Rian Howlett , Laura Bratton and Ines Ferré of Yahoo Finance report Dow, S&P 500, Nasdaq surge to records as tame inflation cements Fed rate cut bets:

US stocks surged to record highs on Friday as investors digested a crucial inflation report that helped cement expectations for the Federal Reserve’s next policy moves.

The Dow Jones Industrial Average rose 1%, or over 450 points. The S&P 500 gained 0.8%, while the Nasdaq Composite jumped 1.2%.

The September inflation data released on Friday morning came in cooler than expected. The headline Consumer Price Index rose 3% on an annual basis, the highest level since May but softer than forecasts for a 3.1% gain. Month-over-month, prices rose 0.3%, a slight cooling from August's reading and also below expectations.

The report was delayed by more than a week due to the ongoing government shutdown, and was the first major economic release since the closure began, giving investors a long-awaited pulse check on the economy.

The CPI data did little to shake the near-unanimous investor confidence in a coming rate cut from the Fed next week — and more beyond that. Around 99% of bets are on a quarter-point cut next week, while some 96% of traders expect another slash in December.

Meanwhile, President Trump injected fresh uncertainty into trade negotiations with key US partners, announcing Friday he would cancel trade talks with Canada. Trump cited a Canadian advertisement against his signature tariffs plan which features the voice of former President Ronald Reagan.

In corporates, Intel (INTC) shares pared significant gains after the chip giant reported third-quarter revenue that topped Wall Street estimates.

"We believe we're well-positioned to play a more significant role in AI," Intel's head of investor relations John Pitzer said in an interview with Yahoo Finance.

Ford extends gains 13% to hit session high

Ford (F) rallied as high as 13% on Friday afternoon after the carmaker posted better-than-expected earnings. 

Gold slips to cap volatile week

Gold (GC=F) retreated less than 1% on Friday to cap a volatile week.

Futures for the precious metal fluctuated between positive and negative territory, hovering near $4,122 per troy ounce on Friday afternoon.

Gold plunged 5.5% from record levels on Tuesday, but was able to recover some of those losses to close out the week down more than 1.5%.

The company outpaced third quarter estimates with adjusted earnings per share figures of $0.45 (vs. expectations of $0.36) and revenue of $47.185 billion versus expectations of $43.7 billion. 

Sean Conlon and Pia Sing of CNBC also report Dow rallies 400 points for first close above 47,000 ever following mild inflation report:

U.S. stocks closed at new heights on Friday as cool inflation data spurred optimism among investors that the Federal Reserve can stay on its rate-cutting path, boosting the U.S. economy and justifying higher valuations for equities.

The Dow Jones Industrial average rose 472.51 points, or 1.01%, to 47,207.12, securing its first close above the 47,000 level ever. The S&P 500 added 0.79% to 6,791.69, while the Nasdaq Composite climbed 1.15% to 23,204.87. All three major averages closed at records.

The September consumer price index report — which was delayed because of the U.S. government shutdown — rose 0.3% on the month, bringing the annual inflation rate to 3%, according to the Bureau of Labor Statistics. That’s just below the 0.4% and 3.1% that economists polled by Dow Jones had expected. When excluding food and energy, core CPI came in at 0.2% last month and 3% on a 12-month basis, also lighter than the Dow Jones forecasts for 0.3% and 3.1%, respectively.

Following the CPI data, traders increased their bets that the Fed will cut rates at both its remaining two meetings this year. Odds for a December cut initially jumped to 98.5% from roughly 91% odds before the data, per the CME FedWatch tool. Odds for a cut next week remained above 95%.

Hopes that more rate cuts would stimulate economic activity sent bank stocks higher during the trading day, with key names such as JPMorgan, Wells Fargo and Citigroup each rising 2%. Other names in the financials sector, including Goldman Sachs and Bank of America, similarly advanced.

To be sure, the headline annual rate did represent a slight uptick from the prior month. Most government economic data — including weekly and monthly jobs figures — remains postponed because of the shutdown.

“There was little in today’s benign CPI report to ‘spook’ the Fed and we continue to expect further easing at next week’s Fed meeting,” said Lindsay Rosner, head of multi sector fixed income investing at Goldman Sachs Asset Management. “A December rate cut also remains likely with the current data drought providing the Fed with little reason to deviate from the path set out in the dot plot.”

The markets largely ignored a proclamation from President Donald Trump that he was ending trade negotiations with Canada because of an advertisement used by Ontario featuring former President Ronald Reagan “speaking negatively” about tariffs. The ad, which Trump deemed “FAKE,” quotes Reagan’s presidential radio address from April 1987, in which the former president says that “trade barriers hurt every American worker and consumer” in the long run.

Ontario Premier Doug Ford said later Friday that his province is going to pause airing the ad after this weekend’s World Series games so that U.S.-Canada trade talks can restart.

Major indexes notched their second winning week in a row, with all three gaining around 2%. The S&P 500 is now up 15% for the year, and the Nasdaq is up 20%. 

Stocks are responding to earnings beats this season with significant returns, Barclays says

The earnings beats seen this third-quarter reporting season are driving higher-than-average equity returns, according to Barclays.

“Though we’re still in the early innings of reporting season (just 34% of S&P 500 market cap is expected to have reported results by the end of this week), stocks are reacting positively to EPS beats thus far,” said strategist Venu Krishna in a note. “Companies beating the consensus estimate have delivered a median beat of ~6% (~8% cap weighted) and outperformed [S&P 500 Equal-Weighted Index] by 67 [basis points] over the first trading session after reporting results, compared to a [long-term] median of 33 [basis points].”

