Layan Odeh of Bloomberg reports Canada’s top pension earns 7.5% in its best quarter in over a decade:

Canada Pension Plan Investment Board earned 7.5% in its first fiscal quarter, fueling its best performance since 2015 with investments in stocks and energy. 

Net assets rose to C$863.6 billion ($622.5 billion) in the period ended June 30, up about 9% from the previous quarter. “Our investment portfolio remains well positioned to benefit from favorable public equity market performance, with meaningful contributions across our globally diversified portfolio,” 

Chief Executive Officer John Graham said in a statement Friday. Public equity holdings were buoyed by AI-related sectors and “resilient” corporate earnings. Investments in real assets — particularly energy — as well as a stronger US dollar further boosted returns, according to the statement. 

Canada’s largest pension plan made 14 credit investments during the quarter, the largest being $1 billion in Blackstone Inc.’s private credit fund.

 CPPIB also pledged to buy up to $1 billion in auto loans from Global Lending Services and committed around €270 million ($312.4 billion) to finance a European corporate loan portfolio originated by Ares Management Corp. 

The Toronto-based pension plan also invested in the AI buildout, allocating $150 million in a delayed draw term loan facility supporting CoreWeave’s deployment of AI compute infrastructure across four data centers. 

It also put $1.75 billion toward EQT AB’s strategy to build AI systems, led by data center developer and operator EdgeConneX. CPPIB routinely receives more contributions than required to pay benefits during the first part of the calendar year, partially offset by benefit payments exceeding contributions in the final months of the year.  

Earlier today, CPP Investments issued a press release stating its net assets total $863.6 billion at first quarter of Fiscal 2027: 

Highlights:

• Net assets increase by $70.3 billion
• Net income of $60.2 billion
• Net return of 7.5%
• 10-year net return of 9.4%

TORONTO, ON (August 14, 2026): Canada Pension Plan Investment Board (CPP Investments) ended its first quarter of fiscal 2027 on June 30, 2026, with net assets of $863.6 billion, compared to $793.3 billion at the end of the previous quarter.

The $70.3 billion increase in net assets for the quarter consisted of $60.2 billion in net income and $10.1 billion in net transfers from the Canada Pension Plan (CPP). CPP Investments routinely receives more CPP contributions than required to pay benefits during the first part of the calendar year, partially offset by benefit payments exceeding contributions in the final months of the year.

The Fund, composed of the base CPP and additional CPP accounts1, generated a 10-year annualized net return of 9.4%. For the quarter, the Fund’s net return was 7.5%. Since CPP Investments first started investing the Fund in 1999, and including the first quarter of fiscal 2027, it has contributed $609.3 billion in cumulative net income.

“Our investment portfolio remains well positioned to benefit from favourable public equity market performance, with meaningful contributions across our globally diversified portfolio,” said John Graham, President & CEO. “This led to CPP Investments delivering its strongest quarterly investment performance in more than a decade. While a strong quarter is welcome, a single quarter isn’t how we measure success. Our focus remains on delivering the long-term investment performance required to help sustain the Canada Pension Plan for generations of contributors and beneficiaries.”

Performance was broad-based, with gains from across asset classes. Public equities generated strong returns, supported by resilient corporate earnings, strong performance in AI-related sectors and improving investor sentiment. Real assets, particularly energy, also contributed meaningfully, alongside steady gains in credit and positive contributions from external manager programs. Fixed income delivered more modest gains amid elevated bond yields and evolving expectations for monetary policy, while foreign exchange movements, primarily from a stronger U.S. dollar, further enhanced overall results. CPP Investments intentionally constructs a diversified global portfolio that is less concentrated than public market indices, supporting the Fund’s long-term resilience.

Performance of the Base and Additional CPP Accounts

The base CPP account ended its first quarter of fiscal 2027 on June 30, 2026, with net assets of $773.4 billion, compared to $712.9 billion at the end of the previous quarter. The $60.5 billion increase in net assets consisted of $55.5 billion in net income and $5.0 billion in net transfers from the base CPP. The base CPP account’s net return for the quarter was 7.7% and the 10-year annualized net return was 9.5%.

The additional CPP account ended its first quarter of fiscal 2027 on June 30, 2026, with net assets of $90.2 billion, compared to $80.4 billion at the end of the previous quarter. The $9.8 billion increase in assets consisted of $4.7 billion in net income and $5.1 billion in net transfers from the additional CPP. The additional CPP account’s net return for the quarter was 5.7% and the annualized net return since inception was 6.5%.

The additional CPP was designed with a different legislative funding profile and contribution rate compared to the base CPP. Given the differences in its design, the additional CPP has had a different market risk target and investment profile since its inception in 2019. As a result of these differences, we expect the performance of the additional CPP to generally differ from that of the base CPP.

Furthermore, due to the differences in its net contribution profile, the additional CPP account’s assets are also expected to grow at a much faster rate than those in the base CPP account.

Long-Term Financial Sustainability

Every three years, the Office of the Chief Actuary of Canada (OCA), an independent federal body that provides checks and balances on the future costs of the CPP, evaluates the financial sustainability of the CPP over a long period. In the most recent triennial review published in May 2026 (revised report), the Chief Actuary reaffirmed that, as at December 31, 2024, both the base and additional CPP continue to be sustainable over the long term at the legislated contribution rates.

The Chief Actuary’s projections are based on the assumption that, over the 75-year projection period following December 31, 2024, the base CPP account will earn an average annual rate of return of 4.05% above the rate of Canadian consumer price inflation, known as a real return. The corresponding assumption is that the additional CPP account will earn an average annual real rate of return of 3.53%.

The OCA report provides forward-looking return assumptions and projected financial states for the base and additional CPP. The table below presents CPP Investments’ historical net real returns, which reflect realized performance over past periods.

CPP Investments continues to build a portfolio designed to achieve a maximum rate of return without undue risk of loss, while considering the factors that may affect the funding of the CPP and its ability to meet its financial obligations on any given day. The CPP is designed to serve today’s contributors and beneficiaries while looking ahead to future decades and across multiple generations. Accordingly, long-term results are a more appropriate measure of CPP Investments’ performance and impact on plan sustainability.

Operational Highlights

Corporate developments

• John Graham, President & CEO of CPP Investments, was named the 2026 Canadian Business Leader of the Year by the Canadian Chamber of Commerce. The award celebrates exceptional leaders who exemplify what it means to be a nation, business and community builder.

• Appointed Geoffrey Rubin as incoming Head of Asia Pacific, in addition to his existing role as Senior Managing Director & One Fund Strategist. He succeeds Agus Tandiono who, after 12 years with CPP Investments, has decided to retire from his role as Senior Managing Director & Head of Asia Pacific. This change will be effective at the end of 2026.

• Released additional portfolio-level disclosure on the climate-related characteristics of its portfolio, introducing a framework classifying the portfolio according to carbon intensity and transition governance indicators of portfolio companies. CPP Investments has reported portfolio carbon footprint metrics since 2018.

• CPP Investments Insights Institute released a new report, Measuring What Matters: Evaluating the Total Portfolio Approach, examining how performance should be evaluated once risk choices, portfolio design and implementation are made explicit within a Total Portfolio Approach framework.

Board appointment

• Welcomed the appointment of Elizabeth Cannon to the Board of Directors, effective May 26, 2026. Dr. Cannon has more than four decades of experience in academia and governance and is currently Professor and President Emerita at the University of Calgary.

First Quarter Transaction Highlights

Capital Markets and Factor Investing

• Completed eleven co-investments alongside external fund managers, committing approximately C$1.2 billion across macro-themed strategies and equity trades in technology, financial and industrial sector opportunities.

Credit Investments

• Invested US$100 million into a credit-linked note with Barclays Bank Plc, a leading global financial institution, for a diversified portfolio of corporate loans across geographic markets.

• Invested €118 million in a senior first-mortgage loan secured by Capital Dock, a 217,000 square foot Class A office building located in Dublin’s South Docklands. The property is owned by a joint venture led by Kennedy Wilson.

• Committed US$88 million to purchase equity residuals in Element Fleet Management’s Chesapeake IV program, which issues asset-backed securities backed by a portfolio of U.S. fleet lease receivables, alongside Blackstone. Based in Toronto, Canada, Element is a global leader in fleet management and intelligent mobility solutions.

• Invested US$73 million in a synthetic risk transfer with a U.S. global systemically important bank, backed by a portfolio of U.S. subscription line facilities to large, diversified private equity sponsors.

• Invested US$75 million in the Class A notes of a private financing structure backed by the General Catalyst Customer Value Fund, which finances customer acquisition costs for technology companies in the U.S.

• Expanded an existing forward-flow agreement with Affirm, a leading U.S. payments provider with a broad merchant network, for a committed capacity of US$1.7 billion in outstanding loan portfolio balance.

• Committed approximately €270 million to finance a portfolio of European corporate loans originated by an Ares Management fund.

• Committed US$600 million-equivalent in a second separately managed account by TPG Asia Real Estate (formerly TPG Angelo Gordon), targeting real estate credit opportunities in South Korea.

• Invested A$302 million (C$299 million) in the A$1.9 billion (C$1.8 billion) first-lien term loan supporting CC Capital and One Investment Management’s privatization of Insignia Financial, a wealth management platform in Australia.

• Invested an additional US$100 million in a synthetic risk transfer referencing a portfolio of non-bank originated agency residential mortgage warehouses, increasing our total investment to US$175 million.

• Invested US$150 million in a delayed draw term loan facility supporting CoreWeave’s deployment of AI compute infrastructure across four data centres in the U.S. and Canada through a special purpose vehicle.

• Invested US$150 million in the preferred equity of Cerity Partners, a national registered investment advisor in the U.S.

• Committed US$1 billion in financing to Blackstone Private Credit Fund, which is a U.S.-based investment fund focused on providing senior secured loans to large, performing companies.

• Entered into a two-year forward flow commitment with Global Lending Services, a U.S. auto financing solutions provider, to acquire up to US$1 billion of auto loans.

• Agreed to sell our remaining interests in a European non-performing loan portfolio to a newly formed joint venture between Arrow Global and Fortress Investment Group, generating approximately C$1 billion in net proceeds. Our original investment was made in 2017.

Private Equity

• Committed US$85 million to acquire interests in three funds managed by Arcline Investment Management through a Stepstone-managed co-investment vehicle. Arcline is a growth-oriented private equity firm focused on the industrial sector.

• Invested US$15 million in Ollin Biosciences’ Series B initial closing to support the development of OLN324, a potential treatment for diabetic macular edema and wet age-related macular degeneration. Based in the U.S., Ollin Biosciences is a clinical-stage biotechnology company.

• Increased our investment in Beeline Medicines, a newly created biopharmaceutical company in the U.S. focused on developing new therapies for autoimmune diseases, by approximately US$11 million through a Series A extension, alongside Bain Capital.

• Committed US$100 million to Francisco Partners Agility IV, a private equity fund focused on global technology investments.

• Committed US$400 million to KKR Asian Fund V, a private equity fund focused on upper mid-market and large-cap buyout investments across Asia Pacific.

• Committed approximately US$300 million to funds managed by Sequoia, including Expansion Fund II, Growth Fund XII, and Direct Investment Vehicle 2026. Sequoia is a multi-stage global venture and growth investor.

• Committed an additional C$50 million to the Northleaf Venture Catalyst Fund III series, bringing our total commitment to Northleaf’s Canadian venture capital and growth equity program to approximately C$240 million.

• Committed US$124 million to a continuation vehicle managed by New Mountain Capital holding Azuria Water Solutions, a U.S. water infrastructure services provider.

• Committed US$104 million indirectly in the acquisition of Zentiva, a leading European generics and over-the-counter pharmaceuticals company, alongside GTCR.

• Invested US$100 million for a minority stake in Sealed Air, a U.S.-based leading global provider of food and protective packaging solutions, alongside CD&R.

• Invested US$100 million in Accuity Healthcare, a leading provider of pre-bill, revenue integrity services to hospital and healthcare systems in the U.S. through a single-asset continuation vehicle managed by Frazier Healthcare Partners.

• Committed US$50 million to Accel Core, which will invest in Accel’s core technology sectors, expected to include artificial intelligence, security, developer tools, fintech, defense and software. Accel is a leading global venture capital firm.

• Sold our 2.5% stake in Planet Labs, a U.S. satellite imagery and geospatial data company. Net proceeds were approximately US$342 million. Our original investment was made in 2021.

• Sold a diversified portfolio of 33 limited partnership fund interests in North American and European buyout funds to Blackstone Strategic Partners and Ardian, for net proceeds of approximately C$4.0 billion. The portfolio of interests represents various investments made in funds over the course of approximately 20 years.

Real Assets

• Invested US$1.75 billion to support EQT’s strategy to build AI Infrastructure, led by global data centre developer and operator EdgeConneX.

• Formed a strategic partnership with CtrlS Datacenters Ltd., a leading data centre operator in India. As part of the partnership, we will invest INR 40 billion (C$588 million) for an 8.2% stake in the company and we have allocated up to INR 30 billion (C$441 million) for a 48% stake in a joint venture to develop hyperscale data centre campuses across India.

• Completed the acquisition of a 50% stake in Inkia Energy, Peru’s largest power generation platform, at a total enterprise value of US$3.4 billion, alongside I Squared Capital.

• Formed a South Korea hospitality partnership with BlueCove Investment, a Korean hospitality-focused asset manager. We have announced a KRW 500 billion (C$474 million) programmatic venture, ​in which we will hold a 95% interest.

• Committed US$1.2 billion in financing to Caturus, an integrated natural gas and LNG platform in the United States, increasing our stake to 31%.

