Voucher programs—which use public funds to finance private education—have been sweeping state and federal legislatures over the past few years. These bills are harmful to public schools, especially public schools in rural communities. Yet, this week, the “Keep Public Funds in Public Schools Act” was introduced in the Senate, which would repeal the national private school voucher program passed in the 2025 reconciliation bill, thereby protecting rural communities from these programs. Often framed as “school choice” programs, vouchers give parents the equivalent of per-pupil public school funding to send their child to any private or homeschool program they choose.

But diverting public funds away from public K–12 schools and toward private schools does not guarantee educational opportunities will be expanded for all students—and this is especially true in rural communities. Most obviously, because students in rural communities often don’t have a private school option and therefore cannot use the vouchers, state voucher programs—which are financed by all the taxpayers in a state—amount to an education subsidy for wealthy urban families at the expense of strong public schools. Moreover, for rural areas that can support multiple school systems, voucher programs introduce a potentially large cost for the students that remain in public schools, as any sharp drop in public school enrollment will raise the fixed cost per pupil of running schools. For example, school facilities and staff that are efficient for 1,000 students in a school may no longer be efficient if enrollment were to drop to 800 or 900.

Voucher programs work like this: Parents who wish to send their kid to private school can receive public funding to cover part of the tuition or education-related expenses, rather than paying out of pocket. In states with vouchers programs, this added cost to government of paying for private educational expenses makes a big dent in state budgets—see examples here, here, and here. These programs also often entail fraud and abuse of funds and strip away funding for public schools. As a share of K–12 budgets, voucher spending accounted for as much as 26% in 2025, squeezing public schools of sorely needed funds. Moreover, recent reports have documented accounts of voucher funding getting used for high-end concert tickets and rideshare apps like Uber and Lyft. For wealthy parents in urban districts who were already planning to send their kids to private school, these slippery regulations and extra funding for education expenses are a feature, not a bug, of voucher programs. Vouchers are disproportionately taken up by students already attending private school, compared with those who consider a private school option when voucher laws get passed in their state.

For students in rural areas with no private school option, voucher programs simply mean there is less to spend on public schools, which leads to teacher shortages, fewer educational opportunities, and worse building maintenance. In rural communities with homeschooling or private school options, voucher programs impose an added cost to public education when students transition from public to private school.

We call this cost the fiscal externality of voucher programs, and it is borne by school districts, students, and their families when voucher-driven declines in student enrollment intersect with the fixed nature of many school costs. In rural districts, many key education costs—such as interest on bonds issued in the past, heating, electricity for school buildings, bus drivers, and even some staff—cannot easily adjust to student enrollment declines.

While public schools’ fixed costs do not decline when they lose students to voucher programs, their revenue does. Thus, when students in rural areas take up vouchers to leave public school for private school or homeschool, public schools have less revenue to cover the same level of fixed costs. The costs that can be adjusted—such as supplies or certain personnel—will get forced down due to shrinking school budgets. These variable costs are crucial for effectively educating children, meaning students who remain in public schools will pay the price of voucher program takeup.

This fiscal externality therefore leaves districts unable to deliver the same level of instruction to the remaining public school pupils. When students leave public schools in rural areas with voucher programs, there are fewer resources available on a daily basis to educate kids—fewer teachers and other staff members and fewer curriculum and education supplies. Education quality suffers.

How large is the fiscal externality that voucher programs impose on public schools in rural districts? Take the McComb Local School District in Ohio, which had 627 students in 2022 and is classified as a rural district according to the U.S. Census. Using EPI’s Fiscal Externality Calculator, we estimate that a 5% decline in enrollment would lead to an increased cost of $520 per pupil for the remaining students in the district, or a total of $309,530.

The key assumption is that there is some fraction of schools’ costs that is fixed and can’t be adjusted in the near term when enrollment falls. We assume that instruction and services costs (the cost of teachers and services like transportation, counseling, nurses, and school administrators) can only partially adjust to changes in enrollment. Specifically, we assume that when enrollment declines, instruction costs are only able to adjust by 50% of the enrollment decline, and service costs are only able to adjust by 20%. We assume that capital and building and maintenance costs can’t be adjusted at all. (Users can set their own adjustment rates for their school districts using the fiscal externality calculator here. The method behind this calculation is detailed in our report.)

Under these assumptions, aggregating all the rural Ohio districts using the rural categorization of school districts from the National Center for Education Statistics, a voucher-driven 5% enrollment decline would impose a fiscal externality of just over $206 million on Ohio public schools.

Rural districts have the most to lose when states enact voucher programs. For rural communities, vouchers are not a cost-free policy that simply expands education options for children—they are a subsidy for wealthy urban and suburban families at the expense of strong public schools. Voucher programs also introduce a large potential cost for the students that remain in rural public schools. The public spending declines associated with the introduction of vouchers will reliably cause significantly worse educational outcomes at a time when states should be spending more—not less—on public schools. States that promote voucher programs at the expense of funding for strong public education are signaling that rural students are not a priority. 

Key takeaways:

• Recent Democratic proposals to exempt broad swaths of the middle class from federal income taxes accept a damaging frame of taxes as a pure drain on affordability.
• But taxes aren’t a drain on affordability; they fund the public services and social insurance programs that make a decent life possible for middle-class families.
• Progressive taxes on the ultrarich and corporations are essential and should be the immediate priority, but they cannot sustain the public sector alone, let alone expand it in ways needed.
• Middle-class tax rates have fallen by a third since 1979, yet economic anxiety remains high. Tax-cutting has failed because it has left the private-sector drivers of inequality untouched and starved public services.

For decades, anti-tax politicians have tried to smuggle in large tax cuts for the ultrarich and corporations by loudly offering tax cut crumbs to the middle class. Key to this effort has been framing taxes as a pure drain on typical families’ ability to afford a secure economic life. Any success in this dishonest campaign to foster anti-tax sentiment is a disaster for working people—and that’s why some recent tax policy ideas from Democrats and the rhetoric around them are so deflating.

Two things are true about taxes in the United States. First, taxes on the richest families and corporations are far too low. Second, it is broad-based taxes on the middle-class that are the foundation of a functioning public sector and a decent society.

Progressive taxes on the ultrarich and corporations are mostly needed to reduce the potential gains to the rich and powerful from rigging the rules of markets. When the powerful rig these rules and hugely disproportionate shares of income concentrate at the top—like in the United States today—progressive taxes can also raise significant revenue.

But if sharply progressive taxes succeed in reducing the incentive for rigging the rules of markets and if other policies help lead to more broadly shared income growth in the country, this means that progressive taxes will raise a lot less revenue over time.

To be clear, this would be a victory for a better society. For example, the purpose of a carbon tax is to lower greenhouse gas emissions and if it’s highly successful, it will by definition stop raising much revenue. Progressive taxes aimed at reducing inequality will see the revenue they raise start to decline when they are their most successful. Right now, we do have deep inequality in the U.S. and progressive taxes will raise a lot of money—but we shouldn’t make the public sector’s resources dependent on this remaining true forever.

But more importantly, taxing only the very rich has never been the primary foundation of public-sector resources and can’t be going forward. The revenue needed to support programs that provide social insurance and income support (Social Security and Medicaid, for example), as well as public investment and services like highways, transit, and public education requires broad-based taxation. Without Social Security providing secure retirement, Medicare, Medicaid, and the Affordable Care Act providing access to health care, and public schools providing universal education, a decent life for the middle-class would be entirely unaffordable. And without middle-class taxes supporting all of these things, they would collapse.

If typical Americans lose faith that paying broad-based taxes to support public services and investments is a good deal, it will be a disaster for their ability to afford a decent life. Sadly, some recent Democratic proposals capitulate to this view of taxes as a “pure burden” rather than an investment in the country and its people.

Senators Chris Van Hollen (D-MD) and Cory Booker (D-NJ) have both floated ideas that would draw a line below which nobody would pay any federal income tax (Van Hollen’s line is $92,000 for a married couple while Booker’s is $75,000). Both proposals pay for this with tax increases on the rich. If these tax increases on the rich were standalone pieces of legislation, they’d be excellent. But they are instead paired with tax benefits that mostly miss the bottom of the income distribution. In Booker’s proposal, the gains from the higher standard deduction that zeroes out taxes for many are actually largest for families between the 60th and 80th percentiles, and gains persist on average through the 99th percentile. Van Hollen’s bill phases out the “alternative maximum tax” that zeroes out taxes for many, and the biggest gains hit in the middle of the income distribution, but the proposal still provides gains on average for families between the 60th and 80th percentiles.

Both proposals clearly aim to address the affordability challenge that politicians have seized on, but in doing so both frame taxes as a pure drain on affordability, with Booker even calling his the “Keep Your Pay Act.” But taxes aren’t a drain on affordability. They provide the resources needed to run the public sector, and the public sector in turn does a great deal to make life more secure and more affordable over people’s lifetimes.

Social Security and Medicare, for example, both rely on payroll taxes on workers’ wages. But they also provide income for these workers in retirement. Instead of draining affordability, these programs smooth income over the lifecycle to ensure working families can afford a decent life even when they can no longer work. Food stamps and Medicaid are financed by taxes and provide benefits to people who otherwise would not be able to afford the most basic necessities: food and health care. The same people who receive Medicaid and food stamps in one era of their lives will contribute to them through taxes in other periods when they have found steady work. Again, the taxes collected are recycled back into families’ incomes in ways that minimize suffering and severe affordability crises throughout their lives.

State and local taxes—often borne quite heavily by the broad middle class—pay for public education. This education—both K–12 and higher education—is incredibly valuable and necessary for anyone operating in modern economies. Without the taxes to support education, families would have to dig into their own pockets to pay for private schooling, and it would be delivered less efficiently and much less equitably.

Other taxes finance infrastructure and other key public goods and services, without which life would be harder and more expensive for most families.

Cutting taxes even fails on the crass political grounds of buying voters’ short-term goodwill. It’s often underrecognized (mostly, again, because of conservative campaigns to hide this fact), but taxes for the middle class have been cut a lot in recent decades. Figure A below shows the percentage point change in tax rates of households at different parts of the income distribution between 1979–2019. We stop at 2019 to compare equivalent points of the business cycle. Tax rates tend to fall sharply during recessions, which can obscure the full extent of legislative changes to tax rates. Further, cutting taxes temporarily during recessions can make some sense—tax cuts are one form of fiscal stimulus that can be used to fight recessions (unless these tax cuts are quite well-targeted on low- and moderate-income families, they tend to be less efficient stimulus than spending measures).

Figure A

The largest tax cuts have gone to the bottom fifth of households—a key policy victory of recent decades. The expansion of refundable tax credits like the Earned Income Tax Credit and the Child Tax Credit—credits that are paid directly to lower-income families even if their amount is greater than the families’ tax liability—have essentially made the problem of taxing families into poverty almost nonexistent. These tax cuts should clearly be kept. But all households, not just those with very low incomes, have seen sizable tax cuts. Tax rates for households in the middle of the income distribution have been cut by a third since 1979.

And yet, does anybody feel like this tax-cutting has led to most U.S. households feeling great about their place in the economy and their prospects for affording a decent life today? Do these voters express warm feelings about the policymakers from both parties who provided these middle-class tax cuts?

The tax-cutting strategy has failed to make these households happy for two reasons. First, it leaves the private-sector drivers of inequality untouched, and as governments have collected less in taxes, employers and corporations have contributed less to middle-class families’ wages. Second, lower taxes have starved public-sector capacity and led to a degradation of public services. Strangely, the newly fashionable “abundance” movement often frames this degradation as a problem of public-sector excesses, but it’s clearly driven by disinvestment. In short, middle-class families value public services and the decades-long campaign to cut taxes has harmed the ability to provide them. The lessons for today’s tax debates should be clear.

The failure of tax-cutting to foster economic security and happiness is not all that surprising for scholars of U.S. attitudes toward taxes, who argue that Americans are not universally anti-tax. Instead, Americans view paying taxes as a patriotic good and a moral obligation. But they are angry about paying their taxes when they think others are shirking their part of the social contract, particularly when they think the richest people and corporations aren’t paying their fair share.

Because we are starting with such high levels of inequality and because of this public cynicism about the rich ever being forced to pay their fair share, the first priority—by far—for policymakers today should be to enact significant stand-alone tax increases on the ultrarich and corporations. The revenue raised solely from the ultrarich could close today’s fiscal gap, the difference between today’s budget deficits and what is needed to put them on a sustainable path going forward. And this act would convince the rest of Americans that the ultrarich are not always prioritized in policymaking and would make future debates about the costs and benefits of higher taxes for higher levels of public goods much healthier.

But we can’t run a decent society based on just taxing the rich and telling everybody else that taxes are an unfair drain. Oliver Wendell Holmes famously said that taxes are the price you pay for civilization. But if the taxes are paid only by the rich, we will get the civilization they want. That doesn’t seem good enough to me.

Socrates’ trial, documented extensively, involved accusations of impiety and corrupting youth; his defense and subsequent execution profoundly impacted Western thought and ethics․

Historical Context of Ancient Athens

Ancient Athens, during the 5th century BCE, was a vibrant yet turbulent democracy․ This period, following the Persian Wars, witnessed a golden age of philosophical and artistic flourishing, but also political instability and social unrest․ The Peloponnesian War with Sparta deeply divided Athenian society, fostering an atmosphere of suspicion and questioning of traditional values․

Socrates lived amidst these shifting sands, challenging conventional norms through his relentless questioning․ Athenian democracy, while innovative, was susceptible to the influence of popular opinion and demagoguery․ The trial of Socrates occurred within this complex political landscape, reflecting anxieties about authority, tradition, and the very foundations of Athenian society․ Understanding this context is crucial for interpreting the events surrounding his condemnation․

The Charges Against Socrates: Impiety and Corrupting the Youth

Socrates faced two primary accusations: asebeia (impiety) – disrespect for the city’s gods – and corrupting the youth․ Meletus, Anytus, and Lycon formally brought these charges, alleging Socrates introduced new deities and influenced young Athenians to question established beliefs․ This was particularly sensitive in a society valuing tradition and religious observance․

The charge of corrupting the youth stemmed from Socrates’ association with individuals later deemed problematic by the Athenian state․ Critics argued his philosophical inquiries undermined civic virtue and loyalty․ These accusations, though debated, tapped into existing anxieties about social order and the influence of radical thought within Athenian society, ultimately leading to his trial․

The Accusation and Initial Defense

Formal accusations by Meletus, Anytus, and Lycon initiated Socrates’ trial; his initial defense centered on challenging the validity of these claims and seeking truth․

The Role of Meletus, Anytus, and Lycon

Meletus, a young and relatively unknown Athenian citizen, formally initiated the charges against Socrates, alleging impiety – disrespect for the city’s gods – and corrupting the youth․ Anytus, a prominent and wealthy politician with a history of opposing democratic reforms, likely held a personal grudge against Socrates due to his critical questioning of Athenian society and its leaders․ Lycon, a rhetorician and father of a student who had associated with Socrates, added his name to the accusation, potentially motivated by concerns about his son’s influence․

These three individuals represented different facets of Athenian society and their combined accusation presented a formidable challenge to Socrates, ultimately leading to his trial and condemnation․

Socrates’ Apology: A Defense Speech

Socrates’ Apology, as recounted by Plato, isn’t a plea for mercy but a robust defense of his philosophical life․ He vehemently denies the charges, asserting his commitment to truth and virtue․ Socrates explains his “divine sign,” an inner voice guiding him away from wrongdoing, and clarifies his method of questioning – elenchus – aimed at exposing ignorance and prompting self-examination․

He argues that a good life is a virtuous life, and that fearing death is foolish, as it’s an unknown state․ His speech isn’t about escaping punishment, but about upholding philosophical integrity․

Key Arguments in Socrates’ Defense

Socrates’ central defense rests on his assertion that he is pursuing truth and fulfilling a divine mission, as ordained by the oracle at Delphi․ He contends that his questioning, though irritating to some, is a service to Athens, prompting citizens to examine their beliefs․ He refutes the charge of corrupting the youth, arguing he improves them through critical thinking․

Furthermore, Socrates highlights his poverty and lack of political ambition, demonstrating he isn’t motivated by personal gain․ He insists that a life unexamined is not worth living, and his philosophical pursuit is paramount․

The Athenian Jury and the Trial Process

The Athenian jury, composed of hundreds of citizens, decided Socrates’ fate through a public vote; the process lacked formal rules of evidence and procedure․

Composition and Selection of the Jury

The Athenian jury for Socrates’ trial was remarkably large, typically consisting of between 201 and 501 citizens․ These jurors weren’t professional legal experts, but ordinary male citizens selected by lot – a process of random drawing – from a pool of eligible Athenians․ This pool was drawn from the dēmos, the body of all citizens․

