Canada’s pension funds helped pioneer institutional investment in private assets. Now regulators and asset managers are exploring whether the model can be opened to ordinary investors, raising questions about liquidity, valuation, fees and whether the advantages enjoyed by sophisticated investors can really be replicated at retail level.
For decades, Canada’s largest pension funds have been among the most prominent institutional investors in private markets. Their scale, long-term liabilities and ability to tolerate illiquidity have allowed them to build portfolios spanning private equity, infrastructure, real estate, private credit and natural resources. Now the Canadian model is approaching a new frontier.
Regulators are considering how to give individual investors greater access to long-term and private assets, while asset managers are developing structures that could make traditionally institutional investments available to a much broader pool of capital. The result is a significant convergence between two parts of the investment industry that have historically operated very differently: institutional private markets and retail wealth. But the timing is intriguing. Just as Canada considers opening the door to retail investors, some of the country’s most experienced private-market investors are discovering that private equity is not necessarily the one-way bet it once appeared to be.
The pension fund laboratory
Canada’s pension funds have long been regarded as pioneers in private-market investing. The country’s large defined-benefit schemes have the scale and investment horizons to take positions in assets that cannot easily be bought or sold. That has enabled them to invest directly in companies and infrastructure projects, alongside commitments to external private-market managers.
The scale is substantial. The Canadian Securities Administrators reported that Canadian-domiciled private asset funds grew from C$83bn in 2020 to C$134bn in 2023. The figure covers prospectus-exempt funds investing in areas including private equity, private debt, real estate and infrastructure, and the regulators acknowledge that it is likely to underestimate the true size of the market.
The model has also evolved. Canada Pension Plan Investment Board (CPP Investments) has historically built a substantial direct-investment capability. But the organisation is increasingly working with major private-capital managers as transactions become larger and more complex. The Financial Times reported in August that CPP Investments has committed capital to infrastructure funds managed by EQT and KKR and is also backing Blackstone’s open-ended infrastructure vehicle.
CPP Investments’ infrastructure exposure is now almost C$80bn, according to the FT, illustrating just how far Canadian pension capital has moved into private assets. That is important because it demonstrates that even the largest and most sophisticated investors are not necessarily choosing between “direct” and “fund” investment anymore. Instead, the ecosystem is becoming more interconnected. Pension funds provide capital and expertise. Private-market managers provide sourcing, specialist sector knowledge and transaction capacity. Co-investment structures bring the two together. The same process may now be coming to retail investment.
From institutions to individuals
The Ontario Securities Commission has been examining how investment-fund structures could give retail investors access to what it calls “Long-Term Assets”. Its consultation proposed a framework through which retail investors could gain exposure to assets such as infrastructure while benefiting from the expertise of professional investment managers.
Crucially, the OSC’s proposal is not simply about giving individuals the ability to buy private equity funds directly. It envisages investment structures designed to manage some of the particular risks associated with illiquid assets. Among its stated objectives are allowing retail investors to invest alongside experienced asset managers and institutional investors, including pension funds, while providing a potential additional source of capital for long-term assets.
That is potentially transformative.The traditional dividing line has been relatively straightforward: public markets are available to most investors, while private markets are predominantly the domain of institutions, family offices and accredited or high-net-worth investors. But that distinction is becoming harder to maintain.
Private-market managers want more permanent sources of capital. Wealth managers increasingly want differentiated products for clients. Governments want private capital directed towards infrastructure and economic development. And investors themselves are being told that diversification requires looking beyond listed equities and government bonds. Canada therefore finds itself at the centre of a much broader international trend.
The case for democratisation
There is a compelling argument for giving individual investors greater access to private assets. A retail investor currently has limited ways of participating directly in areas such as private infrastructure, private companies or privately originated credit. Yet those assets increasingly form a significant part of the portfolios of Canada’s largest pension funds.
The appeal is not necessarily simply higher returns. Private assets can provide diversification, exposure to different sources of economic growth and, in some cases, access to investments with long-duration cash flows. Infrastructure is an obvious example. A pension fund can own an airport, electricity network or renewable-energy asset for decades. An individual investor cannot easily replicate that investment strategy by buying shares in a conventional brokerage account. A regulated fund structure could potentially bridge that gap. It could also help channel capital towards assets that policymakers want to see developed. The OSC consultation specifically noted that increasing capital allocation to long-term assets could help finance areas such as transportation, housing, energy and municipal services.
That creates an unusual alignment of interests. Asset managers get access to a larger pool of capital. Investors gain exposure to new asset classes. Governments potentially gain another source of financing for infrastructure. But the investment industry is discovering that there is a considerable difference between making private assets available and making them suitable for everyone.
The problem with copying the pension model
The strongest argument against rapid retail expansion comes from the very characteristics that made private markets attractive to pension funds in the first place. Illiquidity is an advantage when an investor has long-term liabilities and does not need to sell tomorrow. It can become a serious problem when an individual investor suddenly wants their money back.
Private assets are also difficult to value. Unlike a listed share, there may be no continuously observable market price. A fund may instead rely on models, comparable transactions or periodic valuations. The OSC recognises these issues. Its proposed framework is specifically intended to mitigate some of the risks associated with retail investment in long-term assets. But critics argue that regulation cannot completely eliminate the underlying characteristics of private markets.