• Invested €400 million for a significant minority stake in Proudreed, a high-quality, diversified portfolio and one of the largest last-mile urban logistics platforms in France, alongside funds managed by Blackstone.

• Sold our 45% stakes in AMLI 3464 and AMLI Fountain Place, multifamily properties in the U.S. Combined net proceeds from the sales were approximately US$123 million. Our ownership interests were initially established in 2012 and 2016, respectively.

• Sold a 0.7% stake in Constellation Energy, a U.S.-based power producer, through a registered block trade for net proceeds of US$742 million. Our position was acquired through the sale of Calpine Corp. to Constellation in 2026, and we continue to hold a 1.3% stake in Constellation.

• Sold our 72% stake in the Elephant Park U.K. build-to-rent portfolio with Lendlease, to Greystar. Net proceeds were approximately C$670 million. Our original investment in the portfolio was made in 2017.

Transaction Highlights Following the Quarter

• Committed C$1 billion to acquire a majority stake in Tarchon, a 1.4 GW subsea electricity interconnector project between Germany and the U.K., alongside Elia Group’s international development platform, WindGrid.

• Committed US$100 million to a U.S.-based real estate property management business.

• Invested C$95 million in a mezzanine loan secured by Starwood Capital’s Italian logistics portfolio.

• Committed US$200 million to Advent Mid-Market Private Equity SCSp, which will focus primarily on control buyouts in North America and Europe across the business and financial services, consumer, healthcare and industrial sectors.

• Entered into an agreement to acquire LXP Industrial Trust, one of the largest portfolios of modern warehouse and logistics facilities in the U.S., in a transaction valued at approximately US$5.2 billion, in partnership with Brookfield Asset Management.

• Invested in the mezzanine tranche of CIBC’s commercial banking synthetic risk transfer, backed by a diversified portfolio of Canadian mid-market commercial loans.

• Sold our remaining 10.1% stake in the Unibail-Rodamco-Westfield Germany retail platform, generating net proceeds of €75 million. Our initial investment was made in 2015.

• Committed US$300 million to Balbec Capital’s IGCF-VII, which will invest in asset-backed private credit opportunities across the U.S. and Western Europe, including residential whole loans, mortgage servicing rights, consumer credit and commercial real estate lending.

• Committed US$250 million to Carlyle Aviation Partners Fund VII, which acquires and leases commercial aircraft globally across the full age spectrum and invests in aviation debt.

• Invested US$270 million to acquire limited partner stakes in funds managed by Leonard Green & Partners and Apollo through a secondary transaction. The portfolio primarily consists of buyout investments in North America and Europe.

• Committed €250 million to Azora Southern European Opportunities Fund III, which will primarily focus on value-add opportunities in structuring undersupplied sectors such as hospitality and living across Spain, Italy and Portugal.

• Committed €350 million to Aermont Capital Real Estate Fund VI. Aermont are a pan-European real estate manager, focused on operationally intensive sub-sectors with platform build-out capability, for long-term value creation.

• Committed US$500 million to Apollo Investment Fund XI, which targets control-oriented buyout investments across North America, Europe and Asia.

• Completed the sale of our remaining 8% stake in Elis SA through a block trade, generating net proceeds of approximately C$800 million. Our original investment was made in 2017.

About CPP Investments

Canada Pension Plan Investment Board (CPP Investments™) is a professional investment management organization that manages the Canada Pension Plan Fund in the best interest of the more than 22 million contributors and beneficiaries. In order to build diversified portfolios of assets, we make investments around the world in public equities, private equities, real estate, infrastructure, fixed income and alternative strategies including in partnership with funds. Headquartered in Toronto, with offices in Hong Kong, London, Mumbai, New York City, São Paulo and Sydney, CPP Investments is governed and managed independently of the Canada Pension Plan and at arm’s length from governments. At June 30, 2026, the Fund totalled C$863.6 billion. For more information, please visit www.cppinvestments.com or follow us on LinkedIn, Instagram or on X @CPPInvestments.

It's Friday, and it was a very busy week for me covering mid-year results, so I will close it with CPP Investments' quarterly results, which I do not normally cover.

Delivering 7.5% in its first fiscal quarter with net assets just shy of $864 billion is extremely impressive.

Performance was broad-based, led by public equities and real assets (particularly energy), and the strength in the US dollar also contributed to the strong quarterly gain.   

As you can read, Credit and Private Equity were also busy, investing in lots of deals and funds.

So even though a quarter doesn't make a year, the Fund is definitely off to a great start.

In related news, CPP Investments just launched expanded portfolio carbon footprint reporting:

TORONTO, ON (August 14, 2026): Canada Pension Plan Investment Board (CPP Investments) today announced additional portfolio-level disclosure related to its carbon footprint, introducing a snapshot of carbon intensity and transition governance indicators across the Fund’s holdings.

CPP Investments’ Climate Change Principles, including regular reporting on its portfolio emissions, help inform how the organization fulfills its mandate against the backdrop of increasing climate risk and opportunities as the world navigates a whole economy transition.

“Our investment strategy remains focused on delivering long-term value to help ensure the Canada Pension Plan’s financial sustainability for many generations. We consider material risks, including climate-related risks and opportunities, to support risk-adjusted returns over decades. We know that progress towards a lower-carbon future will not be linear, and we are committed to continued transparency as we invest across sectors and work with companies to reduce risk and preserve value,” said John Graham, President & CEO, CPP Investments.

Framework to Analyze CPP Investments’ global portfolio carbon footprint

CPP Investments has reported portfolio carbon footprint metrics since 2018. This enhanced reporting provides a point-in-time view of the composition of that footprint by classifying individual portfolio holdings across two dimensions: Carbon Intensity and Transition Governance.

Carbon Intensity refers to a company’s Scope 1 and Scope 2 greenhouse gas emissions (GHG) relative to its total enterprise value by utilizing the Partnership for Carbon Accounting Financials metric of tonnes of carbon dioxide equivalent per $1 million of Enterprise Value Including Cash (tCO₂e/$M EVIC).

Using information from the S&P Global LargeMid Cap reference portfolio, applying Global Industry Classification Standard (GICS) level 3 industry classification and then taking into account definitions of “hard to abate” and “high emitting” from the International Energy Agency and TPI respectively, we established a threshold of 40 tCO2e/$M EVIC to capture assets from harder to abate industries and those that have elevated carbon intensity relative to the rest of the portfolio. Companies at or below the threshold are not necessarily low-emitting or do not necessarily have low transition risk. Companies above the threshold are not necessarily high-emitting or necessarily have high transition risk.

Transition Governance refers to observable evidence that a company has taken steps to understand and prepare for transition-related risks and opportunities and there is evidence of a company’s alignment with at least one of three key indicators of transition-related governance or planning: either Science Based Targets initiative (SBTi) approved targets, Transition Pathway Initiative (TPI) Level 4 or 5 or participation in CPP Investments’ Decarbonization Investment Approach (DIA). Where the analysis has identified evidence of transition governance as above, companies are categorized as Confirmed. Holdings that do not meet these criteria or holdings that have not yet been assessed due to data limitations, lack of external coverage, or an inability to match a company to external datasets, or the company has not yet been assessed through DIA, are categorized as Unconfirmed.

Results of Framework Analysis

The framework shows that for CPP Investments $787 billion investment portfolio at 31 March 2026 (excluding government issued securities) 86.7% of the portfolio was below the 40 tCO2e/EVIC threshold.

Approximately 83.5% of the investments included as “evidence confirmed” were covered by third party transition governance indicators (SBTi and TPI) with the remainder covered by the DIA (16.5%).

The Notes provide additional information on the methodology, sources of information and results of the analysis.

Future Disclosure

These metrics will be disclosed annually, in addition to the portfolio carbon footprint. Values will fluctuate over time depending on factors such as changes in portfolio companies’ management of climate-related risks, opportunities, market valuation movements affecting Enterprise Value including Cash (EVIC), data quality, and the Fund’s composition and growth. In addition, the Framework is a simplified indicator of climate-related characteristics of the portfolio at a point-in-time, not a specific assessment of whether companies are implementing their transition plans.

CPP Investments does not set fixed portfolio-level targets for these disclosed categories or for its portfolio carbon footprint more broadly. Maintaining flexibility allows CPP Investments to invest across sectors where it sees long-term value and support companies as they respond to the transition to a low-carbon economy.

“CPP Investments’ investment approach continues to be grounded in disciplined underwriting, active ownership and a belief that the transition to a lower-carbon economy will unfold unevenly across sectors and regions. Because companies will respond differently to these changes, this disclosure provides additional transparency into carbon intensity and transition governance indicators across our portfolio of assets while remaining consistent with our mandate and climate change principles,” said Richard Manley, Chief Sustainability Officer, CPP Investments.

Enhanced transparency, consistent investment discipline

CPP Investments invests across the global economy, and climate-related risks and opportunities vary significantly by sector, geography and business model. Across the portfolio, CPP Investments assesses financially material climate-related risks and opportunities and incorporates them into investment decisions.

This additional disclosure does not alter CPP Investments’ investment strategy, underwriting approach, stewardship framework, or portfolio construction flexibility but aims to develop and disseminate accurate and accessible information.

CPP Investments uses its rights and influence as an owner to encourage stronger climate risk oversight and strategic transition planning where transition risk is material. In public markets, this may include engaging directly with boards of directors and exercising voting rights to promote effective governance of climate-related risks and opportunities. For example, during the 2026 proxy season, we voted against 950 directors on the boards of companies for failure to provide appropriate oversight of climate risk during the last proxy voting season.

In private assets, CPP Investments may work with general partners, boards and management teams, particularly where it has board representation or other governance rights, to support stronger risk assessment, transition-related planning and governance practices over time.

CPP Investments will continue to pursue its investment strategy and invest across sectors and assets that can generate long-term value, while enhancing transparency into how climate-related considerations are reflected across the portfolio. 

So what is this all about? Basically, it changes nothing in terms of the way CPP Investments invests but it will provide more portfolio transparency on its carbon footprint.

As Richard Manley, Chief Sustainability Officer, CPP Investments states: "This disclosure provides additional transparency into carbon intensity and transition governance indicators across our portfolio of assets while remaining consistent with our mandate and climate change principles." 

Keep in mind, transparency in reporting its results and carbon footprint is very important to CPP Investments and any initiative that improves disclosure is welcome news.

That's all from me. Like I said, I typically do not cover CPP Investments quarterly results, but today was what Frank Switzer called a "double-header'.  

Below, Tom Lee and Mark Newton break down the Fundstrat Top Ideas positioning, the macro outlook, and member questions at the monthly Macro Update & Top Ideas webinar.

Also, Sandisk CEO and Chairman David Goeckeler joins 'Squawk on the Street' to discuss Investor Day, memory demand, how the company has changed over the past decade, and more. 

Man, did that stock bounce big after Citadel took over Situational Awareness's portfolio! :) 

Mathieu Dion of Bloomberg reports La Caisse posts 5% first-half return as stocks rally, private equity slumps:

Caisse de Depot et Placement du Quebec, Canada’s second-largest pension manager, fell short of its benchmark in the first half of the year as losses on private equity holdings pulled down the overall return. 

Net assets rose to $552 billion for the Montreal-based firm, which handles pension money and other capital on behalf of the Quebec government. Its average return was 5.1 per cent over the past six months, below the 7.5 per cent for its tracking index, in an environment marked by geopolitical tension in the Middle East and enthusiasm for artificial intelligence investments.

Over a 10-year period, La Caisse has returned 7.5 per cent a year, nearly matching its benchmark.

Chief executive Charles Emond said the conflict in Iran, its impact on inflation and interest rates, and the sustainability of the AI investment cycle are sources of uncertainty for the second half.

“The enthusiasm surrounding AI is based on expectations — which are already very high — regarding both demand and the profitability of investments that have already been made,” Emond said during a press conference. “So we’re in a situation where risks are multiplying, yet we’re also seeing record inflows from investors being deployed into risky assets.”

La Caisse’s stock portfolio recorded a 14.6 per cent return, its “best combination of returns and value-added for a half-year period in 20 years, thanks to favourable positioning in global technology sectors,” La Caisse said in a statement. It noted the market is being driven by an “exceptionally high” concentration of performance from a small group of AI-related stocks.

But private equity went in the opposite direction, down 4.3 per cent, as holdings in technology, insurance and financial services saw their valuations crunched because they’re seen as more vulnerable to AI adoption, the money manager said.

The fixed income portfolio increased by 1.7 per cent as rising United States long-term yields partly limited gains. Premiums on private credit were “favourable,” especially in real estate and infrastructure.

Real assets returned 5.5 per cent, with positive results from both infrastructure, such as energy transmission and highways, and real estate. Office properties and shopping centres are recovering from the damage done during the COVID pandemic.

La Caisse said its depositors need an average return of six per cent to meet their long-term obligations. 

Today, la Caisse issued a press release stating it posted a mid-year 2026 return of 5.1% over six months, 6.4% over five years and 7.5% over ten years:

• The first half of the year was marked by the conflict in the Middle East and strong enthusiasm for artificial intelligence
• La Caisse’s equity markets and infrastructure activities stood out during this volatile period
• This performance translates into $26 billion in gains over six months
• The overall return remains above depositors’ long-term needs and their plans are in excellent financial health
• The negative value added mainly stems from stock markets continuing to outperform private assets, limiting gains for a diversified portfolio

La Caisse presented today an update to its results as at June 30. Over six months, the average return on depositors’ funds was 5.1%, below its index’s 7.5%. The weighted average annualized return stood at 6.4% over five years and 7.5% over ten years, compared with a benchmark portfolio that posted returns of 6.8% and 7.6%, respectively. The benchmark portfolio recorded higher returns partly due to the extended superior performance of stock indexes compared with private assets. It should be noted that depositors have determined that they need an average return of 6% to meet their obligations over the long term. Net assets now total $552 billion.

