom and AtkinsRéalis,” spokesman Jean-Benoît Houde said in an email. 

“That said, Jean-Marc Arbaud’s variable compensation also reflects the entirety of his work, including major progress in the construction of the nearly 70 km network that will ultimately completely transform mobility in Greater Montréal and become the largest automated metro line in the world.” 

Arbaud is also working on the CDPQ’s tram project in Quebec City and led the winning proposal for a high-speed train between Québec City and Toronto, Houde added. 

In February, Transport Minister Geneviève Guilbault to order the REM to put shuttle buses in place full-time until the service became more reliable. 

Describing the issues as “unacceptable,” the REM suspended operations outside of rush hour for more than two weeks, in order to do maintenance, and offered free fares for three weeks in late February and early March. 

Days after non-rush hour service was suspended, CDPQ CEO Charles Emond defended Arbaud’s work, saying that without him, the REM, which Emond maintains was built faster and at a lower cost than other similar systems, wouldn’t exist.

 “It’s important not to throw away the baby with the bathwater. In the last two, three weeks, the service wasn’t there, but our operators recognize our responsibilities,” Emond said at the time. Arbaud wasn’t the only CDPQ Infra executive to get a bonus in 2024. 

Daniel Farina, the general manager of CDPQ Infra, received $570,000 in variable compensation, bringing his total salary to $998,353, while Sophie Lussier, executive vice-president and head of corporate services, organizational performance and secretariat at CDPQ Infra received variable compensation of $450,000, bringing her total pay to $857,992. 

Julien Hurel, the vice-president responsible for the REM project at CDPQ Infra, received $353,000 in variable compensation, bringing his total pay to $715,538.

Read more here. My take? Arbaud earned every penny of his compensation, most of the people under him however are overpaid.

Mary McDougall, Alexandra Heal and Sun Yu of the Financial Times report pension groups cut back on pioneering private equity investments:

Top pension funds are stepping back from competing head-on with private equity groups to buy up companies, instead opting to invest alongside them to secure access to the best deals.

Caisse de dépôt et placement du Québec (CDPQ) and the Ontario Municipal Employees Retirement System (Omers) are scaling back the proportion of their funds exposed to directly owned private companies, while Ontario Teachers’ Pension Plan has said it is eyeing more strategic partnerships.

A tough period for exiting investments over the past two years has encouraged the Canadian pension groups to back more companies alongside huge private equity managers as direct ownership has become increasingly challenging, requiring big in-house teams and a higher risk appetite.

“The private equity downturn is making the direct investing model harder as we are facing a shortage of viable projects and difficulty in exiting from our existing investments,” said an executive at one of the funds.

There are three main ways pension funds allocate to private equity: direct investing, where they buy a stake in a company on their own; through a private equity fund; or through co-investments, where they invest in companies alongside a private equity fund but without having to pay the fund fees.

Canada’s $3.2tn pension system is a major private equity investor with 22 per cent of its public sector funds’ assets allocated to the asset class, according to think-tank New Financial.

At present, the nine biggest Canadian pension funds have about half of their private equity exposure in buyout funds and half through direct holdings and co-investments, according to analysis from CEM Benchmarking.

But that balance has shifted as pension funds have come under pressure to invest in buyout funds to secure access to the best co-invest deals, where they get to invest alongside the firms but without having to pay fund fees.

CDPQ is in the second year of a five-year plan to lower the proportion of direct private equity investments from 75 per cent to 65 per cent, while Omers pivoted from allocating very little to private equity funds to announcing last September it would no longer invest directly in European opportunities.

Ontario Teachers’ has said it is “tactically looking to invest more with other partners in areas where it makes sense as the portfolio and market evolves”, though direct investments are still a core part of its strategy.

The shift comes as the private equity industry has ballooned in size, resulting in fierce competition for both assets and talent — and as some Canadian pension funds are also rethinking their US exposure.

Marlene Puffer, former chief investment officer at Alberta Investment Management Corporation, said Canadian pension funds were “in the boat of having to add more value into every holding because exits are more challenging now — they have to do more hands on management and it becomes increasingly complex”.

She added that pension plans allocated money to private equity funds on the understanding that they would be invited to invest in many of the co-investment opportunities that arise with them.

It was “difficult for Canadian pension funds to compete for talent with Apollo that pays much better”, another fund executive said.

Martin Longchamps, CDPQ’s head of private equity and credit, said the rationale behind its shift towards more partnerships was to “drive access to deal flow through those relationships”. Omers’ chief investment officer, Ralph Berg, said the pension fund had “evolved our investment strategy over the last couple of years to explore different models and use funds where it is complementary”.

Canada Pension Plan Investment Board, the country’s largest pension fund with C$699bn (US$504bn) in assets, said it had “always pursued a partnership strategy and continue to be committed to that approach”.

I read this article yesterday and it brought me back to a meeting I had with Mark Wiseman when he was CEO of CPP Investments years ago.

We were in a small conference room at their offices in Toronto and he explained to me while they mostly do direct investing in infrastructure and real estate, in private equity all they were doing back then was investing in top funds and co-investing alongside them on larger transactions.

"If I could afford to hire David Bonderman, I would but I can't so we invest in his fund and co-invest alongside them on larger transactions." 

Wiseman’s successor, Mark Machin, told me the same thing when I met him n Montreal:"In private equity all we do is invest in top funds and co-invest with them on larger transactions to reduce fee drag."

John Graham also expressed the same views when I met up with him here in Montreal.

That's three CEOs of the largest and most important pension fund in Canada with the biggest private equity portfolio in the world among institutional investors expressing the same thing.

Basically, if you can't beat them, join them and negotiate hard on co-investments to lower fee drag.

There is nobody working at a pension fund in Canada who can compete with the world's top private equity funds. 

Sure OMERS and OTPP did some purely direct deals and some were incredibly profitable over the long run but it's almost impossible nowadays to compete with the top private equity funds and things are also changing in infrastructure and real estate.

Just like top hedge funds that pay big commissions to investment banks gain access to the best trades first, top private equity funds  that pay huge advisory fees to big banks get the first phone calls when a major deal is in the works.

It doesn't mean that there aren't good private equity managers at Canada's large pension funds, it just means they cannot compete head on with top PE firms.

And to be clear, the majority of direct private equity investing at Canada's Maple Eight is co-investing alongside top funds (a form of direct investing) not purely direct investing where they source deals themselves.

What about Erol Uzumeri, one of the founders of Searchlight Capital Partners?  He came from OTPP Private Capital.

Yes he did and he was lucky that Derek Murphy, former Head of PE at PSP, seeded him because without that anchor investor, Searchlight would have never gotten off the ground.

Same goes for Steve Faraone and Mike Murray of Peloton Capital Management. They too came from OTPP Private Capital and were lucky billionaire Steven Smith seeded them and IMCO made an allocation to them because phone calls were made at the highest level.  

Don't get me wrong, Erol, Mike and Steve are all excellent private equity investors but no way in hell would they be where they are without seed capital from major anchor investors.