Jurors were expected to be at least thirty years old and had to meet certain citizenship requirements․ There was no requirement for legal training or expertise․ The sheer number of jurors aimed to prevent bribery and ensure a representative sample of the Athenian populace․ This system, while intended to be democratic, also meant the jury lacked specialized knowledge of law or rhetoric, potentially influencing the outcome․

The Voting Procedure and Outcome

Following the speeches from both the prosecution and Socrates’ defense, the Athenian jury engaged in a two-stage voting process․ First, they deliberated on the question of guilt or innocence․ This was done through secret ballot, with jurors dropping stones into separate urns – one for ‘guilty’ and one for ‘not guilty․’

If a majority voted for guilt, a second vote determined the penalty․ Socrates’ accusers proposed death, and the jury then voted on whether to accept this or suggest an alternative punishment․ Ultimately, Socrates was found guilty by a narrow margin, and the jury, swayed by the prosecution, voted for the death penalty․

Socrates’ Reaction to the Verdict

Upon receiving the guilty verdict, Socrates displayed remarkable composure, a characteristic trait throughout the trial․ Accounts suggest he wasn’t surprised, seemingly anticipating the outcome given the prevailing sentiment against him and his philosophical inquiries․ He engaged in a calm discussion with the jurors, questioning the fairness of their decision and expressing his continued commitment to truth․

Rather than pleading for mercy or exhibiting despair, Socrates maintained his dignity and philosophical stance․ He calmly accepted the judgment, viewing it as a consequence of his dedication to examining life and challenging conventional wisdom, even in the face of death․

The Sentence and Imprisonment

Following the verdict, Socrates faced a death sentence; however, he rejected exile or silence, ultimately enduring imprisonment awaiting the execution of his penalty․

The Proposed Penalties and Socrates’ Rejection

After being found guilty, Socrates was asked to propose a penalty fitting his crimes․ Surprisingly, he rejected suggestions of exile, which would have allowed him to continue philosophizing elsewhere, and even monetary fines․ He firmly believed that to propose a lesser punishment would be to acknowledge the justice of the charges against him – charges he vehemently denied․

Instead, Socrates ironically suggested being rewarded with free meals at the Prytaneum, a state-sponsored dining hall, recognizing his contribution to Athens through philosophical inquiry․ This audacious response infuriated the jury, solidifying their resolve for a harsher sentence, ultimately leading to his condemnation to death․

Conditions of Imprisonment in Athenian Prisons

Athenian prisons during Socrates’ time were markedly different from modern facilities․ Primarily used for holding individuals awaiting trial or execution, they lacked the rehabilitative focus of contemporary systems․ Conditions were harsh, characterized by cramped, dark cells and limited sanitation․ Prisoners relied on friends and family to bring food and basic necessities, as the state provided minimal support․

Socrates’ imprisonment wasn’t solitary confinement; he received visitors, including disciples like Plato and Crito, who detailed his philosophical discussions and plans for escape․ Despite the grim environment, Socrates maintained his composure and continued engaging in dialogue, demonstrating his unwavering commitment to philosophical inquiry even in adversity․

The Opportunity for Escape: Crito’s Plea

Crito, a devoted friend of Socrates, visited him in prison and passionately urged him to escape, presenting a detailed plan to smuggle him out of Athens․ Crito argued that escaping was not only possible but also justifiable, emphasizing the injustice of the verdict and Socrates’ duty to his family and friends who would suffer from his death․

He highlighted the potential for public condemnation of the Athenian authorities if Socrates were allowed to die unjustly․ However, Socrates steadfastly refused, believing that escaping would violate his principles and undermine the laws of Athens, even if those laws were unfairly applied to him․

Socrates’ Philosophical Stance on Death

Socrates viewed death not as an evil, but as a potential transition to a better state, or peaceful nothingness, dismissing the common fear as ignorance․

The Soul’s Immortality and the Afterlife

Socrates, as portrayed in Plato’s dialogues, particularly the Phaedo, extensively argued for the immortality of the soul․ He posited that the soul exists prior to birth and continues after death, undergoing reincarnation․ This belief stemmed from his theory of Forms – eternal, unchanging ideals – which the soul apprehends before inhabiting a body․

Death, therefore, isn’t annihilation but a separation of the soul from the body, allowing it to return to the realm of Forms․ The virtuous soul, having focused on philosophical pursuits, is deemed more likely to achieve a favorable afterlife․ Conversely, a soul attached to bodily desires faces a less desirable fate, potentially requiring further cycles of rebirth․ This perspective offered Socrates solace in the face of execution․

The Fear of Death as Ignorance

Socrates argued that the fear of death arises from a false belief that death is an evil․ He contended that humans fear what they do not understand, and death remains largely unknown․ If death is simply a state of non-existence, it cannot be harmful, as there is no consciousness to experience harm․

Alternatively, if death involves a transition to another realm, it could be even more beneficial than life․ Therefore, fearing death is irrational; true wisdom lies in recognizing our ignorance about it․ Socrates believed philosophical inquiry should aim to dispel this fear, preparing individuals for a peaceful acceptance of their mortality․

Acceptance of Fate and Divine Providence

Socrates demonstrated a profound acceptance of his fate, believing it was divinely ordained․ He consistently maintained that a good man should not fear death, even when facing unjust punishment; This acceptance stemmed from his conviction that the gods guide all things, and resisting their will is futile and impious․

He viewed his trial not as a defeat, but as a fulfillment of a higher purpose․ Socrates trusted in divine providence, believing that even in death, a greater good would be served․ This unwavering faith allowed him to face execution with remarkable composure and dignity, inspiring generations․

The Execution of Socrates

Socrates faced execution by hemlock poisoning, calmly accepting his fate amidst friends and disciples, demonstrating philosophical fortitude until his final moments․

The Method of Execution: Hemlock Poisoning

Socrates’ execution involved the administration of hemlock, a highly poisonous plant․ This method, common in ancient Athens for capital punishment, induced gradual paralysis beginning in the feet, ascending through the body․ The process wasn’t swift, allowing Socrates time for final conversations with his devoted followers․

Plato’s Phaedo vividly describes the physical effects, detailing the chilling sensation and eventual cessation of bodily functions․ The hemlock’s impact wasn’t merely physical; it represented the state’s rejection of Socrates’ philosophical inquiries․ It was a deliberate, public act intended to silence dissent, yet ironically, it immortalized Socrates’ ideas and cemented his legacy as a martyr for truth and intellectual freedom․

Socrates’ Final Hours and Conversations

Socrates spent his last hours in prison, calmly engaging in philosophical discourse with friends and disciples, notably detailed in Plato’s Phaedo․ He dismissed anxieties about death, arguing for the soul’s immortality and the prospect of a better afterlife; These conversations weren’t expressions of despair, but rather a reaffirmation of his lifelong pursuit of wisdom and virtue․

He patiently answered questions, offering reasoned arguments and challenging conventional beliefs․ His composure and intellectual rigor remained unbroken, even in the face of imminent death․ Socrates’ final moments exemplified his commitment to philosophical inquiry, transforming his execution into a powerful lesson on living a meaningful life․

The Presence of Friends and Disciples

Throughout Socrates’ imprisonment and final hours, a devoted circle of friends and disciples remained steadfastly by his side․ Figures like Plato, Crito, and Xenophon witnessed his unwavering commitment to his principles, documenting his dialogues and providing invaluable accounts of his character․ Their presence wasn’t merely observational; they actively participated in philosophical discussions, challenging Socrates and seeking guidance․

These companions offered opportunities for escape, which Socrates resolutely declined, prioritizing adherence to the law․ Their grief was palpable, yet they respected his decision, recognizing the profound integrity that defined his life and death․ Their testimonies became crucial in preserving Socrates’ legacy․

Philosophical Interpretations and Legacy

Plato and Xenophon’s writings immortalized Socrates, shaping Western philosophy; his emphasis on reason, ethics, and self-knowledge continues to inspire critical thought today․

Plato’s Accounts: Apology, Crito, and Phaedo

Plato’s dialogues offer invaluable, though potentially idealized, portrayals of Socrates’ trial and final days․ The Apology meticulously reconstructs Socrates’ defense speech, showcasing his unwavering commitment to philosophical inquiry and truth, even in the face of death․

The Crito explores Socrates’ reasoning for accepting his unjust sentence, emphasizing the importance of obeying just laws and upholding societal order, even when personally wronged․ Finally, the Phaedo details Socrates’ serene death, focusing on his philosophical arguments for the immortality of the soul and the separation of the body and spirit․

These texts are foundational for understanding Socrates’ beliefs and the ethical dilemmas surrounding his trial, though their literary nature necessitates critical analysis․

Xenophon’s Portrayal of Socrates

Xenophon, a student and contemporary of Socrates, presents a contrasting perspective in his Memorabilia and Apology․ Unlike Plato’s more philosophical and dramatic accounts, Xenophon’s portrayal emphasizes Socrates’ practical wisdom, piety, and contributions to Athenian society․

He depicts Socrates as a skilled conversationalist who guided his companions towards virtuous conduct and sound judgment, rather than a radical questioner challenging fundamental beliefs․ Xenophon’s Apology offers a more straightforward defense, focusing on rebutting specific accusations and highlighting Socrates’ beneficial influence․

Scholars debate whether Xenophon’s depiction is a more accurate, less idealized representation of the historical Socrates, or simply a different interpretation․

Socrates’ Influence on Western Philosophy

Socrates fundamentally reshaped Western philosophical inquiry, despite not leaving any written works himself․ His emphasis on critical self-examination, the Socratic method – questioning assumptions to reveal underlying contradictions – became a cornerstone of philosophical practice․

Through his student Plato, Socrates’ ideas profoundly influenced metaphysics, epistemology, and ethics․ Concepts like the pursuit of virtue, the importance of reason, and the search for universal definitions continue to resonate․

His martyrdom also established a powerful archetype of the philosopher as a truth-seeker willing to challenge authority, inspiring generations of thinkers․

The Significance of the Trial for Political Thought

Socrates’ trial highlights tensions between individual beliefs and state power, raising crucial questions about democracy, justice, and the limits of authority․

Conflict Between Individual Conscience and State Authority

Socrates’ unwavering commitment to philosophical inquiry, even when facing accusations that threatened his life, embodies a profound conflict․ He prioritized truth and moral integrity above obedience to the Athenian state, believing a life unexamined wasn’t worth living․ This stance directly challenged the authority demanding conformity․

The trial demonstrates the dangers when a government suppresses dissenting voices and prioritizes political expediency over intellectual honesty․ Socrates’ refusal to compromise his principles, even to save himself, established a powerful precedent for individual conscience as a check on state power․ His case continues to fuel debates about civil disobedience and the ethical obligations of citizens․

The Dangers of Democracy and Mob Rule

Socrates’ trial starkly illustrates the potential pitfalls of direct democracy, where popular opinion can easily sway justice․ The large jury, influenced by pre-existing biases and emotional appeals, condemned a man whose only crime was challenging conventional wisdom․ This highlights how easily a democratic system can devolve into mob rule, prioritizing popular sentiment over reasoned judgment․

The accusations against Socrates, fueled by political rivals, demonstrate how easily democratic processes can be manipulated․ His fate serves as a cautionary tale about the fragility of justice when subjected to the whims of public opinion and the dangers of unchecked power within a democratic framework․

The Importance of Critical Thinking and Questioning

Socrates’ life and death epitomize the vital importance of critical thinking and relentless questioning․ He challenged Athenians to examine their beliefs, exposing contradictions and prompting deeper understanding – a method perceived as threatening by the established order․ His unwavering commitment to intellectual honesty, even in the face of death, underscores the necessity of independent thought․

The trial reveals the dangers of unexamined assumptions and the suppression of dissenting voices․ Socrates’ insistence on questioning everything, including societal norms, remains a powerful call to cultivate intellectual courage and resist blind acceptance of authority, fostering a society built on reason and truth․

Modern Relevance and Scholarly Debate

Socrates’ trial continues to spark debate regarding intellectual freedom, justice, and the tension between individual beliefs and societal norms, remaining profoundly relevant today․

Socrates as a Symbol of Intellectual Freedom

Socrates stands as an enduring emblem of intellectual freedom, representing the courage to question established norms and pursue truth relentlessly, even in the face of persecution․ His unwavering commitment to critical thinking, embodied in his method of elenchus – probing questioning – challenged Athenian society’s assumptions․

The trial itself highlights the dangers of suppressing dissenting voices and the importance of protecting free speech․ His refusal to compromise his philosophical principles, even to save his life, cemented his legacy as a champion of independent thought․

For centuries, Socrates has inspired individuals to prioritize intellectual honesty and the pursuit of knowledge above conformity and societal pressure, making him a timeless icon․

Ongoing Discussions about the Fairness of the Trial

Scholarly debate continues regarding the fairness of Socrates’ trial, questioning whether political motivations heavily influenced the outcome․ Some argue the charges were fabricated or exaggerated by his opponents – Meletus, Anytus, and Lycon – seeking to silence a prominent critic of Athenian democracy․

The size of the jury (501 citizens) and the voting procedure, which allowed for relatively small majorities to secure a conviction, are also points of contention․

Historians analyze the socio-political climate of the time, suggesting Socrates’ philosophical inquiries threatened the established order, leading to a predetermined verdict․ The trial remains a complex case study in legal and ethical considerations․

The Enduring Appeal of Socrates’ Philosophy

Socrates’ enduring appeal stems from his commitment to critical thinking, self-examination, and the pursuit of truth, even in the face of death; His method of questioning – the Socratic method – continues to be a cornerstone of educational philosophy, fostering intellectual curiosity and rigorous analysis․

His emphasis on virtue, knowledge, and the examined life resonates across cultures and generations․

The accounts by Plato and Xenophon offer invaluable insights into his teachings and personality, solidifying his status as a foundational figure in Western thought․ His willingness to prioritize principles over personal safety inspires ongoing reflection on morality and justice․

Resources for Further Study

Explore Plato’s dialogues and Xenophon’s Memorabilia for primary sources; scholarly books and articles offer deeper analysis of Socrates’ life and trial․

Primary Sources: Plato’s Dialogues and Xenophon’s Memorabilia

Plato’s dialogues, particularly the Apology, Crito, and Phaedo, are foundational texts․ The Apology presents Socrates’ defense speech, offering invaluable insight into his philosophical stance and the charges against him․ Crito explores themes of justice, law, and civic duty through a conversation about escaping imprisonment․

Phaedo details Socrates’ final hours and arguments for the immortality of the soul․ Xenophon’s Memorabilia provides a different, more historically-focused perspective on Socrates’ life, character, and teachings, complementing Plato’s more philosophical portrayals․ These texts, though differing in style, are crucial for understanding the historical context and philosophical complexities surrounding Socrates’ trial and death․

Secondary Sources: Scholarly Books and Articles

Numerous scholarly works analyze Socrates’ trial and death, offering diverse interpretations․ Stone’s “The Trial of Socrates” provides a detailed legal and historical examination of the proceedings․ Benson’s “Socrates’ Apology” offers a comprehensive analysis of Plato’s text, exploring its rhetorical strategies and philosophical arguments․

Articles in journals like the Classical Quarterly and Ancient Philosophy frequently address specific aspects of the trial, such as the political motivations of the accusers or the philosophical implications of Socrates’ defense․ These sources provide critical perspectives and contextualize the primary texts, enriching our understanding of this pivotal event in intellectual history․

Online Resources and Digital Archives

Several online platforms offer access to resources concerning Socrates’ trial; The Perseus Digital Library provides digitized versions of primary texts, including Plato’s dialogues and Xenophon’s accounts, crucial for research․ JSTOR and Project MUSE host scholarly articles analyzing the trial’s historical and philosophical dimensions․

Internet Archive contains scanned copies of older scholarly books, offering valuable historical perspectives․ Websites dedicated to ancient philosophy often feature dedicated sections on Socrates, compiling relevant materials and offering interpretive essays․ These digital archives facilitate accessible and comprehensive study․

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Key takeaways:

• The growing revenue of college sports and the heightened attention on the experience of college athletes suggest that college athletics is far from the amateur endeavor it might have started as decades ago.
• Recent policy changes have allowed some college athletes to receive compensation, whether in the form of name, image, and likeness (NIL) rights or revenue sharing. However, not all college athletes have the right to be compensated.
• The NCAA has backed the SCORE Act, which would jeopardize college athlete compensation by prohibiting them from being classified as employees in the first place.
• Policymakers should consider proposals that strengthen rights for college athletes, including granting them employee status under federal labor laws.

Introduction

It has long been argued that college athletes should not receive compensation to maintain the “amateurism” of college sports. However, the growing revenue generated from college sports and heightened attention on the experience of college athletes suggest that college athletics is far from an amateur endeavor.

