Monday Market Minute | Dec 18, 2023

2023 in review — the year higher for longer reshaped Canadian private markets

What Moved

The 2023 Canadian private markets scorecard told a clear story. Private credit was the unambiguous winner, delivering the best risk-adjusted returns in over a decade at 9–13% net depending on strategy. Housing had a modest recovery from its 2022 correction, with national prices up approximately 5% from the trough. PE deal activity declined roughly 30% from 2021 but showed late-year signs of stabilization. Canadian VC remained in a deep freeze outside the AI sector. SVB's collapse proved a non-event for Canadian fundamentals but tightened bank lending permanently.

Why It Matters

The year demonstrated that private markets were not a monolith — performance divergence between asset classes was extreme. Investors who treated "alternatives" as a single allocation missed the nuance that mattered. The structural lessons of 2023 — liquidity matching, governance due diligence, rate sensitivity analysis, and the importance of secured collateral — would define how sophisticated investors built private markets portfolios going forward. The Bridging and Fortress cautionary tales, the Ninepoint liquidity lesson, and private credit's validation all contributed to a maturing Canadian exempt market ecosystem.

Signal to Watch

Whether the lessons of 2023 would translate into permanent improvements in investor due diligence and fund governance, or whether the next cycle of easy money would once again suppress the vigilance that difficult markets had cultivated.

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