The bottom line is this, if you're as good as KKR, EQT, TPG, Blackstone, Apollo, etc. then why would you work at a Canadian pension fund? 

The same goes when traders who use pension fund's balance sheet tell me "You know, I can easily work at a big hedge fund."

I laugh and tell them straight in their face: "No you can't buddy because if you can work at Citadel, Millennium, Bridgewater or Rokos Capital Management, you would be there making millions in bonuses every year."

Again, it doesn't mean they are bad traders but the world of elite hedge funds is on another level, just like the world of elite private equity funds.

What else do I want to get off my chest?

OTPP once did a performance attribution on their private equity holdings and it turned out co-investments and direct investments were the best performers over the long run and the worst performance came from fund investments and syndicated investments where they got a small slice and didn't do their own due diligence on a deal. 

Again, they had done some great purely direct deals years ago but times have changed drastically which is why OTPP is reassessing its private equity approach.

Same goes for OMERS and others, there's simply no choice, times have changed, adding value is harder, exits are extremely challenging, competing in this arena with top funds is not in the best interest of your pension fund.  

And times are also changing for real estate and infrastructure so large pension funds better adapt fast or risk underperforming there too.

And by adapt, I mean invest in top funds and co-invest alongside them.

The world of pension fund investing in private markets is all becoming investing in strategic partners that can add value over the long run.

Always remember what Mark Wiseman told me: "If I could hire David Bonderman, I would but I can't afford him."

It's that simple folks, let's not make it out to be more complicated than what it truly is. 

Private equity will always remain an important asset class but if you don't have the right approach investing in top funds and co-investing alongside them on larger transactions to reduce fee drag, you're going to significantly underperform over the long run.

Below, Joseph Bae, Co-CEO, KKR discusses what's driving private equity returns and where its finding value across the market with Bloomberg's Sonali Basak at Bloomberg Invest.

And Bruce Flatt, CEO, Brookfield discusses tariffs against Canada, structural trends in asset management and investing in digital infrastructure with Bloomberg's Erik Schatzker at Bloomberg Invest.

Both interviews are from a month ago and well worth watching.

Lastly, David Bonderman was a private equity legend who built TPG Inc. into a firm with $239 billion in assets under management. He was known for his kind and respectful treatment of people, as well as his wise counsel and extraordinary business judgment. His business partner Jim Coulter spoke to Bloomberg's Jason Kelly about Bonderman's life and legacy. 

Read more on David Bonderman on TPG's website here.

Layan Odeh of Bloomberg News reports CAAT Pension Plan CIO hunting for more private investments at home:

CAAT Pension Plan is searching for Canadian real estate and infrastructure investments, continuing its strategy of investing for the long term as U.S. President Donald Trump’s erratic trade policy disrupts public markets.

Canadian investments comprise about a quarter of the Toronto-based fund’s $23.3 billion (US$17 billion) of assets, CAAT said in a statement Tuesday, when the pension reported a 15.2 per cent return for 2024.

“We are very interested in continuing to invest in our own country,” Chief Investment Officer Asif Haque said in an interview, adding that the firm is also “intrigued” by opportunities in European private markets and Asian investments.

Canadian pension fund managers are grappling with a new reality this year amid Trump’s unpredictable trade policy, which has disturbed public markets and weakened the outlook for U.S. private equity deals. While the market volatility concerns Haque, he said he also sees “pockets of opportunity” across public and private markets.

The fund’s returns were driven by investments in public equity such as stocks and private equity, which gained 29 per cent and 16 per cent, respectively. Real assets returned 4.6 per cent, while commodities earned about 17 per cent. Credit advanced 11 per cent.

The pension plan will continue building out its real estate and infrastructure portfolio this year after making some investments in energy transition, industrial real estate and multiresidential properties. Real assets comprise 17 per cent of the pension’s total, and CAAT aims to boost that to 25 per cent.

Originally created for the Ontario college system, CAAT now invests pension assets for 700 employers and more than 110,000 members in various industries.

Earlier today, CAAT Pension Plan reported a strong financial performance in 2024:

Strong investment returns lead to growth in total assets. Healthy funding reserves provide peace of mind for Plan members and employers

TORONTO, April 22, 2025 — CAAT Pension Plan ("the Plan") released its 2024 Annual Report today. The Plan’s investment portfolio recorded a 10-year annualized net rate of return of 9.6% as of December 31, 2024. The Plan outperformed its policy benchmark by 1.5% per year over this 10-year period. This strong performance was supported by an annual net rate of return of 15.2% in 2024.

At year end, the Plan had $23.3 billion in total assets under management, up from $20.1 billion in 2023. Funding reserves, which can serve as a cushion against market and demographic volatility, were $6.1 billion as of January 1, 2025. As previously reported, the Plan has set aside $1.24 for every dollar promised in pensions, or a funding level of 124 percent on a going-concern basis. With the Plan’s continued financial strength, CAAT committed to pay its conditional inflation protection enhancements to 2028; a promise it has maintained since the policy was introduced in 2007.

Secure, even in uncertain times

“Employees want a strong, sustainable pension plan that delivers the unparalleled value of predictable lifetime retirement income” says Derek Dobson, CEO and Plan Manager, CAAT Pension Plan. “Sound investment management and funding decisions helped build reserves to allow the Plan to continue to grant valuable benefit enhancements even in times of economic uncertainty. This sense of strength and stability improves employee wellbeing long before retirement, which is why demand for high-performing workplace pensions continues to grow.”

The Plan’s assets are invested in a broadly diversified portfolio, including public and private equities, nominal and inflation-linked bonds, real assets and commodities.

“All asset classes in the Plan’s portfolio contributed positively to performance during 2024”, says Asif Haque, Chief Investment Officer, CAAT Pension Plan. “While we are gratified by the strong results for the year, we are especially pleased that long-term investment performance has contributed to furthering the health of the Plan.”

Workplace pensions can build a more resilient domestic economy

Leaders in Canada’s public, private and not-for-profit sectors are looking to build a more durable domestic economy. Providing Canadians with greater access to workplace pension plans can contribute to this goal. Plans that provide a predictable stream of retirement income for life can boost productivity, support local businesses and contribute to the country’s economic growth and prosperity. In 2024, for instance, CAAT paid out $724 million to retirees or their beneficiaries, improving financial security for members and supporting local economies across Canada. It also allocated more than 25% of its investment holdings in Canadian equities, bonds, real estate and infrastructure.

In providing greater access to workplace pensions, the Plan also achieved an important milestone in 2024. Membership surpassed 100,000 employees in Canada and has more than doubled its size since the Plan introduced its DBplus design in 2018, opening its workplace pension solution to the private, non-profit and broader public sectors. The number of employer sponsors has expanded from approximately 50 to over 700 during the same time.

Other highlights from the 2024 Annual Report include:

• Ranked #1 highest performing Canadian pension plan in the BNY Mellon Canadian Master Trust Universe, based on 10-year investment returns at the end of 2024 for plans with a market value above $1 billion.
• Introduced the GROWTHplus Investment Account, a voluntary, tax-sheltered savings option available to Plan members that allows any additional savings to benefit from the CAAT net rate of return.
• Nine in 10 members reported trust in the CAAT Plan and confidence that their pension benefits are secure.
• Recognized as a Top Employer and Best Place to Work by Benefits and Pensions Monitor.

