LPs aren’t expecting to distance themselves from private equity commitments or drastically alter strategies in the face of tariffs, inflation and other uncertain market forces.
That was one of the takeaways from a NEXUS 2025 panel on March 11 featuring a cast of LP leaders. Despite having different geographies and levels of private markets exposure, they articulated a similar sense of contentment with current private equity target allocations and long-term goals for the asset class in their portfolios.
The conversation centered on how each of the three funds is approaching deploying capital today, given geopolitical tension and potential economic tailwinds.
Allen Waldrop, director of private equity at Alaska Permanent Fund Corporation, expressed the challenges of planning for the moves of a new administration in the US during his comments:
“There’s just no way to do it.”
The sovereign wealth fund’s deputy CIO was joined by a pair of LPs from the Canadian market: Robert Mellema, managing director, private equity and real assets for Canada Pension Plan’s CPP Investments, and Jeff Markusson, a senior managing director for Ontario Teachers’ Pension Plan.
All three spoke of measuring performance in the private markets across a decades-long time horizon and generally had optimism about private equity achieving a level of modest outperformance to public equities despite a recent narrowing of that gap.
For Mellema of CPP Investments, a longstanding commitment to the secondaries market has helped shape PE exposure during a challenging time for exits. He said during the panel he expects his system to remain active in that space.
Even with fundraising slowing, Markusson and Waldrop said during the panel that secondaries hadn’t taken a major role in their portfolios.
Markusson said the continuation vehicle theme has been eagerly adopted by Ontario Teachers’ Pension Plan. He told the audience that pensions have for a long time found that putting businesses into sell mode causes a lot of friction.
“We’ve stuck with a lot a businesses held for 10 or 15 years … and it’s not because they’re dogs, but because they’ve performed quite well and there’s an opportunity to compound over many years,” he said. “When we have conviction, we want to stay invested, and not perpetually put companies into sale mode.”
Alaska Permanent Fund Corporation, which has about 40 percent private markets exposure in its portfolio, isn’t keen to deviate commitments to keep pace with private equity specialties in today’s economy, such as AI software, according to Waldrop. Waldrop said that’s too much of a potentially short-cycle strategy for their fund to take an interest in.
“But we are looking at long-term trends along the same lines, such as increased power consumption,” he said.
There is one strategy change Waldrop mentioned: Five years ago, the sovereign wealth fund had an interest in venture capital and early-stage co-investments. Now, the fund views that space as too volatile to participate in.
When it comes to co-investments, the fund is “aiming for the center of the fairway,” Waldrop said, and not heroic returns.
Going forward, Waldrop expects the private equity market to be subject to “shakeouts” amid all of the market’s uncertainty. He also doesn’t think that’s a bad thing.
“I think good deals are done in times of uncertainty,” he said.
LPs aren’t expecting to distance themselves from private equity commitments or drastically alter strategies in the face of tariffs, inflation and other uncertain market forces.
That was one of the takeaways from a NEXUS 2025 panel on March 11 featuring a cast of LP leaders. Despite having different geographies and levels of private markets exposure, they articulated a similar sense of contentment with current private equity target allocations and long-term goals for the asset class in their portfolios.
The conversation centered on how each of the three funds is approaching deploying capital today, given geopolitical tension and potential economic tailwinds.
Allen Waldrop, director of private equity at Alaska Permanent Fund Corporation, expressed the challenges of planning for the moves of a new administration in the US during his comments:
“There’s just no way to do it.”
The sovereign wealth fund’s deputy CIO was joined by a pair of LPs from the Canadian market: Robert Mellema, managing director, private equity and real assets for Canada Pension Plan’s CPP Investments, and Jeff Markusson, a senior managing director for Ontario Teachers’ Pension Plan.
All three spoke of measuring performance in the private markets across a decades-long time horizon and generally had optimism about private equity achieving a level of modest outperformance to public equities despite a recent narrowing of that gap.
For Mellema of CPP Investments, a longstanding commitment to the secondaries market has helped shape PE exposure during a challenging time for exits. He said during the panel he expects his system to remain active in that space.
Even with fundraising slowing, Markusson and Waldrop said during the panel that secondaries hadn’t taken a major role in their portfolios.
Markusson said the continuation vehicle theme has been eagerly adopted by Ontario Teachers’ Pension Plan. He told the audience that pensions have for a long time found that putting businesses into sell mode causes a lot of friction.
“We’ve stuck with a lot a businesses held for 10 or 15 years … and it’s not because they’re dogs, but because they’ve performed quite well and there’s an opportunity to compound over many years,” he said. “When we have conviction, we want to stay invested, and not perpetually put companies into sale mode.”
Alaska Permanent Fund Corporation, which has about 40 percent private markets exposure in its portfolio, isn’t keen to deviate commitments to keep pace with private equity specialties in today’s economy, such as AI software, according to Waldrop. Waldrop said that’s too much of a potentially short-cycle strategy for their fund to take an interest in.
“But we are looking at long-term trends along the same lines, such as increased power consumption,” he said.
There is one strategy change Waldrop mentioned: Five years ago, the sovereign wealth fund had an interest in venture capital and early-stage co-investments. Now, the fund views that space as too volatile to participate in.
When it comes to co-investments, the fund is “aiming for the center of the fairway,” Waldrop said, and not heroic returns.
Going forward, Waldrop expects the private equity market to be subject to “shakeouts” amid all of the market’s uncertainty. He also doesn’t think that’s a bad thing.
“I think good deals are done in times of uncertainty,” he said.