“The first half of the year was dominated by two major trends: excitement for AI and the geopolitical tensions in the Middle East. In Equity Markets, our teams outperformed in the context of a strong rally driven by AI. Meanwhile, our Private Equity portfolio was affected by AI’s impact on certain industries, such as insurance and services. Despite inflationary pressures, our Infrastructure portfolio once again was distinguished by outstanding performance,” said Charles Emond, President and Chief Executive Officer of La Caisse. “Over the long term, our well-diversified overall portfolio continues to demonstrate an ability to navigate various market conditions, delivering less volatile returns and a well-managed risk level for our depositors.”

Return Highlights EQUITIES

Equity Markets: Portfolio Outperforms in a Bullish, Concentrated and Volatile Environment

The first half of the year was marked by strong global stock market performance, particularly in emerging markets, despite the volatility caused by geopolitical tensions in the Middle East. The market rally was once again largely due to a small group of AI-related stocks, which are benefiting from an unprecedented investment cycle in data centres. This concentration of performance in major stock market indexes remains exceptionally high by historical standards. Over six months, the portfolio posted its best combination of returns and value added for a half-year period in 20 years, thanks to favourable positioning in global technology sectors. The return was 14.6% over six months, above the benchmark index’s 13.6% return.

Over five years, the portfolio’s annualized return was 13.0%, in line with its benchmark index. The portfolio’s transformation during the period, in particular to gain more exposure to growth stocks and incorporate systematic management strategies, generated a significant shift in performance.

Private Equity: Industry and Portfolio Still Under Pressure

The private equity industry continued to face challenging market conditions: a decline in transaction volume, a limited number of IPOs and interest rates that continue to rise. The portfolio also experienced a decline in valuation multiples for certain companies operating in industries seen as more vulnerable to the increasing adoption of AI, such as technology, insurance and financial services. In this environment, the portfolio posted a six-month return of ‑4.3%. In contrast, its benchmark index, half of which is made up of public stocks benefiting from the opposite reality amid the enthusiasm surrounding artificial intelligence, posted a return of 8.0%.

The five-year annualized return was 7.9%, driven by growth in the profitability of portfolio companies, which are managed both directly and through external funds. This performance resulted in nearly $30 billion of gains, making the portfolio one of the main contributors to the overall results for the period. The benchmark index stood at 12.9%. A decline in performance by a handful of portfolio companies and the stronger showing by the stock market indexes, which make up half of the benchmark index, explain the difference in returns.

FIXED INCOME

Current Yield Gains Partly Limited by Higher Long-Term U.S. Bond Yields

In the United States, in an environment where the economy has been resilient against geopolitical tensions, rising energy prices and inflationary pressures, long-term bond yields ended the first half of the year higher. In Canada, better-controlled inflation and a more modest growth outlook led to a slight easing of long-term bond yields over the same period. In this context, the Fixed Income asset class, primarily made up of the Credit and Rates portfolios, generated a 1.7% six-month return, above its benchmark index of 1.1%. It benefited from a stable current yield of 2.1% and positive execution, particularly in Government Debt, which stood out due to its strategic exposure to emerging markets. Premiums earned on private credit were also favourable, particularly in the Real Estate Finance and Infrastructure Financing segments.

Over five years, the asset class posted an annualized return of 0.4%, still recovering from 2022’s major bond market correction. However, it continues to outperform its benchmark, which stood at ‑0.5%, due to the strong performance of all public and private credit activities, including the quality of the selection in Government Debt and Corporate Credit.

REAL ASSETS

Infrastructure: Continued Strong Performance

Over six months, the Infrastructure portfolio continued to be a performance driver for the overall portfolio, with a solid 7.2% return. Growth in profits from our assets in the energy transmission, highway, and public-private partnership sectors were among the major contributors. Its benchmark index, comprised solely of public stocks, sits at 12.7%, boosted mainly by growing stock market values rather than by rising profitability of the companies in the index.

Over five years, the portfolio demonstrated its resilience across varied market conditions, delivering an 11.5% annualized return. The sound geographical and sectoral diversification of the assets, including favourable exposure to the energy and transportation sectors, as well as an attractive current yield of 5.2%, explain the excellent performance. The portfolio outperformed its index, which stood at 10.2% for the period.

Real Estate: Portfolio Continues Positive Trajectory, Industry Under Strain

For the first six months of the year, the portfolio posted a 2.7% return, compared with 3.2% for its benchmark index. The portfolio transformation plan to shift from an operator to an investor model is progressing well. Following years of challenges, values are stabilizing and the majority of sectors in the portfolio are showing positive performance, reflecting a gradual market recovery, including in the office and shopping centre segments. The difference from the index is due in particular to the underperformance of life sciences funds over the period.

Over five years, the portfolio’s annualized return was 0.9%, despite favourable performance in the logistics sector. Headwinds in the office sector—to which the portfolio has historically been overexposed in the United States—continued to weigh on returns over the period. The benchmark index stood at 2.2%.

Québec: Strategic Investments in Core Sectors Making a Difference for Building the Economy of Tomorrow

In the first half of the year, La Caisse continued to support the growth of Québec companies in sectors that are strategic to Québec’s economy, such as artificial intelligence and disruptive technologies, in addition to renewable energy, while advancing several major infrastructure projects that are redefining communities and mobility in Québec.

Supporting companies’ growth

• Boralex: Announcement of the joint acquisition of the company, bringing its enterprise value to approximately $9 billion, to support its growth as an independent private entity, thereby doubling La Caisse’s stake to 30%
• Cologix: $240 million in senior financing for the MTL8 data centre, located in Montréal’s Technoparc and designed to meet AI-related needs
• nesto: Participation, alongside partners, in a $302-million Series E funding round to support the growth of this tech unicorn in the mortgage sector
• Innovair Solutions: $150 million to support the growth of this leader in heating, ventilation, and air conditioning solutions, while maintaining its roots and ownership in Québec
• Novisto: Equity investment in the company and a partnership to equip organizations in their sustainability transition

Structuring projects for communities and mobility

• A25 Concession: $280 million to acquire Transurban’s remaining stake, bringing La Caisse’s ownership to 100%
• REM: Commissioning the Anse-à-l’Orme branch of the network, which now operates across 23 stations and 64 km of track; announcement of two additional stations in the Sud‑Ouest Borough; and issuance of a $1.85-billion green bond, one of the largest ever issued on the Canadian market
• TramCité: Announcement of the preferred consortia (Tram Alliance and Québec Connexion Capitale) for the awarding of the civil engineering and systems contracts
• Québec City–Toronto Alto high-speed train: The Cadence team, led by CDPQ Infra, issued a pre-bid notice for the Canadian high-speed rail network

Financial Reporting

The credit rating agencies reaffirmed La Caisse’s investment-grade ratings with a stable outlook, namely AAA (DBRS), AAA (S&P), Aaa (Moody’s) and AAA (Fitch Ratings). Information on internal and external investment management costs as at December 31 will be presented in the annual disclosure.

About La Caisse

La Caisse has invested for over 60 years with a dual mandate: generate optimal long-term returns for its 48 depositors, who represent over 6 million Quebecers, and contribute to Québec’s economic development.

As a global investment group, La Caisse is active in the major financial markets, private equity, infrastructure, real estate and private credit. As at June 30, 2026, it held CAD 552 billion in net assets. For more information, visit LaCaisse.com, LinkedIn or Instagram.

La Caisse is a registered trademark of Caisse de dépôt et placement du Québec that is protected in Canada and other jurisdictions and licensed for use by its subsidiaries.

Alright, time to cover La Caisse's mid-year results and let me begin by stating the results are solid.

Any time you're delivering 5% in the first six months at a massive pension fund with an actuarial target of 6%, you're doing very well.

Of course, you wouldn't know it reading the media here in Quebec, another catastrophe for La Caisse, failing to keep with its benchmark:

I'm being facetious, but I find many reporters here in Quebec love to paint a negative story on La Caisse's results.

I got on this morning conference call a bit late and the last question from a reporter was literally: "Why did you underperform Teachers' in the first half of the year?"

CEO Charles Emond explained that SpaceX added 4% to their mid-year results and that since stocks took off in 2023, La Caisse has outperformed Teachers'.

Of course, to an expert like me, this is all meaningless because La Caisse has more public market exposure than Ontario Teachers and if you want to understand performance of any large Canadian pension fund over the last three years, see who has higher public market exposure and you will see who has outperformed.

But SpaceX is a gem for Teachers, no doubt as it added significantly to its mid-year results and if Anthropic goes public this year, that too will add to their return.

I'm not here to compare pension funds. From my vantage point, they're all delivering well above their actuarial targets, and that is ultimately what matters most, not beating a benchmark. 

Alright, what else do I like about La Caisse's results? They give a press conference in the morning where it's mostly CEO Charles Emond who goes over many items and they provide an attached presentation with slides going over their results:

 

I've said this before and I will say it again, when it comes to communicating their results, La Caisse sets the standard and follows NBIM's model in Norway with a conference call and presentation.

Are there minor tweaks I would do to improve it? Yes, I would make the press conference public like NBIM does (posted on YouTube) and maybe add a few things to their presentation (for example, post results, benchmark and add actuarial target rate too like BCI does).

But all in all, I give La Caisse an A+ on communicating its results, CPP Investments an A, and the rest a B or B+.

I know, it's a lot of work, these are mid-year results, but effective communication is paramount to effective pension governance. 

Now, in terms of results, obviously the weak performance in Private Equity caught my eye, that portfolio continues to struggle both on an absolute and relative return basis, and quite honestly, it is a major drag on overall returns.

Over a longer period, the performance remains strong, and I discussed this with Vincent Delisle below.

Discussion With Vincent Delisle, EVP and Head of Liquid Markets

Earlier today, I had a chance to catch up with Vincent Delisle, Executive Vice President and Head of Liquid Markets to go over 2026 mid-year results.

I want to begin by thanking him for taking some time to share his insights and also thank Conrad Harrington and Jean-Charles Del Duchetto for setting up the Teams meeting and sending me material.

I also want to thank Jean-Charles for recording our interview on his end and sending it to me after because, for some reason, I had noise suppression on my Sound Recorder and Vincent's replies didn't come through on my end (technical glitch; see here for details on turning off noise suppression).

Anyway, right off the bat, I told Vincent the mid-year results are solid but the only thing that caught my attention was Private Equity's -4.3% for the first six months. I found that on the low end, not just on an absolute or relative basis to public market benchmark, but also relative to peers,  so I inquired what went wrong there.

Vincent replied: 

Private equity. Well, first of all, the asset class -- private equity -- is having a tough time everywhere. Interest rates moving higher. No exits. In our private equity portfolio, we have a few sizable public equity positions that are lodged in the private equity portfolio because of governance reasons. Some of them where we sit on the board, so they're not included in the public equity portfolio, but they sit within Private Equity. Charles alluded to WSP during the press conference. WSP engineering and construction is one of those areas that was hit by AI fears, you know, you had a hit in software (Sas-Pocalypse), engineering and construction. So the decline in stocks such as WSP, and Alstom as well, which is lodged in that portfolio, would explain the lower number that you're referring to. 

I was relieved to hear this because I said, "so this is more of a cyclical rather than a structural issue". 

He confirmed this:

This is more of a cyclical issue. The strategy in private equity pivoted towards more GP/ co-invest three or four years ago when Martin Longchamps joined us. These vintages are doing well. A few public stocks in there, such as WSP and Alstom, had a tough first semester. So that would explain the drag on the on the performance.

I pressed him on this and asked: "why not get rid of them from the PE portfolio?" (to put into public equity portfolio).

He explained:

95% of these large relationship stocks are in the public equity portfolio. WSP and especially Alstom. Alstom, we have a board seat, so there's a there's a governance difference that justifies why they're in the relationship portion, which is in private equity.

I moved on to Infrastructure, where La Caisse delivered solid returns again, but the portfolio underperformed its public equity benchmark which had a big beta effect.

Vincent replied:

Infrastructure for us has been the steadiest of all portfolios on the private side. You know, 7% to 10% returns almost regularly every year, delivering again this year. The benchmark on which we compare it is made up of 100% public equity, so the value, the relative here, is being hit, but it's still a solid foundation of the global portfolio, staying the course. It's a six-month number, so we're not concerned about that, but we're really happy with the steady performance of that portfolio, and most of that return comes from the dividends, from the revenue. So this is a very nice asset class for us within the privates.

Next, Real Estate, where I noted Rana's (Ghorayeb) strategy moving from an operator to an investor is taking hold nicely, and it seems to be finally turning the corner even if life sciences took a hit there. 

Vincent confirmed this:

Some external funds in life sciences had an impact on the portfolio. So the story for Real Estate is it's a new strategy pivoting away from the historical operational aspect to being investors. That's working out well. We're doing this while Real Estate as an asset class is going through some very, very tough times because of yields. You know, there's a common denominator there between what's impacting private assets, but we're very encouraged by what we're seeing in recent months, almost 3% returns in the first half. So it's gone from being a drag on the global portfolio to a positive contributor and we're optimistic.

Great, I shifted my attention to public markets which is Vincent's area of expertise and noted they outperformed in the first six months there in what was a volatile environment.