Only recently have college athletes been granted the right to be compensated for name, image, and likeness (NIL) rights. This decision came into effect after years of antitrust lawsuits against the National Collegiate Athletic Association’s (NCAA) compensation rules. These lawsuits culminated in the Supreme Court decision in NCAA v. Alston, as well as a growing number of states enacting their own compensation laws for college athletes. The recent House v. NCAA settlement allows Division I schools—those with the largest and most economically lucrative athletic programs—to share revenue with college athletes, and further expands opportunities for college athletes to receive compensation.

As a result of these policy changes and a growing movement among college athletes to demand fair compensation for their performance, federal policymakers have put forward proposals to address college athlete compensation. In this blog post, we examine these proposals and their impacts on college athletes and their labor/employment status.

A brief history of college athlete compensation

Despite claims of “amateurism” in college sports, the experience of college athletes showcases a reality in which athletics is prioritized over academics. For example, while the NCAA puts limits on how many hours college athletes can engage in athletic-related activities during playing season, many coaches create expectations for students to exceed these limits, with some athletes exceeding over 40 hours per week. News coverage has reported that coaches have issued fines to athletes who miss practices. Many college athletes are also required to travel for their games, forcing them to miss classes. If college athletes fail to meet these expectations, they may be cut from the team, which could jeopardize future scholarships and other academic opportunities.

Simply put, some college athletes are expected to perform a physical regimen that more closely resembles professional sports than amateur endeavors on top of their academic coursework. The athletic commitment is demanding enough to be its own job, yet college athletes are performing them without any meaningful compensation in return.

In recent years, there have been several policy changes related to college athlete compensation. In 2019, California became the first state to pass a law that granted college athletes NIL rights. The NCAA permitted NIL compensation in 2021 and since then, more than 30 states have enacted laws related to college athlete compensation, with remaining states deferring to NCAA rules to regulate such compensation.

A primary driver of the NCAA’s change of rules regarding NIL compensation was the 2021 Supreme Court decision in NCAA v. Alston. The unanimous decision upheld a lower court decision that found the NCAA’s rules restricting certain educational benefits for college athletes violated federal antitrust laws. In a concurring opinion, Justice Brett Kavanaugh questioned “whether the NCAA’s remaining compensation rules can pass muster under ordinary rule of reason scrutiny” and suggested collective bargaining as an avenue for college athletes to receive a fairer share of the revenue that they generate for their schools. Soon after the NCAA v. Alston decision, the National Labor Relations Board (NLRB) General Counsel Jennifer Abruzzo issued a memorandum taking the position that college athletes are employees under the National Labor Relations Act.

In response to this memo, men’s basketball players at Dartmouth College filed for a union election petition at the NLRB; however, the petition was withdrawn shortly after the 2024 presidential election. In January 2025, Acting General Counsel William Cowen rescinded Abruzzo’s memorandum, leaving college athletes’ employee status in limbo.

The House v. NCAA settlement, which allowed Division I schools to share revenue directly with college athletes, was another turning point in the college athlete compensation landscape. The majority of states with college athlete compensation laws have considered legislation to modify their statues to reflect the terms of the House settlement, but not all have done so.

Who are college athletes?

The National Collegiate Athletic Association is the governing body for college athletics in the United States, overseeing sports programs for 557,000 college athletes at more than 1,100 colleges. It organizes institutions into three divisions based on size, athletic scope, and financial resources. Division I schools are the largest, with the most extensive athletic programs and highest scholarship limits. Approximately 37% of college athletes compete for Division I schools. Division II schools offer fewer scholarships and financial resources, while Division III has the greatest share of college athletes (38%), but offers no athletic scholarships.

During the 2024–2025 school year, the college athlete population was 57% male and 43% female. These young men and women are diverse: 61% are white, 16% are Black, 7% are Hispanic or Latino, 7% report more than two races, and 2% are Asian. Breaking down demographics by race and gender, we find that white males make up the largest group at 32%, followed by white females at 28%, Black males at 12%, and Black females at 4%. The remaining athletes fall into other demographic categories. If we focus on men’s basketball and men’s football athletes at the highest revenue-earning,1 there are 11,504 total athletes, 32% of whom are white and 48% of whom are Black, with the remaining athletes falling into an “other” race category.

Figure A

In terms of geography, college athletes tend to be from the most populous states. According to estimates using NCAA data and population data from Census, most student-athletes are from California, Texas, Florida, New York, and Pennsylvania (in descending order). On a per capita basis, it is Georgia, North Carolina, and Michigan (in descending order) that produce the highest rates of college athletes. This is likely due to having several large state universities with strong athletic programs and an impressive high school sports infrastructure. NCAA-affiliated institutions are also concentrated in the populous states, but especially among states in the Northeast. The states with the most NCAA schools are Pennsylvania (96), New York (93), California (59), Texas (53), and Massachusetts (51).

Current policy landscape

As mentioned above, many states have enacted laws that grant college athletes NIL rights. In the wake of the House v. NCAA settlement, there have been calls for federal policymakers to pass legislation addressing college athlete compensation.

One of the most prominent pieces of federal legislation is the Student Compensation and Opportunity through Rights and Endorsements (SCORE) Act. Backed by the NCAA, this bill would prohibit college athletes from being classified as employees, denying basic labor rights to over half a million young people. The bill creates a federal standard for NIL rights. In doing so, the SCORE Act preempts state legislation concerning college athlete compensation, creating a ceiling rather than a floor for setting standards around college athlete compensation. Further, the SCORE Act limits the types of NIL deals athletes can enter, places caps on NIL payments, and restricts athletes’ abilities to transfer and play at new schools. Finally, the bill would grant the NCAA broad antitrust immunity by authorizing them to limit revenue sharing and education-related benefits to athletes.

On April 3, 2026, President Trump issued an executive order on college athletics. Similar to the SCORE Act, the order directs the NCAA to tighten rules on transfers, eligibility, and NIL compensation, threatening noncompliant schools with the loss of federal funding. It does not, however, address whether college athletes are employees (an earlier executive order from Trump directed the Department of Labor and National Labor Relations Board to clarify employee status of college athletes). Multiple lawyers have argued the latest executive order would not survive a legal challenge. The NCAA president nonetheless praised it, and both the administration and conference commissioners are using the order to push Congress to pass the SCORE Act.

The Student Athlete Fairness & Enforcement (SAFE) Act is another proposal that seeks to codify a federal standard for NIL rights. However, unlike the SCORE Act, the SAFE Act establishes strong health and safety protections for college athletes, allows flexibility for transfers, and places penalties on bad actor agents, among other reforms. Furthermore, the bill does not address college athletes’ employee status or shield the NCAA from antitrust liability.

By far the most effective policy solution for college athletes to be fairly compensated is to grant them the right to form unions and bargain collectively. Legislation like the College Athlete Right to Organize Act  would classify college athletes as employees, granting them the right to form unions and bargaining collectively under the National Labor Relations Act. The bill would also amend the NLRA to define public colleges—in addition to private colleges—as an employer in the context of intercollegiate sports so that all college athletes have the right to organize and collectively bargain.

Below we evaluate whom these proposals impact and estimate how much revenue the college sports industry generates under current compensation policies.

College athlete demographics versus college attendee demographics

College sports are frequently presented as disproportionately Black, but the data show a slightly different story. Black college athletes make up roughly 16% (89,000) of all college athletes compared with 13% (3.31 million) of the total college student population, not significantly different from the NCAA share. Hispanics are drastically underrepresented in the NCAA, accounting for only 7% of college athletes, despite representing over 20% of total college enrollment. In fact, it is white college athletes, and white male athletes in particular, who are disproportionately represented in college athletics: While 61% of college athletes are white and 32% are white males, only 48% of all college students are white and only 19.1% are white males. Notably, it is Black female athletes who are left out of NCAA college athletics at the highest rates. While they account for 8.3% of total college enrollment (2.14 million), they are only 4.5% of total college athletes in the NCAA (25,000).

Figure B How much do collegiate sports make?

By far, the most economically lucrative division in the NCAA is Division I sports, which includes 37% of total athletes but generates 96% of total revenue across the three divisions, according to the NCAA. According to the Knight-Newhouse College Athletics Database (an authoritative source on college athletics finances and a better representation of self-generated revenue), Division I schools generated $14.6 billion during the 2024 fiscal year. For context, of the five major professional sports leagues in the United States, only the NFL generated more revenue than Division I schools did during the same time period. The NFL, MLB, NBA, NHL, and MLS generated $22.2 billion, $12.8 billion, $12.3 billion, $6.6 billion, and $2.2 billion, respectively, in fiscal year 2024. The primary revenue sources for NCAA Division I are media rights (27%), donor contributions (22%), ticket sales (15%), and institutional support (14%). NCAA Division I revenue has grown 115% (in 2024$) since 2015.

Figure C

Due to the House v. NCAA settlement, schools gained the ability to share revenue directly with athletes beginning in the 2025–2026 school year, adding to any third-party NIL earnings athletes may receive. Though official figures for both revenue sharing and NIL deals are unavailable, schools are currently capped at $20.5 million under the revenue-sharing agreement. Not every university joined the new revenue-sharing arrangement, but every Power 4 school did (the 68 universities in the four highest revenue-generating conferences). Under the generous assumption that all Power 4 schools share the full $20.5 million with their athletes, this would amount to approximately $1.394 billion in athlete earnings, or about 15.1% of total revenue across these conferences. For comparison, coaches at the same set of schools receive $2.3 billion in compensation or 19% of total expenditure. However, if implemented as intended, the revenue-sharing agreement would be a step-up for revenue-generating athletes. Prior to House v. NCAA, the most Power 4 schools could provide the athletes was $2 to 4 million dollars in athletic scholarship money.

Conclusion

Despite the growing revenue that athletes are generating for college sports, many college athletes are not being compensated for their work. Recent policy changes have allowed some college athletes to receive compensation, whether in the form of NIL rights or revenue sharing. However, the reality is that not all college athletes have the opportunity to be compensated. Federal policy proposals, such as the SCORE Act, would further jeopardize college athlete compensation by prohibiting them from being classified as employees in the first place. It is bad policy to deny any worker basic labor rights. Policymakers should consider proposals that strengthen rights for college athletes, including granting them employee status under federal labor laws.

Acknowledgments

The authors thank the Notre Dame Student Policy Network (SPN) for their contributions to the background research for this blog post. The authors would like to thank Billy Bonnist and Liesl Erhardt for leading the SPN team, which included Sarah Francis, Evan Fitzpatrick, Ciara Gilligan, Anvita Jaipura, Owen Murphy, and Caroline Streicker.

1. Defined as the Football Bowl Subdivision (FBS) autonomy schools or schools in the Power 4 (formerly Power 5) conferences. It is worth acknowledging that other sports also produce significant revenue, including women’s basketball, softball, men’s baseball, and women’s volleyball.

Julie Shu and Cassandra Robertson of The Century Foundation wrote a comment on how pension funds can support growth and build an economy that supports workers:

Private equity firms have increasingly come under fire for actions that are making life more difficult and unaffordable, such as driving up the prices of single-family homes, closing hospitals that aren’t profitable enough, and laying off workers at companies they have purchased. New efforts by public pension funds are hoping to counter these bad practices and instead promote investments that benefit communities and workers. 

Public pension funds have the ability to drive investment in our economy to promote shared prosperity while seeking competitive risk-adjusted returns. These funds represent over $6 trillion in capital, and are the collective retirement savings of millions of teachers, firefighters, nurses, sanitation workers, and other public employees who have earned these benefits through years of service. These funds are invested across the economy, in private equity, in real estate, and in public markets. The largest asset managers in the world rely on pension fund dollars to help fill their portfolios. 

Recognizing this power, public pension funds are increasingly instituting policies to ensure that their money works for the people who contributed it, not against them. In line with the funds’ fiduciary duty to seek diversified, consistent, risk-adjusted returns for their participants, funds are thinking deeply about what prompts growth and prosperity. Some states are using their pension funds to invest in affordable housing or infrastructure, leveraging their capital to build the future workers hope to see. But one of the most powerful innovations is a new movement of public pension funds adopting workforce principles and requiring asset managers abide by them across their portfolio. Such principles—consistent with the fiduciary duty that fund managers have—promote investments that simultaneously maximize returns and worker well-being.

Private financial markets have grown rapidly over the past two decades and play an increasingly prominent role in the U.S. economy—and in the portfolios of institutional investors, including workers’ pension funds. Today, the private equity industry manages $11 trillion in assets, and companies owned by private equity employ about one out of every thirteen U.S. workers, or 11.7 million workers nationwide. Over half of the capital that private equity firms manage comes from public pension funds and other institutional investors. These large funds, such as the California and New York City public employee retirement system funds, invest the earnings of hard-working people who spent their careers in public service. The size of these pension funds is only expected to increase in the future. By requiring asset managers to adopt workforce principles across their portfolio to ensure that their workers are treated fairly and their rights are protected as a condition of receiving investments, pension funds are not only determining how their workers’ retirement savings are invested, but also ensuring that those investments create good jobs for other workers. 

Why does this matter?

Private equity firms are focused on the short-term profits from any given deal. Public pension funds also seek competitive, risk-adjusted returns—but in addition to that, as universal owners, they are also incentivized to seek sustainable, long-term economic growth as aligned with their fiduciary duty. 

The history of the private equity model has shown that while it can provide a good rate of return to investors, it also can have significant negative externalities for workers, communities, and the economy. When public companies are taken private, this can result in significant job losses and negatively impact whole communities. For example, when Toys R Us was bought by two private equity companies and eventually forced into bankruptcy in 2018, over 30,000 employees were laid off. The private equity firm Cerberus loaded up Steward Health Care with debt, running it into bankruptcy in 2024 and closing many of its hospitals. While this left many without access to care, the private equity company made over $800 million in profit. Some deals strip companies for parts, selling the land out from underneath a company’s buildings and leasing it back at exorbitant rates, as with Red Lobster. 

Purchase of a company by a private equity firm can also lead to lower employment, lower wages, and lower productivity. Overall, this can lead to greater inequality, which will subsequently impact other parts of the portfolio through reduced economic growth, and—if the acquisition were funded with public pension fund dollars—may not benefit the very people funding the investments. 

The push to make things better.

In order to promote not only better jobs for workers but also a better economic future for the country as a whole, public pension funds are increasingly requiring better treatment of workers across their investment portfolio. As long-term, fully diversified investors with commitments decades out, public pension funds recognize that a high-road approach toward workers can be an important tool to facilitate long-term positive returns (aligned with their fiduciary duty) that depend on overall GDP growth.  

This is where the new principles being adopted by public pension funds for their private equity investments come in. These principles include industry standard wages, freedom of association, and other measures that support the workforce. The University Pension Plan of Ontario has identified inequality as a systemic risk, as they believe inequality can lead to instability and lower overall investment returns. Labor leaders, such as Sean McGarvey, Randi Weingarten, Gwen Mills, and Rebecca Pringle, have made a clear case that supporting good jobs encourages healthy returns and is therefore an advantageous strategy for investors. This perspective is supported by a large body of research.

First, research from MIT demonstrates that good jobs lead to better productivity and more competitive companies. Higher compensation can reduce turnover and increase productivity across industries, including airports, manufacturing, warehouses, and retail. Turnover can cost an employer between 5 percent and 95 percent of an employee’s annual salary, depending on the industry. Greater productivity is essential for economic growth, a key tool for pursuing higher returns. 

Second, strong safety standards are crucial to not only worker health but also investment return. Injuries and unsafe practices can be expensive and lead to reputational risk. Research from California shows that putting worker safety first reduces employee injuries and costs, while buttressing the bottom line. 

Third, pension funds often push for union neutrality since unionization can lead to better trained workers with lower turnover and higher productivity. Capital and infrastructure projects that use union labor have higher productivity and cost less, in part because of the higher skill level of the workforce. 

Finally, adherence to high-road labor practices can lead to better performance in public markets as well. Just Capital, a research organization, has found that the companies they rank as having positive worker practices outperformed the market overall. This is confirmed by evidence that investments in compensation lead to long-term higher market returns. Implementing strong workforce principles can therefore advance productivity and profitability for both private and public companies. 

For fully diversified, long-term investors such as public pension funds who touch all parts of the economy, higher productivity and lower inequality is a strong strategy to promote growth and protect future returns. Treating workers with dignity can help to achieve these goals.

Looking ahead.

Worker power and worker rights are not at odds with competitive risk-adjusted returns. They are self-reinforcing. As unions and pension trustees continue to advocate for workers in investment decisions, they are building a more sustainable economic foundation that benefits everyone. The choice is clear: pension funds can either perpetuate a business model that ultimately undermines their own portfolios, or they can champion an approach that recognizes workers as valuable assets whose wellbeing directly correlates with sustainable, broad-based economic growth. The latter path not only honors the legacy of the working people whose careers built these pension funds, but also helps ensure those funds remain robust for future generations of retirees. 