About CAAT:

Established in 1967, the CAAT Pension Plan is an independent, jointly governed plan that offers highly desirable modern defined benefit pensions. Originally created to support the Ontario college system, the CAAT Plan now proudly serves more than 700 participating employers in 20 industries, including the for-profit, non-profit, and broader public sectors. It currently has more than 110,000 members. The CAAT Plan is respected for its pension and investment management expertise and focus on stability and benefit security. On January 1, 2025, the Plan was 124% funded on a going-concern basis.

Late this afternoon, I had a Teams meeting with CAAT Pension Plan CIO Asif Haque and Chief Pension Officer Evan Howard going over the results and Plan activities.

Before getting to that discussion, I urge my readers to go over the 2024 Annual Report here. 

I actually read it all and it's very well written so let me go over some things below.

First, the message from Chair Kareen Stangherlin and Vice-Chair Virginia Di Monte:

 

I'd like to also congratulate CEO and Plan Manager Derek Dobson for celebrating his 15th year at CAAT Pension Plan.

I also note the most important passage in the Chair and Vice-Chair's message:

In 2024, the Plan maintained a healthy funded ratio of 124% and built reserves to a total of $6.1 billion, which serve to cushion against potential changes in investment markets or unexpected liability growth. This funding strength, along with CAAT’s leadership expertise, has helped Plan governors make decisions that will benefit members and employers in 2025 and beyond, including, as previously announced, reducing contribution rates for DBprime benefits and increasing the DBplus benefit factor on contributions starting January 1, 2025.

After growing to over 100,000 total members last year, CAAT launched an innovative workplace retirement solution, GROWTHplus Investment Account, allowing members the option to save more by investing with the pension plan they know and trust. At its core, the design delivers on a vision that has catapulted CAAT since it opened membership to its defined benefit (DB) plan: to offer members efficient ways to save towards a more secure retirement, while keeping costs and risks low for employers.

CAAT Pension Plan enjoys one of the best, if not the best funded status in Canada and is doing its part in offering safe, secure and cost efficient DB pensions to members across the public and private sector.

The organization also introduced GROWTHplus allowing members to save more by investing with CAAT Pension Plan:

In October 2024, CAAT launched its latest innovation: GROWTHplus, an optional savings account for Plan members to grow their tax-sheltered savings and benefit from CAAT’s investment returns. Available at no additional cost to employers, the account provides added value to members’ lifetime pension with CAAT through both its investment scale and expert management.

Next read the message from Derek Dobson, CAAT Pension Plan CEO and Plan Manager: 

 I note the following:

Our secure pension promise is built on a solid financial foundation. I am pleased to share the Plan remains 124% funded, holding $23.3 billion in total assets under management and $6.1 billion in funding reserves. The fund’s diversified investment portfolio recorded an annual net rate of return of 15.2%, contributing to a 10-year annualized net rate of return of 9.6%. The Plan extended conditional inflation protection enhancements to 2028, an enhancement that has been granted every year since its introduction in 2007.

These strong results are more assuring when you consider that they include the previously announced improved DBplus benefits and reduced DBprime contributions. On top of this, Plan governors reduced the discount rate by 15 basis points to 4.75%. A lower rate reflects a measured risk tolerance and prudent assumptions of expected returns to manage liabilities in the long run. This approach puts our commitment to benefit security at the centre of management and funding decisions.

As we continue to manage long term risks, we do so in an increasingly challenging market environment. These conditions underscore the importance of the Plan's robust approach to safeguarding benefits and building reserves. With a diversified portfolio and robust reserves set aside to protect the Plan against economic shocks, our members and employers can be confident in the resilience and sustainability of their pension plan.

Alright, let me also provide some highlights and other pertinent information to help my readers understand CAAT Pension Plan's portfolio:

First, the 2024 highlights:

 

 Next, have a look at CAAT Pension Plan's long-term asset mix target:

 

The portfolio above is where the asset mix is heading over time.

Below is the actual asset allocation, including the effect of derivatives and the associated benchmark index as at December 31, 2024 (from page 60 of the Annual Report):

From what I can tell, there was a slight decrease in Real Assets last year (from 19% to 17%) and Commodities (from 5% to 4%) and a slight increase in Public Equities (from 30% to 32%) and Credit (from 6% to 7%).

And here are the net investment returns by asset class for 2024:

And the net Fund returns vs policy benchmark:

Like almost all its peers, CAAT Pension Plan underperformed its policy benchmark last year due to the strong performance of Public Equities which made the benchmark in Private Equity surge (PE returned 16% relative to benchmark return of 31% made up of MSCI ACWI +3%):

The Plan’s assets totaled $23.3 billion at the end of 2024 (up from $20.1 billion in 2023). The investment portfolio returned 15.2% in 2024, net of fees. All asset classes contributed positively to returns during the year, led by Public and Private Equity. The portfolio underperformed its policy benchmark in 2024, due to the Private Equity asset class lagging its benchmark. Over the past 10 years, Private Equity has outperformed its benchmark significantly.

This is why I keep emphasizing it's important to look at long-term performance over 5 and 10-year periods and in this regard, CAAT Pension Plan continues to outperform its policy benchmark adding 1.2% and 1.5% respectively over the last five and ten years..

In fact, in their press release, it states the Plan ranked #1 highest performing Canadian pension plan in the BNY Mellon Canadian Master Trust Universe, based on 10-year investment returns at the end of 2024 for plans with a market value above $1 billion.

That long-term performance is very impressive but the most important thing to note is the Plan's funded status remains extremely strong at 124% and they took measures to ensure the funded status remains strong no matter what happens in markets.

Discussion With Asif Haque and Evan Howard

As I stated above, this afternoon after markets closed, I had a chat with CIO Asif Haque and CPO Evan Howard.

I want to thank both of them and also thank Andrew Seymour and Theresa Wilson for setting up this meeting.

I began by asking Asif to give me an overview of their performance:

If there's three things we want people taking out of that annual report. From an investment standpoint, we care very much about investment performance over the long term doing what it needs to do to make sure the Plan health is supported and enhanced where we can. And our 10-year performance of 9.6% net of fees more than fills that bill and we're very proud of that.

Also you know well from our previous conversations, active management is an important part of our investment program and an important part of our value proposition and over a ten year period, we outperformed our policy benchmark by 1.5% net of fees, so again something we are quite proud of. Value added across all asset classes over the long term period.

We don't think about the 15.2% that we were able to generate last year net of fees. We can talk about that but you know what markets were doing in 2024. 

The last thing I would say is the discussion in Canada right now given the macroeconomic headwinds is all about resilience and the Plan is resilient. That's the thing we are most proud of and we are happy with $23 billion in assets and we now have over $6 billion in reserves to help buffet the Plan against economic headwinds, market shocks, demographic changes, etc.

