On the Sustainability of the Canadian Model

40 Pages Posted: 19 Feb 2024

See all articles by Eduard van Gelderen CFA FRM

Eduard van Gelderen CFA FRM

PSP Investments ; International School of Management (ISM) Paris

Date Written: February 9, 2024

Abstract

The Canadian model is generally regarded is one of the most successful investment models. Historical performance shows good risk adjusted returns, outperforming passive investment strategies and other investment models. This performance is attributed to four specific characteristics: its governance, large allocation to private markets, internal management and the focus on long-term value creation. The central question in this study is to what extent the Canadian model can be as successful in the future as it has been since the launch of the model over twenty years ago. The first part of the paper studies the specific characteristics to determine whether the group of institutions pursuing the Canadian model, the so-called Maple-8, are a homogenous group or a merely a diverse group using similar principles. The second part of the paper discusses the current state of the model based on interviews with the Maple-8’s c-suite and subject matter experts. The overarching message is that the Canadian model should first and foremost remain focused on value creation and must seek the reassertion of its license to operate. Improvements of the model can be found in risk management and the use of technology. The model provides a good opportunity to further strengthen Canada’s pension system.

Keywords: pension funds, investment models, value creation, private assets

JEL Classification: G23

Suggested Citation

van Gelderen, Eduard, On the Sustainability of the Canadian Model (February 9, 2024). Available at SSRN: https://ssrn.com/abstract=4722747 or http://dx.doi.org/10.2139/ssrn.4722747

International School of Management (ISM) Paris ( email )

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