“Given the small number of misses to date, we will get a better sense of the average reaction to an EPS miss later in the season,” he continued. “The reaction to beats is an incremental indicator that a strong earnings season will be unusually critical to sustaining further upside for US equities, considering the elevated [implied volatility] into results highlighted by our derivatives strategists combined with long institutional and systematic equity positioning.”

Another earnings week, some companies did better than others. GM, Ford did well, Netflix and Tesla disappointed. Deckers Outdoor (DECK) got clobbered today after guiding lower.

Next week is an even bigger week with Meta, Amazon, Google and Microsoft all reporting as well as Apple. 

This week they ran a lot of megacap tech shares up. Advanced Micro Devices (AMD) was up 8% today after IBM said its chips can be used for qantum computing. Shares are up 108% this year:

Of course, quantum computing stocks popped earlier this week after Trump said the US government might buy stakes in some of them but they didn't hold their gains.

Alphabet (Google) shares hit another record high as the company gets set to report next week and all eyes will be on its search data and how they're holding up in this new AI enabled world.

 Alphabet and Meta remain cheap relative to other Mag-7 stocks trading at 26 times forward P/E.

A complete list of companies whose shares are making a new high is available here.  

If you want to make money in these markets, I suggest you track these shares closely and buy when they dip.

Below, you will find the top performing large cap stocks this week (full list here): 

In other news, cooler-than-expected inflation reading keeps Fed on course for a rate cut next week.

The Fed is more worried about employment than inflation at this stage but it will be interesting to see what happens when inventories run out and companies start passing on the tariffs to consumers. 

We aren't there yet and Trump might tell companies to wait for corporate tax cuts before passing on the tariff so it remains a little murky as to how this will all play out. 

Below, the CNBC Investment Committee debate their strategies when stocks are at record highs. Great discussion, listen to their positioning.

Next, Fundstrat’s Tom Lee joins CNBC to explain why he still sees upside for stocks and crypto heading into year-end. He discusses the Fed’s rate cuts, gold’s peak, Bitcoin and Ethereum.

Third, Warren Pies, 3Fourteen Research, joins 'Closing Bell' to discuss how far stocks can continue to rise, the power of the retail investor and much more.

Fourth, Lo Toney, Plexo Capital, joins 'Closing Bell' to discuss the megacap tech earnings next week, if it's too early to know more about AI profits and much more.

Fifth, Chase Lochmiller, Crusoe Co-Founder & CEO, joins CNBC's 'Squawk on the Street' to discuss the company’s $10 billion valuation, the build-out of AI data centers in energy-rich regions, and how Crusoe is tackling power constraints.

Lastly, Chanos & Company President and Founder Jim Chanos says it's a "party like it's 1999" in credit markets. He speaks to Bloomberg's Scarlet Fu.

Earlier today, Prime Minister Carney announced a major new investment to power Canada’s clean-energy future: 

In a rapidly changing and uncertain world, Canada’s new government is focused on what we can control. We are protecting our communities and our country. We are building our economy with major projects and millions more homes. We are empowering Canadians with lower costs and new opportunities to help you get ahead. We cannot control what other nations do, but we can control what we choose to build – and we are building Canada strong.

Canada’s new government is moving decisively to build major nation-building projects that create high-paying careers, reduce emissions, and grow our economy.

To that end, the government launched the Major Projects Office to cut red tape and fast-track major nation-building projects. Last month, the Prime Minister, Mark Carney, announced the first wave of projects referred to the Major Projects Office for review. One of these projects is the Darlington New Nuclear Project (DNNP) in Bowmanville, Ontario – a catalyst for new jobs, industrial growth, and our clean-energy future that will put Canada at the forefront of global nuclear innovation.

Today, the Prime Minister announced that the Canada Growth Fund will invest $2 billion to support the construction and operation of the four small modular reactors (SMRs) at the DNNP. This project will make Canada the first G7 country to bring SMR technology online and drive $500 million annually into Ontario’s nuclear supply chain. Once complete, Darlington’s first of four SMRs will provide reliable, affordable, clean power to 300,000 homes, while sustaining 3,700 jobs annually, including 18,000 during construction, over the next 65 years.

Prime Minister Carney was joined by the Premier of Ontario, Doug Ford, who announced that the Government of Ontario will invest $1 billion in this project through the Building Ontario Fund. Ontario Power Generation remains the majority owner and operator of the DNNP, with the Canada Growth Fund and the Building Ontario Fund acquiring meaningful minority stakes in the project, representing 15% and 7.5% ownership, respectively.

This investment will strengthen Ontario’s power grid and represents the kind of nation-building projects that defines Canada’s new economic approach. Together, the Government of Canada and the Government of Ontario are demonstrating Canada’s ability to meet the highest standards in developing world-class assets efficiently, cost-effectively, and competitively.

By unleashing private investment, advancing energy security, and strengthening the industrial base that will power the clean-energy transition, we are building Canada strong.

Quotes

“The Darlington New Nuclear Project will create thousands of high-paying careers and power hundreds of thousands of Ontario homes with clean energy. This is a generational investment that will build lasting security, prosperity, and opportunities. We’re building big things to build Canada Strong.”