So the long term performance, the one year return and the resilience baked into the Plan are the three things from a financial perspective we'd want people to take away.

Evan Howard, the Chief Pension Officer then gave an overview of the Plan's activities last year:

It's in the report but we passed some significant thresholds this year. We surpassed 100,000 members during 2024 and entered the year with over 111,000 members, really more than doubling the membership we had when we started all this. 

On the employer side, ended the year with over 700 participating employers which again coming a long way from the 30 Ontario community colleges and employers that are our roots.

The other big milestone is we did the GROWTHplus investment account which is  a voluntary savings account available to all of our Plan members and allows them to earn the CAAT return on their tax-sheltered savings.

I asked Even if this replaces a TFSA and he replied:

It's not a TFSA. As far as the Income Tax Act, it's considered an "AVCA" or an additional voluntary contribution  account and it's subject to the same pension adjustment contribution limits that an RRSP would be subject to.

Right now, if a member has assets in their RRSP whether they're locked in or not locked in, they can transfer those to us. Right now we are only taking transfers but over the course of this year we are building capacity for members to provide payroll based contributions if they have an excess contribution room that they can then direct a monthly amount into if they wish to.

Since they just launched it late last year, the uptake reported in the annual report is $5 million so far which Evan told me is in line with their expectations.

I asked him what is the typical profile of employees and employers in their Plan and he responded:

It's a mix. There's definitely many smaller employers from the non-for-profit sector or the private sector. One of the great things is these are employers where gaining access to a defined benefit plan is something they wouldn't be able to do on their own.  

Another employer that joined us effective at the beginning of this year is West Jet in respect to all their pilots.

Evan also reminded me they have an arrangement with Lawyers' Financial, formerly Canadian Bar Insurance, for lawyers to join their Plan. 

I shifted my attention back to performance and noted even though the Plan underpeformed its benchmark last year, it was the same story, Public Equities soared so Private Equity underperformed its benchmark despite posting another solid year.

Asif responded:

That's exactly right, the absolute return of Private Equity in 2024 was 16%. On an absolute basis a very strong return but yes, against a Public Equity focused benchmark given Mag-7 dynamics last year, it underperfomed on a relative basis. We don't think about the performance of Private Equity on a one-year basis but that's what it was in 2024. But longer term, more than 20% return out of Private Equity for the 10-year period, quite a bit exceeding its benchmark for that 10-year period. So both on an absolute basis and relative to benchmark basis, we are very pleased with our PE portfolio over a longer period.

No question about it, it's an excellent performance over a longer period and even returning 16% last year is nothing to sneeze at.

I noted they marginally beat their Public Equity index last year 28.9% vs 28.2% and asked whether external hedge funds helped them do that. Asif replied:

You remember that a large part of our Public Market program is a portable alpha structure and yes, the impact of a hedge fund program was a meaningful contributor to value added. The traditional long only public equity portfolio was more or less flat for the year in terms of benchmark relative performance so it really was the hedge fund side that led to that outperformance for the one-year period.

But again the longer term performance even in public markets is what we care about and the value added in all public market asset classes has been positive driven by both hedge funds and long only funds.

I then noted that Real Assets made up of Real Estate and Infrastructure returned 4.6% last year and asked him what is the mix between the two in terms of exposure there and he told me 60-40 between Infra and Real Estate (or 65-35 but he didn't have the specific figures in front of him). He told me "it is titled towards Infrastructure but not in a huge way."

He told me they had a strong year in Infrastructure and Real Estate wasn't that bad, "flat or slightly down on an unhedged basis for the year but again these are asset classes where we care very much about the long-term performance and their contribution to the Plan's health over the long term, again, we are very pleased".

The Real Assets portfolio is very important and I noticed they increased their allocation to Credit to 7% last year, coming closer to the 8% long-term target.

I also mentioned in the Bloomberg article, the perception it left me was they're moving away from US assets to find opportunities in Europe and domestically here in Canada and asked him to clarify. 

Asif responded:

I would say the Credit portfolio is a global portfolio so there is no distinct intention to look at European opportunities, it's more global. When I was talking about opportunities in Europe, we were leaning a bit more toward the Real Asset side, we were seeing more opportunities in Infra and Real Estate space in Europe in 2024 and we are looking at other opportunities in 2025.

In terms of policy uncertainty in the US and whether that is influencing allocations, he added:

No, I would say we are continuing to look at all the different asset classes that meet what we require in terms of enhancing the overall health of the Plan over the long run. We look globally for those opportunities so that hasn't changed, our focus on looking fo the best opportunities wherever they may be around the world, that has not changed.

Part and parcel of that is we are always looking for great opportunities here at home. And we have through 2024 and again in 2025 been finding good opportunities again mainly in the Real Assets space in Canada and we are very pleased about that.

So, it's not in any way a shift  away from one geography into many others. We continue to have a global view, we continue to have  along-term view and it so happens we've been finding great opportunities that enhance the health of the Plan in Canada.

I ended by asking him given the volatility in markets if they are implementing any shifts and he said over the short term they are shoring up liquidity and risk management but their focus remains on the long term.

I thank Asif and Evan for taking the time to chat with me, and I just noticed the Toronto Maple Leafs are leading the Ottawa Senators 2-1 at the end of the second so Asif should be very happy (and I want to catch the third period action).

Below, CNBC's 'Fast Money' traders react to President Trump's comments that he does not intend to fire Fed Chair Powell. Hallelujah! Let's hope he has finally seen the light there!

Alex Harring and Pia Singh of CNBC report the S&P 500 ekes out a gain, Dow tumbles 500 points to post three-day losing run:

The S&P 500 ticked higher in choppy trading on Thursday, but finished the holiday-shortened trading week lower as tariffs continued to worry investors.

The broad index advanced 0.13% to close at 5,282.70 after swinging between gains and losses earlier in the session. The Nasdaq Composite inched down 0.13% to end at 16,286.45.

But the Dow Jones Industrial Average shed 527.16 points, or 1.33%, to settle at 39,142.23. The 30-stock index was weighed down by a 22% decline in UnitedHealth following the insurer’s earnings miss. Both the Dow and the Nasdaq posted three days of losses.

Nvidia retreated almost 3% on Thursday, building on its drop of nearly 7% in the previous session. The artificial intelligence darling on Tuesday disclosed a quarterly charge of about $5.5 billion tied to exporting its H20 graphics processing units, or GPUs, to China and other destinations due to U.S. export controls.

While UnitedHealth and Nvidia weighed on the market, other well-known stocks provided upward momentum. Eli Lilly surged 14% after delivering positive trial results for a weight-loss pill. Netflix popped 1% ahead of the streaming giant’s earnings report.

Stocks briefly took a leg up on Thursday afternoon after President Donald Trump said he expects trade deals to be reached with China and the European Union. That comes a day after Federal Reserve Chair Jerome Powell spooked investors by saying Trump’s tariff policies could drive up inflation in the near term and cause challenges for the central bank.

Still, the major averages posted losses on the week, which concludes with Thursday’s close, as the market is dark for Good Friday. The Dow and Nasdaq each lost more than 2% week to date, while the S&P 500 slid 1.5%.