This comment caught my attention for many reasons.

First, as public pension funds become larger and manage more assets across public and private markets, what role do they play, if any, in growing the economy and supporting workers?

Last month, I discussed how OMERS' economic contribution to Ontario grew to $15.3 billion, delivering stability and social value for members and communities: 

A growing economic impact

The new report shows that OMERS activities contributed to:

• $15.3 billion in provincial GDP (an 11% increase from 2023 and a 28% increase from 2020).

• 135,200 jobs across Ontario, including almost 40,000 jobs in rural communities.

• Nearly $4.2 billion in combined federal and provincial tax revenue.

• In total, more than 832,000 Ontarians - the equivalent of 1 in 11 households - benefited from OMERS activities in 2025.

Impact across all regions of Ontario

OMERS contribution to economic activity is felt across every region:

• Greater Toronto Area: 71,500 jobs; $7.9B GDP contribution

• Southwestern Ontario: 25,800 jobs; $2.7B GDP

• Eastern Ontario: 16,800 jobs; $1.7B GDP

• Central Ontario: 14,900 jobs; $2.4B GDP

• Northern Ontario: 6,200 jobs; $0.6B GDP

And that's just OMERS. Imagine if we did a detailed study on the economic impact of all of the Maple 8 funds and how they contribute to the Canadian economy (if I remember correctly, it was done a few years ago).

Now, on to my second point, what is the economic impact large global pension funds, sovereign wealth funds and other large institutional investors have on the global economy?

It's huge, they provide stable, long-term capital and help public and private companies grow.

When these companies grow, they hire more people and the multiplier effect of all this activity on the global economy isn't trivial.

Third, what role can global pension funds and institutional investors play in public policy?

Here is the tricky part. In the US where public pensions report to state treasurers who have their own political agenda, there is more political interference in the decision-making process.

In Canada, our large public pension funds operate at arm's length from the government, they have independent boards who focus on the best interests of members.

There is no political interference but governments still maintain power (by nominating board members) and in extraordinary circumstances, can step in if they deem it necessary (think of the purge at AIMCo).

Having said this, all of Canada's large public pension funds take responsible investing very seriously and report to their members on activities related to it.

But responsible investing isn't the primary objective; rather it's a complement to investment activities to garner better risk-adjusted returns over the long run.

There are a lot of things I agree with the comment above and some things, I do not agree with.

They paint a mostly negative view of private equity, choosing Cerberus as an example, but that old way of managing assets is dead or on its way out.

If you look at what Pete Stavros at KKR is doing, they're literally forging a new path to capitalism, sharing profits with workers if they deliver and help add value to companies they acquire.

No doubt, private equity funds have a shorter investment horizon than pension funds but the smart ones extend if they can add value to their companies and reap bigger rewards.

Do pension funds have influence on private equity funds?

Yes, they do, but I wouldn't over-emphasize it. 

KKR didn't implement its new model because public pension funds forced it to. They realized it makes great economic sense, aligning the interests of workers with their interest in adding value to companies they acquire.

But pension funds can make sure that private equity funds align with their interests as well.

For example, University Pension Plan of Ontario (UPP) states diversity is a systemic risk and they make sure all the public and private companies they invest with know their views. 

So, at some level, global pension funds and other large institutional allocators have an influence, especially with smaller private equity funds.

Lastly, a big topic these days is the impact of AI on work. I tend to agree with a Harvard study that says AI doesn't reduce work, it intensifies it. 

But pension funds investing with top venture capital funds are more privy to information on how AI will shape our economy, good and bad.

Do they have a role in supporting work, or will they invest in funds that destroy work? 

Probably a mix of both if I am truthful. 

The key thing I want to make clear here is that as pension funds get bigger and command ever more assets, policymakers will lean on them to help support the economy and if their objectives coincide, they will answer the call.

Those are just some of my reflections on pensions and public policy and how they can contribute to economic growth and and build an economy that supports workers.

Below, in this episode of Blue Skies, Erin O'Toole is joined by Jim Leech, former CEO of the Ontario Teachers' Pension Plan and a well-respected voice on business issues, to discuss the current debate about whether governments should mandate public pension plans like the CPP to invest more in Canada. 

They also explore the development of the 'Canadian Model' for pension governance and why it has gained international acclaim. They also engage in a wider discussion of issues related to Canadian economic competitiveness and financial security for pensioners.

This discussion took place a year ago but it's well worth listening to it because Erin and Jim cover a lot.

 Sarah Rundell of Top1000Funds reports on how CalSTRS' One Fund approach navigates uncertainty:

Scott Chan is shocked the market hasn’t reacted more to the crisis emulating from the US-Israel-Iran conflict. But the CalSTRS CIO is confident its one fund approach allows it to position dynamically and ensure diversification no matter what is presented.

So warned CalSTRS’ CIO Scott Chan speaking at the $392 billion pension fund’s March investment committee meeting, explaining to trustees that many unknowns lie below that will impact global trade flows, the equity bull market, and in the shape of currents like AI and America’s burgeoning housing crisis, young people’s ability to tap into the American dream.

The impact of the conflict in Iran is also gathering force below the surface of an apparently benign market.

Chan said he “was shocked” that the market hasn’t reacted more to the crisis – notwithstanding the sharp rise in oil prices. He attributed the absence of a market reaction to enduring uncertainty of how events will play out.

“The market is pricing efficiently what it knows,” he said, adding: “Right now with the uncertainty, I don’t care who you talk to, if they tell you they know what’s going to happen, you should probably walk the other way.”

In the first few weeks of the conflict, CalSTRS strategy has involved rebalancing from its slight overweight to growth assets, ensuring “ample” liquidity and staying mindful of emerging opportunities. For example, the energy crisis potentially opens the door to investment opportunities in markets that are net importers of oil through the Strait of Hormuz like India, Japan, China and South Korea, where sharp falls in the KOSPI represented a potential buying opportunity.

Away from geopolitics, Chan noted other currents building like trends in fiscal policy intervention and the formation of new trade alliances that are rewriting supply chains and redirecting how capital flows. As governments grapple to manage huge deficits, he flagged the risk and opportunity in interest rate volatility and the importance of diversification, discipline and staying dynamic.

Reflecting on market impacts closer to home, Stephen McCourt, managing principle and co-CEO, Meketa, argued that new Fed chair Keven Warsh won’t necessarily push for lower rates. “If Trump’s interest is to get the Fed to lower interest rates irrespective of data, Warsh is an unusual selection.” Coupled with inflationary concerns, he said it explains why markets have priced in fewer rate cuts for 2026.

Chan said the CalSTRS’ One Fund approach, its version of a total portfolio approach, will support the investor’s demand to dynamically allocate and diversify to maximise returns in the current complex environment. It allows the team to invest tactically to position the portfolio to benefit from volatility and has required putting in place cultural and organisational structures, notably a total fund team that maps a common language of risk, and how portfolio risk is shifting.

Recent strategies include increasing capital to asset backed private credit that is less cyclical, more stable and adds diversification with a similar return to other forms of private credit. Elsewhere, strategies include rebalancing the portfolio and pursuing opportunities when the markets are discounted.

CalSTRS generated an unofficial 13 per cent return over the last calendar year, well above the 7 per cent actuarial goal, with the value of the portfolio increasing by $42.5 billion, net of fees, contributions and benefits.

The global equity portfolio rose 22.8 per cent, led by strong non-U.S. equity market performance and interest rates fell, driving strong performance in fixed income markets.

The $58.8 billion private equity portfolio yielded a positive return over the past six months and outperformed the Custom State Street Index, which is used to evaluate performance against other institutional investors.  Staff have increased co-investments, which now represent 24.6 per cent of the private equity allocation and continue to work toward the goal of 33 per cent co-investments. 

Clearly, CalSTRS is doing well, and here CIO Scott Chan explains how their One fund approach dynamically allocates and diversifies to maximize returns in the current complex environment. 

[...] It allows the team to invest tactically to position the portfolio to benefit from volatility and has required putting in place cultural and organisational structures, notably a total fund team that maps a common language of risk, and how portfolio risk is shifting.

Recent strategies include increasing capital to asset backed private credit that is less cyclical, more stable and adds diversification with a similar return to other forms of private credit. Elsewhere, strategies include rebalancing the portfolio and pursuing opportunities when the markets are discounted.

Whatever they are doing, it's working, CalSTRS delivered a gain of 13% over the last calendar year, outperforming its large Canadian peers (but underperforming Norway's giant sovereign wealth fund which gained 15.1% in 2025).

Again, it's all about asset allocation and CalSTRS is more exposed to liquid public markets (similar to Norway's Fund) but also has a sizable private equity/ private markets portfolio which seems to be performing relatively well. 

Again, outperfoming its required rate of return (7%) by 600 basis points last calendar year is nothing to sneeze at, but keep in mind, their fiscal year ends at June 30 , so these are not official returns.

No doubt, their One Fund approach is proving very useful in this environment and they managed to diversify globally properly to take advantage of opportunities.

So, kudos to CalSTRS, Scott Chan, and his investment and risk teams, they're executing nicely in a difficult environment.

Moreover, for the 11th time, CalSTRS has been named one of the Best Places to Work in Money Management by Pensions & Investments magazine:

This 14th annual survey and recognition program is dedicated to identifying and honoring the top employers in the money management industry.

“As their employees attest, the companies named to this year’s Best Places to Work list demonstrate a commitment to building and maintaining a strong workplace culture,’’ Pensions & Investments Editor-in-Chief Julie Tatge said. “In doing so, they’re helping their employees, clients and businesses succeed.’’ 

The Best Places to Work award winners are chosen based on workplace policies, practices, philosophy, systems and demographics, as well as an employee survey.

“We’re honored to receive this award, which is a testament to our team’s commitment to protect the more than 1 million California public educators and beneficiaries who rely on us to help secure their future,” CalSTRS Chief Executive Officer Cassandra Lichnock said. “The award affirms that our greatest asset is our innovative, inclusive and passionate workforce.”

"This is an acknowledgement of the amazing teamwork and passion of our investments team and our colleagues across the organization,” CalSTRS Chief Investment Officer Scott Chan said. “I'm so grateful to the team for embracing our organization's mission and continuing to strive for innovation and collaboration.”

The 2025 Best Places to Work in Money Management award winners are posted online.

Good for them, this is a well-deserved acknowledgement.

Below, in this episode of How I Invest, a conversation with Scott Chan, Chief Investment Officer of CalSTRS, to explore how he oversees a staggering $350 billion in assets (March 2025). 

Scott shares insights on CalSTRS’ collaborative investment model, their approach to private and public markets, and why they aim to be the "global partner of choice." He also discusses the importance of structural alpha, liquidity management, and identifying long-term supply-demand imbalances.

Great discussion, listen carefully to his insights and approach. 

Mary McDougall and Alexandra Heal of the Financial Times report Canadian pension funds count cost of private equity slump:

A number of Canada’s biggest investors lost money on their private equity holdings last year as a downturn in the buyout sector continued to weigh on returns at some of the world’s largest retirement funds.

Ontario Teachers’ Pension Plan, which manages C$279bn ($206bn) of assets, and the C$145bn Ontario Municipal Employees Retirement System reported returns of minus 5.3 per cent and minus 2.5 per cent respectively for their private equity portfolios in 2025. For OTPP, it was the worst performance for this asset class since 2008 and for Omers since 2020.

La Caisse, Quebec’s C$517bn state pension fund, also reported weak private equity results. The group said its PE portfolio returned 2.3 per cent last year, well below the 12.6 per cent gain in its benchmark index, half of which is made up of listed stocks.

The Healthcare of Ontario Pension Plan, which published results this week alongside OTPP, reported private equity returns of 3.6 per cent in 2025. Its broader private markets portfolio returned 2.1 per cent, compared with 11.7 per cent for its listed holdings.

“Those are pretty dismal numbers, in private equity returns should be at 15 per cent minimum,” said one Canadian pension investor.

Rising interest rates since 2022 have weighed on private equity investment, with higher borrowing costs hitting dealmaking, returns and exit options.

Canada’s pension system is a major private equity investor with more than 20 per cent of public sector pension money allocated to the asset class, according to think-tank New Financial.

Dale Burgess, executive managing director of equities at OTPP, said private equity investors had been “navigating increased cost of capital, more constrained exit markets and greater operating complexity, creating a drag on returns”.

OTPP’s PE portfolio dropped in value from C$60.4bn to C$50.8bn last year, partly driven by full or partial sales of its investments in insurance brokerage BroadStreet Partners, Indian hospital chain Sahyadri Hospitals and Canadian retirement home provider Amica Senior Lifestyles.

To address the challenges, OTPP said it had made a “strategic shift” towards investing in areas where it believes it has a competitive edge, particularly the financial, services and technology sectors.

Omers said its C$25.6bn private equity portfolio had a net investment loss of C$700mn last year, with challenges in its industrial holdings and “weak performance across our earlier-stage growth and venture portfolios”. In recent months Omers has announced sales in its private equity portfolio including California-based care manager Paradigm and Toronto-based home care business CBI Health.

La Caisse blamed its disappointing private equity results on “slow earnings growth for portfolio companies and lower multiples in the technology and healthcare sectors”.

Overall returns across the pension companies were boosted by buoyant stock markets last year. OTPP’s total portfolio net return was 6.7 per cent, compared with 6 per cent for Omers and 9.3 per cent for La Caisse.

A quick note on the paltry returns in PE portfolios of some of Canada's Maple 8 funds (from the ones that reported thus far).

Last week, I spoke with OTPP's former CEO Jim Leech and asked him point-blank: "What's going on with OTPP's PE portfolio?"

Jim was in good spirits. He had just come back from skiing with his grandchildren in British Columbia and told me: "I don't know. All I can tell you is there is a lot more competition nowadays compared to when I was heading up Teachers' Private Capital." 

From my vantage point, covering all these pension plans/ funds, clearly 2025 wasn't a great year in Private Equity, and it wasn't a particularly great year in private markets.

Jim Leech is right, the game has changed significantly, there's way too much competition in private equity and that has spread to infrastructure, real estate and private credit.

Alternatives used to be a niche market, now there’s not much "nichiness" going on. Everyone is doing the same thing, the big giants keep raising bigger funds, and everyone is waiting for some serious financial crisis (aka dislocation in the markets) to put a lot of dry powder to work.

All I know is there is reason to be concerned, the Maple 8 funds shifted billions collectively into private markets over the last 20 years and that game seems stale these days.

Private Equity remains an important asset class but there are a lot of discussions taking place at these large shops.

If you underperform your benchmark over one year or even three years, it's a tough pill to swallow but you'll survive. 

If you underperform your benchmark in PE for 5 years, you're in deep trouble.

I'm not sure the situation is that dire, but it's definitely not the best of times for private markets, especially private equity and real estate.

Things might be slowly changing for the better -- I think they are -- but investors are anxious and worried.

Don't forget, in Canada, the whole "raison d'etre" of shifting into private markets was to manage more internally and add value without paying excessive fees.

If you can't deliver there, your whole "value add" proposition is in trouble.

Still, I don't want to take one or two bad years and extrapolate. I think there's a lot of generalizing going on in private equity/ private credit and I want to be very careful because the level of pessimism is a bit absurd in my opinion.

Private equity stocks are finally popping this week, too soon to tell whether they're turning the corner and headed back up for good but I'm paying attention.

All this to say, no doubt, private equity is in a slump but it's not dying and going away, that's just plain silly.

Does the industry need a good shakeout? You bet, it's already underway.

The dispersion of returns of top PE funds and top private credit funds with bottom ones has grown considerably over the last few years. 

Only the best will survive and that's the way it should be.  

Below, private equity returned fewer profits to investors for a fourth straight year as the industry sat on $3.8 trillion of unsold assets and struggled to raise money for new funds. Bloomberg's Allison McNeely reports (watch this clip here as I cannot embed it below).

Also, Orlando Bravo, founder and managing partner of Thoma Bravo, sits down with CNBC's Leslie Picker to discuss the impacts of artificial intelligence on the software sector.

Third, KKR Co-CEO, Scott Nuttall discusses the firm’s evolution into a diversified global investment platform and its dealmaking priorities with Bloomberg’s Dani Burger at Bloomberg Invest 2026 in New York.

Fourth, Ares Management Corporation Co-Founder & CEO, Michael Arougheti, discusses the private credit cycle, firm growth and the push to expand access beyond traditional institutional investors. He spoke with Bloomberg’s Dani Burger at Bloomberg Invest 2026 in New York.

Lastly, Apollo Global Management Inc. Chief Executive Officer Marc Rowan warned that a shakeout is coming for private credit firms as the industry faces a wave of concerns about rising defaults on loans to software companies.

For weeks, private credit executives have faced questions from investors over whether the $1.8 trillion industry can withstand sustained pressure if the software sector is upended by artificial intelligence in the coming years. Rowan’s comments came as business development companies have been hit by redemptions in recent weeks amid those broader investor concerns.