He replied:

It is a very complicated environment to manage equities, there's no denying it. Listen, our numbers Are solid, you know. 75% of Public Equities is managed internally, and we've talked about this in recent conversations. Most of that is through quantitative, systematic strategies. They've had a significant contribution year-to-date, contributing to a very strong first half. 

They had a very strong July as well and before you ask, that was a surprise to me. Our external managers also had a strong first half of the year. 

What makes things complicated is that we keep moving from one theme to the other; you know, it's been AI over the last few years. But AI meant NVIDIA three years ago. Then it meant hyperscalers. This year there was South Korea and memory chip stocks. That's a challenge because you want to be agile, but you don't want to overly move the portfolio. So yeah, very happy with how we've we delivered some value added in the first half.

The last few weeks have been nuts as well. You've seen July and the last few weeks. So it's a market.

I interjected, stating I've been trading and watching the deleveraging of Situational Awareness, how hedge funds shorted their positions, Citadel scooped up the portfolio and stocks like Sandisk and CoreWeave have surged since then. 

I said everything seems to be related to the momentum factor and if you watch the Momentum ETF (MTUM) closely, you realize where all the action has been lately.   

I asked Vincent if his quant team trades these positions and he replied:

We don't, in terms of positioning When people ask me questions about our quant strategies, I tell them the turnover and positioning is actually quite low. We don't trade often, we stay the course. The portfolio is very well diversified. 

That's what makes it complicated because you get these momentum swings, then you get the momentum crash in July. The momentum comes back. We're very happy with the numbers, but what remains a challenge is when you want to be diversified and you want to be (diversified). 

Whether it's the global portfolio or within public equities, it is very tough to keep your head above water when only 25 to 30 percent of the benchmark is outperforming, and then you get these big shifts. 

But our positioning was the right one: first half long semis/ underweight Mag Seven so that was a positive contributor. We had increased our beta exposure to Asian technology. That was Japan, that was Taiwan, that was Korea. We did this two years ago. Right now we're scaling back exposure there, but we were at the right spot at the right time to benefit from it.

I asked him what he thinks of the "rotational trade" where the rest of the market (ex-growth stocks) starts benefiting and whether that will take more precedence for the rest of the year and next year.

He replied:

I think it has to. The rotation, basically, the rotational trade means that eventually the market performs on more than only one thing. The rotational trade was alive and kicking in June and July, but the last three weeks, actually the last 14 days, rotation has gone away.

So we do believe in the rotational trade, S&P equal weight versus S&P market cap-weighted index. Our bias is to be long the rotation.

It's been a good few months in the second quarter, but the last few weeks the rotation has gone away.

But you have to believe that a rotation eventually happens because of everything that's going on in the AI space, the amount of money that's being invested in data centers that's benefiting the picks and shovels, the semiconductors, everybody building and selling you AI. For these investments to be profitable, you know you're going to have to see some results pretty quick, and the results have to mean that AI doesn't only benefit 10% of the benchmark; that it benefits the other 90% that's not moving that much.

I agreed and told him I saw the presentation at the end where they noted developments in the Middle East and the sustainability of the AI investment cycle as two key elements they're paying attention to.

I told them there are a lot of macro themes out there as well and asked him his thoughts. He shared this:

Yes, the macro landscape right now is basically a tug-of-war between inflation, which is higher than expected but hasn't moved that much post-Iran, and employment numbers in the US and Canada that are quite soft. So I don't see any inclination for the Fed to embark on an aggressive tightening cycle, and as long as rates don't go up that much, this cycle can continue. It's one of the few periods in my career where I look at the macro, but I spend much more time on the micro.

He added: "The Fed, the nonfarm payrolls don't move markets as much in an environment where it's all about GPUs, compute, data center spending, which is going to have a huge impact on leadership."

I told him that means this year can be a repeat of last few years and pension funds will continue to underperform their benchmark (except OTPP, which has SpaceX). 

I asked him to share his thoughts on benchmark underperformance and he did:

It's a tough period for diversification as it's penalizing a lot of people right now. It's penalizing investors that look at risk and how they build their portfolios for Canadian pension funds, which have diversification through private markets. 

It is a challenge when public equities perform so well. The last few years have been off the charts as far as I'm concerned, because public equities are performing double the historical rates, while bond yields are going up, which is really impacting negatively on the private side. 

Our number for the first half, 5.1%, is a very solid number. It's a very solid number. In this context, with public equity outperforming, it's impossible to beat a benchmark for private portfolios. 

The way I look at it, you know, these market cycles tend to last four to five years, 48 to 60 months. I like to study the ISM cycles, and that's how they work. So 23 bottom ISM rebound. We're probably close to a peak in the PMIs in the ISM. 

Eventually, the drag on sentiment has to come from higher yields, whether it's the Fed or the long end, which has moved, you know, 50, 70-odd basis points this year. 

So our sense is it is a struggle to have a diversified portfolio compared to the average ETF on the TSX or S&P 500, but still a big belief on our part that longer term you want that diversification. 

We're targeting 6% return. That's what our depositors are asking. We adjust the risk accordingly. But I understand how people would look at the numbers and compare their own ETFs, and they have questions. We are living in an environment. This is a cycle where there's a lot of enthusiasm for the stock market. 

I said Charles (Emond) alluded to this in the press conference earlier stating there is "recency bias" where investors extrapolate recent gains into the future. 

I told him some parts of the market definitely remind me of 1999, maybe even worse and he responded:

One thing has changed versus 1999-2000: Retail participation is much higher. ETF flows are dominating sentiment. That's why you get these buy-the-dips almost on every dip; it comes back very quickly.

We believe in a well diversified portfolio, balancing risk and return, which can be boring if you're looking at the S&P going up 20-25 percent, almost on a yearly basis for the last three to four years, but you want to have these this structure, this construction for for days where it's more it's more challenging, and you could have a scenario where you get the rotation. 

I know 2000-2001 was a rotational market, even though the Nasdaq declined. It was a rotational market in other parts of the economy, other sectors. That's my base case scenario. I don't think the market is going to go down significantly, but the rotation, you know, is something that needs to happen, especially for those who are pitching us the AI story. 

Lastly, I asked him about Fixed Income and Private Credit where he shared this:

It's my most boring portfolio and my preferred portfolio. Our fixed income, our credit portfolio has added 150 basis points of value over the last five years. It's up 80 ish in the first half. Fixed income is obviously getting challenged by rising yields. We have more Canadian exposure in our Canadian government are playing with a little liquidity fixed income portfolio, whereas credit we are sensitive to US duration. So that was a little bit drag out there, but you know, borrowing can be good sometimes, and that's what fixed income is giving us.

We ended it there. I once again thank Vincent for another stimulating discussion; he knows his markets well and it's always fun talking shop with him. 

And again, I thank Jean-Charles Del Duchetto for sharing his recording with me; he saved me (literally).

Below, CTV news reports Quebec pension fund La Caisse says the return on its fund for the first half of the year was 5.1 per cent, below its benchmark index’s 7.5 per cent. 

You can watch the Zone Economie interview with Charles Emond in French here. 

The Caisse critics in Quebec are tough, they're truly clueless about what counts in terms of sustainable returns over the long run.

Lastly, Mike Pyle, BlackRock, joins 'Closing Bell Overtime' to talk the day's market action.

Paul Vieira of the Wall Street Journal reports Blackstone and La Caisse will buy 25% of Air Canada's Aeroplan loyalty program:

Asset manager Blackstone and Quebec's La Caisse pension fund have agreed to acquire a 25% stake in Air Canada's loyalty-points program for nearly US$2 billion, which the airline said would help reduce debt and take steps toward obtaining an investment-grade rating.

Blackstone, meanwhile, said the deal is a sign of the asset manager's confidence in Canada as a place to do business.

Montreal-based Air Canada, the nation's largest airline, said the proceeds would help repay an upcoming billion-dollar bond maturity and reduce debt. Air Canada said the transaction values its Aeroplan points program at 10 billion Canadian dollars (US$7.2 billion).

Blackstone and La Caisse are leading a consortium that also includes two other Canadian pension plans: PSP Investment and the British Columbia Investment Management Corporation. Montreal's La Caisse manages over a half-trillion Canadian dollars in assets on behalf of Quebec residents, and part of its mandate is to support companies in the province.

Aeroplan members collect points through Air Canada flights and purchases made with co-branded credit cards, which they can then redeem in exchange for air travel or other goods. Securities filings indicate that Aeroplan has over 10 million active members, or a total representing a quarter of Canada's population.

"The transaction strengthens Air Canada's financial position by unlocking value from Aeroplan while retaining full operational control," said John Di Bert, the airline's chief financial officer. "It provides additional financial flexibility, and supports our pursuit of an investment grade rating," he added. Moody's, S&P Global and Fitch Ratings all have speculative-grade ratings on Air Canada debt.

Air Canada reported second-quarter earnings on Tuesday, following news of the Aeroplan deal, and the airline said it is carrying C$12.79 billion of long-term debt and lease liabilities on its balance sheet. The company said its adjusted earnings for the quarter were 40 Canadian cents a share, above analysts' estimates for 15 Canadian cents a share according to FactSet.

About two decades ago, Air Canada spun off Aeroplan as a separate, publicly-traded entity to help raise money after a bankruptcy restructuring. In 2019, the airline reacquired Aeroplan for C$497 million in cash, along with the assumption of about C$2 billion in liability associated with unused Aeroplan points.

Aeroplan is an industry-leading loyalty platform, according to Mark Rutledge, a senior managing director at Blackstone. The travel-industry Freddie Awards named Aeroplan as this year's winner of the best loyalty-travel program in the Americas.

"Blackstone is a long-term believer in Canada as both a compelling place to invest and serve clients," Rutledge said.

"This transaction adds to our decades-long commitment to the country and is another example of our ability to provide flexible, efficient capital solutions to leading businesses around the world," he added.

Air Canada shares finished trading on Tuesday up 5.9%, at C$27.27, in Toronto. 

Freschia Gonzales of Benefits and Pensions Monitor also reports Blackstone and La Caisse lead a $2.5 billion investment in Aeroplan:

Air Canada will sell a 25 percent stake in its Aeroplan loyalty program to an investor group that includes three of Canada's largest institutional and pension managers, in a $2.5bn transaction that values the program at $10bn. 

The airline said on August 11 that funds managed by Blackstone and La Caisse are leading the minority investment, with PSP Investments and British Columbia Investment Management Corporation (BCI) also taking part.  

Air Canada will keep the remaining 75 percent and, according to the company, full operational control over Aeroplan's strategy, operations and day-to-day management. 

For retirement asset managers, the deal marks another large private equity commitment by Canadian public sector plans.  

La Caisse, PSP Investments and BCI all invest pension money, and La Caisse framed its participation as a portfolio move.  

"It is also an attractive diversification opportunity for our global portfolio, which ultimately benefits our depositors," said Martin Longchamps, executive vice-president and head of private equity and private credit at La Caisse. 

Air Canada will direct the proceeds toward repaying an upcoming US$1.2bn ($1.7bn) bond maturity and toward accelerating share buybacks. 

According to Air Canada, repaying the bond reduces gross debt without drawing down cash. 

The transaction landed alongside weaker quarterly results.  

Air Canada reported a net loss of $178m for the second quarter, compared with net income of $186m a year earlier, as per BNN Bloomberg.  

That worked out to a diluted loss of 63 cents per share against diluted earnings of 51 cents a year before.  

Revenue rose to $6.3bn from $5.6bn over the same period, BNN Bloomberg reported. 

Settlement of the Aeroplan investment is planned for August 17, the company said. Air Canada will continue to consolidate Aeroplan in its financial statements and record the stake as a non-controlling interest within shareholders' equity. Investors will share in distributions declared by Aeroplan's board under an agreed policy. 

According to the announcement, Air Canada also secured the right to buy back the investor group's stake between the fifth and eighth anniversaries of settlement, and on certain specified events.  

The repurchase price follows a formula that gives the investors an internal rate of return of 6.5 percent, calculated net of all distributions. 

Separately, Air Canada said it plans a substantial issuer bid to buy back up to $800m of its Class A variable voting shares and Class B voting shares for cancellation.  

The company will run the buyback as a modified Dutch auction, set its terms shortly after the August 17 settlement, and aim to complete it in September.  

Air Canada intends to fund the bid with proceeds from the Aeroplan investment. 

John Di Bert, executive vice-president and chief financial officer at Air Canada, said the transaction strengthens the airline's balance sheet and supports its pursuit of an investment-grade rating as it executes its long-term plan.  

Blacktone issued a press release stating that Air Canada announced a CDN$2.5 billion minority equity investment in Aeroplan led by it and La Caisse:

• Blackstone and La Caisse are leading a CDN$2.5 billion, 25% minority equity investment in Aeroplan, valuing the program at CDN$10 billion

• Investor group also includes PSP Investments and British Columbia Investment Management Corporation

• Air Canada retains full control over Aeroplan’s strategy, operations and day-to-day management through its controlling interest

• Aeroplan Members, partners and employees will experience no changes as a result of the transaction

• The transaction supports investment in Air Canada’s strategic plan and long-term growth and underscores the value of Aeroplan’s industry-leading loyalty program.

• Proceeds will be used toward the repayment of upcoming US$1.2 billion bond maturity and accelerate share repurchases, including through a substantial issuer bid for up to CDN$800 million in shares

MONTRÉAL, August 11, 2026 – Air Canada today announced that funds managed by Blackstone and La Caisse, together with other leading Canadian institutions, are making a CDN$2.5 billion minority equity investment in Aeroplan Inc. The transaction terms provide that the investor group is acquiring a 25% non-controlling equity interest in Aeroplan, valuing the program at CDN$10 billion.[1]

Air Canada will maintain full operational control of Aeroplan and a controlling ownership interest after the minority investment. Aeroplan remains a core part of Air Canada’s commercial strategy and customer value proposition, and the experience of members, partners and employees will be unaffected by the transaction.