The Rt. Hon. Mark Carney, Prime Minister of Canada

“Today’s investment to support the first SMRs in the G7 is a downpayment on Ontario’s nuclear energy future. We’re protecting Ontario by supporting good-paying, long-term jobs for Ontario workers and building the energy infrastructure – including both SMRs and new, large-scale nuclear – needed to make Ontario an energy superpower.”

The Hon. Doug Ford, Premier of Ontario

“Capitalising on big opportunities requires thinking big, acting fast, and making the kinds of generational investments that provide a means to achieve our ambitions – creating jobs, growing our economy, and reducing emissions while lowering long-term energy costs. The Darlington New Nuclear Project will stimulate demand for clean energy technologies and green construction jobs as the first initiative of its kind among G7 countries. By supporting Canadian ingenuity and innovation, we are helping pave the way for the use of this technology not only here in Canada but around the world.”

The Hon. François-Philippe Champagne, Minister of Finance and National Revenue

“The financing we’re providing to the Darlington New Nuclear Project will pave the way for a future where Canadian energy fuels our economy at home and provides export opportunities for Canadian expertise. By uniting government, industry, and Indigenous partners, we are not only creating thousands of good jobs in Ontario, but building out affordable, reliable power that Canadians can depend on.”

The Hon. Tim Hodgson, Minister of Energy and Natural Resources

“This is one of many milestones to come for major projects like Darlington – projects that hold transformative power to turbocharge and connect our economy, diversify our products and markets, and create hundreds of thousands of high-paying careers. Through the Major Projects Office, we will be moving these projects faster and more efficiently, building one Canadian economy together.”

The Hon. Dominic LeBlanc, President of the King’s Privy Council for Canada and Minister responsible for Canada-U.S. Trade, Intergovernmental Affairs, Internal Trade and One Canadian Economy

Quick facts

• The DNNP will be the first grid-scale SMR in the G7.
• Earlier this year, the Government of Ontario approved Ontario Power Generation to move forward with construction of its first of four rate-regulated SMRs as part of this project.
• At its full potential of four SMRs, the DNNP will provide 1,200 megawatts of clean, reliable electricity – enough to power about 1.2 million homes (more than the number of households in the Greater Toronto Area) – while reducing carbon emissions by an average of up to 2.3 million tonnes annually between 2029 and 2050.
• As part of its mission, the Major Projects Office:
  • collaborates with key partners – including project proponents, Indigenous Peoples, investors, and all levels of government – to facilitate the development of major projects that will benefit Canada.
  • works to identify and advance nation-building projects, including through the Building Canada Act.
  • acts as a single window for project proponents into the federal regulatory process to simplify and accelerate project approvals.
• The Canada Growth Fund was established in 2022 to ensure Canada continues to be a leading destination for investment and to drive innovation across new and traditional sectors of Canada’s industrial base. To date, it has built a diverse and impactful portfolio – with 16 portfolio companies representing a total commitment of $4.75 billion.
• The Canada Growth Fund is a $15 billion arm’s length public investment vehicle launched by the federal government to attract private capital and invest in Canadian projects and businesses. It makes strategic investments to help Canada meet the following national economic and climate policy goals:
  • Reduce emissions and achieve Canada’s climate targets.
  • Accelerate the deployment of key technologies, such as clean electricity.
  • Scale-up companies that will create jobs and drive productivity and clean growth across new and traditional sectors of Canada’s industrial base.
  • Encourage the retention of intellectual property in Canada.
  • Capitalise on Canada’s abundance of natural resources and strengthen critical supply chains to secure Canada’s future economic and environmental well-being.

Associated links

• Darlington New Nuclear Project
• Canada Growth Fund

The Canada Growth Fund and Building Ontario Fund also announced an innovative equity investment in world-leading Ontario Power Generation SMR project:

Canada Growth Fund Inc. (CGF) and Building Ontario Fund (BOF) today announced an equity commitment agreement to finance the Small Modular Reactors (SMR) project to be constructed at the Darlington New Nuclear Project (the DNNP or the Project), which will be majority owned and operated by Ontario Power Generation Inc. (OPG). Through this agreement, CGF and BOF have committed to invest up to $2 billion and $1 billion, respectively, each taking minority ownership positions in the Project. 

The DNNP will see the construction of four grid-scale commercial SMRs – a first among G7 nations – that, when completed, are expected to deliver up to 1,200 MW of reliable, affordable, and low-carbon electricity, enough to power 1.2 million homes. CGF and BOF are investing in this world-leading energy infrastructure project to de-risk the construction and operation of the first SMRs. Leveraging their unique investment mandates, both organizations are bringing forward innovative financial arrangements to temporarily share certain risks that currently limit private sector interest today. As a result, this transaction is paving the way to spur private sector and Indigenous investment in the DNNP over time.  

The investment will also reinforce Canada’s robust nuclear supply chain, inject hundreds of millions of dollars into Ontario’s industrial supply chain, contribute to the resilience of Canada’s low-carbon electricity grid, and foster a new generation of Canadian nuclear expertise. 