In March 2026, the C.D. Howe Institute published a particularly forceful critique. Former Ontario Securities Commission chair Edward Waitzer and lawyer Rachel Wasserman argued that private equity’s lack of transparency and liquidity makes it fundamentally different from the public markets available to ordinary investors. They also challenged the assumption that retail investors are being excluded from an obviously superior investment opportunity. Their argument is that private equity has recently struggled to justify the premium implied by its reputation, while fees, valuation uncertainty and liquidity constraints remain significant.
That criticism deserves attention because Canada’s own pension funds are providing some evidence for it.
When the experts struggle
Ontario Teachers’ Pension Plan generated a 6.7% total-fund return in 2025, taking its assets to C$279.4bn. But private equity was a significant weak spot. The asset class returned -5.3%, compared with a benchmark return of 18.0%. Infrastructure returned 1.8%, against a 7.8% benchmark. The pension fund itself says private equity is facing a combination of less liquidity, high competition, expensive debt and valuation pressures. OMERS had a similar experience. Its C$145.2bn portfolio generated a respectable 6% overall return in 2025, but private equity returned -2.5%, compared with 9.5% in 2024.
Private credit, by contrast, returned 8.3%, while infrastructure returned 6%. The lesson is not that private markets have failed. Far from it. Canada’s pension funds remain deeply committed to them. Rather, the lesson is that private markets require expertise, patience and portfolio construction. The assets do not automatically produce superior returns simply because they are private. That makes the retail question considerably more complicated.
If one of Canada’s most sophisticated investors can experience a 5.3% loss in private equity in a year when its public-equity portfolio returned 15%, should the industry really be presenting private equity as an obvious upgrade for individual investors?
Private markets are changing too
There is another reason the Canadian experiment matters. The expansion of retail access is happening at the same time as private markets themselves are changing. The old model was relatively simple: pension funds and endowments committed capital to closed-end private-equity funds, which invested over a defined period and eventually returned capital through exits. The new model is much more fluid.
Evergreen funds, semi-liquid structures, private credit vehicles and long-term asset funds are designed to make private assets more compatible with wealth-management channels. That changes the infrastructure required to support them. Valuation becomes more important. Liquidity management becomes critical. Fund administration becomes more complicated. Distribution and suitability requirements become more demanding. In other words, the convergence is not simply between institutional and retail investors. It is also between private-market investment and the broader investment infrastructure supporting traditional wealth management.
That is precisely where Canada’s experiment could have implications beyond its borders.
Canada as a test case
Canada has an unusual combination of ingredients. It has some of the world’s largest and most sophisticated pension investors; a developed private-capital industry; regulators actively examining retail access; and a government increasingly interested in mobilising private capital for strategic investment. The launch of the proposed Canada Strong Fund adds another dimension.
Prime Minister Mark Carney announced plans for a C$25bn government-owned investment vehicle intended to support major projects in areas including energy, infrastructure, mining, agriculture and technology. Individuals are also expected to have the opportunity to invest in the fund. That creates a potentially powerful narrative.
Canadian citizens could increasingly encounter private-market investing not simply through a pension fund they never see, but through products held directly in their investment accounts. Yet the government fund also illustrates the distinction between access and risk. A national investment vehicle with a strategic mandate is not the same thing as buying a conventional private-equity fund. The structure, governance, liquidity and investment objectives matter enormously.
For asset managers, this means the next phase of private-market growth may depend less on simply raising more institutional capital and more on designing products capable of surviving the transition into the wealth market.
The infrastructure challenge
For Convergent Assets, this may ultimately be the most interesting part of the story. Opening private markets to retail investors is not simply a regulatory exercise. It requires an ecosystem.
Managers need appropriate fund structures. Administrators need to value illiquid assets accurately and frequently enough to support subscriptions and redemptions. Platforms need to handle more complex products. Advisers need the tools and knowledge to explain liquidity and valuation risks. Regulators need data that enables them to monitor what is happening.
The Canadian Securities Administrators’ finding that private asset funds increased from C$83bn to C$134bn between 2020 and 2023 gives an indication of the underlying growth already taking place. The next stage could therefore be less about whether retail investors can access private markets and more about whether the investment infrastructure can support them safely at scale. That is a very different question.
A new convergence
Canada’s pension funds helped establish the country’s reputation as a private-market pioneer. Now the country is testing whether the same philosophy can be extended beyond institutions.
There is a compelling logic. If private infrastructure, private credit and private companies can form meaningful components of long-term institutional portfolios, why should individual investors necessarily be excluded? But there is an equally compelling counterargument. Institutional investors have enormous advantages: specialist teams, negotiating power, sophisticated risk management, diversified portfolios and, crucially, the ability to tolerate illiquidity.
Those advantages cannot simply be packaged into a fund and assumed to transfer automatically to the retail investor. Canada’s experiment therefore has the potential to become something more important than another story about the democratisation of private markets. It could become a test of whether the investment industry can genuinely translate institutional investment capability into a retail product without transferring institutional-level risks to investors who lack institutional-level resources. That is the real convergence to watch.
The question is no longer whether private markets belong in mainstream portfolios. Canada’s pension funds have already answered that. The question is whether the infrastructure, regulation and product design of the next generation of private markets can make them work for everyone else.
And Canada may be one of the first major markets to find out.