“This will be a shakeout — I don’t think it is going to be short term,” Rowan said in an interview with Bloomberg News Editor-in-Chief John Micklethwait at Bloomberg Invest in New York. “It was foreseeable. It was predictable. And all you can do is have been a good underwriter, a good risk manager, have done a small number of stupid things.”

Monte Stewart of Canada CRE News reports Sagard, La Caisse are investing $490M in US-based IOS Properties:

Sagard Real Estate and La Caisse are launching a partnership to invest about $490 million in industrial outdoor-storage properties across major U.S. infill markets.

The partnership will pursue an industrial outdoor storage (IOS) strategy focused on key U.S. seaport markets where tenant demand is driven by proximity to major ports, population centres and trade infrastructure, said the companies. Priority markets include Southern California, the greater New York City and northern New Jersey region, the San Francisco Bay Area, Houston, and the Baltimore–Washington, D.C., metropolitan area.

The initiative brings together Sagard Real Estate (SRE), a U.S.-based real estate investment advisor and subsidiary of Montreal-based Sagard, and La Caisse. The partnership has an initial target gross asset value of CAD 490 million (US$360 million), with the option to scale through additional commitments.

“Our partnership with Sagard enables us to create a dedicated IOS platform that strengthens our real estate portfolio construction strategy through diversification into alternative sectors,” said Rana Ghorayeb, executive vice-president and head of real estate at La Caisse. “IOS is a critical supply chain asset class, benefiting from strong structural tailwinds: E-commerce growth, global trade, and nearshoring. By leveraging Sagard’s fully integrated regional teams and proven off-market sourcing capabilities, we gain privileged access to high-quality opportunities.”

Sagard Real Estate President Mark Bigarel said the organizations worked closely to develop the strategy and target markets.

“This partnership brings together two like-minded organizations with aligned values and complementary strengths,” he said. “With La Caisse’s scale and long-term vision, combined with our operator-driven expertise, we are well-positioned to capture compelling opportunities in markets with strong fundamentals and durable demand drivers.”

The partnership has completed its first acquisition in the Meadowlands submarket serving the greater New York City area. The fully leased IOS property functions as an operational hub with strong connectivity to Manhattan and the Port of New York and New Jersey.

“Our IOS program focuses on some of the most strategically important U.S. logistics and trade markets, and this first closing directly advances our investment objectives,” said Chad Messer, deputy CIO and portfolio manager at Sagard Real Estate. “With limited supply and high demand for well-located outdoor-storage facilities near major seaports and population hubs, we believe this strategy is uniquely positioned to generate attractive, risk-adjusted returns through disciplined sourcing, value creation, and active management.”

Sagard Real Estate said the partnership reflects both organizations’ commitment to building a scalable IOS platform across major U.S. port and population-centre markets, supported by long-term capital and durable demand fundamentals. 

Nolan Keegan of Hoodline also reports big-money yard grab hits Meadowlands as Sagard, La Caisse roll out $360M storage play:

Two heavyweight investors are teaming up to turn unglamorous pavement into a serious cash play. Sagard Real Estate and La Caisse have launched a new U.S. joint venture aimed at buying and operating industrial outdoor storage yards near major ports, with an initial gross asset target of CAD 490 million (about USD 360 million) and a first deal already inked in the Meadowlands submarket. The focus is on fenced, paved yard space used by contractors, trailer operators and equipment fleets at a time when infill land near key seaports is getting scarce. Executives are pitching the strategy as a way to lock in steady income from a niche corner of the logistics chain where well-located sites are hard to find.

In a company release, Sagard Real Estate said the partnership will target Southern California, the greater New York City and northern New Jersey region, the San Francisco Bay Area, Houston and Baltimore/Washington, D.C., and that the joint venture can expand further if additional capital is committed, according to Sagard Real Estate. La Caisse, the Quebec pension giant that reported net assets of CAD 517 billion as of Dec. 31, 2025, is serving as the strategic capital partner in the vehicle, per La Caisse.

Why yard space is suddenly a prime asset

Executives describe industrial outdoor storage, or IOS, as a structural investment play tied to the rise of e-commerce, global trade flows and nearshoring, all colliding with a finite supply of infill yard sites near big population centers and ports. "IOS is a critical supply chain asset class, benefiting from strong structural tailwinds - e‑commerce growth, global trade, and nearshoring," said Rana Ghorayeb, La Caisse’s head of real estate, in the companies' announcement via Sagard Real Estate. Sagard added that the partnership will lean heavily on regional sourcing and off-market access as the backbone of its value-creation strategy.

First Meadowlands deal plants the flag

The joint venture’s debut purchase is a fully leased IOS hub in the densely built-out Meadowlands submarket serving the greater New York City area. The partners say the property’s strong connectivity to Manhattan and the Port of New York and New Jersey underpins long-term structural demand for the site. Industry coverage has highlighted the CAD 490 million (roughly USD 360 million) initial target for the program and noted that the partners have not released detailed information about the specific location, according to Bisnow.

Local fallout: better yards, tougher land markets

Institutional buyers can upgrade yard operations with improvements like paving, lighting and security, but their arrival can also tighten local land markets and fuel community pushback over truck trips and shifting land uses. That tension is already apparent in Southern California, where investors have been converting underused parcels and flex properties into IOS yards, according to goes all in on industrial storage land grab coverage and a MacLeod & Co. market report that points to tight supply and rising per-acre pricing.

What this means for other port cities

Because the joint venture includes an option to scale, industry watchers expect more acquisitions in major seaport markets and even fiercer competition for infill industrial land, according to observers cited by Bisnow. For the full details on the strategy and initial rollout, see the companies’ press announcement and the original distribution via WebWire and the firms’ releases. 

Last week, La Caisse issued a press release stating it is launching an industrial outdoor storage joint venture strategy with Sagard Real Estate:

Sagard Real Estate (SRE), a leading U.S.-based real estate investment advisor and subsidiary of Sagard, a global multi-strategy alternative asset management firm, and La Caisse (formerly CDPQ), a global investment group, today announced the launch of a new partnership focused on an Industrial Outdoor Storage (IOS) strategy across major U.S. infill markets, with an initial target gross asset value of CAD 490M (USD 360M) and the option to scale the partnership through further commitments.

This partnership between two major Québec institutions will deploy an IOS strategy focused on key U.S. seaport markets where strong tenant demand is driven by proximity to major ports, population centers, and trade infrastructure. Priority markets include Southern California, greater New York City/northern New Jersey, the San Francisco Bay Area, Houston, and the Baltimore/Washington, D.C., metropolitan area.

“Our partnership with Sagard enables us to create a dedicated IOS platform that strengthens our real estate portfolio construction strategy through diversification into alternative sectors,” said Rana Ghorayeb, Executive Vice-President and Head of Real Estate at La Caisse. “IOS is a critical supply chain asset class, benefiting from strong structural tailwinds—e-commerce growth, global trade, and nearshoring. By leveraging Sagard’s fully integrated regional teams and proven off-market sourcing capabilities, we gain privileged access to high-quality opportunities.”

“We are proud to partner with La Caisse on this new IOS strategy. Our teams have worked closely to define the markets, lifecycle, and we look forward to executing on this together,” said Mark Bigarel, President of Sagard Real Estate. “This partnership brings together two like-minded institutions with aligned values and complementary strengths. With La Caisse’s scale and long-term vision, combined with our operator-driven expertise, we are well-positioned to capture compelling opportunities in markets with strong fundamentals and durable demand drivers.”

The partnership has closed its first acquisition, an IOS investment in the highly infill Meadowlands sub-market, serving the greater New York City area. The location of the fully leased operational hub offers strong connectivity to Manhattan and the Port of New York and New Jersey, supporting long-term structural demand.

“Our IOS program focuses on some of the most strategically important U.S. logistics and trade markets, and this first closing directly advances our investment objectives,” said Chad Messer, Deputy CIO and Portfolio Manager, Sagard Real Estate. “With limited supply and high demand for well-located outdoor storage facilities near major seaports and population hubs, we believe this strategy is uniquely positioned to generate attractive, risk-adjusted returns through disciplined sourcing, value creation, and active management.”

The partnership affirms Sagard Real Estate and La Caisse’s commitment to advancing IOS across major U.S. port and population-center markets, establishing a scalable platform supported by long-term capital and durable demand fundamentals.

ABOUT SAGARD REAL ESTATE

Sagard Real Estate is a real estate investment advisor and operator providing investment management services throughout the U.S., including portfolio management, acquisitions, debt origination, asset management, development, and property management for investors. With US$6.0 billion in assets under management, Sagard Real Estate offers commercial real estate investment strategies through separate accounts and commingled funds. Founded in 1997, the firm is headquartered in Denver and maintains regional investment offices in New York City, Charlotte, Austin, Los Angeles, and San Francisco metro areas. Sagard Real Estate is a part of Sagard, a multi-strategy alternative asset management firm.

For more information, visit www.sagard.com/realestate or follow us on LinkedIn.

ABOUT SAGARD

Sagard is a global multi-strategy alternative asset management firm with more than US$33B under management1, 190 portfolio companies, and 440 professionals.

We invest in venture capital, private equity, private credit, and real estate. We deliver flexible capital, an entrepreneurial culture, and a global network of investors, commercial partners, advisors, and value creation experts. Our dynamic and supportive ecosystem gives our partners the advantage they need to learn, grow and win at every stage. The firm has offices in Canada, the United States, Europe and the Middle East.

For more information, visit www.sagard.com or follow us on LinkedIn.

1As of September 30, 2025

ABOUT LA CAISSE

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

As a global investment group, we’re active in the major financial markets, private equity, infrastructure, real estate and private credit. As at December 31, 2025, La Caisse’s net assets totalled CAD 517 billion. For more information, visit lacaisse.com or consult our LinkedIn or Instagram pages.

Alright, it's Monday, most people are off in Ontario, Alberta and British Columbia this week, so I expect it to be quiet in the pension world (not in markets).

This joint venture between Sagard Real Estate and La Caisse caught my attention last week for two reasons.

First, last September, I wrote about how OTPP is launching a JV with Sagard Real Estate to invest in US industrial properties.

The real estate subsidiary of Sagard is now launching a joint venture with La Caisse focused on an Industrial Outdoor Storage (IOS) strategy across major US infill markets, with an initial target gross asset value of CAD 490M (USD 360M) and the option to scale the partnership through further commitments. 

Clearly, Sagard Real Estate is attracting top Canadian pension funds because of its expertise and experience in traditional and niche strategies.

Second, I like this strategy because instead of playing pure logistics, it's more defensive and really deals with the scarcity of land issue near major ports. From the second article:

The focus is on fenced, paved yard space used by contractors, trailer operators and equipment fleets at a time when infill land near key seaports is getting scarce. Executives are pitching the strategy as a way to lock in steady income from a niche corner of the logistics chain where well-located sites are hard to find. 

The article also states:

Institutional buyers can upgrade yard operations with improvements like paving, lighting and security, but their arrival can also tighten local land markets and fuel community pushback over truck trips and shifting land uses.

But La Caisse and Sagard Real Estate both espouse sustainable investing and I doubt you'll see community pushback.

In short, I like this joint venture because if it's done correctly, you can realize great risk-adjusted returns in this Industrial Outdoor Storage (IOS) space. 

As Rana Ghorayeb, Executive Vice-President and Head of Real Estate at La Caisse states in the press release:  

“IOS is a critical supply chain asset class, benefiting from strong structural tailwinds—e-commerce growth, global trade, and nearshoring. By leveraging Sagard’s fully integrated regional teams and proven off-market sourcing capabilities, we gain privileged access to high-quality opportunities.” 

I also like what Chad Messer, Deputy CIO and Portfolio Manager, Sagard Real Estate

“Our IOS program focuses on some of the most strategically important U.S. logistics and trade markets, and this first closing directly advances our investment objectives. With limited supply and high demand for well-located outdoor storage facilities near major seaports and population hubs, we believe this strategy is uniquely positioned to generate attractive, risk-adjusted returns through disciplined sourcing, value creation, and active management.” 

There you have it, it's all about generating great risk-adjusted returns during volatile and uncertain times.

Lastly, speaking of volatile and uncertain times, earlier today I learned Iran hit key UAE oil port and Dubai airport.

Keep in mind, La Caisse invested US$2.5 billion in 2022 to acquire stakes in DP World’s key Dubai assets, including the Jebel Ali Port, Jebel Ali Free Zone, and National Industries Park. This partnership made CDPQ a major partner in the Middle East's largest port. 

I hope the people working there are safe and these assets were not hit in these strikes but clearly we are now seeing the risk of war on key infrastructure assets in that region.

Below, in this epsiode of The Weekly Take from CBRE, Spencer Levy explores the world of Industrial Outdoor Storage (IOS) with Brian Fiumara & Myles Harnden from CBRE and Nick Firth from Industrial Outdoor Ventures. From its unique benefits and challenges to capital markets and pricing, environmental and regulatory concerns, and future outlook, get the inside scoop on this exciting new asset class.

Also, Industrial Outdoor Storage (IOS) is booming, a discussion with expert Vytas Norusis, Senior Valuation Services Director at Colliers.

Freschia Gonzalez of Benefits and Pensions Monitor reports OPTrust marks 30 years with 17th straight fully funded result:

Seventeen years of full funding and three decades in operation put OPTrust in a small club of Canadian defined benefit plans that have delivered on their promises through multiple market cycles. 

OPTrust’s 2025 Funded Status Report, Service & Security – Since 1995, confirms the OPSEU Pension Plan remained fully funded for the 17th consecutive year. On a funding basis at 31 December 2025, the Plan reported an actuarial value of assets of $27.9bn against liabilities of $27.7bn, for a surplus of $199m. 

Financial‑statement figures show net assets available for benefits of $27.2bn, pension obligations of $22.5bn and an accounting surplus of $4.7bn. 

The funding valuation uses a 2.80 percent real discount rate (4.80 percent nominal), down from 2.90 percent (4.90 percent nominal) in 2024. That change alone added about $562m to liabilities, but OPTrust still held its fully funded position. 

The valuation also identified $708m in deferred investment losses to be recognised over four years, using asset smoothing to support stability in future valuations. 

On the asset side, OPTrust posted a 4.2 percent net Total Portfolio return in 2025.  

The five‑year average net return stands at 6.3 percent, the 10‑year at 6.7 percent, and the since‑inception average at 7.8 percent. Investment returns now account for more than 70 percent of the benefits OPTrust pays to members when they retire. 

Peter Lindley, president and chief executive officer of OPTrust, said that “in a year shaped by economic uncertainty and geopolitical tensions,” the Plan’s results reflected its diversified investment approach. 

He said their role as a long‑term investor allows them to “look beyond short‑term uncertainty” and focus on keeping the Plan sustainable over the decades ahead. 

The asset mix pairs a large illiquid allocation with a sizeable liquid book. Illiquid assets – private equity, infrastructure, real estate and an incubation portfolio – represented 54.2 percent of the portfolio and returned ‑0.8 percent in 2025, but 10.4 percent over five years and 12.3 percent over 10 years.  

Within that, private equity (18.7 percent of assets) returned 4.6 percent, infrastructure (17.9 percent) 1.9 percent and real estate (16.9 percent) ‑8.5 percent. 

Liquid assets accounted for 61.2 percent of the portfolio and returned 10.5 percent. Government bonds (27.3 percent) returned 0.8 percent. Public equity (16.6 percent) delivered 18.2 percent, credit (3.2 percent) 5.7 percent, Absolute Return Strategies (8.0 percent) 9.7 percent and commodities (6.1 percent) 45.0 percent, reflecting strong gold performance.  

The Funding Portfolio, which manages liquidity and uses moderate leverage, showed a weight of ‑15.4 percent, indicating balance sheet leverage at the total‑fund level. 

2025 also marked the first full year of a structural shift in public markets. OPTrust combined eight separate programmes into a single Liquid Completion Portfolio under its Member‑Driven Investing strategy, its version of a Total Portfolio Approach.  

The new portfolio, managed centrally by the Total Portfolio Management group, returned 20.3 percent and generated $1.6bn in profits in its first year. 

On the liability side, the report shows 117,895 members and retirees at year‑end: 55,510 active members, 17,962 former members with entitlements and 44,423 pensioners.  

Active members had an average age of 43.4 and average salary of $78,563. Retirees had an average age of 74.5 and received an average annual pension of $25,636.  

In 2025, OPTrust paid $1,417m in benefits and received $716m in contributions. 

The 2025 cost‑of‑living adjustment was 2.0 percent for both the primary schedule and OPTrust Select. 

Under the primary schedule, pensions in pay and deferred pensions automatically receive inflation adjustments.  

Under OPTrust Select, the Board may grant inflation‑related increases on a discretionary basis. 