Transaction details and public benefits

• OPG remains the majority owner and operator of the DNNP, with CGF and BOF acquiring meaningful minority stakes in the Project, representing 15% and 7.5% ownership, respectively.
• CGF’s and BOF’s capital will be made available, subject to the satisfaction of conditions, to OPG in two tranches: 1) initial capital funding of SMR 1; and 2) additional capital to fund SMRs 2–4 once the Project meets certain milestones.
• OPG expects to complete construction of SMR 1 by the end of the decade and connect it to the grid by the end of 2030. Construction on SMRs 2-4 is expected to be completed in the mid-2030s.
• As a first-of-its-kind project, DNNP has a higher risk profile that limits access to traditional financing. In line with their mandates, CGF and BOF are investing at a stage where the Project is exposed to certain construction and technological risks.
• CGF and BOF investments aim to de-risk DNNP and advance it to a point where private sector participation can be efficiently catalyzed in this essential energy infrastructure asset.
• DNNP represents a compelling opportunity for CGF and BOF to invest in a large-scale rate-regulated asset with rates subject to oversight and approval by the Ontario Energy Board.
• According to the Conference Board of Canada, DNNP will create up to 18,000 Canadian jobs annually through the construction phase, while adding $38.5B to Canada’s GDP over the next 65 years.
• The current estimate to construct four SMR units at DNNP is $20.9B, including interest, escalation, and contingency.
• CGF and BOF will benefit from market-based investment governance, facilitating future participation from private investors.
• During project development OPG continues to build respectful, collaborative relationships with the communities of the Williams Treaties First Nations, advancing conversations at the pace set by the Nations. 

Quotes 

“Through this novel financing arrangement, Canada Growth Fund is pleased to support these first-of-a-kind small modular nuclear reactors with significant potential to be replicated across Canada and globally,” said Yannick Beaudoin, President and CEO of Canada Growth Fund Investment Management Inc. ("CGFIM"). “We look forward to building upon this financing model to attract further interest from private investors committed to developing low-carbon energy infrastructure in Ontario and across Canada.” 

“We are delighted to bring PSP Investments’ rigorous investment process, depth of expertise, operational excellence and arm’s length governance model to the execution of CGF’s mandate,” said Deborah K. Orida, President and Chief Executive Officer of PSP Investments. “With today’s announcement, CGFIM continues to position CGF as a leading investor in the Canadian ecosystem, with a keen focus on unlocking important projects, improving Canada’s investment climate, and contributing to PSP’s foresight on the evolution of the energy sector.” 

“This is a watershed moment for Building Ontario Fund and demonstrates our catalytic role in financing large-scale infrastructure projects,” said Michael Fedchyshyn, CEO of Building Ontario Fund. “The transaction opens new investment opportunities in the province’s energy sector and will boost competitiveness, drive job creation, and support innovation across the industrial base.” 

“The Darlington New Nuclear Project will help meet growing demand for low-carbon energy, and provide significant economic benefits for Ontarians and Canadians, creating jobs and securing contracts across the province’s robust nuclear supply chain,” said Nicolle Butcher, OPG President and CEO. “Other Canadian provinces and global jurisdictions are seeking our expertise to deploy SMRs as a solution for their energy security needs, making this project a platform for further growth.” 

About the Canada Growth Fund

Canada Growth Fund (CGF) is a $15 billion arm’s-length investment vehicle designed to attract private capital to build Canada’s clean economy. It uses investment instruments that absorb certain risks to catalyze private investment in low-carbon projects, technologies, businesses, and supply chains. Visit www.cgf-fcc.ca for more information. For CGF’s Media relations, contact mediacgf@cgf-fcc.ca.  

About Canada Growth Fund Investment Management

In Budget 2023, the Government of Canada appointed PSP Investments, through a wholly owned subsidiary, to act as the asset manager for CGF. Canada Growth Fund Investment Management Inc. serves as the independent and exclusive asset manager for CGF. 

About Building Ontario Fund

 Building Ontario Fund (BOF) is a board-governed Crown agency with a mandate to catalyze investment in revenue-generating infrastructure projects across Ontario. Backed by $8 billion in funding from the province, BOF supports transformative projects in five priority sectors: affordable and student housing, long-term care, energy, transportation, and municipal and community infrastructure. Through innovative financing and partnerships with institutional investors and Indigenous communities, BOF helps unlock private capital to deliver high-impact infrastructure. Established under the Building Ontario Fund Act, 2024, BOF is building a stronger, more resilient province for today and future generations. Learn more at buildingonfund.ca and follow us on LinkedIn @buildingontariofund. 

About Ontario Power Generation

As Ontario’s largest and one of North America’s most diverse electricity generators, OPG invests in local economies and employs thousands of people across Ontario. OPG and its family of companies are advancing the development of new low-carbon technologies, refurbishment projects and electrification initiatives to power the growing demands of a clean economy. Learn more about how the company is delivering these initiatives while prioritizing people, partnerships and strong communities at opg.com. 

Advisors

Blake, Cassels & Graydon LLP acted as legal advisors to CGF and CGFIM in connection with CGF’s investment.

McCarthy Tétrault LLP acted as legal advisors to BOF in connection with BOF’s investment.

Torys LLP acted as legal advisor to OPG in connection with this transaction. 

RBC Capital Markets acted as financial advisor to CGF, CGFIM and BOF in connection with CGF’s and BOF’s investments.

CIBC World Markets Inc. acted as financial advisor to OPG in connection with this transaction. 

PSP Investments’ Conflict of Interest Policy

PSP Investments has established a policy to address the risk of any real, potential or perceived conflicts of interest in the context of the services provided by CGFIM to CGF, requiring PSP Investments and CGF to disclose where they have overlapping investments.  

