Canadian pension funds divestment of private equity holdings rebalances portfolios
Canadian pension funds are strategically divesting from their private equity holdings to realign their portfolios. Recognizing the inherent lag in private equity valuations compared to publicly traded assets, the move aims to address potential overvaluations, particularly in the context of rising interest rates. According to Associate Professor Sebastien Betermier, who shared insights with the Financial Post, selling a portion of the private equity portfolio serves as a deliberate measure to restore overall portfolio balance. "The lag effect implies that any substantial decline in the value of publicly listed equities may not be immediately mirrored in the valuation of privately listed equities, taking several months to materialize.
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