According to the report, a retiree who started a $20,000 pension in January 1995 would receive $38,059 starting January 2026, a 90 percent increase over 31 years. 

Service metrics remained strong. Members rated OPTrust’s service 8.6 out of 10 in 2025, and CEM Benchmarking ranked the organisation among the top 10 pension plans globally for service.  

The Member Experience and Pension Operations team handled about 48,000 phone calls and supported roughly 73,500 life events, while recalculating benefits for about 61,000 members and former members who received retroactive salary increases dating back to 2022. 

Responsible investing and climate remain embedded in the strategy.  

OPTrust reports that it met all 2025 targets under its climate change strategy, now four years into a net‑zero‑aligned program launched in 2022.  

Between 2023 and 2024, the Plan achieved a 23 percent reduction in its carbon footprint through decarbonisation in several carbon‑intensive assets and changes in portfolio composition.  

In 2025, OPTrust voted at 700 company meetings in 30 countries, engaged 104 companies in 28 countries on ESG issues, and completed the fourth year of its COMPAS ESG data program to support investment monitoring and stewardship. 

Lindley said OPTrust was set up 30 years ago “to pay pensions today and preserve pensions for tomorrow.” He said the plan has been fully funded for 17 consecutive years and serves 118,000 members in retirement.  

On Wednesday, OPTrust released its 2025 Funded Status Report, stating it was fully funded for 17th consecutive year:

TORONTO, March 11, 2026 — Today, OPTrust released its 2025 Funded Status Report — Service & Security – Since 1995 — which details the Plan's financial results and funded status, while marking its 30th anniversary. In 2025, OPTrust remained fully funded for the 17th consecutive year and achieved a net investment return of 4.2 per cent. Over the past 10 years, the Plan's average net investment return is 6.7 per cent.

“Thirty years ago, OPTrust was founded with a mission to pay pensions today, and preserve pensions for tomorrow,” said Peter Lindley, President and CEO of OPTrust. “As OPTrust remains fully funded for the 17th consecutive year, we continue to fulfil that purpose for our 118,000 members, delivering income security and peace of mind in retirement.”

Since starting operations in 1995, OPTrust’s membership has grown by more than 70 per cent, and assets have increased nearly fivefold. Today, investment returns account for more than 70 per cent of the benefits paid to OPTrust members when they retire, with over $1.4 billion in entitlements paid in 2025. The Plan’s average annual net investment return since inception is 7.8 per cent.

“In a year shaped by economic uncertainty and geopolitical tensions, the continued strength of the Plan is a testament to our diversified investment strategy guided by an experienced investment team,” said Lindley. “Our perspective as a long-term investor allows us to look beyond short-term uncertainty, and to stay focused on the sustainability of the Plan over the decades to come.”

OPTrust continues to provide exceptional service to members, who rated their service satisfaction as 8.6 out of 10. The Plan was recognized among the top 10 pension plans globally for service by CEM Benchmarking Inc.'s annual rankings.

Find more information about OPTrust's 2025 strategy and results in Service & Security – Since 1995 at optrust.com.

About OPTrust

With net assets of over $27 billion, OPTrust invests and manages one of Canada's largest pension funds and administers the OPSEU Pension Plan (including OPTrust Select), a defined benefit plan with 118,000 members. OPTrust was established to give plan members and the Government of Ontario an equal voice in the administration of the Plan and the investment of its assets through joint trusteeship. OPTrust is governed by a 10-member Board of Trustees, five of whom are appointed by OPSEU/SEFPO and five by the Government of Ontario.

Take the time to read the full Funded Status Report here. It is extremely well written and provides all the important information.

Before I get to my discussion with James Davis, some high-level comments.

First, a message from Chair Richard Nesbitt and Vice-Chair Ram Selvarajah:

 

I note:

The Board continues to oversee OPTrust’s five-year strategic plan, now in its fourth year. The transformation of our pension administration system and processes through the PATH initiative is progressing well and remains on track for rollout in 2027. We are also advancing our climate change strategy, now four years in, with climate considerations integrated into core investment processes as part of our ambition to achieve a net-zero portfolio by 2050.

Modernization efforts across the organization — including the thoughtful use of AI tools — are strengthening our capabilities and enhancing collaboration in a hybrid work environment. At the same time, we are investing in our people, fostering learning and career growth to build a durable foundation for the decades ahead. 

Next, a message from CEO Peter Lindley:

I note the following (shorter version from here):

Thirty years ago, OPTrust was founded with a clear purpose: to provide secure, reliable pensions for our members. Today, that purpose remains unchanged, though the world around us has evolved dramatically.

Navigating a complex landscape

The past year has been shaped by economic uncertainty and geopolitical tensions that continue to influence markets and the Canadian economy. In this environment, resilience matters. OPTrust is fully funded for the 17th consecutive year, consistent with our long-term objectives.

Putting members first

Our members count on us for more than investment performance – they trust us for guidance and support through every stage of their careers and into retirement. We are advancing the modernization of our pension administration system to continue supporting our members now and into the future. This modernization project, called PATH, will transform how we serve them.

Building for the future

We are in the fourth year of our five-year strategic plan, seeing strong progress in enhancing Plan sustainability, investing in our people and strengthening our capabilities. In an ever-changing world, being strategic means embracing innovation in a thoughtful way. We are piloting AI tools to enhance efficiency and collaboration, with careful attention to governance and security. Combined with modernization efforts like PATH, these initiatives are creating a stronger, more agile organization that is ready to meet the needs of tomorrow. 

“I am proud of what OPTrust has accomplished and energized by what lies ahead. Our focus remains clear: delivering pensions today and preserving pensions for tomorrow. That commitment has guided us for 30 years, and it will continue to guide us for decades to come.” -- Peter Lindley

Next, some highlights from OPTrust's 2025 year:

 Here are the membership statistics for OPTrust:

The key thing here is that the ratio of active to retired workers is 1.25 so OPTrust is a more mature plan and needs to manage risks more closely.

The real discount rate dropped in 2025 from 2.9% to 2.8%, "reflecting a more conservative estimate
of investment returns, adds prudence to the funding assumptions, helping to ensure the Plan will be ready to tackle future challenges":

The following from pages 22 and 23 of the 2025 Funded Status Report are very important to read and understand because it situates readers on their member-driven investment journey and philosophy and why they implemented a total portfolio approach across public markets last year:

 

Worth noting this:

The early impact of the new model was evident in 2025 results. The Liquid Completion Portfolio generated a 20.3 per cent return, delivering $1.6 billion in total profits in the first year of implementation. 

The plan's total portfolio performance is best gauged over a longer period, returning 6.7% annualized over a 10-year period:

And the table below shows OPTrust's asset mix and returns by asset class as at the end of 2025:

As you can see, 54.2% of the assets are in illiquid private markets and 61.2% in liquid (public) markets (doesn't add up to 100% because they used leverage in liquid markets).

Real estate had a tough year, and James and I discussed this below, but strong returns in public equity, commodities and absolute return strategies helped them post a positive return. 

Lastly, OPTrust manages 74% of its assets internally to reduce costs and is well diversified internationally but also has excellent domestic exposure:

Alright, I provided a good overview of the key highlights for 2025. 

Discussion With OPTrust CIO James Davis  

Earlier today, I had a discussion with OPTrust CIO James Davis, going over their 2025 results.

I want to thank him for taking the time to talk to me and also thank Jason White for sending me material and setting up this virtual meeting.

James began by giving me an in-depth overview covering everything in detail:

Well, the first thing I want to point out is that this is the 30th anniversary at OPTrust. It's also the 10th anniversary of our member-driven investment strategy and my 10th anniversary here at OPTrust. 

It's kind of a very opportune time to reflect on our investment performance at OPTrust in general. And I thought what I would do is give you a little bit of colour, since it is the 10th anniversary of our member-driven investment strategy, on how well that's done. That was introduced in 2015 and really what it was designed to do was to focus our plan on what the real objective is, which is sustainability, being able to pay pensions today and preserve pensions for tomorrow, which, you know, is our mission. 

And that's the metric that matters. The North Star for us is our funded status. So our investment strategy is very liability aware, and our North Star is the funded status. We are a pension plan, so we invest for the very long term. Our liabilities are long-term, and so we make investment decisions with that in mind, again, with the primary objective of improving plan sustainability. 

One thing I did want to point out is key to MDI is avoiding unnecessary risks. So recognizing we are mature we don't want to take risks unnecessarily. In fact, we only want to pursue risks purposefully and efficiently, striving for resilience. 

We also take a total portfolio approach, and I know that's becoming very, very popular now; people are talking about it a lot. We were an early adopter, and why I think that's so important is it breaks down silos within the overall organization. That's not just within the Investment division, but across the entire organization. It does recognize that risk is a scarce resource and it has to be shared, and as I mentioned, has to be taken purposefully and efficiently. It supports agility, which is really important, especially in the private markets, and it ensures alignment, and our alignment is within the overall organization, towards overall improvement of plan sustainability. 

So with that in mind, and then, you know, looking over the past 10 years, I think our MBI strategy has performed very well. We have a 6.7% rate of return over that 10-year period, which is above the return that we would need to preserve pensions today and or pay patients today and preserve pensions for tomorrow. And it's also ensured that we have remained fully funded. 

In fact, we're fully funded for the 17th consecutive year, as you would know from our funded status report. But perhaps what's not as well understood is we're the best funded we've ever been in history, in the history of the plan, going all the way back 30 years. And we've been able to reduce our discount rate to 2.8%, the lowest it's been in that 30-year period. And that's a real rate of return, so we've been able to build margins, and that adds conservatism to our overall plan. 

Now, one thing that's key to our MDI strategy is that we purposefully overweight illiquid assets. We have an abundance of liquidity, and we believe by investing in the liquid asset space, we have the best opportunities for value creation, and we get to harvest illiquidity premium over time. 

Now, all that being said, that's not always going to work in any particular year and 2025 is a challenging year for us, primarily because of our illiquid asset exposure. 

If you look at private markets, and in particular, I'm going to call on private equity, the reason we like illiquid markets is our private equity portfolio. Looking back to 2014, which is the numbers I have at hand, we've outperformed public equity by 6.2% per year, and over the last 10 years, it's been by more than 7% a year. That's one of the reasons why we're really in that space. It hasn't been the strongest performer within our illiquid portfolio last year in 2025 returning 4.6% It's also worthwhile noting that that is the lowest private equity return we've had in 12 years, and it's also a reflection of the current market environment where the liquidity is actually being penalized, and where there has not been a lot of deal flow and and what you're seeing is what I believe is a correction in the private markets in time, instead of in price. 

And that's a term we use in public markets all the time but I think it's actually appropriate in private markets as well. And if you do look over the last 12 years, in 9 of the past 12 years, our private equity asset class has achieved double-digit returns, with the highest return being in 2021 with a 52.2% rate of return. So that's one of the reasons why I like private equity and private market assets. But as I mentioned, they've been challenged. 

Let me talk very briefly about infrastructure, which has also been challenged, a 1.9% rate of return, which is low, lower than what we would expect in that particular asset class. But I got to put it in the context of the kind of returns we've had historically. And again, what's been going on in overall markets in 2021 and 2022 our infrastructure returns were 33% and 21.1% respectively. But again, deal activities literally ground to a halt, and we have a large exposure to renewables, and renewables have fallen out of favor. Part of that is an oversupply, but higher, longer-term interest rates also weigh on that particular sector of the infrastructure asset class as well. 

I do believe that renewables will recover and do very well. The energy challenges that we have and the need for more energy are not going away, and renewables are a solution, but it's just a period in time where it hasn't been working as well as it has historically. 

Probably the one you want me to touch on most is real estate, so maybe I'll weigh in a little bit of that. If you look at our overall investment returns and those of our peers, over the last several years, real estate has been a really challenging asset class, and we really reflected that in our 2025 results with a minus 8.5% rate of return. And so why is that happening? I think for us anyway, it's a function of the asset class in general, but it's also because we had some exposure to development assets which we had acquired before or around the time of COVID and things happened in the market that made development really, really challenging. 

One of the things that you had was supply-side, shocks and the cost of materials for construction went up. The cost of labor went up when COVID hit. You had problems. Can you imagine, you know, trying to pour concrete flooring and you have to socially distance by six feet with people that you're actually constructed in the building with so you have had challenges there. Then we know what happened in the office sector, and we know that the retail sector was challenged as well. 

Now we, earlier in this decade, benefited in our real estate portfolio by being overweight multi-residential and industrial that served us very, very well, and our long-term returns in real estate have been very strong. But what's happened is these development assets have been problematic for us, and we really reflected that in our real estate returns this year. 

So we're working through those challenges. And you know, we're optimistic that this is a great asset class for us to own. It continues to turn out great cash flow, is a good inflation hedge, relatively stable, but we are making some changes in how we think about investing in our liquid assets. So happy to share more about that in just a few minutes, if you want to dig in more on our approach to TPA.

But within, within the overall portfolio, what was the shining star? Our liquid portfolio, and our liquid portfolio did particularly well, primarily because of our exposure to gold and to equities. But it's more than that. 

Last year, we made a strategic change in the way we manage our liquid assets. You may recall that our liquid portfolio acts like a completion portfolio. And so we look at the overall risk profile we get from our illiquid assets, we look at what we need for our plan liabilities and what's happening in the macroeconomic environment, and adjust the liquid markets allocations accordingly. The team has a lot of flexibility there, they can do so within the illiquid asset space, they can go to where they think the best opportunities lie at any particular point line. We did not have a lot of credit exposure. We did, instead, choose to be in equities and in commodities, mostly gold, that, as I mentioned, did serve us particularly well. 

One thing that doesn't actually get reflected when you look at the returns in our liquid portfolio, to the extent that it probably should, because returns don't tell the story, and that's our bond portfolio. We have a significant portion of the portfolio and longer maturity government bonds. That's by design. That's our liability hedge portfolio that reflects our plan maturity, and it goes directly to our metric that matters, our North Star, which is the funded status. 

To the extent that you know interest rates go up, you will have disappointing performance in your long bond portfolio, but you will also have reduced liabilities, and similarly, when the opposite happens. So, we do view that as a stabilizer in the overall portfolio, and are willing to tolerate some drag on returns as a result of holding those assets. So I'm going to pause there, because I'm sure you want to dig in a little bit more.

James covered it well and I began by asking him in public equities if they use the MSCI ACWI Index and he responded:

I don't want to say we're benchmark agnostic. We do pay attention to what the indices are doing, because in many cases, we are getting our public equity exposure through index positions, but we're quite dynamic in that space. And as I mentioned, the public markets team, which is our liquid asset class team, or what we call our total portfolio management team, they can move things around quite significantly, and they can do so with a great amount of agility. 

So, last year, we reduced our exposure early on in the first quarter of 2025, and we did use the opportunity to add to our equity exposure once we got a clearer sense of where the tariff situation was appearing to land. 

And so we did the same thing throughout the course of the years. We've had exposures as high as 7% in gold and then as low as 3% in gold. So the team is quite dynamic. There is no gold in our benchmark. We don't think about it that way at all. What we do think about is absolute returns and what we need to pay pensions. 

I told James there used to be a risk-mitigation portfolio at OPTrust that invested in gold, commodities, USD, etc. and asked if that's still in place. 

He replied:

We still think about it that way, but we report in a way that we thought was simpler. There was some confusion around thinking about risk within the risk mitigation portfolio, not recognizing that our overall funded status and the volatility that funded status depends on all of the assets that are in the portfolio. 

So given that our goal is stability and sustainability of the plan, we thought calling a one small segment of the portfolio, which is about 10% of the assets, and saying that represents the risk mitigation portfolio, was probably not telling the full story, but the concept is still there. 

Gold is still viewed as a risk mitigation asset. Our liability hedge portfolio was viewed as a risk-mitigating asset, but we didn't call it that specifically within our risk mitigation portfolio historically. So that's why we report on that slightly differently 

So, the completion portfolio is not the risk mitigation portfolio? He answered:

No, but what it is designed to do is it's designed to complete the overall risk profile of the portfolio. So think of it this way, if there are no opportunities that are presenting themselves in the illiquid asset space, or if we can't get the risk factor exposure that we want in our illiquid asset space, we'll go to the liquid asset space and look for those opportunities. 

So if our private equity portfolio exposure is dropping, we would be adding public equities to the portfolio, assuming we still wanted that equity or that growth risk factor in the overall portfolio. You got you 

 I asked James if it's still 50/50 public /private now and he replied:

It's very close to that, as I say, that the public market equities have moved around, given the volatility over 2025, but if you look at it in general, we're probably somewhere around 15 to 18% on average, sometimes a little bit lower than 15 in public equities, and our private equities are around 17- 18% as well.