At the time of the approval of the transaction, PSP Investments held (i) ownership stakes in each of GE Vernova Inc. and Hitachi, Ltd., the ultimate parent companies of the technology developer in respect of the DNNP, of approximately 0.01% and less than 0.2%, respectively, held through various portfolios in the context of its ordinary course public market activities, including through externally managed portfolios over which PSP Investments has no investment discretion and (ii) an ownership stake in AECON Group Inc., the ultimate parent company of the constructor in respect of the DNNP, of less than 0.5% held through a private fund where PSP Investments has no management discretion. In each instance, PSP Investments’ investment carries no governance or decision-making ability.  

The foregoing is being disclosed in accordance with PSP Investments' Conflicts of Interest Policy.

Alright, it's been a while since I covered the Canada Growth Fund which PSP Investments oversees and this is a major deal worth covering.

The transaction details and public benefits in the Canada Growth Fund press release above are telling, they basically lay it all out and explain the nature and scope of the project and why the Canada Growth Fund is teaming up with the Building Ontario Fund to fund this major project which is a greenfield project and carries its own unique risks and opportunities. 

As stated above, OPG remains the majority owner and operator of the DNNP, with CGF and BOF acquiring meaningful minority stakes in the Project, representing 15% and 7.5% ownership, respectively.

This is a major milestone for Canada because if this project goes well, it will "reinforce Canada’s robust nuclear supply chain, inject hundreds of millions of dollars into Ontario’s industrial supply chain, contribute to the resilience of Canada’s low-carbon electricity grid, and foster a new generation of Canadian nuclear expertise." 

I would also invite you to read this National Post article, What are small modular reactors? Why Carney and Ford just pledged $3B for a mini nuclear plant.

There are risks but if you ask me, nuclear energy is the future and it's the only reliable clean source of energy in a world where AI is sucking up a lot more energy and we need to decarbonize to attain net zero by 2050.

A small governance note, the Canada Growth Fund operates independently from governments but it was set up by the federal government and that $15 billion earmarked for investments in clean energy and other technologies is taxpayer money. So, you bet they have a channel to government representatives and are in constant contact with them when it comes to major investments like this one.

It would be the same if the BDC or EDC and not PSP was asked to handle the Canada Growth Fund but the government has no say in PSP's investments, it has more of a say in the BDC and EDC's operations.

It can be confusing but let me just make it crystal clear, the federal government funded the CGF and has more influence on it than it does over PSP Investments which manages the CGF.

In any case, this is a major investment in Canada's energy future which is why I highlighted what Energy and Natural Resources Minister Timothy Hodgson noted above.   

SMRs are the future of energy, let's all hope this project turns out to be a major success.

Learn more about small modular reactors and this project on OPG's website here.

Below, Prime Minister Mark Carney and Premier Doug Ford hold a news conference in Bowmanville, Ont. to announce a joint investment in the Darlington New Nuclear Project. The federal government will invest $2 billion and the Ontario government $1 billion to support the construction and functioning of four small modular reactors which, once operational, will provide clean power to 300,000 households.

Also, small modular nuclear reactors are being touted as a key piece of the future of clean energy and construction is now underway in Ontario on the first of its kind in the G7. For The National, CBC’s Susan Ormiston breaks down what’s behind the hype and why some say Canada should proceed with caution. 

No doubt, there are risks and costs will probably be a lot higher once finalized but this is the future of energy and it will provide power to Ontario for decades to come so let's embrace it and stop the nonsensical comments that wind, solar and battery storage are the way to ensure a low carbon future.

Lastly, Canada has a few immediate economic problems, like tariffs and a potential recession. But there are also some long-standing structural problems, like our poor productivity and the erosion of business investment.

National Bank Chief Economist Stéfane Marion has highlighted the decimation of investment by Canadian business and the sharp divergence with the U.S. He talks to host Amanda Lang about what happened to manufacturing and why Canada needs a red tape czar. 

Great discussion with my former colleague Stefane Marion, take the time to listen to it.  

Sai Devabhaktuni, Senior Managing Director, recently joined other Private Equity Leaders for a discussion on Portfolio Construction at the 2025 Mergermarket Private Equity Forum. 

The private equity playbook is being rewritten and reshaping how investors operate. Longer holding periods, slower exit activity, and changing GP behaviours are driving institutional allocators to rethink traditional approaches. At the recent Mergermarket Private Equity Forumin Austin, industry leaders gathered to discuss how they are evolving portfolio construction in today’s environment.  

Navigating the slower flywheel  

Sai Devabhaktuni, Senior Managing Director at BCI Private Equity, shared how BCI is navigating these market challenges. “The investment – value creation – monetization flywheel is not spinning as fast as it should be.” Put simply, private equity firms are taking longer to exit investments and return capital while simultaneously approaching investors for new fund commitments.  

In response to these extended timelines, BCI has recalibrated its capital deployment and is taking a more deliberate approach on both the timing and the sizing of commitments.  BCI’s disciplined strategy includes being more selective on investments and active portfolio management that carefully weigh risk exposures across holdings.  

Dynamic portfolio management  

At the same time, Devabhaktuni outlined three areas where BCI Private Equity is adapting: 

• Building strategic GP relationships: Moving toward fewer, deeper partnerships while prioritizing managers with strong value creation capabilities, AI adoption, and robust succession planning. As Devabhaktuni explained, “As we’re deploying capital… that capital will be there for an extended period of time, we need to make sure it’s protected and there’s continuity.” That said, BCI remains open to new partnerships: “If an interesting opportunity comes up and there’s a value proposition, we’ll engage. The bar is higher, but we’ll engage.” 