Proceeds from this investment will be used toward the repayment of Air Canada’s upcoming US$1.2 billion (CDN$1.7 billion) bond maturity, strengthening Air Canada's balance sheet through a reduction in gross indebtedness without a corresponding reduction in cash and cash equivalents. Most of the balance to be applied to accelerate the share repurchases contemplated in its long-term strategic plan.

The investor group led by Blackstone and La Caisse also includes PSP Investments and British Columbia Investment Management Corporation (BCI).

“This investment highlights Aeroplan as a differentiated loyalty platform and showcases the exceptional value created since its acquisition. The transaction strengthens Air Canada’s financial position by unlocking value from Aeroplan while retaining full operational control. It provides additional financial flexibility, and supports our pursuit of an investment grade rating, as we execute our long-term strategic plan, for the benefit of our customers, employees and investors,” said John Di Bert, Executive Vice President and Chief Financial Officer at Air Canada.

“Air Canada has established Aeroplan as one of Canada’s leading loyalty programs, with strategic partnerships across travel, financial, and commercial sectors. We are pleased to welcome Blackstone, La Caisse and other leading Canadian institutions as minority investors in Aeroplan as we continue to strengthen and expand Aeroplan’s global appeal. Under the new partnership, Air Canada retains full control of the program, meaning partners, members, and employees can all expect full continuity of the program as they do today. Air Canada is committed to remaining the majority owner of Aeroplan, ensuring continued control of the program while positioning it for future growth and value creation,” said Craig Landry, Executive Vice President & Chief Innovation Officer at Air Canada, and President of Aeroplan.

"We are proud to support Air Canada and the leading loyalty platform they’ve built in Aeroplan,” said Mark Rutledge, Senior Managing Director, Blackstone. “Blackstone is a long-term believer in Canada as both a compelling place to invest and serve clients. This transaction adds to our decades-long commitment to the country and is another example of our ability to provide flexible, efficient capital solutions to leading businesses around the world."

“This investment in Aeroplan, one of the country’s leading loyalty programs built by Air Canada, reflects La Caisse's ability to structure tailored capital solutions backed by a strategic asset, alongside a strong group of co-investors," said Martin Longchamps, Executive Vice-President and Head of Private Equity and Private Credit at La Caisse. "It is also an attractive diversification opportunity for our global portfolio, which ultimately benefits our depositors.”

Transaction Details
The investor group is making a CDN$2.5 billion minority equity investment in Aeroplan Inc., acquiring a 25% equity interest in it. Air Canada will retain a 75% ownership interest and continue to control Aeroplan and its operations, strategic direction and day-to-day management. Proceeds from the transaction will primarily allow Air Canada to repay its upcoming US$1.2 billion debt maturity with most of the balance applied to accelerate the share repurchases contemplated in its long-term strategic plan. Settlement of the investment is planned to occur on August 17, 2026.

Financial Reporting, Governance and Ongoing Control

This investment includes customary minority investor rights. Air Canada will retain control of Aeroplan's strategy, operations, and day-to-day management. Air Canada will continue to consolidate Aeroplan in its consolidated financial statements and this investment will be reflected as a non-controlling interest within shareholders' equity.

Distribution Policy and Call Option

The investors will be entitled to participate in distributions from Aeroplan, as and when declared by its board of directors, pursuant to an agreed distribution policy.

Air Canada will also have the right to repurchase the interest held by the investor group in Aeroplan between the fifth and eighth anniversaries of the transaction’s settlement, as well as upon the occurrence of specified events. The repurchase price will be determined pursuant to an agreed formula that provides the investors with an internal rate of return of 6.5% calculated net of all distributions.

Air Canada Announces Substantial Issuer Bid
Air Canada also announced today that it intends to conduct a substantial issuer bid (the “proposed offer”) to purchase for cancellation up to CDN$800 million of its Class A variable voting shares and Class B voting shares (collectively, the “shares”). The terms and pricing of the proposed offer are expected to be determined soon after the planned settlement of the Aeroplan minority investment on August 17, 2026. The proposed offer would thereafter be launched with a view to being completed in September 2026. Air Canada intends to fund the proposed offer with proceeds from the investment in Aeroplan.

The proposed offer will proceed by way of modified Dutch Auction. Once launched, shareholders may tender their shares in response to the proposed offer in one of two ways: (i) an “auction tender" specifying the number of shares tendered and a tender price per share within a range set by Air Canada shortly before the proposed offer commences or (ii) a “purchase price tender" specifying the number of shares tendered, to be sold at the purchase price determined by the auction tender rather than at a specified price. Shareholders who choose not to tender shares or whose tendered shares are not purchased will see their equity interest in Air Canada increase in proportion to the number of shares purchased under the proposed offer. The proposed offer will not be conditional on any minimum number of shares being tendered but will be subject to conditions customary for transactions of this nature.

The contents of this news release relating to the proposed offer are for informational purposes only and do not constitute an offer to buy or the solicitation of an offer to sell Air Canada's shares. The proposed offer has not yet commenced. The solicitation and the offer to buy shares will only be made pursuant to an issuer bid circular, which will contain the details of the proposed offer and will be filed with Canadian securities regulatory authorities and sent through notice-and-access to Air Canada’s shareholders in accordance with applicable legal requirements.

Advisors
BofA Securities, Stikeman Elliott LLP and Deloitte LLP respectively acted as advisors to Air Canada and Aeroplan. Scotiabank, Kirkland and Ellis LLP and Blake, Cassels & Graydon LLP respectively acted as advisors to Blackstone.

About Air Canada
Air Canada is Canada's largest airline, the country’s flag carrier and a founding member of Star Alliance, the world's most comprehensive air transportation network. Headquartered in Montréal, Air Canada provides scheduled service directly to more than 180 airports in Canada, the United States and Internationally on six continents. It holds a Four-Star ranking from Skytrax. Air Canada’s Aeroplan program is Canada’s premier travel loyalty program, with more than 10 million members worldwide. Members can earn or redeem points on the world’s largest airline partner network of more than 50 airlines, plus through an extensive range of merchandise, hotel and car rental partners. Through Air Canada Vacations, it offers a selection of vacation and Flight & Hotel packages, tours, cruises, car rentals, and experiences. Its freight division, Air Canada Cargo, provides air freight lift and connectivity to hundreds of destinations across six continents using Air Canada’s passenger and freighter aircraft. Air Canada’s climate-related ambition includes a long-term aspirational goal of net-zero greenhouse gas emissions by 2050. For additional information, please see Air Canada’s TCFD disclosure. Air Canada shares are publicly traded on the TSX (AC).

About Aeroplan
Aeroplan Inc. operates Canada’s leading travel loyalty program, with more than 10 million active members worldwide. Aeroplan Members can earn or redeem points with over 50 airlines to 1,300+ destinations globally, without blackouts or surcharges. Members can redeem Aeroplan points for a variety of travel, merchandise, gift cards and other rewards provided directly by participating partners or made available through Aeroplan’s suppliers. Aeroplan Elite Status recognizes Air Canada’s frequent flyers, as well as Aeroplan’s most engaged members, with a range of priority travel services and membership benefits. To join Aeroplan and start turning daily purchases into points for flights, hotel stays, gifts and more, visit aircanada.com/aeroplan.

About Blackstone
Blackstone is the world’s largest alternative asset manager. Blackstone seeks to deliver compelling returns for institutional and individual investors by strengthening the companies in which the firm invests. Blackstone’s over US$1.3 trillion in assets under management include global investment strategies focused on real estate, private equity, credit, infrastructure, life sciences, growth equity, secondaries and hedge funds. Further information is available at www.blackstone.com. Follow @blackstone on LinkedIn, X (Twitter), and Instagram.

About La Caisse
For more than 60 years, La Caisse has invested with a dual mandate: generate optimal long-term returns for its 48 depositors, who represent over six million Quebecers, while contributing to Québec’s economic development.

As a global investment group, La Caisse is active in major financial markets, private equity, infrastructure, real estate and private credit. As at December 31, 2025, its net assets totaled CDN$517 billion. Learn more at LaCaisse.com, LinkedIn and Instagram.

La Caisse is a registered trademark of Caisse de dépôt et placement du Québec that is protected in Canada and other jurisdictions and licensed for use by its subsidiaries. 

This is a huge private equity deal in Canada involving Air Canada, Blackstone, La Caisse, PSP Investments and BCI.

The fact that Blackstone and La Caisse led the deal and PSP and BCI also took part in it tells me it was a win-win for all parties involved.

Air Canada gets C$2.5 billion in cash, retains full operational control of Aeroplan, and the Blackstone-La Caisse led consortium are acquiring a significant minority stake in a very profitable loyalty program.

In fact, the first thing that stood out to me is this (from WSJ article above):

About two decades ago, Air Canada spun off Aeroplan as a separate, publicly-traded entity to help raise money after a bankruptcy restructuring. In 2019, the airline reacquired Aeroplan for C$497 million in cash, along with the assumption of about C$2 billion in liability associated with unused Aeroplan points. 

Think about it: Air Canada reacquired Aeroplan seven years ago for C$497 million in cash, along with the assumption of about C$2 billion in liability associated with unused Aeroplan points, and are now selling a 25% minority stake to world-class investors for C$2.5 billion.

From Google AI:

Aeroplan is exceptionally profitable because it functions as a high-margin financial and data business rather than a traditional airline service. Air Canada recently valued the loyalty program at a staggering $10 billion when selling a 25% minority stake to investors like Blackstone and La Caisse for $2.5 billion.

That shows you how profitable this business is: a huge cash cow, a dream investment for any private equity investor.

Blackstone rightly partnered up with La Caisse on this deal since Air Canada's head office is in Montreal and invited PSP Investments and BCI to also take part in the deal.

And the fact that Blackstone, not Brookfield, led the deal tells me the global private equity giant is getting very serious about its investments in Canada. 

The second thing I noticed is this (from the second BPM article):

Settlement of the Aeroplan investment is planned for August 17, the company said. Air Canada will continue to consolidate Aeroplan in its financial statements and record the stake as a non-controlling interest within shareholders' equity. Investors will share in distributions declared by Aeroplan's board under an agreed policy. 

According to the announcement, Air Canada also secured the right to buy back the investor group's stake between the fifth and eighth anniversaries of settlement, and on certain specified events.  

The repurchase price follows a formula that gives the investors an internal rate of return of 6.5 percent, calculated net of all distributions.  

Air Canada wisely secured the right to buy back the consortium's minority stake between the fifth and sixth anniversaries of settlement, and on certain specified events and the repurchase price follows a formula that gives the investors an internal rate of return of 6.5 percent, calculated net of all distributions.  

The investors secured a minimum IRR of 6.5%, net of all distributions, which will be significant if Aeroplan keeps growing the way it has done over the past five years.

Smart move by Air Canada and this investor group; everyone is probably hedging their investment. 

Anyways, this is an excellent deal, one that business schools around the world will use as a case study.

Lastly, to all my wealthy friends who keep boasting how they have 50K, 75K or more Aeroplan points and keep getting bumped up to business class, just remember who owns a stake in Aeroplan now and also keep in mind senior executives at Canada's Maple 8 who travel all the time have a lot more points than you'll ever collect (another major perk to their job).

Below, Jamie Murray, president of The Murray Wealth Group, joins BNN Bloomberg to discuss Air Canada and to provide an outlook on the markets.

Also, for my buddies, a breakdown of the best credit cards to use to gain access to lounges at airports (they're obsessed with this nonsense). 

Layan Odey of Bloomberg reports OMERS returns 4.8% in first half, fuelled by stocks and US dollar:

Ontario Municipal Employees Retirement System returned 4.8 per cent in the first half of the year, gaining $6.9 billion from a strong United States dollar and rising stock market.

The pension “had a pleasing start to 2026” despite “an increasingly complex global dynamic,” chief executive Blake Hutcheson said in a statement Tuesday.

Net assets rose to $151.6 billion as of June 30. Every asset class delivered positive returns, with stocks and private credit advancing 12.2 per cent and 7.8 per cent, respectively. Private equity holdings eked out a 1.1 per cent gain, held back by “market headwinds,” according to the statement. 

Currency appreciation, particularly of the U.S. dollar, added a net 1.4 per cent to returns.

The Toronto-based pension plan invested $1 billion into Canadian equities in the first half of the year and plans to add at least $10 billion of investments in the country over the next five years, Hutcheson said. Canada makes up 25 per cent of Omers’ portfolio, with 52 per cent invested in U.S. holdings.

Omers sold several assets since the start of the year, including specialty care management company Paradigm. It also announced the sale of utility and infrastructure provider Network Plus. 

Today, OMERS issued a press release stating it earned $6.9 billion in the first six months of 2026:

OMERS generated a net investment return of 4.8%, a gain of $6.9 billion, for the period of January 1 to June 30, 2026. Net assets as at June 30, 2026 totalled $151.6 billion.

“OMERS had a pleasing start to 2026,” said Blake Hutcheson, OMERS President and CEO. “While an increasingly complex global dynamic created challenges for investors worldwide, we generated almost $7 billion in returns, a reflection of our team’s disciplined approach and our diversified portfolio. As a pension plan that pays benefits over decades, we maintain a steady focus on the long term, and to that end we have added more than $78 billion to the Plan over the last 10 years.”

