Monday Market Minute | Jul 1, 2019

Mid-year check: Canadian private markets outpace public counterparts

What Moved

At the 2019 halfway mark, Canadian private market strategies delivered a strong risk-adjusted profile. Private credit funds reported H1 returns in the 3.5-5.5% range (annualizing to 7-11%), with minimal volatility and no significant credit events. MICs maintained steady monthly distributions. PE portfolios, while less liquid in their reporting, showed stable EBITDA growth across portfolio companies. The contrast with public equity's Q4 2018 crash and Q1 2019 recovery — a round trip that left many investors shaken — was instructive.

Why It Matters

The first half of 2019 demonstrated the core proposition of private market investing: consistent, predictable returns with low correlation to public market volatility. Investors who held diversified alternative allocations through the December sell-off and subsequent recovery experienced meaningfully smoother portfolio trajectories. The mid-year data strengthened the case for strategic — not tactical — allocation to alternatives.

Signal to Watch

H2 fundraising activity would indicate whether the strong H1 performance translated into new capital commitments. Institutional allocators typically reviewed alternative allocations at mid-year, making Q3 a pivotal fundraising season for Canadian managers.

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