• Implementing broad diversification: The strategy spreads investments across firm sizes, geographies, and capital stack positions to build portfolio stability. “We want to construct a portfolio that is resilient and diverse in terms of the size of private equity firms we engage with—not just large cap but also middle market.” Geographically, the team favors a regional approach, maintaining diversified exposure across markets rather than taking concentrated country-specific positions. 

• Flexible, active portfolio management:  BCI tactically rebalances its exposure as market conditions evolve.  This may include utilizing the secondary markets, altering the risk/reward paradigm by moving up the capital structure or obtaining exposures through continuation vehicles. As it relates to continuation vehicles, BCI takes a case-by-case approach to each opportunity. “There’s no default option from our perspective; everything is bespoke.”   

Looking ahead  

Managing nearly C$34 billion in assets under management through 80+ investment professionals across Victoria, New York, and London, BCI Private Equity reflects how leading investors are adapting to markets with active portfolio management while maintaining a focus on long-term value creation. Current market dynamics will likely persist with evolving distribution patterns—a reality that prompted Sai to note, “It’ll be interesting to see what happens in the future.” BCI’s agile approach, characterized by flexible deal structuring and disciplined investing, enhances the firm’s ability to respond to these conditions.  

You can watch a recording of the full panel discussion on BCI's website here. 

I cannot embed it below because the embed code isn't public but it's worth listening to this panel discussion.

Fast forward to minute 6 to listen to Sai's comments.

He discusses a well-known problem in that GPs are not exiting their investments fast enough and coming back to LPs to re-up, meaning to ask for more capital.

In response, BCI is "recalibrating" its  capital deployment, a fancy term which just means they're slowing things down, carefully evaluating whether to re-up with funds, looking at building new strategic relationships where warranted, and just managing liquidity a lot tighter using secondaries market which offers decent pricing.

Sai says there are a lot of structural factors affecting PE portfolios in 2025 -- 2022 inflated pricing, higher rates to name two -- but they are adapting to the new reality and focusing more on managing risk.

He talks about how they're thinking through a lot of issues like stagflation, probability of recession, AI bubbles in public markets and they're constructing a portfolio which is resilient both in terms of sectors and geographies.

They're also thinking hard about structured equity and how they can use it to manage risk better. 

Anyways, there is more to this panel discussion so take the time to listen to all the panellists' views here. 

Again, I cannot embed the discussion below so watch it here.  

My only remarks are that private equity is still struggling, especially the smaller less well-known funds.

Steve Weiss made a comment today (watch clip below at minute 2) where there were "36 bids" at an auction run by an investment bank and that competition is ferocious in the space especially for smaller players. As far as the big players, he rightly notes the IPO markets for PE related investments remains shut (only tech IPOs are doing well).

Ilya Gridneff and Mary McDougall of the Financial Times report Canada tells pension funds to invest at home in age of ‘economic nationalism’:

Canada is calling on its C$3tn (US$2.1tn) pension system to boost domestic investment as it seeks C$500bn in new finance to reboot the economy and lower its dependence on the US.

Industry minister Mélanie Joly told the Financial Times the new wave of “economic nationalism” means Canada’s financial institutions must foster homegrown investments and major infrastructure projects to kick-start the country’s sluggish economy.

“I’ve had lots of conversations with our banks, and our pension funds. There’s a sentiment that we need to think about Canada first and that we need to put capital where our mouth is,” she said.

This month Joly launched an industrial strategy aimed at creating jobs and attracting foreign investment in response to US President Donald Trump’s tariffs on Canada.

“For a long time pension funds have said that they need to provide yields to their beneficiaries . . . but they can have a discussion with their beneficiaries about their impact in their own country, their own environment, where beneficiaries live,” she said.

Like the UK, Canada has been examining how to channel more pension assets to domestic targets to combat weak productivity and poor business investment.

Last year more than 90 Canadian corporate executives signed an open letter calling on the government to amend rules which would allow them to increase domestic investments, saying the amount they allocated to Canadian equities had dwindled from 28 per cent in 2000 to 4 per cent by 2023.

Ottawa in December lifted its 30 per cent cap for investments in Canadian entities at a time when Trump was threatening tariffs and trade wars against its major trading partner.

“This will make it easier for Canadian pension funds to make significant investments in Canadian entities,” said the finance ministry’s Fall Economic Statement.

The Canada Pension Plan Investment Board, the country’s largest fund with C$714bn of assets, revealed its total allocation to Canadian assets dropped to 12 per cent of the fund in March from 14 per cent two years earlier, although the total value of Canadian assets still increased.

But Paul Beaudry, a former Bank of Canada deputy governor, warned forcing funds to invest locally was “very dangerous” as it risked creating “a type of crony capitalism”.

Beaudry said the government could identify either socially beneficial projects or mid-level companies that big funds overlooked for investment.

“I’m not against pushing it but I like it to be more on the incentive part than on the idea of kind of forcing it,” he said.

Prime Minister Mark Carney launched a “Buy Canada” campaign last month that prioritises local products for procurement as a way to make Canada “the strongest economy in the G7”.

It is an ambitious goal considering the country’s economy shrunk more than expected in the second quarter while exports fell 7.5 per cent compared with the first three months of the year because of the tariffs, according to Statistics Canada.