“All asset classes contributed positively to our overall result, led by public equities,” said Jonathan Simmons, OMERS Chief Financial and Strategy Officer. “Currency tailwinds added a net 1.4% to returns.”

These results come as OMERS continues to seek opportunities to put more capital to work in Canada, building on existing investments across key infrastructure, hotels, shopping destinations, premium office real estate, technology, bonds and other sectors. In the first half of 2026, OMERS invested another $1 billion into Canadian equities.

“OMERS is committed to adding at least $10 billion in new investments in Canada to its portfolio over the next five years,” said Mr. Hutcheson. “While we continue to maintain a geographically diversified portfolio to meet our long-term pension obligations, the current environment in Canada has considerable potential and we look forward to exploring those opportunities that align to our strategy.”

OMERS focus on creating a strong future for our members drives our broader investment approach.

“As we move through the remainder of 2026, we are actively managing our existing portfolio and assessing opportunities to deploy capital in ways that meet our risk-adjusted returns,” said Mr. Hutcheson. “We believe our long-term focus on high-quality assets with long-term growth prospects will serve the futures of 665,000 members well, and we are relentlessly focused on delivering for them.”

About OMERS

OMERS is a jointly sponsored, defined benefit pension plan, with more than 1,000 participating employers ranging from large cities to local agencies, and 665,000 active, deferred and retired members. Our members include union and non-union employees of municipalities, school boards, local boards, transit systems, electrical utilities, emergency services and children’s aid societies across Ontario. OMERS teams work in Toronto, London, New York, Amsterdam, Luxembourg, Singapore, Sydney and other major cities across North America and Europe – serving members and employers, and originating and managing a diversified portfolio of high-quality investments in government bonds, public and private credit, public and private equities, infrastructure and real estate.

Media Contact: Don Peat, Director, Investment Communications & Media, 1 416.417.7385, dpeat@omers.comOpens email client

Net assets$ Billions

Diversified by asset class and geography

Asset diversification

As as June 30, 2026

Geographic diversification

1 These figures have been updated to allocate foreign currency debt issued by OMERS Finance Trust (OFT) according to the geographic region in which the currency was issued. Previously, all OFT debt was allocated to Canada, reflecting OFT’s domicile.

Net return history

For the six-month period ended June 30, 2026

4.8%

a gain of $6.9 billion

Annualized, for the 10-year period ended June 30, 2026

7.2%

a gain of $78.2 billion

Asset class investment performance

Net returns

Six months ended June 30, 2026

Government Bonds

3.2%

Public Credit

3.8%

Private Credit

7.8%

Public Equities

12.2%

Private Equities

1.1%

Infrastructure

5.1%

Real Estate

5.5%

Total Plan

4.8%

Investment performance highlights

Over the six months ended June 30, 2026:

• Our strategic allocation to fixed income assets continued to contribute positively to overall returns, led by private credit. Public credit and government bonds both posted positive returns as well, amid rising bond yields.

• Public equities delivered strong returns as global equity markets reached record highs, supported by strong corporate earnings and continued investor enthusiasm for artificial intelligence-related investments. Our portfolio’s performance was led by gains in the information technology and industrial sectors.

• Private equities were held back by market headwinds which resulted in multiple compression. The team has continued to execute our capital rotation strategy with focus and discipline, announcing several transactions during the first half of the year.

• Infrastructure continues to deliver steady results, with most assets performing in line with expectations.

• Real estate continued its momentum from 2025 and delivered solid returns, driven by strong leasing activity at higher rates, particularly in the office portfolio.

• Currency appreciation, particularly of the U.S. dollar, added a net 1.4% to returns.

Long-Term Issuer Credit Ratings

This Investment Update presents certain non-GAAP measures. These measures are calculated on the same basis as those calculated and presented in our 2025 Annual Report, except where otherwise noted. This Investment Update and the Condensed Interim Consolidated Financial StatementsOpens new window (the “Interim Financial Statements”) are unaudited. OMERS Administration Corporation’s financial performance set out in this Investment Update represents the OMERS Primary Pension Plan and is for the period ended June 30, 2026, unless otherwise indicated. Past performance may not indicate future performance because a broad range of uncertainties (including without limitation those related to interest rates and inflation) could have an impact on the performance of various asset classes. The financial information included in this Investment Update should be read in conjunction with the Interim Financial Statements.

Portfolio update

We continue to invest with intention in assets that build strong futures for members and communities alike. Highlighted below are select activities undertaken since January 1, 2026.

• OMERS investment Bruce Power returned its Unit 3 reactor to service more than seven months ahead of schedule, with the renewed unit set to power Ontario for decades to come. We also invested in a milestone financing program for the Saugeen Ojibway Nation, in connection with its medical isotopes partnership with Bruce Power.

• OMERS investment Xanadu became a publicly listed company on the Toronto Stock Exchange and the Nasdaq.

In addition, we:

• Completed the full financing of 70 Hudson Yards in New York City alongside Related Companies. Upon completion, it will host New York’s largest tenant relocation since 2020.

• Participated in a Series A funding round for Dominion Dynamics, which is developing Canadian technology that helps protect and defend remote regions, including the Arctic, by connecting sensors, autonomous aircraft and personnel.

• Sold Paradigm, a leading specialty care management organization, as well as CBI Home Health, the homecare carve-out of CBI Health. OMERS remains the majority owner of CBI Health, which provides clinic and community-based rehabilitation and physiotherapy services.

• Announced the sale of Network Plus, one of the UK’s leading utility and infrastructure service providers, agreed to sell our stake in AMS, a global leader in talent and organizational consulting, and announced the sale of Exolum, Europe’s leading logistics company for transportation and storage of liquid products.

• Were recognized for record-breaking sales performance by the International Council of Shopping Centers. Yorkdale led Canadian retail as the top-performing shopping centre for the 10th year in a row. Both Scarborough Town Centre and Square One Shopping Centre’s sales per square foot increased once again.

• Acquired, through our joint venture with AustralianSuper and M7, a portfolio of 13 modern logistics properties in key locations across Spain, marking a key step in scaling its supply chain assets.

• Made a follow-on investment in Fonoa, an AI tax operating system within our portfolio, through a Series C funding round to support its growth.

• Participated in new equity commitments to Hale, an Australian logistics manager and developer.

• Closed two significant OMERS Finance Trust note offerings, an A$1 billion, 10-year note and a US$1 billion, 5-year note, marking OFT’s second AUD and 10th USD offering.

• Supported Zymeworks Inc. in the acquisition of Theravance Biopharma US, LLC by providing financing for the transaction, and financed Enstructure’s acquisition of LOGISTEC’s Marine Terminal Division.

Subsequent to the end of June:

• An agreement was announced that, if approved, would monetize OMERS indirect 5% interest in Maple Leaf Sports & Entertainment, one of the world’s premier sports and entertainment companies. The transaction is expected to close later this year.

Discussion With Blake Hutcheson and Jonathan Simmons

Earlier today, I had a chance to catch up with OMERS CEO Blake Hutcheson and CFO & CSO Jonathan Simmons to go over their mid-year results.

I want to thank both of them as well as Don Peat for setting up this Teams meeting.

As I told Don after the meeting, I do not take mid-year results as seriously as annual ones, but it gives me an opportunity to catch up and cover items of interest.

Blake began by giving me a quick overview:

We are pleased to report our results. Anytime you can deliver, six months, close to 5%, we feel good about it. We generated close to $7 billion in profits. Our 10-year returns are above 7%. We've generated close to $80 billion of incremental profit for the 10-year period in which we've had a substantial say in directing OMERS, so it's one of those periods where we got to keep going. Hard to know what the next six months have in store, but we're off and running, and it's a good news story. We feel good.

I told Blake somewhat jokingly, "You delivered solid results, but you were missing one thing: SpaceX."

Blake, ever diplomatically replied:

We're not going to comment on the winners or the losers of any of our peers, but we will say the ventures business, which is why we're in it, has consistently demonstrated that while it may be out of favour for a long period of time, you can do extraordinarily well with the right investment. And we had the same thing with Xanadu. So, good for them.

I noted the results are solid for mid-year and going into the stretch, if we have no negative surprises, OMERS should have a very decent 2026.

I also noted currency gains from being long USD helped add 1.4% to the plan's return in the first six months. Jonathan replied:

It was a nice tailwind for us. Hard to predict where it's going, but we're happy to have the level of diversification that we have, and it's paying dividends right now.

Next, I moved to private equity where I noted it seems like there are ongoing issues there impacting all pension funds. 

Blake noted the following:

At a global economic level, you've got high inflation, high interest rates, and slow growth. For most businesses, the cost of doing business is higher. For most families, the cost of living is higher, and the culmination of those things makes it very difficult to see significant tailwinds, both on the operating profits and on the metrics, the multipliers on these on these operating companies, and so and the bid ask spreads are high, and if you hold a business and somebody wants to get a 15% return on a go-forward economic basis,very hard to for them to look at your business without synergies or without strategic spots. to get to that point, so not much is moving.

Our strategy is really simple: asset management, asset management, asset management. Let's make sure we have the right teams. Let's make sure we're unlocking incremental revenue opportunities. Small bolt-ons with the companies that we have, refinancing them where we need to use all the tools in the tool chest to make those assets ready, able, and willing to hit a market somewhere down the road. 

There are some that are trading quite well. We've actually been pretty active, at or above our marks for the most part for the trades we've had. But you know the Canadian pension plan business as well as anybody. We are never in a fire sale position. We don't have to sell anything if we don't think that the long-term prospects more than offset taking any short-term gain. 

So, we recognize it's tough and maintain our focus. We're not alone. We recognize that we have to asset manage and strengthen those muscles as much as possible, and we have to be more patient than sometimes investors choose to be. But lucky for us, we're a long-term player, and we can be right.

I raised the issue of critics claiming pension funds can't beat their benchmark and explained how in an environment where a few growth stocks are surging and concentration risk is high, it's next to impossible to beat benchmarks. I stated that these are pension funds that need to beat their required actuarial rate of return.

I asked them if they are cautious on public equities and Blake responded:

That's 100% true. If we get a real 5%, call that a nominal 7% and change return, we are happy. We've got a commitment to be fully funded with a considerable cushion by 2030. We're on track to do that. So to your point, certain benchmarks or certain proxies for portfolios-they're interesting. That's not how we invest. We start with our known liabilities. A lot of our programs are absolute return strategies, not relative return strategies, and we try to protect our downside, get right in the zone that we need to be in to pay pensions, and not apologize for it.

And by absolute return strategies, he didn't mean external and internal hedge fund strategies only:

Our real estate portfolio, we do a budget, and whatever happens to some global index for real estate, it's interesting, it has nothing to do with how we reward our people or our expectation for that portfolio. Same for our infrastructure book. So, when we talk about absolute return strategies, we do include some of those hedge fund exotics, but we also include our real asset portfolio, which is agnostic to public company benchmarks.

I mentioned that there is increasing talk about how Office is making a comeback in commercial real estate markets and Blake replied:

We've never been off that refrain. I've been saying it all during COVID when people said it was going the way of the dodo bird, that we built buildings because great real estate is great real estate. I mean, if you look at the value we've created in places like Hudson Yards and Vancouver, you know where we built a building that came on in stream post COVID, leased above pro forma, very de minimus vacancy, great office product. 

We think that we've never lost confidence in it as an asset class but secondary office product, watch out, for sure.

But the kinds of things we invest in at Oxford, there hasn't been a moment where I thought the value longer term wasn't greater than where it currently sits on our books. 

Jonathan jumped in: "It's definitely K-shaped, and I like the part of the K we are in right now."

In other words: "Quality, quality, quality." Focus on quality, and you will be rewarded. 

I asked if Eric Plesman is doing anything different in Oxford's massive portfolio and Blake responded: "No but he's an outstanding executive, and we're really happy to have him back. He's doing great."

In Infrastructure, steady Eddie, I asked if there's anything different there and Blake replied:

No, $30 billion of equity tied in that business with 30 assets, and we always have a few troubled ones. Lucky for us, we also have some great ones. So it's been a really consistent performer for us for decades now.

I asked Jonathan about Private Credit and he replied:

Continuing to deploy, continuing to earn a premium and with a very solid portfolio with all the right risk attributes that you would hope for. We keep looking for those cockroaches vigilantly, but what we've seen in our own portfolio is terrific and. results with minimal delinquency and methods. 

Shifted my attention to Canada where I noted OMERS wants to deploy $10 billion over five years.  

I said for the first time in a long time, I see real potential in Canada, the adults are running the show. I asked them if there is anything in particular about Canada that they find particularly appealing and Blake responded:

I can't speak for the other Canadian pension plans, when people have tried to pressure us to spend or invest more in Canada, our consistent refrain has been: you create the conditions for us to invest more in Canada, and and we will find a way to do it because as a fiduciary, we may have a heart but that's not what we're here to do. We're here to invest the money of our pensioners brutally on a risk-adjusted basis with a relative lens around the world, as to where we can do the best for them.

So, to your point, the conditions are starting to emerge. We are seeing more and more opportunities through large corporations, and some government opportunities, more than we've seen in a long time. 

Is the pipeline huge? I would say it's better than it has been in a decade, but there's still some proof is going to be in the pudding. But we see the conditions improving. We see the opportunity set improving. We believe in this country, and all things being equal, we want to do a lot more here.

He added: " Clearly, there's a better opportunity for discussion at all levels of government than I've seen in a decade, and so that provides some optimism that there will be further opportunities."

Blake told me they are taking part in the big conference in September, hosted by CPP and PSP investments, attracting global institutional investors to invest more in Canada.