On Credit, James shared some very interesting insights: 

We're not big in private credit. I have some concerns with private credit. I think it's my view personally. I realize it's it's been a desirable asset class. You know, in many ways, it's disintermediated in the banks. Its growth has been driven by changes in regulatory policy, but it seems to be overhyped. I mean, I go to conferences, and that's all everybody's talking about, so it's an area that I've avoided.  

The other thing to keep in mind is the way we approach our private market assets; the teams can invest across the capital stack. So if there is a better opportunity in the credit space than there is in the equity space, they can take advantage of that. But we do not have an allocation. I don't have a core allocation to our sort of long-term acceptable risk portfolio, and it's not something that we would target when we sit look at the overall environment, say, 'Yeah, we want to, you know, we want to move 5% from here to there'. It's very opportunistic.

He added:

Where we do have credit exposure, which is minimal, in the public space, we would tend to do it either through CDX or through external managers, but in the private market space, to be very unique, would be specific to a particular deal. 

We then shifted to sustainable investing where James had this to share:

There's been a lot going on, as you are probably aware in the last several years on the responsible investing side of things, and so we've approached this in a couple of ways. First, we wanted to get metrics in place, which we did earlier, a few years ago, and then we had set what we felt was a pretty ambitious objective to reduce our overall carbon footprint. Which we did, we had reduced it between 2023 and 2024 I think, by 23% and we've continued our progress in responsible investing, but more with a focus on gathering data from our portfolio companies and from our partners.

For us to advance further and to have more influence and impact within our overall portfolio, we have to work with our partners, and we have to have data. So we need much more evidence-based and data-driven in our overall climate change strategy. So that's been the focus. 

We've also launched a taxonomy, a climate change taxonomy, which, to me, I think is really special. It's not focused on numbers. And quite frankly, I think, you know, focusing too much on numbers in the climate space can be misleading, but what it does tell you is what exposures we have in the plan, what assets in the plan are most exposed, and what assets are doing something about it. 

And so it's qualitative, but it does help us to identify at a higher level where the largest risks are within the plan and what we might where we might want to engage more so we continue to try to improve. It's our mantra of excellence and continuous improvement. We try to do that across the portfolio, but climate change.

I told him the federal government is trying to open up more opportunities in infrastructure investing and asked if that is something that interests OPTrust. 

He replied: 

For sure? We do have a significant exposure to Canada already, more than a third of the fund of I think it's about 36% or something, of the fund is in Canada right now. And there's nothing that would make me happier than to invest more and more in Canada if we could find the opportunities. And so the fact that the government is working with the pension plans and the private sector to try to make the environment more friendly for long-term capital investment. This is a wonderful thing.  

And if you think about Ontario as a whole, I mean, our members are in Ontario, the benefits that they are getting, they're spending that money in Ontario. So this is the economic benefit. Regardless of where those returns come from, they're going to go into our members' hands, and they're going to get multiplied throughout the overall economy. 

Wouldn't it even be better, the extent that we could get even more assets here? But it has to make sense. It has to make sense for us. And so to the extent that we can support government and policy makers to make a better environment for investing in Canada. You know, we're all over that.  

On membership, James shared this:

It's growing, I mean, it's partly in the public service. You're not expecting the same degree of growth, especially, you know, in this kind of an environment, but we are seeing both membership is improving, and that's a positive for us, but we are mindful. We are a mature plan, and we do have more retirees and deferred retirees than we do active members, and that's not going to change for some time. 

Lastly, we spoke about the challenges in private equity where I noted there's enormous competition there and across the private markets so maybe there is a structural change going on, and it will be increasingly harder to harvest returns of the past there.

James replied:

To start with, let me say that I remain very confident in the ability of that asset class to perform well. I would call out that there remains a lot of dry powder, a lot of investors are still looking to move into that space. 

As I mentioned, I think the market is correcting more in time than it is in price. I think some further correction in price would probably be welcome, because I think it would help unfreeze the market and improve/ move deal activity. So that'd be number one. 

Number two, we know that there is a move afoot to private markets, to other investors, whether it's over 401K or other retail-type investors in the United States, that will provide another source of demand. I'm not sure how it will impact overall returns and whether certain segments of the market will do worse or better, but it is an additional source of returns. 

The third thing, which I think is important, though, and I don't hear a whole lot about it, is to what degree will tokenization and the blockchain potentially impact the private markets. I think there is something there. I think we will begin to see assets slowly going on the blockchain, and there will be more price discovery, more price transparency. What I don't know, though, is, does that destroy the information asymmetry that you have now in that space. 

And I mean, that's where the value creation, that's a huge part of the value creation, is that you know your first call, and you've got access to deals, or you just happen to be you have great relationships in that space where you see things that others would not, and you're able to capitalize them on them. But if the market becomes more symmetric and more transparent, then that opportunity is going to go away.

Great food for thought, I always enjoy speaking with James, he's a really sharp and experienced CIO who has dabbled in meteorology in the past.

Alright, let me thank James and Jason once again. It was a really long week for me with back-to-back interviews and coverage and I need to rest.

Below, a member profile from OPTrust. Also, Audrey Forbes, Member Experience and Pension Operations, OPTrust who retired in June 2023, discusses the importance of taking care of members:

“I’m passionate about pensions because the vast majority of the people the industry serves could otherwise fall through the cracks without a pension. Many of these individuals could end up in poverty at retirement.

That’s why I love the public sector pension model—it provides financial security for many people who wouldn’t typically achieve it. In many ways, it’s an equalizer in the workplace, irrespective of colour, ethnicity or other demographic factors.”

Shes’s absolutely right. Remember, it's all about members, that's why pensions exist to take care of their members. 

James Bradshaw of the Globe and Mail reports HOOPP rides stocks to 7.7% gain as market turbulence weighs on private assets:

The Healthcare of Ontario Pension Plan leaned heavily on strong stock markets to report a 7.7-per-cent investment gain last year, even as returns from private markets were sluggish against a turbulent economic backdrop.

HOOPP’s one-year results trailed the benchmark return that the plan uses to measure its performance, which was 8.6 per cent. That relative underperformance was partly attributed to challenges with two specific investments – one in infrastructure and another in private credit.

But a 22.2-per-cent return from HOOPP’s portfolio of publicly traded stocks, which it bulked up last year after U.S. President Donald Trump announced broad and punitive tariffs, kept the plan’s investment gains near their longer-term average.

Over 10 years, HOOPP’s average annual return was 7.8 per cent.

Net assets increased to $132-billion last year, from $123-billion a year earlier. The plan is 109-per-cent funded, meaning it has $1.09 for every dollar it expects to pay out in pensions.

The fallout from tariffs and a period of high inflation undermined some of the bedrock economic assumptions that long-term investors such as pension plans have relied on for years. At the same time, valuations for private assets such as real estate and private equity came under pressure as buyers and sellers struggled to agree on prices and deal-making slowed.

“It was obviously a year full of lots of complexity,” HOOPP chief executive officer Annesley Wallace said in an interview. “Particularly in that context, we feel good about the 7.7-per-cent return.”

HOOPP invests on behalf of more than 504,000 members and 870 employers in Ontario’s health care sector, including nurses, medical technicians and, more recently, physicians.

In infrastructure – typically one of the most stable asset classes, producing steady cash flows – a single HOOPP investment in the U.S. renewable energy sector ran into problems. That dragged down the portfolio’s return, which was 1.8 per cent last year, underscoring the volatility in renewable energy after the Trump administration reversed course on climate policies and offshore wind development.

HOOPP did not name the problematic infrastructure investment.

Similarly, in private credit, HOOPP’s 0.9-per-cent annual return was hampered by “issuer-specific performance challenges in a single credit investment,” according to the pension plan’s annual report released on Tuesday.

Investors have been jittery about private credit as a number of lenders have grappled with ways to meet clients’ requests for redemptions, most recently U.S. giants such as Blue Owl Capital Inc. and Blackstone Inc.

“We see opportunity in private credit,” Ms. Wallace said, but she emphasized the importance of “being disciplined” about where to make loans.

All of HOOPP’s portfolios of private assets ended the year with positive returns, with private equity gaining 3.6 per cent and real estate up 1.1 per cent.

The pension plan ended 2025 with 49 per cent of its assets invested in Canada and 29 per cent in the United States.

Ms. Wallace said the plan is keen to make more Canadian-based investments if the right deals are available, some of which might be smaller in scale and faster to get off the ground than the major, nation-building projects that the federal government has flagged for fast-track approvals.

“There’s lots of active discussions,” she said.

HOOPP is also defe`nding a years-long dispute with Dutch tax authorities over transactions in the Netherlands from 2013 to 2018. A Dutch court ruled that HOOPP wrongly claimed about $340-million of dividend tax refunds through a trading strategy that took advantage of the pension fund’s favourable tax status in the country. HOOPP is appealing the decision.

“We continue to defend ourselves against those allegations,” Ms. Wallace said. “We have very strong governance and risk management.”

In recent weeks, the Caisse de dépôt et placement du Québec reported a 9.3-per-cent gain for 2025, the Ontario Municipal Employees Retirement System (OMERS) was up 6 per cent and Ontario Teachers’ Pension Plan reported a 6.7-per-cent return on Tuesday. 

On Tuesday, HOOPP announced it delivered strong 2025 results for Ontario’s healthcare community:

• Net assets reach $132 billion, with nearly half invested in Canada, and membership now exceeding 500,000

TORONTO, March 10, 2026 — The Healthcare of Ontario Pension Plan’s net assets grew to $132 billion at the end of 2025, up from $123 billion at the end of 2024. The Fund’s net return was 7.7%, and net investment income was $9.7 billion. The Plan’s funded status was 109% at the end of the year, underscoring its financial resilience and long-term ability to meet pension commitments to Ontario’s healthcare community.

HOOPP’s 10-year annualized net return was 7.8%, exceeding its 10-year benchmark of 5.9%, consistent with the absolute long-term returns required to meet the pension promise.

“Our strong results reflect the strength of our foundation, including our scale, disciplined investment approach, independent governance model and, most importantly, our people,” said Annesley Wallace, HOOPP’s President and CEO. “In an increasingly complex investment environment, we remained focused on prudent risk management and long-term value creation. Looking ahead, we are well positioned to protect the Plan’s strength and continue delivering sustainable retirement security for Ontario’s healthcare community.”

Portfolio performance

The 2025 results reflect performance across a diversified portfolio. The Fund maintained significant exposure to public equities and fixed income, supporting liquidity, flexibility and disciplined risk management amid shifting market conditions. Returns were driven by public equities, reflecting resilient corporate earnings and more accommodative monetary policy later in the year. Fixed income delivered stable income and performed well as interest rates declined, with shorter-duration bonds benefiting from rate cuts by the Bank of Canada. Private markets generated positive, though more moderate, returns in a challenging valuation environment.

Investing in Canada

A strategic foundation of HOOPP’s portfolio is its strong domestic presence. Approximately 49% of the Fund is invested in Canada across public equities, fixed income, infrastructure, real estate and private credit. This long-term investment approach supports economic activity at home while maintaining global diversification aligned with HOOPP’s pension obligations.

“Our results reflect the strength of a globally diversified portfolio, with a significant portion invested in Canada,” said Wallace. “We are proud to invest in the communities where our members live and work, while maintaining the global reach and discipline required to deliver on our long-term pension commitments.”

Serving a growing healthcare community

HOOPP surpassed 504,000 members and 870 employers in 2025, reflecting continued growth across Ontario’s healthcare sector. During the year, the Plan welcomed The Hospital for Sick Children (SickKids), achieving 100% participation across Ontario hospitals and expanded eligibility to incorporated physicians. In 2025, HOOPP paid out $4.1 billion in pension benefits, providing dependable retirement income and generating meaningful economic activity across Ontario.

Strategic progress

In 2025, HOOPP launched its 2030 Strategic Plan, a forward-looking roadmap focused on strengthening retirement security for Ontario’s healthcare community in an increasingly complex global environment. The strategy advances HOOPP’s vision of building a stronger financial future for members while maintaining a secure and sustainable Plan. The strategy sets out three priorities: maximizing value for members, improving the adaptability and resilience of the portfolio and evolving with Ontario’s healthcare community. It is an ambitious roadmap that strengthens HOOPP’s foundation today while preparing the Plan for the opportunities and challenges of tomorrow.

2025 financial highlights

• Net assets: $132 billion
• Net return: 7.7% (5.3% real return)
• Net investment income: $9.7 billion
• 10-year annualized net return: 7.8%
• Funded status: 109%
• Canadian investments: 49% of portfolio
• Carbon footprint reduced by 37% compared to 2021 baseline
• Membership: 504,000+ members, 870+ employers
• Pension benefits paid: $4.1 billion
• Cost-of-living adjustment (COLA): 100% CPI granted for eligible service
• Contribution rates unchanged since 2004: 6.9% on earnings up to the Year’s Maximum Pensionable Earnings (YMPE) and 9.2% on earnings above the YMPE

The full 2025 Annual Report is available at Plan performance.

About the Healthcare of Ontario Pension Plan

HOOPP serves Ontario's hospital and community-based healthcare sector, with more than 870 participating employers. Its membership includes nurses, medical technicians, food services staff, housekeeping staff, physicians and many others who provide valued healthcare services. In total, HOOPP has more than 504,000 active, deferred and retired members.

HOOPP is fully funded and manages a highly diversified portfolio of $132 billion in assets that span multiple geographies and asset classes. HOOPP is also a major contributor to the Canadian economy, paying more than $4.1 billion in pension benefits annually.

HOOPP operates as a private independent trust, and its Board of Trustees governs the Plan and Fund, focusing on HOOPP's mission to deliver on our pension promise. The Board is made up of appointees from the Ontario Hospital Association (OHA) and four unions: the Ontario Nurses' Association (ONA), the Canadian Union of Public Employees (CUPE), the Ontario Public Service Employees' Union (OPSEU) and the Service Employees International Union (SEIU). This governance model provides representation from both employers and members in support of the long-term interests of the Plan.

Please take the time to read HOOPP's 2025 annual report here and highlights for members here.

Below is the table of contents for the annual report:

 

I think it's worth reading Chair Anthony Dale and Vice-Chair Dan Anderson's message:

 

I note the following:

Both the healthcare and investment landscapes continue to evolve amid significant and ongoing changes. Demand for healthcare services across Ontario is steadily increasing, shaped by demographic shifts and growing complexity of care. At the same time, the global economy continues to be shaped by persistent inflationary pressures, heightened geopolitical risk and accelerated technological disruption. In this environment, HOOPP’s long‑term focus, agility and organizational stability are more important than ever.

Throughout 2025, the Board played a pivotal role in ensuring HOOPP continued to adapt and meet future needs. The launch of HOOPP’s 2030 Strategic Plan marked an important milestone. Developed with contributions from the Board and employees across the organization, the plan sets a clear direction for the next five years. It ensures HOOPP will continue to evolve alongside the healthcare sector it serves, so the Plan remains resilient, responsive and aligned with the needs of current and future members. 

As well as this: 

In early 2025, the Board appointed Annesley Wallace as HOOPP’s President and Chief Executive Officer and supported her seamless onboarding, ensuring strong continuity in executive leadership and positioning the organization for continued success. Annesley brings a distinguished track record of leadership in investment management and pension administration and is well equipped to advance HOOPP’s mandate of delivering secure, lifelong pensions to Ontario’s healthcare workers. 

The Board is confident that, under Annesley’s leadership, HOOPP’s strategy, governance framework and dedicated team will continue to effectively navigate future opportunities and challenges, while safeguarding and enhancing the value of the Plan. 

The Board also extends its sincere gratitude to Jeff Wendling, who retired in 2025 after more than 26 years of dedicated service to HOOPP, including five years as President and Chief Executive Officer. Under Jeff’s leadership, the Plan maintained a strong funded status, navigated significant market challenges and maintained stable contribution rates while enhancing member benefits. 

Next, read CEO Annesley Wallace's message:

 

I note the following:

The launch of HOOPP’s 2030 Strategic Plan marks the beginning of an important new chapter in our journey. Built on decades of financial strength and operational discipline, the strategic plan provides a roadmap for navigating an increasingly complex world while
remaining focused on delivering retirement security for our members.

The strategy is anchored by three core pillars: 

•  Maximizing the value of the Plan for members by enhancing the benefits and services that matter most, while recognizing today’s realities.
• Improving the resilience and adaptability of the portfolio through a Total Portfolio Approach (TPA) to investing that balances long‑term returns with flexibility in a rapidly changing environment. 
• Evolving with Ontario’s healthcare community by thoughtfully growing our membership and ensuring HOOPP remains the pension plan of choice for healthcare workers and employers across the province.

Maximizing the value of the Plan for members

HOOPP’s strong funded position enabled us to provide a full cost‑of‑living adjustment for 2024, helping retired members maintain their standard of living amid rising costs. We also maintained contribution rates that are among the lowest of Canada’s major pension plans.