Canada has also set up its Major Projects Office to fast track national infrastructure proposals and to create a positive investment environment for financial institutions such as its pension funds.

The government is also potentially lowering the 90 per cent threshold that limits municipal-owned utilities from attracting more than 10 per cent private sector ownership, in particular from Canadian pension funds.

CPP Investments has nearly 50 per cent of all its assets invested in the US, despite pressure from Ottawa to invest more in its home market. Similarly Omers, the pension fund for Ontarian municipal workers with C$141bn of assets, had 16 per cent invested in Canada and 55 per cent invested in the US at the end of June.

“Dozens of policymakers have frequently commented in recent years about welcoming more investments into Canada and our approach remains unwavering and steadfast,” CPP Investments said. “We act in the best interests of contributors and beneficiaries in line with the pension promise.”

CPP Investments in July announced a C$225mn investment in a new data centre in Cambridge, Ontario. It also has a $1.7bn investment in Canadian Natural Resources, the country’s largest energy producer.

Other Canadian funds have a higher domestic allocation, such as the C$123bn Healthcare of Ontario Pension Plan, which has more than 55 per cent of assets invested in Canada, and the C$270bn Ontario Teachers’ Pension Plan which has 36 per cent.

I must admit these articles are starting to irritate me.

Industry Minister Mélanie Joly shouldn't be publicly commenting on Canadian pension plans as they don't fall under her purview. 

I don't know why she's giving interviews to the FT to discuss this matter publicly, it sends all the wrong messages to people reading it throughout the world, namely, that Ottawa dictates where Canada's large pension funds invest.

But the truth is Canada's large pension funds/ plans operate independently from governments.

Yes, the board of directors at two of the largest Crown corporations in Canada -- CPP Investments and PSP Investments -- is nominated by the federal government and provincial governments (in the case of CPP Investments) but that's about it.

Governments have no say whatsoever on how they manage pension assets or where they invest, all they can do is hold these pension funds to the highest standards of transparency and force them to divulge a lot of details on where they invest.

Governments can hold consultations with these large pension funds and they hold enormous influence over them but they cannot manage their day to day operations or force them to invest more domestically.

That's just silly and counterproductive, you don't want government bureaucrats with no skin in the game telling large pension funds where to invest.

What governments can do is create the winning conditions to allow large domestic pension funds to invest more domestically, in particular in infrastructure assets.

I discussed this in my last comment here and this is where the federal and provincial governments can play a critical role:

At the heart of this report lies "The Investible Window" which provides the winning conditions for pension funds to invest more domestically:

Basically, in a nutshell, pension funds want to invest in highly scalable projects that provide competitive risk-adjusted returns, they want good governance rights and they prefer brownfield over greenfield assets, meaning an asset that is already operational and has know cash flows.

The report also explicitly states: "Benchmarking against global peers is the norm. The fact that a project is domestic is not sufficient justification for sub-commercial returns."

What does this mean in practice? It means Canada's large pension funds aren't averse to investing in large domestic projects where they have no currency risk as long as these projects are scalable and offer competitive returns relative to what they can get elsewhere.

The report offers a lot more details and provides more context but I'm boiling it down to what is critically important. 

Anyway, take the time to read the entire report here, well worth it and I certainly hope it helps bridging the disconnect between policy and practical pension investments.  

What about CDPQ and its dual mandate to maximize returns and help develop Quebec's economy?

What about it? It's going well now but I remember a time not too long ago when it was a disaster and fraught with scandals, corruption and outright fraud.

Moreover, if we were honest with Quebecers, we would publish the opportunity cost of all this domestic investment relative to going global and investing and co-investing alongside top alternative funds which CDPQ also does and does well.

So, while the dual mandate works at CDPQ and can work at other large Canadian pension funds, I'm far from certain it's in the best interest of pension contributors and beneficiaries or the Canadian economy.

Besides, you would need to adopt new laws to change the governance at these funds, no easy feat.

All this to say with all due respect to Industry Minister Mélanie Joly, please stay in your lane and let experts like the Minister of Energy and Natural Resources Timothy Hodgson who actually sat on pension boards discuss this matter publicly.

One final thing, the article ends by noting:

Other Canadian funds have a higher domestic allocation, such as the C$123bn Healthcare of Ontario Pension Plan, which has more than 55 per cent of assets invested in Canada, and the C$270bn Ontario Teachers’ Pension Plan which has 36 per cent.

Again, regular people reading this have no context and don't understand the liability-driven investments at HOOPP and OTPP which necessitates a high allocation to Canadian fixed income.

In other words, every pension fund and plan is different with a different mandate and asset mix but regular people reading this article are totally clueless.

And CPP Investments is managing close to $800 billion in assets, I'd be very concerned if their allocation to Canada was similar to smaller funds or plans.

I can go on and on but let me stop there, I take all these articles with a grain of salt, they're mostly meaningless gibberish.

Below,Industry Minister Melanie Joly address the news that GM will end production of its BrightDrop EV in Ingersoll, Ontario. 

Like I said, Joly should be talking about industries, that's her job, leave pension funds to experts who understand all the intricacies involved.

And CNBC's 'Fast Money' team discusses General Motors as the automaker beats earnings expectations on the top and bottom lines.