He is laser focused on opportunities and investing at scale but also shared this:

It's not easy. We invested in MLSE that gets monetized this fall if all the approvals go through. That was close to $900 million that we put back in our bank account, and after we deploy it, it's not easier. It's not easy with the inflows and outflows of real-life investing to move our Canadian needle because there's going to be things you sell and things you're going to buy, but the direction of travel for us is more Canada.

I ended our discussion by asking them if there is anything keeping them up at night.

Blake replied:

In both cases, families with with health issues. Those are those are the things that keep us all up at night, not only for ourselves but for our colleagues. 

Listen, it is not an easy time, I think, for any investor, in a world where stability and certainty are far from our everyday,  a construct, and so it's not easy. AI has massive threats and massive opportunities. You know, tariffs and the like, massive threats, massive opportunities. 

Lots of lots in the air out there, micro and macro, that I wouldn't say keep us up at night, but keep us on our toes. And so, what do we do? We do what we should do. What do you do? You think long term, stay disciplined, and you deploy where you have expertise. You focus on quality. You diversify, diversify, diversify, and you really try not to let any of the short-term noise distract you from the long-term goals.

Great perspective, great way to end our discussion.

I thank Blake and Jonathan for sharing their time and insights with my readers. 

Alright, on April 23, OMERS held its Annual Meeting at the Metro Toronto Convention Centre, where they presented their 2025 financial results and updates on investing, pensions and their Climate Action Plan. You can view that here.

Below, Blake Hutcheson, Co-Chair of the Raise Muskoka campaign, talks about his dream for the future of healthcare in Muskoka.

Blake and Jonathan do a lot to raise money for worthy causes, good for them, they lead by example.

Layan Odeh of Bloomberg reports SpaceX windfall leads Ontario Teachers’ to 9.5% first-half gain:

Ontario Teachers' Pension Plan earned 9.5% in the first half of the year, driven by the initial public offering of Elon Musk's SpaceX.

Investments in venture growth, public equities and inflation-sensitive assets boosted returns, Chief Executive Officer Jo Taylor said in a statement Monday. Net assets climbed to C$303.2 billion ($217.5 billion).

Ontario Teachers' put money into Musk's Space Exploration Technologies Corp. in 2019, the inaugural investment for its venture growth arm. The space company now has a market capitalization of $1.8 trillion after completing its record-smashing IPO in June.

That was a "significant contributor" to the pension fund's strong first-half return, Ontario Teachers' said. Venture growth companies now represent 9% of its assets, up from 6% at the end of last year.

The Toronto-based fund has revamped its private equity strategy after posting a loss in that asset class in 2025 for the first time in 16 years. Private equity comprises 16% of the entire portfolio, down three percentage points from year-end, while public stocks are 21% of holdings, up from 18%.

Some of Ontario Teachers' notable investments during the first half include the acquisition of four multifamily residential assets in Germany alongside DW Effectum Residential. The pension plan also participated in financing the spinout of UK energy technology platform Kraken from Octopus Energy Group. 

James Bradshaw of the Globe and Mail also reports Teachers’ pension plan earns 9.5% in first half with boost from SpaceX shares:

Ontario Teachers’ Pension Plan reported a 9.5-per-cent return in the first half of the year, boosted by a stake in Elon Musk’s SpaceX that soared in value after the company went public and was briefly worth US$8.7-billion.

Teachers said Monday that it booked $26.6-billion of net investment income in the six months that ended June 30, and its investments gained 14.5 per cent over a 12-month span.

An early investment in Space Exploration Technologies Corp. “was a significant contributor” to the strong first-half gains for Teachers, the pension plan said in a news release.

The Globe previously reported that Teachers invested about $300-million in SpaceX in 2019 through its venture investing arm, then made follow-on investments. The massive expansion of the company’s value as it launched rockets, expanded its Starlink satellite internet business and merged with it. Mr. Musk’s artificial intelligence startup gave Teachers billions of dollars of gains on paper.

SpaceX listed its shares publicly through an initial public offering on June 12, and by June 30, Teachers held a stake worth nearly US$8.7-billion, according to a regulatory filing released last week.

The SpaceX share price has dropped since then, and at Friday’s closing price, the Teachers’ stake would be worth about US$6.7-billion.

The first of a series of lockup periods that restrict shareholders from selling SpaceX stock expired last week, giving many investors their first chance to cash in on a part of their investments in the company.

The portfolio of a few dozen investments that Teachers owns through its ventures arm accounted for 9 per cent of the plan’s $303.2-billion of assets at the end of June. One year earlier, those investments – SpaceX included – made up 4 per cent of the portfolio.

Over 10 years, Teachers has earned an average annual return of 7.8 per cent.

The pension plan’s first-half returns are “ahead of our target at this point in the year” and included “positive returns across asset classes,” chief executive officer Jo Taylor said in a statement.

Aside from the venture growth division, the plan’s most significant gains came from public equities and inflation-sensitive assets, but Teachers does not disclose detailed returns by asset class at the mid-year mark.

The plan was fully funded as of Jan. 1, 2026, and had a $31.2-billion preliminary funding surplus. 

Today, Ontario Teachers’ issued a press release stating it delivered a 9.5% total-fund net return in the first half of 2026:

2026 mid-year highlights:

• Net assets at $303.2 billion.
• Six- and 12-month total-fund net returns of 9.5% and 14.5%.
• Long-term returns of 7.8% over ten years and 9.4% since inception.
• Fully funded for the 13th straight year and the plan’s sponsors have indicated that they will file the valuation with appropriate regulatory authorities.

TORONTO (August 10, 2026) - Ontario Teachers’ Pension Plan Board (Ontario Teachers’) today announced a total-fund six-month net return of 9.5%, with net investment income of $26.6 billion. The one-year total-fund net return was 14.5%. Net assets are $303.2 billion, up $23.8 billion from year-end (all figures are as at June 30, 2026, and in Canadian dollars, unless noted).

“We delivered a strong start to 2026, with a total-fund net return that is ahead of our target at this point in the year. These results were broad based with positive returns across asset classes, with the most significant contributions coming from venture growth, public equities, and inflation-sensitive assets,” said Jo Taylor, President and Chief Executive Officer. “We have entered the second half of the year with good momentum to deliver our annual performance objectives.”

As the plan’s obligations extend decades into the future, longer-term performance is a key measure of success. Ontario Teachers’ has delivered an annualized total-fund net return of 9.4% since inception in 1990. The five- and 10-year annualized net returns were 7.7% and 7.8%, respectively.

The table below summarizes Ontario Teachers' portfolio mix by asset class for the current period and previous year-end.

Detailed Asset Mix  As at June 30, 2026 As at Dec. 31, 2025 Asset Class$ billions%$ billions%Equity    Public equity61.121%50.018%Private equity48.016%50.819%Venture Growth25.99%15.36% 135.046%116.143%Fixed income62.721%61.823%Inflation sensitive    Commodities30.110%32.112%Natural resources13.14%12.14%Inflation hedge12.54%11.94% 55.718%56.120%Real assets    Real estate28.210%27.910%Infrastructure44.815%34.513% 73.025%62.423%Credit39.313%38.314%Absolute Return Strategies24.58%25.29%Funding and other1(91.9)(31%)(87.3)(32%)Net investments2298.3100%272.6100%

 

1 Includes funding for investments (term debt, bond repurchase agreements, implied funding from derivatives, unsecured funding, and liquidity reserves) and overlay strategies that manage the foreign exchange risk for the total fund.

2 Comprises investments less investment-related liabilities. Total net assets of $303.2 billion as at June 30, 2026 (As at December 31, 2025 – $279.4 billion) include net investments and other net assets and liabilities of $4.9 billion as at June 30, 2026 (As at December 31, 2025 – $6.8 billion).

Funding Status

As of January 1, 2026, the plan was fully funded with a $31.2 billion preliminary funding surplus, underscoring its long-term financial health and sustainability. The plan’s co-sponsors, the Ontario Teachers’ Federation (OTF) and the Government of Ontario, have elected to file the preliminary valuation with appropriate regulatory authorities.

Corporate News

• Cathy Cranston was appointed Board Chair of Ontario Teachers’ Pension Plan, effective January 1, 2027. Ms. Cranston, who has served on the board since 2019, was appointed by the Government of Ontario and the Ontario Teachers’ Federation, the Plan’s co-sponsors. She will succeed current Board Chair Steve McGirr, who will retire at the end of the year after serving his full term.
• Adam Howard was appointed to Ontario Teachers’ Pension Plan’s board for a term that runs until December 31, 2028. Mr. Howard was appointed by the Government of Ontario.
• Ontario Teachers’ published its 2026-2030 Climate Strategy, which introduced a 2030 target of $70 billion in Climate Transition Aligned (“CTA”) assets, encompassing private market investments in companies that are decarbonizing their operations and those enabling the global energy transition.

Investment Highlights

• Space Exploration Technologies Corp. (SpaceX), a spaceflight, telecommunications, and artificial intelligence company, listed its shares on the NASDAQ stock exchange, a significant milestone for the first investment made by Teachers' Venture Growth. SpaceX was a significant contributor to Ontario Teachers' total-fund net return in the first half of the year.
• Welcomed Integrum as a new shareholder in Allworth Financial, a U.S.-based registered investment adviser, as part of an expanded strategic investor group.
• Invested alongside joint venture partner DW Effectum Residential in the German residential market through the acquisition of four fully let multi-family residential assets in southern Germany.
• Established a new real estate joint venture with Equus Capital Partners, targeting core and core-plus assets in key markets across the U.S. The JV completed the acquisition of Ashton Logistics Park, a two-building Class A industrial portfolio located in Virginia.
• Participated in the financing supporting Kraken’s spin-out from Octopus Energy Group, a UK energy technology platform providing software and AI solutions to utilities.
• Co-led the Series F primary financing round for Ramp, a financial operations platform helping businesses streamline finance functions.
• Acquired a portfolio of royalties on critical minerals in Western Australia. The portfolio provides exposure to lithium, tin, and tantalum.
• Co-led a secondary share transaction in Vinted, a leading European second-hand marketplace.
• Subsequent to the period-end, completed the sale of all equity interests in Aethon III LLC, Aethon United LP, and related entities and interests. Aethon’s natural gas assets are primarily located in the Haynesville Shale formation.
• Subsequent to the period-end, reached an agreement to sell a 40% stake in Caruna, Finland’s largest electricity distribution company.

About Ontario Teachers’

Ontario Teachers' Pension Plan Board (Ontario Teachers') is a global investor with net assets of $303.2 billion as at June 30, 2026. Ontario Teachers’ is a fully funded defined benefit pension plan, and it invests in a broad array of asset classes to deliver retirement security for 346,000 working members and pensioners. For more information, visit otpp.com and follow us on LinkedIn.

Media Contact:

Dan Madge
Ontario Teachers' Pension Plan
Email: media@otpp.com

Note to editors: Please see attachment: 

2026 Interim Financials (PDF)

Forward-Looking Statements

This news contains forward-looking information and statements (“forward-looking statements”) that are intended to enhance the reader’s ability to assess the future financial and business performance of Ontario Teachers’.

The forward-looking statements include all information and statements regarding Ontario Teachers’ current beliefs, targets, intentions, plans, and expectations concerning its objectives, future performance, strategies, and financial results, as well as any other information or statements that relate to future events or circumstances and which do not directly and exclusively relate to historical facts. Forward-looking statements often but not always use words such as “trend,” “potential,” “opportunity,” “believe,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “contribute”, “achieve,” and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may” and similar expressions.

Because the forward-looking statements are based on estimates and assumptions that are subject to significant business, economic and competitive uncertainties, many of which are beyond Ontario Teachers’ control or are subject to change, actual results or events could differ materially from those expressed or implied. Although Ontario Teachers’ believes that the estimates and assumptions inherent in the forward looking information and statements are reasonable, such information and statements are not guarantees of future performance and, accordingly, readers are cautioned not to place undue reliance on such information or statements due to their inherent uncertainty.

Ontario Teachers’ forward-looking statements speak only as of the date of this interim report or as of the date they are made and should be regarded solely as Ontario Teachers’ current plans, estimates and beliefs.

Ontario Teachers’ does not intend or undertake to publicly update such statements to reflect new information, future events, and changes in circumstances or for any other reason, except as required by law.

Discussion with Jo Taylor, Gillian Brown and Stephen McLennan

Earlier today, I had a Teams meeting with Jo Taylor, Gillian Brown, and Stephen McLennan to go over their mid-year 2026 results. 

I want to thank them for taking the time to speak with me and also thank Dan Madge for setting up the meeting. 

Jo began by giving me a brief overview of the results:

I would say we are always trying to find areas where we can do better for our members. As far as our returns for the first half of the year, we're pleased with the broad-based return as a validation of the strategies we've been working on for a little while. We are still working on parts of the private business to try and get it to where we would ideally still want it to sit from a risk-return point of view, but the performance overall has been broad-based, and I think pretty good.

I told him any time you're delivering 9.5% mid-year results, it's not just "pretty good", it's truly excellent. I asked Gillian if the first half of the year was the same story as last year or a bit different. She replied:

To Jo's point. I think this year is different in the sense that we were probably looking at more of the active strategies, and more of them were adjusting to a new market environment. We are really spending time around improving those returns. I think we're now feeling more confident around more of our strategies. The vast majority are working quite well.

I think private equity is still going through a bit of an adjustment. We're seeing positive results coming from creating a value creation team, leaning into the companies we hold. We're seeing positive operating performance come out of that. 

I think reading enough into valuations and multiples is still quite challenging with not a lot of transactions going on in the market, but we have been successful around selling, divesting some of the names that we hold, at valuations that we felt were good, and so I'd say the portfolio is shifting. But it's it's a slow shift. It's a slow shift on private equity assets, as you know. 