Investors have been on alert since Trump first announced his plan for “reciprocal” tariffs — which he later walked back — on April 2. The S&P 500 has dropped nearly 7% since then. The Dow and the Nasdaq have both lost more than 7% in that period.

“This is a market that is waiting and looking for direction,” said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management. “Right now, it’s more about waiting to see what happens with those trade deals.”

It's Thursday, markets are closed tomorrow as it's Good Friday. Catholic and Orthodox Easter fall on the same day this Sunday and I will take the long weekend off.

In terms of markets, Netflix posted a major earnings beat today, as revenue grew 13% during the first quarter of 2025 and the stock up 3% in after-hours trading. 

A couple of charts this week. First, the Nasdaq where upward momentum has shifted abruptly again:

The Nasdaq is range-bound here, stuck between its 200-week and 50-week exponential moving average and incapable of breaking above its 10-week exponential moving average to start a new uptrend.

Not surprisingly, Technology and Consumer Discretionary (Amazon and Tesla) are the two worst sectors in the S&P 500 year-to-date, down 18.4% and 19.7% respectively:

Only Consumer Staples (5.8%) and Utilities (2.7%) are up year-to-date.

It certainly feels like a bear market as tech stocks get clobbered, defensive sectors are rallying or doing relatively better and gold is surging.

Speaking of gold, it was all the rage on CNBC this week but I think a correction is coming given the latest parabolic move up:

I know, CTAs are all LONG GOLD, Ray Dalio likes gold, gold shares keep ripping higher but be careful chasing it here, the GDX for example can easily decline below its 50-week exponential moving average.

Let me wrap it up with this week's top performing large-cap stocks:

Enjoy the long weekend and Happy Easter for all of you celebrating.

I am leaving you with some great interviews to watch.

Below, Senator Elizabeth Warren, ranking member of the Banking Committee, joins CNBC's 'Squawk on the Street' to discuss why she believes its critical for Jerome Powell to remain as Fed Chair, concerns about tariff policy, reactions to Harvard's funding cuts, and more.

Peter Kraus, Aperture Investors chairman and CEO, joins 'Squawk Box' to discuss the latest market trends, President Trump's tariff policy, impact of policy uncertainty, the Fed's rate path outlook, President Trump's criticism of Fed Chair Powell, and more.

Third, Peter Boockvar, Bleakley Financial Group, joins 'Fast Money' to talk the market's response to Fed Chair Powell's comments.

Fourth, Dan Niles, Niles Investment Management founder, joins 'The Exchange' to discuss Nvidia taking a $.5. billion export charge and what it means for the stock.

Fifth, Eric Johnston, Cantor Fitzgerald chief equity & macro strategist, joins 'Closing Bell Overtime' to talk economic and market impact of tariffs.

Sixth, Blackstone President and COO Jon Gray joins 'Squawk Box' to discuss the company's quarterly earnings results, impact of President Trump's tariff policy, state of the real estate market, the Fed's inflation fight, President Trump's criticism of Fed Chair Powell, and more.

Seventh, Rebecca Patterson, former Chief Investment Strategist at Bridgewater Associates, joins for an extended discussion on the US dollar, Treasuries, and US exceptionalism. The demand dynamic for US Treasuries is shifting, with foreign demand declining, and the relationship between the US dollar and Treasury yields is weakening, leading to concerns about the dollar's haven status and the US deficit. She speaks with Bloomberg's Tom Keene and Paul Sweeney.

Lastly watch Federal Reserve Chair Jerome Powell's remarks at the Economic Club of Chicago.

Bryan McGovern of Benefits Canada reports PSP Investments monitoring global trade conditions amid calls to divest from Tesla:

A federal public sector union representing more than 27,000 members is asking the Public Sector Pension Investment Board to divest any holdings in Tesla Inc. from its $264.9 billion portfolio.

In a public statement, the Canadian Association of Professional Employees is calling on PSP Investments and “all pension funds in Canada” to ditch the electric car maker.

“It is deeply concerning that Canadian public sector pension funds are being used to support a corporation whose owner is directly attacking the federal programs and workforce that deliver essential services for millions of ordinary Americans,” said Nathan Prierm, CAPE president and public service pension advisory committee member, in a press release.

Tesla’s chief executive officer Elon Musk has aligned himself with U.S. President Donald Trump as an advisor. Trump drew the ire of Canadians when he slapped the country with import tariffs while repeatedly calling for Canada to join the U.S. as the 51st state.

In an emailed statement to Benefits Canada, a spokesperson at PSP Investments said the organization is proud to be a Canadian pension investor trying to achieve a maximum rate of return without undue risk of loss. 

“We are continually monitoring global trade conditions and market developments, evaluating how they may impact our portfolio and adjusting when necessary. Our diversified strategy and long-term focus help us navigate market fluctuations as we continue to fulfill our mandate.”

CAPE said divesting from the electric car manufacturer would send a message indicating Canadian public sector workers and taxpayers won’t support the leader of a company involved with the U.S. administration at a time they’re threatening to annex Canada.

This isn’t the first time Tesla exposure has been the source of difficulties for a pension fund. Earlier this year, Dutch civil worker pension fund Stichting Pensioenfonds ABP sold its entire stake in Tesla, consisting of 2.8 million shares valued at US$585 million. Similarly, the New York City comptroller — an elected official overseeing the management of five public pension systems — said he’s seeking securities litigation against Tesla for significant financial losses and mismanagement.

Here is the statement the Canadian Association of Professional Employees (CAPE) put out last week:

Ottawa, April 9, 2025 – Today, the Canadian Association of Professional Employees is calling on the Canadian Public Sector Pension Investment Board, and all pension funds in Canada, to divest from all Tesla holdings. 

Elon Musk, Tesla’s owner and the richest person on the planet, has been using his corporate influence to destroy government and public services in the U.S. He is using his unelected role heading up the Department of Government Efficiency (DOGE) to dismantle essential public services and slash jobs without accountability. 

“It is deeply concerning that Canadian public sector pension funds are being used to support a corporation whose owner is directly attacking the federal programs and workforce that deliver essential services for millions of ordinary Americans,” said CAPE President and Public Service Pension Advisory Committee member Nathan Prier. “CAPE and its members stand firmly in solidarity with our siblings south of the border and against corporate interference, naked conflicts of interest, and indiscriminate job cuts that weaken critical public services ordinary Americans rely on.”

Divesting from Tesla would send a clear and principled message: Canadian public sector workers and taxpayers will not support companies that put profit over public service, particularly when the administration those companies support is threatening to annex Canada. We urge the CPSIB to act now.

CAPE has also been warning against any attempt by current or future Canadian federal governments to implement a DOGE-like approach to public services. Canadians need much more than tax cuts, deregulation, and a race to the bottom to defend themselves against American attacks on our economy and sovereignty. A new federal government mandate should deliver for working people to get us through this crisis, and that will mean strong federal and provincial programs, such as EI and health care, backed by a strong public sector.