Susanna Rust of IPE reports pension fund execs tackle ‘disconnect’ as governments target institutional capital:

A group of senior-level executives from major pension funds across the world have developed a guide to help governments understand how they can successfully attract domestic institutional capital to help achieve their policy goals. 

The guide is the output of a working group of the International Centre for Pension Management (ICPM), a global network of more than 50 pension funds and related organisations that together manage more than $8trn (€6.9trn) of assets.

Sebastien Betermier (featured above), ICPM executive director and a lead author of the new paper alongside Onno Steenbeek, from APG Asset Management, told IPE: “We launched this working group because there is a real disconnect between what governments expect from private capital and what institutional investors expect from their investments.

“This report develops a comprehensive and practical framework – the ‘investible window’ – that is extremely useful for understanding how domestic institutional capital can align to public goals and priorities.

“Our hope is that this paper will provide clarity and facilitate constructive discussions on what institutional investors consider attractive and credible investment structures.”

Other pension fund executives on the working group, in addition to Betermier and Steenbeek, include Mark Lyon, deputy chief investment officer at Border to Coast Pensions Partnership; Chris Rule and Richard Tomlinson, CEO and CIO of Local Pensions Partnership Investments (LPPI), respectively; Jeffrey Hodgson, managing director, global stakeholder affairs, and Derek Walker, head of portfolio design and construction, at CPP Investments, and Ali Parker, head of investment research and strategy at TCorp in Australia.

‘Structures that money can trust’

The report – Unlocking domestic investment opportunities: Aligning public goals with pension fund realities – describes how governments will not mobilise domestic institutional capital via “patriotic appeals and mandates” but by “creating structures that money can trust”. It defines the ‘investible window’ as “the specific set of legal, financial and governance conditions that must simultaneously exist for institutional capital to flow into domestic projects while meeting fiduciary duty”.

“While the exact contours of the investible window may vary across institutions […], there is broad consistency in how institutional investors assess investment readiness,” the paper continued.

“Understanding and designing around this investible window is essential for governments and development partners seeking to attract private capital to domestic priorities.”

Last week, the Mercer CFA Institute Global Pension Index report highlighted how calls for pension funds to channel capital into national priorities have intensified, with the issue particularly central in the UK, where debates on investment mandates and economic growth are reshaping pension policy.

This morning, the UK government unveiled ‘Sterling 20’, a new partnership between 20 of the UK’s largest pension funds and insurers that will work with the government and City of London Corporation “to channel the nation’s savings into key infrastructure and fast-growing businesses in key modern industrial strategy sectors like AI and fintech”.

In a recent opinion piece for IPE Magnus Billing, the former CEO of Swedish pension fund Alecta, said policymakers’ productive finance push made sense, but that “[w]hen policymakers push pension funds towards higher-cost alternatives, they’re asking retirees to gamble their financial security on uncertain outcomes”. 

Founded in 2004 by Keith Ambachtsheer at the Rotman School of Management, University of Toronto, ICPM is now a network of 54 pension funds, having last week welcomed GIC, Singapore’s sovereign wealth fund, as a new member. 

You can download ICPM's report, Unlocking Domestic Investment Opportunities here.

Below, the executive summary and the working group:

 

 Among Canadians in the working group you have Eric de Roos of OTPP, Alison Loat of OPTrust, James Kwon of UPP, Bernard Morency who was formerly at La Caisse, Denes Nemeth of AIMCo, Harpinder Sandhu of BC Municipal Pension Board of Trustees and Derek Walker of CPP Investments

Canadian representation is strong and for good reason. Prime Minister Mark Carney and his government are working on getting major projects off the ground and they want Canada's large pension funds to invest in these projects.

At the heart of this report lies "The Investible Window" which provides the winning conditions for pension funds to invest more domestically:

Basically, in a nutshell, pension funds want to invest in highly scalable projects that provide competitive risk-adjusted returns, they want good governance rights and they prefer brownfield over greenfield assets, meaning an asset that is already operational and has know cash flows.

The report also explicitly states: "Benchmarking against global peers is the norm. The fact that a project is domestic is not sufficient justification for sub-commercial returns."

What does this mean in practice? It means Canada's large pension funds aren't averse to investing in large domestic projects where they have no currency risk as long as these projects are scalable and offer competitive returns relative to what they can get elsewhere.

The report offers a lot more details and provides more context but I'm boiling it down to what is critically important. 

Anyway, take the time to read the entire report here, well worth it and I certainly hope it helps bridging the disconnect between policy and practical pension investments.

If it were up to me, I'd be a bulldozer privatizing every major infrastructure asset the federal government owns and building pipelines east to west and west to east and taking anyone who opposes me to court.

Privatize airports, ports, toll roads, and a lot more and create major energy projects and invite domestic and foreign pools of capital to invest in these projects.

But first get the winning conditions right or else forget it, you're never going to go anywhere and it will be another wasted opportunity.

If I sound old and cynical, good, that's what I'm aiming for, tired of slogans and patriotic puff, actions mean a lot more than words to me.

Below, Prime Minister Carney holds a media availability during his recent visit to the United Kingdom where he met with several heads of government and business leaders and attended the Global Progress Action Summit.

Also, speaking with reporters from Canada House in London, Energy and Natural Resources Minister Tim Hodgson recaps his three-day trip to the United Kingdom. He faces questions about the Trump administration’s recent investments in two Canadian mining companies, Chinese demand for Canadian oil, and Alberta’s push for a pipeline to British Columbia’s north coast.