In June, we announced that these rates will remain stable until at least the end of 2027, extending a remarkable record of unchanged rates since 2004. This long‑term stability remains one of the most meaningful ways we support affordability, predictability and retirement confidence for both members and employers.

Improving the resilience and adaptability of the portfolio

As higher interest rates, geopolitical shifts and technological change reshape global markets, we are evolving how we invest. Our transition to TPA reflects an evolution in how we allocate capital and manage risk across the Fund. This more integrated and flexible
framework strengthens decision making, improves our ability to respond to changes and supports sustainable long‑term value creation, ensuring the portfolio remains resilient through market cycles.

Evolving with Ontario’s healthcare community

2025 was a period of meaningful growth for HOOPP. We welcomed our 500,000th member, a milestone that reflects the continued strength of the Plan. Earlier in the year, Waterloo Regional Health Network expanded HOOPP eligibility to allow all employees to join the Plan, demonstrating the Plan’s growing reach. This momentum continued with The Hospital for Sick Children (SickKids) joining HOOPP effective December 29, 2025. This was a significant achievement that means all hospitals in Ontario are now part of the Plan.

HOOPP employer —The Hospital for Sick Children, Toronto HOOPP employer — Centenary Hospital, Scarborough Health Network. Our network of participating healthcare employers has expanded to more than 870 across the province, including eligible incorporated physicians and their employees. Each new member and employer reinforces the value of a collective approach to retirement security and demonstrates that our strategy is working: expanding access, supporting those who care for others and building a stronger financial future for Ontario’s healthcare community.

Now, some high-level comments before I get to the discussion with Michael and Reena.

Clearly the 20230 strategic plan is critically important, so take the time to understand it: 

 The other thing that is important to note is HOOPP formalized its total portfolio approach (TPA) last year:

Now, in terms of total fund investment performance, HOOPP underperformed its benchmark in 2025 (7.7% vs 8.6%) but it's best to gauge it over the long term (10-year net annualized return of 7.8% vs benchmark of 5.9%):

In terms of asset class returns, all of them contributed positively last year:

The asset allocation is clearly weighted to capital markets (ie. public markets and a large exposure to Canada):

Interestingly, I didn't see a detailed breakdown of assets by asset class as of Dec 30th 2025 which is odd, but the HOOPP's Statement of Investment Principles and Procedures gives you the asset mix targets and ranges:

 

Still, I highly recommend that HOOPP follows best practices and posts its detailed asset mix as of the end of the calendar year, just like OTPP and others do (if I missed it, my bad).

The key thing to remember is HOOPP has a large fixed income portfolio and is more geared to public than private markets and has a lot more Canadian exposure than its peers (mostly owing to its fixed income portfolio). 

And asset mix is the main driver of performance.

What else is worth noting? As shown below, HOOPP’s ratio of active to retired members declined gradually from 2.5 in 2005 to 2.2 in 2015 and remained unchanged at 2.2 at the end of 2025:

While the ratio has declined since 2005, HOOPP remains a relatively young plan relative to its peers.

Lastly, looking at HOOPP's Board, I see a few familiar faces like Debra Alves (former CEO at CBC Pension Plan), Julie Cays (former CIO at CAAT Pension Plan), Poul Winslow (former Senior MD and Global Head of Capital Markets & Factor Investing at CPP Investments) and John Sinclair (former CEO at Vestcor): 

In short, HOOPP definitely has a very strong board of directors and good mix of experienced investment professionals and union representatives.

A strong Board is key to good governance. 

On governance, the only thing I'd like to see is more transparency at HOOPP.

For example, HOOPP is the only Maple 8 fund that does not publish a comprehensive compensation section in its annual report, going over what board directors make and what senior pension executives get compensated.

HOOPP will argue it's a private trust and doesn't need to disclose this information but I would argue its members and the public deserve to know exactly how much people are being compensated there since ultimately taxpayers backstop this pension plan if something goes wrong.

Anyway, there is a lot of great information in the annual report, but I'm a stickler for transparency at all our large Canadian pensions, the more transparency, the better.

Discussion With Reena Carter and Michael Wissell

Alright, long preamble to my discussion with CFO Reena Carter and CIO Michael Wissell but the information above situates my readers well for the discussion below.

I want to thank Reena and Michael for taking the time to speak to me, and also thank Scott White for setting up the virtual meeting.

It was the first time I spoke to Reena. I want to apologize for calling her Rita during the meeting (I'm an idiot!) and make up for it by publicly apologizing and giving my readers a good background on her:

Reena Carter joined HOOPP in 2025 as Chief Financial Officer, bringing over 20 years of financial leadership experience within Canada’s pension industry.

Prior to joining HOOPP, Reena was Senior Managing Director of Portfolio Management and Operations at OMERS where she led all operational functions, portfolio construction and the sustainable investing strategy for OMERS Infrastructure globally. Before that, she served as Executive Vice President, Investment Finance & Valuations and Global Head of Assurance & Advisory, overseeing financial reporting, valuations, planning and internal audit for OMERS.

Reena also spent 13 years with Borealis Infrastructure where she held progressively senior finance roles, including Chief Financial Officer, managing key corporate functions and supporting global investment initiatives. She began her career at KPMG, working in both the assurance and advisory practices.

Reena has served on several boards and is currently on the board of Cymbria Corporation. She holds a Bachelor of Business Administration degree from the Schulich School of Business, York University and is a Chartered Professional Accountant, a Chartered Accountant, a Chartered Business Valuator and a Chartered Director.

Super nice and sharp lady who only began working at HOOPP in August. Glad to have met her.

I began by asking Michael to give me an overview of 2025 results which he did:

First and foremost, the point we always like to make is we are not in the money management business; we are in the pension delivery business. The plan is fully funded for the 16th year which we're really happy about. We feel that we have a good return, a solid return at 7.7%, but being fully funded is really what we're focused on. And that's three decent years in a row coming down with COVID. So that worked out well.  I think that strong returns in our public equity books. I returned to the fact that, as you can tell from the marketplace, some of the privates are struggling. We're pleased that all of our privates were positive. Everything was positive, albeit not necessarily super, super positive, but on the right side of the ledger. And public or public markets portfolios continued to do pretty well last year, with a 22% return in public equity, which really carried the day for us in a bunch of ways. And our bond books kind of, again, crawling out a couple of percentage points as well help to the overall return. So fully funded, decent year are the key things. 

Reena added some perspective on the member side, stating HOOPP welcomed its 500,000th member, the Waterloo Regional Health Network expanded HOOPP eligibility and The Hospital for Sick
Children (SickKids) joined HOOPP at the end of last year. 

I noted HOOPP's public equity performance was really strong last year -- 22% -- trouncing most of its peers (but below the S&P/TSX Composite Index’s 32% gain). I asked Michael to explain the outperformance there.

He replied:

We really globally diversified last year. We increased our diversification, moving a little bit away from MSCI ACWI which we never really follow. We diversified a little bit more, and we added a little bit in as well, so that that also helped. From peak to trough to peak, there was quite a big rip in degrees when you account for April. So I would say better global diversification and adding into the sell-off, which was an interesting experience for us because our incoming CEO, Ainsley, had only been on the job literally days and was right there with us, supporting us as we were looking to take advantage of that opportunity. So she jumped into the frame and really contributed to helping us capitalize on that opportunity. 

It always helps when the new CEO supports the investment team during turbulent times.

As Michael explained, HOOPP didn't shift out of US equities into all Canadian equities when Liberation Day hit; they just diversified more globally.  "We had more countries, so Australia and Canada, we added Japan, we added Europe, and we took the US down."

I then noted HOOPP has a massive fixed income portfolio and asked Michael to explain their approach there and why it's so important.

He replied:

We still have a liability-aware investment strategy. We want to own fixed income for risk-off environments and for when the discount rate is brought low by lower interest rates, if that regime was ever to show up. But at the same time, we want to protect ourselves against an inflationary world. And that's why what makes HOOPP a little bit unique is the quantum of real return bonds. We are still of the size that we can maintain a very high proportion of our bond portfolio in real return bonds and that's what we continue to do here. We grew our proportion (in real return bonds) a little bit up to 20% which is in the annual report. But most of that would have been buying TIPS (US Treasury Inflation Protection Securities) because we weren't able to buy RRBs in Canada. As you know, those options are no longer prevalent. We continue to hope that they will return at some point, but absent having access to those in size, we did add some TIPS to the portfolio. And that's really to keep that real / nominal mix appropriately balanced, so that you've got a hedge that helps you if something blows up, but not so much nominal that you get into trouble if inflation becomes a concern. 

I asked Michael and Reena to give me some flavour on private markets and Reena responded: 

As you noted, private markets were positive. We delivered a billion dollars of income across those private market strategies. And we're also probably unique in that we have less allocation to private markets, so only 35% in private markets and the rest in capital markets (public markets). From that perspective, the private equity story is quite similar other plans; we're seeing they had similar issues from a valuation perspective. There's less in the market, so we're making impact. From that perspective, real estate, similar story, although I think we see some improvement across certain sectors starting to pick up, like Office, but we're still, it's still struggling, or at least it was to the end of 2025. I think our infrastructure was a bit different. We did have one specific asset that returned down, but overall that portfolio is quite resilient. 

She told me the asset that got hit in Infrastructure was a renewable energy asset in the US and given policy changes there, that asset was marked down significantly.

I told Michael that I read all about the total portfolio approach in the annual report and asked him to give me more context:

You've been following this evolution in the pension industry for years. I'm a big believer in this. I've never been big on SAA  (strategic asset allocation). I'm not sure exactly what magic weights work through the full economic cycle. So we're really embracing the idea of having a coordinated portfolio, where, rather than saying, XYZ private asset, here's a bucket, go fill it, working with them, and say, what are the characteristics of the assets that we really need at the total portfolio level and then being adaptable when when something goes up in the net or, or something gets overtly expensive and adjusting our weight. 

We're big fans of this total portfolio approach. It's an integrated and adaptable strategy, rather than sort of being rigid around some sort of SAA approach. It requires the complete and full support of our board and strong governance. And I would say that's very much in place, and I feel very good about it.

 He added:

We're just sort of formalizing that now under this nomenclature, but in my mind, it's nothing new. It's formalized in something new but I would say it's really been a part of what's made us successful over the long and medium term. And we're just going to continue on with that.

I agreed that in order for the total portfolio approach to work well, you need the right governance and the right compensation system that aligns incentives with total portfolio return objectives.

Reena jumped in:

We think that's correct. When I started on the 31st of August last year, and coming in, it is a very different approach because TPA was not being fully implemented; it's very different. I think we do look at things at a total fund level and look at opportunities as they come.

Michael added:

It's safe to say that we are increasingly focused on total fund return from a compensation perspective as well. We want to align with our members, we want to align with our sponsors. And so just to your point, you need all of these elements pulling together, and this has been a big lift. And we think we're really well positioned to take advantage of the opportunities that the markets are going to present to us over the next several years.

On the 2030 strategy, Reena gave me more flavour on what Annesley is looking for:

She is really pulling on growing the three pillars that have been highlighted in the strategy. So our members, our portfolio and returns, and then the community itself. So it's really who's also unique in that we're growing plan and really leaning into that. I think that that's one thing that we've talked a lot about, and also just focusing back on what are we really delivering for the fund? It comes down to, we need to deliver 4.5% to 6.5%  real returns to be able to pay pensions. So that was really something that I think shifted in terms of our focus. Obviously, we do look at benchmarks and how we compare on a relative basis, but that focus on looking at real returns is something that we're working through, making sure that we stay fully funded.

I noted Chantale Pelletier was appointed as the new Head of Global Infrastructure at the beginning of the year and said it's too soon for a new strategy there but wondedred if they're discussing anything new in infrastructure.

Michael responded:

She was a part of the delegation that went to Australia very recently. You may have seen with the Australian Prime Minister. She represented us well, as we signed along with the peer plans that cooperation agreement. It was great to have her be a part of that. I would say, Chantale is coming in and and we're pretty much assessing all of our individual strategies. We don't think big changes are coming, but we only started infrastructure in 2019, so we still have dry powder in that area.

In particular, regulated Canadian assets, where they're made available, are something we're ready, willing, and able to look at. We want to make sure that we're ready and focused on that. 

I do believe, after a period of time when there weren't a lot of those (infrastructure) assets in Canada to really consider that we're going to see more of them over the next year or two. And HOOPP is going to look at all of those, as well as all the other peer plans. 

I think we all see the value of those made in Canada investment opportunities where you don't take foreign exchange risk, where you understand the political climate, where you understand the legal framework, particularly regulated assets,  where you might need some inflation protection. These kinds of assets look particularly compelling to HOOPP because we endeavor to pay COLA (cost of living adjustment). So we're always very careful and focused on the advent of an inflation regime, and making sure we're protecting ourselves against that. 

I told him I hope he's right and he added:

I'm pretty confident. I really do sense things will have to move at a thoughtful and careful pace. I mean, you want to make sure you do the right not necessarily do them quick. But I do get the sense that things are moving forward behind this means we're seeing more and more things starting to become available. And it's not just the federal level, the provincial level, and even at the municipal level as well. We think there's going to be various opportunities to participate with our policymakers, and we remain optimistic. So from an infrastructure perspective, to answer your question, I would say we're turning our eye a little bit more domestically, and we're keeping some powder dry, waiting for those opportunities to come in due time.

On F/X risk, I asked if they hedge it completely and Michael told me not completely but they do hedge a lot of it. He and Reena told me the depreciation of the US dollar had a negligible effect on the plan's overall results last year.

I asked Michael if he looks at where HOOPP is now, given where markets are, their domestic exposure, the fact that infrastructure is really just ramping up, would he say they're in a really good position given the uncertain macro and geopolitical environment? 

He replied: 

I actually feel very good about our portfolio right now. We have an incredibly balanced portfolio. I think a good mix, again, between real and nominal bonds.

I think we are very well balanced, which is the secret to navigating these rough times. If you have a balanced portfolio and you're not over the tips of your skis, then when those are anchored, incredibly liquid and focused on liquidity, then you're able to take advantage of the opportunities as they present themselves. 

And so, when I'm looking at the next several years, I think that this portfolio is solid and can hit on required rates of returns. And I think, looking at a year, two years, three years, there may be opportunities that present themselves where you can really lean into something, whether it's domestic infrastructure, or whether private equity becomes more compelling again, or whether it's equities, something above the equities, or bonds back up, or real yields move up higher. 

I mean, you can buy some more of those, because even though these things will always present themselves, but you've got to enter into those opportunities with a balanced portfolio. And that's really where I think we are right now. 

On private credit, I noted JPMorgan restricted this activity today after markdowns, but it all depends on underwriting. I asked whether this is a big portfolio at HOOPP and how they approach it. 

Reena said it was a small portfolio and Michael responded to my question: 

Well, I think you hit the nail on the head; it is all about underwriting. The thing about credit that people have to understand is that it's not broad data. I think that's the problem. People want to think of private credit in terms of good or bad, and the reality is, there are parameters involved. 

You have to be very good at underwriting. HOOPP has been very involved in the credit space for a long period of time. I would say it's one of our core competencies in credit, not just HOOPP for the record, I would say other Maple 8 funds as well. 

We feel really comfortable with our credit underwriting ability and the partners that we've chosen to underwrite credit with. I would say we've been growing our private credit space, but it's been a little bit more cautious over the last few years, as we've been just a little bit careful in terms of growing them. 

It's something given the right risk-reward relationships, we're still ready to participate in. But, you hit the nail on the head. The word is underwriting. You have to underwrite very effectively, choosing the right partners, choosing the right transactions. And we didn't have a great year last year, but over the last several years, we have performed really well. 

It's also the kind of product that suits a pension plan well, trying to get to that 4.5% and 6.5% real that we talked about,. Typically, we can get those targets in a private credit context. So it suits pension plans well, but again, it's just a matter of Reena's point earlier, you just want to make sure you size it right. 

On absolute return strategies, both internal and external, Micahel told me last year was a "great year".

Finally, Reena told me drive for new members is going well and HOOPP is welcoming Ontario doctors to its pension plan, which is excellent news. 

Alright, it's late, I'm just glad the weather hasn’t killed my power yet as we have a major ice storm in Montreal.

I once again thank Michael and Reena for taking the time to talk to me to share all these insights. 

Below, Annesley Wallace, President and Chief Executive Officer, reflects on HOOPP’s 2025 results and a milestone year for the Plan. 

HOOPP surpassed $130 billion in net assets, remained fully funded, expanded access to eligible physicians and their employees and welcomed The Hospital for Sick Children, meaning every hospital in Ontario now offers a HOOPP pension. We also welcomed our 500,000th member.

Watch to learn how they are continuing to invest wisely and deliver on our pension promise to Ontario’s healthcare community.