CAPE has put forth recommendations that would save taxpayers’ dollars while not impacting service delivery to Canadians, including reducing the reliance on expensive outside contractors, which recently reached record levels, and implementing a flexible telework policy to free up more office buildings to be sold or converted to much-needed housing.
 

About CAPE
With more than 27,000 members, the Canadian Association of Professional Employees is one of the largest federal public sector unions in Canada, dedicated to advocating on behalf of federal employees in the Economics and Social Science Services (EC) and Translation (TR) groups, as well as employees of the Library of Parliament (LoP), the Office of the Parliamentary Budget Officer (OPBO) and civilian members of the RCMP (ESS and TRL). Read more. 

This is a good hump day topic to discuss so let me get right to it.

First, even though I don't particularly like Elon Musk or Tesla, I am 100% against any divestment at our large pension funds except for tobacco which is a global killer. 

All of Canada's large pension funds have divested from tobacco and even there, you will have some critics who claim that tobacco shares offer attractive and stable yields.

Tesla is a major US company, part of many stock indices. 

Divesting from it can be done but is it worth the tracking error risk and potentially losing out on long-term performance through your passive index exposure? 

Moreover, even if you don't like Musk or Tesla's prospects, there is a strong argument to be made that remaining an investor gives you a seat at the table to criticize him through shareholder proxy votes.

I'm not particularly bullish on Tesla shares but some analysts keep reminding me "it's not a car company, it's an AI company".

Whatever, the chart below tells me it's a car company that is experiencing significant challenges:

Clearly Tesla isn't immune to tariffs, a slowing US and global economy and Musk has done more damage to its brand than you can possibly imagine.

Still, it might pop and rally and if you're not invested in it as a pension fund, you can lose serious long-term performance.

It's also worth noting that PSP Investments, CPP Investments and other large Canadian pension funds are governed independently and while they take their members views into consideration, they have a clear mission and objective and operate at arm's length from governments and unions.

In short, pension fund managers need to "maximize returns without undue risk of loss" and in order to do this properly, the laws that govern them are designed not to allow outside influence on their investments.

Notice PSP Investments' email response was a polite and reminded members they are focused on their mandate and Tesla is only a small part of a well diversified portfolio:

“We are continually monitoring global trade conditions and market developments, evaluating how they may impact our portfolio and adjusting when necessary. Our diversified strategy and long-term focus help us navigate market fluctuations as we continue to fulfill our mandate.”

So, forget about PSP and other large Canadian pension funds divesting from Tesla, it's not in the best interests of their members no matter how disgusted they are with Musk and his antics at DOGE.

I personally think Musk hit a low back in February when he took to the stage at a conservative conference outside Washington wielding a chainsaw, a gift from Argentina's libertarian President Javier Milei:

"This is the chainsaw for bureaucracy," said Musk, holding the gleaming power tool aloft at the Conservative Political Action Conference in National Harbor, Maryland.

That was the moment that sunk his brand more than anything else, he looked totally nuts, an extremely wealthy billionaire, the world's richest person showing no regard for the people working in the US federal civil service. [Note: I do agree with him that Trump's trade advisor Peter Navarro is a clueless moron.]
 Well, DOGE has been a total disaster, its execution and roll-out is just as bad if not worse than Trump's disastrous tariff policies.

We can discuss whether there is a legitimate case to cut the size of US or Canadian civil service, but the approach should be a lot better than DOGE.

I have some friends in the private sector who strongly think we need a DOGE here in Canada, they need to retire people early and pay them out, make drastic cuts and rebalance the civil service where "people are well paid and get a DB pension.".

If you read the CAPE press release above, it ends on this note:

 CAPE has put forth recommendations that would save taxpayers’ dollars while not impacting service delivery to Canadians, including reducing the reliance on expensive outside contractors, which recently reached record levels, and implementing a flexible telework policy to free up more office buildings to be sold or converted to much-needed housing.

You might agree or disagree but they make a good point, there has been rampant abuse of contracts over the last ten years and all that real estate can be converted to housing as people work form home.

The truth is you need to have healthy debates but we need to rein in federal spending, that's for sure.

Lastly, Federal Reserve Chair Jerome Powell on Wednesday reiterated the long-held view of Fed chairs going back decades that growth in the US federal debt needs to be reined in, but he suggested that politicians are going about it the wrong way:

"We're running very large deficits at full employment, and this is a situation that we very much need to address" Powell said at an event at the Economic Club of Chicago.

"All of this domestic discretionary spending, which is essentially where 100% of the conversation is, is small as a percentage of federal spending and is declining ... When people are focusing on cutting domestic spending, they're not actually working on the problem." Powell did not specifically mention Elon Musk's Department of Government Efficiency, which has drawn headlines for large cuts to the federal government workforce, among other efforts to reduce the federal government's discretionary spending. But his remarks appeared to dismiss that kind of push as largely irrelevant to federal debt and deficit reduction. "So much of the dialogue that the politicians offer is about domestic discretionary spending, which is not the issue," Powell said. To make real headway on reducing government debt and deficits, Powell said, politicians must reduce spending on the largest parts of government outlays: Medicaid, Medicare, Social Security and the rising cost of interest payments. "Those are issues that can only be touched on a bipartisan basis," Powell said. "Neither party can figure out what to do without both parties being at the table. So that's critical."

Below, central bank leader's appearance comes at a time of heightened market uncertainty regarding President Donald Trump's aggressive tariffs against U.S. trading partners.

Also, Bank of Canada Governor Tiff Macklem spoke Wednesday after the central bank decided to hold interest rates steady as US President Donald Trump’s trade war with Canada intensifies.

The central bank held its benchmark rate at 2.75 per cent on Wednesday, ending a streak of seven consecutive rate cuts and stated US tariffs could trigger deep recession:

Citing the high level of uncertainty, the central bank did not issue its regular quarterly economic forecasts. Instead, it provided two scenarios as to what might happen.

In the first scenario, most tariffs are negotiated away, and Canadian and global growth weaken temporarily. Canadian inflation falls to 1.5% for a year and then returns to the bank's 2% target.

In the second scenario, the tariffs spark a long-lasting global trade war. Canada enters a significant recession, inflation spikes above 3% in mid-2026 before returning to 2%.

The bank, which stressed that many other scenarios were possible, estimated annualized first quarter GDP was 1.8%, down from the 2.0% it forecast in late January.

Lastly, Dan Ives, Wedbush Securities global head of technology research, discusses how the future of Tesla wil be determined in the next 90 days.

Update: After reading this comment, James Infantino, Pensions and Disability Insurance Officer at the Public Service Alliance of Canada (PSAC) shared these concerns and insights:

Thank-you very much for reporting on the call of Canadian Association of Professional Employees (CAPE) for PSP Investments to divest its holdings in Tesla Inc.

Members of the Public Service Alliance of Canada (PSAC) are equally concerned regarding the corrosive impact of the antics of Elon Musk on Tesla Inc. shareholder value and, in turn, the security of their pension benefits.