All fair points that Gillian made, and the shift in private equity indeed takes time. Because OTPP doesn't disclose returns by asset class in their mid-year update, only the asset mix weightings, I asked Stephen if the increase in weighting in some asset classes (Public Equities, Venture Growth and Infrastructure) was due to better relative performance. He confirmed this:

I think the bulk of the increase is really driven by that organic kind of return growth across those asset classes, and in other ones, we have made adjustments kind of inter-period that you might not be able to see by just looking at the asset mix chart. But that would be the large part of that shift that you'd be picking up in the asset mix report.  

Stephen also added that they didn't make any big asset allocation decisions in the first half of the year (meaning a big 5% move in any asset class). I then noted that this year, we saw a big selloff in momentum stocks after a big run-up but they seem to have snapped back for now. I said if this continues and we see growth and hyper-growth stocks outperforming value stocks again this year, it will be another tough year for private equity on a relative basis. Jo stepped in to share this:  

We've been a little cautious about public markets for a couple of years. It just shows how hard it is to predict the correction point, or if there is a correction, how long it's going to last, and how deep it's going to be. As you know, many people thought that on Liberation Day, with that correction, that was the start of something more significant, which didn't hold. Our job is really to try and deal with all situations that we can with a portfolio that is pretty well balanced.  The other thing is I would have expected a little more clarity around growth and inflation, which sort of hasn't really played through to the level I would have expected six months ago.  I don't have the crystal ball. I think we just have to try and sort of do our best for the markets we see. And certainly, Stephen, particularly in terms of composing our portfolio, is trying to think through how to manage the downside as much as if things continue to grow as they have. 

I totally get it, and told Jo, |Gillian and Stephen that OTPP isn't the only major Canadian pension fund/ plan that is cautious on public equities given the high valuations and concentration risk, but the big difference is OTPP invested in SpaceX early and will likely make huge gains there as well as Anthropic when it goes public.  I asked them if they have made a decision on SpaceX and how they will manage this position. Jo responded:

I mean, it's a large holding for us, so we know we have to be thoughtful about that. I'd also say we're trying to understand where the business is going between its core business, which is the Starlink activity, which is essentially what we invested in in 2019, and some of the newer activities and how they're going to complement that business and actually either help to continue grow returns or not. So I think that some of that still needs to be worked through.

I told them I'm still trying to figure out whether SpaceX at these levels represents a great long-term investment (my bear extreme bear case is a 50% haircut from IPO debut, but that's unlikely unless we see a major crisis).

I moved on to real estate, where Stephen shared some insights on that portfolio:

I think things do feel like they've stabilized there, and certainly in the smaller marketplace, we've seen a very strong demand for office of late over the last six to twelve months.

Now that's a pretty short-term indicator, and as you know, real estate's a perpetual asset or a long-term asset. But we're seeing some very encouraging signs both here in Canada and also in other parts of the portfolio.

If you recall, the last couple of years, we've been trying to think about that portfolio on a global basis and trying to make sure that we've got the right portfolio construction within real estate across geography and sectors, and so we're continuing to see that bear fruit in terms of the overall portfolio. So, cautiously optimistic for the real estate aspect.

I noted that Infrastructure continues to do well, with electricity transmission being a big part of that portfolio, providing steady returns.  

Stephen commented:

I'll make a top-down comment, and and both real estate and infrastructure are really meant to be those, for lack of a better term, those steady Eddies, very predictable returns, provide those those inflation-sensitive kind of cash flows, if you will, and we're seeing that in the infrastructure class, certainly in the first six months, in terms of of delivering on kind of expected return, for lack of a better concept. But Gillian, I don't know if you want to add something...

Gillian chimed in:

No, I think that's right. We're seeing good, steady performance out of infrastructure. I think to the points before, obviously, the plan is very focused on both growth and inflation, and just thinking through how that inflation is going to feed through to infrastructure assets, your your sort of core contracted assets, etc. 

That is still a steady part of our portfolio. We're pleased with that. As you mentioned, electricity transmission is one of the good performers there. We're pleased with that exposure.

I recently discussed how OTPP and KKR sold their stake in Caruna to Iberdrola, explaining that if the price is right, they will sell stakes in infrastructure.

Gillian noted: "If you can get paid for forward growth today, you sell it today with certainty rather than taking on continued risk for that forward growth. So no, it's absolutely a rational decision."

I asked them where they see the biggest opportunities right now and Stephen replied:

I'm going to give you a boring answer. One of the ways of our strategy is to be in a position of having flexibility and not being forced into trying to kind of hunt for opportunities that might not be as attractive as everybody thinks. That's not necessarily a statement that that's where we are in the cycle, but we do have the benefit of the flexibility of both scale from an investing perspective, but also a very strong funding position that really allows us to kind of think about where we want to play.

That changes the decision in terms of trying to force investments into the world versus having the ability to be very selective, and that's really premised again, as I said, on that funding ratio component, but also trying to think about the portfolio across a number of different economic scenarios and really delivering that resilience. And we're quite happy with all portfolio construction in terms of not necessarily needing to kind of lean into any one opportunity at the current.

The second part of my question was on liquidity and seizing opportunities as they arise. Stephen added this:

There are two components to your liquidity question. I would start with we've always focused on liquidity, making sure that we have the ability to kind of meet our you know short-term liabilities or short-term commitments, be that pension or other other payments, and we've always managed that very diligently with with a fairly sophisticated kind of mechanism to do that. 

I think the other part of your question was more about that kind of opportunistic liquidity piece, and kind of maintain what I'm going to say, very comfortable liquidity levels. I'm being a bit more hedging that statement because liquidity is one of those things that you have it, and then you don't have it, and so I think we want to make sure that we're careful with how we use it as we kind of look at a world that still continues to be pretty volatile.

I also asked Jo about inflation and why they're preoccupied with it. he answered:

Well, it's certainly a relevant feature for our portfolio. Our liabilities are fully inflation-linked, so the one thing that actually will adjust our surplus would be if inflation starts to spike or perpetuate on a long-term basis.

We have a significant exposure to what we call an inflation-sensitive part of our portfolio. It performed well in 2026. We are pleased with what's in there and how it's responded. You know, we also have real estate and infrastructure, as Stephen mentioned a minute ago.

I would say our allocation to things to deal with inflation feels like we got about the right amount there. Our job is really to react or anticipate, ideally, things that are changing and make adjustments.

But you know, when you have a portfolio that's producing 9.5% at the first half, you probably say it's feeling like it's reasonably well constituted. I think the two features we will probably monitor the most. I would have said 12 months ago, it's growth and inflation. I'd probably say today it's probably inflation and equity valuations.

I think it's safe to say inflation and equity valuations are on everyone's mind.

I asked Jo if they are beating their benchmark in the first half and he confirmed they are (this is where SpaceX adds value).

At this point, Stephen chimed in:

Can I just add to that? Because again, I think there's a lot of discussion around benchmarks. Yeah. I think when we're building the portfolio, we have a return objective that we really need to deliver over the long term to satisfy our pension requirements, and our 9.5% was well in excess of that kind of required rate return. So, I think that should be very aligned with improving our funding ratio over time as the various decisions get made related to that part of the calculation.

I asked whether 6% is their actuarial target and Jo responded:

It's a shade more than that. We keep a close eye on the assets that we have and how that's growing because that's real return, really in terms of what we're making. So we flipped over the target I said when I took over as CEO of $300 billion with these results, which is great a bit earlier than we expected.

The other one is that we are well funded. We have a good, strong surplus. We don't become complacent about that. But I think the more we can see that we have some contingency in our sort of funding, I think it gives us a very strong platform to go out and make the decisions we have to make in what is still a relatively absurd world, you look at Iran and various other things going on. It's not straightforward to anticipate where we're headed next.

Indeed, nothing is straightforward in this wacky world dominated by geopolitical and other tensions.

Gillian Brown had the last word on benchmarks and long-term performance, stating this:

I think that it's important that we recognize what parts of our business are doing well or not, and where we think that a business isn't performing as well as we'd like to see, that we're leaning in. I think that's the private equity story in creating our value creation team and really leaning into the operating performance of businesses that we have, so I think there's probably a balance between you know, too short-term and reactive, but also between sort of being too passive when you think something isn't working anymore, and we're not keeping that up.

Once again, I thank Jo, Gillian and Stephen for another excellent discussion.

Obviously, the news media is just focusing on SpaceX and its contribution to performance -- and with good reason -- but there are so many more moving parts to OTPP's portfolio. 

Clearly, OTPP is going to have an excellent year in 2026, barring some major catastrophe.

Below are two recent interviews featuring OTPP's CEO, Jo Taylor, which are worth listening to. 

Sean Conlon, Hugh Leask, Justina Lee and Sarah Min of CNBC report the S&P 500 rises to record close Friday and posts strongest week since April: 

The S&P 500 rose on Friday as traders interpreted an unexpected loss of jobs in July as meaning the Federal Reserve won’t need to raise interest rates soon and can leave monetary policy on hold for now.

The broad market index advanced 0.62% for a record close of 7,757.64, while the Nasdaq Composite outperformed, climbing 1.3% to 26,690.62. The Dow Jones Industrial Average added 151.83 points, or 0.28%, to end at 54,036.93.

Stocks posted a second straight week of gains. The S&P 500 — which closed above 7,700 for the first time ever earlier this week — advanced 3.6% in the period. The Nasdaq saw a gain of 5.2%, thanks to a bounce-back in chip stocks. The iShares Semiconductor ETF (SOXX) ended the week up more than 7%. The Dow, on the other hand, gained nearly 3% during the week. All three indexes notched their best weekly performances since April.

July’s nonfarm payrolls report showed a drop of 23,000 jobs, while economists polled by Dow Jones had forecast a gain of 83,000. The unemployment rate fell to 4.1% as the labor force participation rate fell to its lowest level in more than five years. Economists had expected it to remain unchanged at 4.2%.

A majority of fed funds futures traders now expect that the central bank will hold its benchmark lending rate at the current 3.50% to 3.75% at the next policy meeting in September, per the CME FedWatch tool. Just a day ago, traders were pricing in a 55% chance of a quarter-point hike.

“For the job market this is a number that’s not booming and may actually be breaking, but for the markets the two biggest areas of concern were yields and inflation,” Saira Malik, Nuveen chief investment officer, said on CNBC’s “Squawk Box.” “This lower number helps not reinforce the Fed’s narrative that they need to raise interest rates.”

Software stocks helped lead the market higher Friday as the latest round of earnings dispelled fears that artificial intelligence would disrupt the industry. Cloudflare popped more than 5% after the cloud cybersecurity company issued a solid full-year and current-quarter outlook. Shares of Atlassian jumped 35% after the company’s fourth-quarter adjusted earnings and revenue surpassed expectations and issued upbeat guidance.

Airbnb shares also rallied 17% after the vacation rental company posted a beat on the top and bottom lines.

Oil prices, meanwhile, were slightly higher as investors awaited a potential deal from the U.S. and Iran to reopen the Strait of Hormuz. Treasury Secretary Scott Bessent had told CNBC earlier in the week that the two sides could reach a deal soon.

West Texas Intermediate futures for September delivery were up 1.15%, settling at $78.18 per barrel, while Brent crude, the international benchmark, climbed 1.29% to settle at $83.55.

“The conclusion is that a resolution will be forthcoming in the not too distant future, and if those conditions change, then you’re going to see angst crawl back into the market,” said Terry Sandven, U.S. Bank Asset Management’s chief equity strategist. “But at present, the wall of worry is crumbling.” 

This was a fantastic week in the US stock market, led by -- you guessed it -- momentum stocks that were recently clobbered and snapped back viciously:

Just have a look at today's top gainers in the stock market (full list here): 

 And have a look at this week's top-performing US large cap stocks (full list here):

You'll see stocks like Atlassian Corp (TEAM), Twilio (TWLO), SpaceX, Palantir (PLTR), Paycom Software (PAYC), Shopify (SHOP), and Ionq Inc (IONQ)  all posted huge gains.

SpaceX (SPCX) came back strong in the latter half of the week after getting clobbered on Wednesday when it reported its first earnings report (it was down a lot prior to then).

When I see these hyper-growth stocks ripping higher, it tells me this market is on RISK ON mode, it wants to make new highs. 

Last week, it was all about Situational Awareness and how that fund imploded.  

I told my readers to pay attention to Aschenbrenner’s positions, all 34 of them available here. 

The short covering we saw last week, carried into this week.

So, what's next?

Again, look at the daily chart of the momentum ETF:

Massive short covering over the past two weeks led to the pop; that's clear to me.

Going forward, it has to sustain a move above its 50-day moving average to create a new uptrend.

The problem?  As stocks make record highs, bullish sentiment reigns.

This morning, I read that the Bank of America sentiment gauge hit its most extreme level since 2021.

That isn't good news from a contrarian standpoint; it means too many investors see things as very rosy.

But on the flip side, Treasury Secretary Scott Bessent admitted the US helped Japan support the yen, and that may end up shaping market behavior. 

There's a lot of liquidity and leverage out there, supporting all risk assets, not just stocks.

Below, the CNBC Investment Committee debate what catalysts the market needs to get the S&P to 8,000 by year-end (from Thursday's show).

Also, Tom Lee joined CNBC on August 6 to make the case that the chase toward 8,000 is already underway.

Lastly, John Belton, Gabelli Funds growth equities portfolio manager, joins 'Squawk Box' to discuss the latest market trends, key takeaways from earnings season, and more.