In fact, according to the attached charts, it would appear that PSP Investments has significantly ramped up its position in Tesla Inc. coincident with the election of Donald Trump as President of the United States. As of December 31st, 2024, Tesla Inc. shares represent the 12th largest single equity holding of PSP Investments!

Many members of large pension funds in the U.S.A. are also calling for a review of investments in Tesla Inc. in the interests of protecting their pension benefit entitlements.

My understanding is that a number of shareholder resolutions have been prepared and submitted in advance of the Tesla Inc. annual meeting in June of this year that demand Telsa Inc. Board of Directors take corrective action to address plummeting share value, up to and including the removal of Elon Musk as CEO.

Of course, it is unfortunate that the Tesla Inc. Board of Directors is comprised of relatives and close personal friends of Elon Musk and sits at the bottom of the independence scale of all listings on the NASDAQ exchange (which is saying something)!

I trust the foregoing to clarify the concerns of pension plan members on the investment of the pension funds in Tesla Inc. and the need for organizations such as CAPE to take action to protect their pension benefits. 

I thank James for sharing this with my readers and I have a few comments to add.

First, I completely understand the concerns of CAPE and PSAC, Tesla shareholder value has plummeted since founder and CEO Elon Musk got involved with running DOGE, however, to be even more accurate, it accelerated when Trump released his tariffs on April 2nd and all the Mag-7 and Nasdaq stocks got hit (Musk has lost billions in net worth recently).

Second, I don't know enough about Tesla's board of directors but I will take James' comment about it sitting on the bottom of the independence scale on the Nasdaq as true which is a concern. 

Last year, Tesla's board approved an egregious pay package of $56 billion to Musk despite the disapproval of global pension funds and sovereign wealth funds led by Norway's GPIF. However,  I did note his friend, billionaire Larry Ellison, left the board in June 2022.

Third, on PSP's holdings of Tesla, I suspect it's mostly due to passive exposure to US equity indices and some active management from their internal and external active managers. I wouldn't read too much into that.

Lastly, divesting out of Tesla or any company comes with risks, especially when that company has a big weighting in the indices. It's basically an active management decision and that decision-making authority must remain the responsibility of pension fund managers. 

This doesn't mean that unions and members can't express their concerns openly, it means they have to trust their pension fund managers are doing their best to fulfill their mandate in obtaining the highest risk-adjusted returns possible during these turbulent times.

Ultimately, that's the most important outcome, and they all take responsible investing seriously and will voice their concerns through proxy votes at Tesla's annual shareholder meeting.

Earlier today, Vestcor announced it earned 12.2% net of fees, outperforming its benchmark:

Fredericton, NB — Vestcor Inc. (Vestcor), Atlantic Canada’s largest investment management firm, is proud to announce a year of strong positive returns for its clients. Vestcor achieved overall investment portfolio returns of 12.2% net of fees, outperforming its benchmark by 0.1%. Through a strong investment performance, Vestcor’s assets have grown by over $2 billion in 2024, to a total of $23.1 billion. As a full-service investment manager and pension administration organization, Vestcor is committed to meeting the long-term investment objectives of all its clients.

Vestcor’s clients require a disciplined, low-risk approach with strong internal active management. Vestcor has successfully exceeded long-term investment policy benchmarks while safeguarding client portfolios, adding $781 million, after investment management fees, relative to benchmark performance for the four-year period ending December 31, 2024. Vestcor’s dynamic investment strategy continued to be a key differentiator. Within our Pension and Benefits Administration Teams, Vestcor met client performance targets, all while managing the high volumes of applications and increased plan membership.

“We are proud of the results we’ve delivered for our clients,” said Sean Hewitt, President and CEO of Vestcor. “Our approach of focussing on strong risk-adjusted returns has helped shield client portfolios from potential losses during turbulent times. Furthermore, our active management, driven by the thoughtful execution of our internally managed active investment strategies, has allowed our clients to earn net investment returns that exceeded benchmarks in 2024 and over the long-term. This accomplishment is a reflection of our team’s expertise and commitment to our clients’ financial success – and most importantly, the financial well-being of the 114,000 pension plan members we serve on behalf of our clients.”

Vestcor’s commitment to providing our clients with customized investment solutions has been central to this success, as the team specializes in adapting strategies to meet the unique goals and inherently low-risk tolerances of each client, especially its target benefit and shared risk plan clients. Through ongoing market analysis, rigorous risk management, and forward-thinking investment choices, the firm has reinforced its reputation as a trusted partner in navigating today’s complex financial landscape.

As a result of these efforts, Vestcor is not only fulfilling its promises to clients, but is also positioning itself for continued success in the future, protecting the financial security of its clients and their members.

The organization also recently launched it’s third Responsible Investment Report, available at vestcor.org/responsibleinvestment.

Vestcor’s 2024 Annual Report will be published in June. Further information about Vestcor is available online at vestcor.org.

ABOUT VESTCOR INC.

A Partner in Creating and Delivering Sustainable Financial Security

Vestcor is an independent not-for-profit company located in Fredericton, New Brunswick. It provides global investment management services to public-sector client groups representing over $23 billion in assets under management as of December 31, 2024, and administration services to 11 public sector pension plans and five employee benefit plans.

Vestcor’s team of more than 160 service professionals provides innovative, integrated, and cost-effective investment management and pension and benefit administration services solutions to Atlantic Canadian clients. Vestcor currently services the requirements of approximately 114,000 pension plan members, 44,000 employee benefits members, and 150 participating employer groups. Further information about Vestcor is available at vestcor.org.

As stated in the press release, Vestcor's annual report will be released in June and will be made available here.

This afternoon, I had a brief discussion with Vestcor CIO Jon Spinney to go over the results.

I''d like to begin by thanking him and also thank Liz-Anne McCleave for facilitating this discussion.

Jon began by giving me an overview of their results:

We had a pretty good year so we are quite happy with how things went overall.

The portfolio has navigated what we've been experiencing in 2025 fairly well so we continue to navigate markets and focus on delivering for our pension members.

In terms of looking at 2024 results, like you said, it's a public markets story. Our Public Equities portfolio delivered 22.6%, better than the benchmark which was 21.7%.

Jon told me the strong results in Public Equities do not include Long/ Short hedge funds, that is in a separate bucket.

He went on:

Generally speaking, we have three main equity buckets: general market cap, a lot of passive there, we have a lot of low-vol equities, some of that is required by regulation and we have a fairly tight risk control for most of our clients so we derisk our portfolio as much as we can and we actively manage that very significantly. And that's Canada, Global and Emerging Markets portfolios.

He said derisking the portfolio means they select lower risk stocks targeting a .7 beta and then run a diversified quant stock selection program on top of that across Canada, Global and Emerging Markets.

Quite impressively, they beat their Public Equities benchmark last year being underweight Mag-7 stocks.

Interestingly, Jon explained why they like Emerging Markets:

In general, Emerging Markets was a really good source of alpha for us last year and over the last several years as well. Very fertile hunting ground for us for public market equities.

We have been really successful in building out our stock selection programs with our internal quant team here and been really successful outperforming both market cap and low-vol benchmarks.

In emerging markets, we are looking for attractively valued companies with good momentum and reasonable quality. That's been very successful in recent years.

I shifted my attention to Fixed Income where he shared this:

Fixed Income, modest outperformance relative to our benchmark.  Our Fixed Income book if you include everything was up 5.6% compared to a benchmark of 5.3%., basically flat or slightly better than benchmark but it contributed to overall performance.

I asked him in terms of total asset mix, if Public Equities and Fixed Income make up 60% of the total portfolio and he replied: "I would say 60-65% is in Public Equities and Fixed Income and the rest is in various alternatives."

We moved on to private markets and I asked him if there are still issues in Real Estate:

Still navigating some challenges in real estate, we've definitely seen sectoral shifts. That combined with interest rates moving higher in previous years caused some challenges.

I think it was a fairly stable year for us in the Real Estate portfolio. It was up 3.3% compared to a benchmark which was up 1.5%. Let's say not extravagant returns but solid performance on the Real Estate side.

Infrastructure was a strong performer for us in 2024. Total Infrastructure portfolio was up 12% compared to a benchmark of 8.5% which for us is CPI + 4%.

I interjected noting their performance in Real Estate was better than larger peers, and asked why.

Jon responded:

Relative to peers, we would have a lot more Canada, a lot less international. 

We are also overweight industrial which has been good for the past several years.

Those are major contributors for us, we didn't have any major currency issues to deal with on international and being overweight industrial and multi-residential helped as well.

I asked him if Vestcor is a direct investor in real estate and infrastructure:

I'd say we do both. Overall for private real estate, roughly 60% is direct or co-invest and 35 to 40% would be with funds.

In infrastructure, a little higher tilted toward funds given our smaller size, it's a little bit difficult to do as much on the JV or direct side. So there we are 50-60% in funds and 30-40% in co-invest.

I noted that in infrastructure there are the big well known funds but there are also a lot of newer niche funds (see Aaron Vale's guest comment on the annual Berlin Infrastructure conference).

I asked Jon how they performed so well in Infrastructure:

For us, we were significantly overweight on things that performed well recently, not necessarily going to be immune to challenges we are facing going forward, things like port assets for example, exposed to trade obviously. It will be interesting to see how things navigate there but it's been strong over the past several years.

Generally for us, being smaller, we can take advantage of smaller opportunities but at the same time, we have a track record of being able to make decisions fairly quickly in terms of acting on JV and co-investment opportunities. We are still shown interesting opportunities both from existing partners we work with and new funds we haven't worked worth in the past as well, so it's a mix of those two things.

Next we moved to discussing Private Equity:

Private Equity has been challenged for sure.Like most funds we benchmark private equity to public equity benchmarks, for us that is MSCI World which was up 29% last year. 

Our Private Equity portfolio did well, it was up approximately 15% in 2024 but still that was the one area for us where value add relative to benchmark was significantly challenged. And that has been a consistent story for us over the last two years. PE is performing well but not able to keep up with high-flying public equity markets.

He added in PE, it's 70% funds and 30% directs and co-investments and over the past four years they have built out the Asia Pacific and Emerging Markets exposure in that portfolio but it is heavily tilted to the US and Europe.

I then moved the discussion to macro to discuss his views on rates, public vs private markets given the tariffs and heightened policy uncertainty.

Specifically, I asked him if he thinks the tariffs will ultimately be inflationary or deflationary and how doe she see rates and opportunities in private and public markets, as well as private credit. 

Jon replied:

We are doing more and more in Private Credit now but fortunately we didn't a lot pre-Covid, so we are in the fortunate situation of being selective and picking up opportunities that make sense starting with a clean sheet. So we are doing it but luckily we don't have any legacy issues to deal with. 

He told me they did some private credit deals in the past when a portfolio company needed financing but it's really in the last couple of years that their clients asked for a dedicated portfolio there.

He went on to answer my question on rates, policy uncertainty and whether tariffs are ultimately inflationary or deflationary:

It's really tough to know how it's going to play out. Obviously, tariffs if we see them play out the way it seems to be doing right now, it's not going to be favourable to the global economy and I think that's going to be disinflationary in the medium term. 

Overall, we know there's a modest supply shock when tariffs are put in place but overall it's not positive for economic activity. Over the long run activity relative to capacity is what's going to drive inflation.

In terms of what that means for pension fund allocations, I think it's really a case of using your favourable liquidity provisions, using your balance sheet effectively to look beyond what's going on in the short-term and make allocations that make sense for the medium to long term. When pension funds are trying ot be too tactical in the short term, you're more likely to add noise to your portfolio as opposed to being accretive on your returns.

I keep coming back to issues on valuations, which markets, which asset classes are more attractively valued and allocating capital there when it makes sense. For example, global equities have been somewhat attractive relative to North American equities. I think that's something pension funds are nicely positioned to take advantage of. 

And then finally, being careful on the alternative asset classes, finding exposures that absolutely make sense in the context of your total portfolio -- that is not taking on too much GDP risk in your infrastructure book, not getting too far off in quality spectrum in private debt is going to be really important I think.

I agree especially since Private Debt has been battle tested in a recession yet.

Jon made the good point that you have to look at alternatives holistically in terms of your total portfolio, "making sure you're not stacking up too many asset classes and strategies that are all going to be demanding liquidity at the same time."

On tariffs, he said if there is a full blown trade war then we will see pockets of inflation in some sectors but overall the real risk is a marked decline in economic activity and that is disinflationary.

Vestcor is more exposed to Canada "by choice" relative to larger Maple Eight peers and "there are opportunities in Canada that still move the needle for us."

He told me roughly 55% of all their assets are in Canada (including Fixed Income). 

Lastly, I asked him about Vescor's new CEO Sean Hewitt and he told me he's working hard on their new five year strategic plan and once it's finalized, he'll be happy to share it with me.

I ended by noting that what we are living now in terms of the fallout from US trade policy on markets feels wonky to me and I've lived through the tech wreck, the 2008 GFC, Covid more recently and it seems odd and endless.

Jon noted he missed the tech wreck from a professional perspective but lived through the GFC and obviously Covid and this was self-inflicted wound for the global economy and hopefully cooler heads prevail and we can move forward with a more stable business environment.

He added they run a fairly low risk portfolio -- overall their total equity beta on the entire fund is .45 (with Infra and Real Estate). "We've historically been more reliant on benchmark relative returns than anyone else in terms of just keeping up with what pensions require and that's going to be a tricky thing to navigate so active management will continue to be important for us."

Great discussion, I thank Jon Spinney again for taking the time to talk to me, he's a sharp CIO and I always enjoy talking to him. 

Below, learn more about Vestcor. Providing investment management and pension and employee benefits administration services to the public sector.

Also, UBS’ David Lefkowitz, Moody’s Mark Zandi and Bleakley Financial’s Peter Boockvar, join 'The Exchange' to discuss markets, the trade war and potential for a recession.

Laslty, KKM Financial’s Jeff Kilburg and Albion Financial’s Jason Ware, join 'Power Lunch' to discuss investors turning more bearish on the markets.