Pension Pulse

Discussing AIMCo's Mid-Year Results With CIO Justin Lord

August 27, 2025 - 10:25pm

James Bradshaw of the Globe and Mail reports AIMCo earns 2% first-half return as clients seek to reduce risk-taking:

Alberta Investment Management Corp. earned a 2-per-cent return in the first half of the year, rebounding from a volatile first quarter that has prompted the pension fund manager’s clients to shift toward lower-risk investments.
AIMCo’s investment gain through June 30 was modest when compared with a 5.4-per-cent gain in the same six months last year. Its balanced fund, which reflects a typical mix of client assets, earned 2.1 per cent, according to a midyear update the pension fund manager released on Wednesday.
After a tough start to the year for markets, marked by turmoil from constantly shifting tariffs levied by the United States, AIMCo and its clients are “quite pleased with a positive return year-to-date,” chief investment officer Justin Lord said in an interview.
A second-quarter rebound in stock markets helped keep AIMCo’s returns positive, and that upward trend has carried into the third quarter, Mr. Lord said. But as its client funds adapt to a less predictable investing environment, they are asking AIMCo to lean toward assets that are typically less risky.
In some cases, they are moving more of their investments into infrastructure-like assets that have longer time horizons and more stable returns. Some are still having conversations about boosting exposure to private credit, a booming market for loans to private companies, even as increased competition has put pressure on credit spreads.
“We have been seeing some allocation changes across client portfolios away from a global equity tilt to lower-risk jurisdictions or asset classes,” Mr. Lord said.
So far, that has not included any retreat on U.S. investments, though AIMCo is taking a harder look at the risks posed by less predictable U.S. policy positions and tensions with its trading partners.
“The U.S. isn’t going away. We don’t see drastic changes to that allocation,” Mr. Lord said, but he added: “With a perceived increase in risk comes a required increase in expected returns.”
Mr. Lord was promoted to chief investment officer in July as part of an overhaul of AIMCo’s senior leadership team instigated by Alberta’s government, which called for a “reset” of the government-owned fund manager.
AIMCo invests on behalf of 17 pension, endowment, insurance and government clients in Alberta. Its total assets increased to $182.9-billion, compared with $179.6-billion at the end of 2024.
Over the past 10 years, AIMCo’s balanced fund has earned an average annual return of 7 per cent, reaping net investment income of $69.9-billion.
First-half returns this year were driven mostly by gains on publicly traded assets such as stocks and bonds, which make up a majority of AIMCo’s portfolio.
Investments in privately owned assets such as infrastructure, real estate, private equity and renewable resources – which account for 35 per cent of AIMCo’s total portfolio – had “more tempered” first-half results, according to the pension fund manager’s midyear update.
AIMCo publishes detailed performance results for each asset class with its annual report.

Earlier today, AIMCo released its mid-year investment performance:

This morning I had a chance to speak to AIMCo's newly appointed CIO, Justin Lord, to go over the results and dig a little deeper (first time we spoke, very nice guy and market savvy which I expected).

I want to thank Justin for taking the time to talk to me and also thank Carolyn Quick for setting up the Teams meeting and sending me the update on an embargoed basis.

I began by asking Justin to give me an overview of the results which were in line with peers:

A couple of comments and certainly 2025 has been anything but a quiet year in global financial markets. That's probably been the norm that investors have been operating in over recent years, it certainly feels like that across the teams here at AIMCo.
Obviously, January to June, investors faced a rapidly changing environment that was driven primarily by US tariff announcements, continued geopolitical tensions and escalation or thereof and uncertain macro, monetary and fiscal backdrops globally.
The AIMCo Balanced Fund did deliver 2.1% net return over the first half of the year. That means approximately $3.6 billion of investment gains for our clients.
This performance was led by our public market portfolios, particularly public equities driving those returns. We did have positive returns across money market, fixed income, mortgages, private debt and loan portfolios as well.
Our private investments like infrastructure and real estate were slightly challenged by the same that we commented on with respect to the macroeconomic uncertainty broadly.
As it relates to fixed income, Canadian bond yields were pushed higher. We've seen that continue at the long end of the curve mid-year reflecting concerns over the impact of trade policy, uncertainty over business investment, economic stability and broader long-term productivity.
But pointing to the results and really pointing to the benefit of a highly diversified portfolio, sound risk management practices, the long-term performance of the Balanced Fund has held up quite well through this volatility.
We do note that our Balanced Fund has earned a 10-year annualized return of 7% as per the report as well.
Our teams at AIMCo continue to seize opportunities and effectively mitigate risks on behalf of our clients to deliver solid performance throughout market cycles.
We do provide our clients with regular, detailed performance on these portfolios and this report is provided just to provide a snapshot of that performance across the aggregated portfolio.
We do reference Balanced Funds in our reporting because it reflects the typical client mix of investment across all asset classes. It does account for the majority of assets under management at AIMCo.
We don't provide reporting against our benchmarks in our mid-year report. We have some asset classes outperforming or exceeding their benchmarks while others are lagging or below.
Just as a follow-on, post the end of quarter, obviously we've seen continued appreciation in equities broadly. Certainly post the quarter and Q2 and following on, US large cap equities have re-assumed a leadership but we are seeing broad based gains across emerging markets, Canadian equities and European equities year-to-date contributing positively and continuing to do so for our clients' funds overall.

Justin paused there to let me digest and I do want to emphasize that while AIMCo has many clients most of the assets are in the Balanced Fund and that fund really demonstrates the benefits of a broadly diversified portfolio.

No, they do not provide detailed reporting by asset class relative to respective benchmarks in their mid-year report but do provide it to their clients which is normal.

I followed up by proposing we discuss public markets first since that's his area of expertise and then we discuss challenges specific to private markets.

I asked him to give me an overview of public market strategies/ activities including internal and external absolute return strategies and asked him whether private debt is part of the fixed income portfolio or part of private equity.

He replied:

Yes, certainly, I will tackle public equities first and then we will move on to private debt.
Public equities including the absolute return strategies makes up approximately 37% of the clients' Balanced Fund asset mix. This is across global equities, Canadian equities and emerging markets. We do have a global small-cap product that is quite small and then our absolute return product.
Clients allocate at the asset mix level to those products as needed to meet their risk/ return requirements. We work with our clients' investment staff, consultants, etc. to help determine what those products should look like from a composition or active risk perspective and obviously clients are involved in helping set those benchmarks at the asset allocation level.
The team internally uses a number of different strategies internally and externally to allocate to active and passive strategies as well as absolute return strategies to ensure we are delivering that beta required at the asset mix level and then certainly targeting excess return on top of each of those benchmarks for the respective products.

I interjected to ask him if that's an overlay strategy, a portable alpha strategy and he responded:

Yes, that's correct. As you know security selection over the last couple of years has been difficult to add value in global equities and around US large cap equities.
If you're looking at the top quartile active manager in US equities, they actually detracted value over the last four year period and that's owing to some of the items you spoke to peers with respect to market concentration, etc.
We have more tools in the toolbox so to speak than just security selection. The use of absolute return strategies to add value or generate excess return on top of equity beta is a key component for achieving client targets from an excess return perspective while managing risk, diversification and reducing correlation of those alphas across the products in general.
Depending on the product description, there will be varying degrees of overlay strategies that will be used in Canada vs global or emerging market strategies.
Security selection has generate positive returns for us and more broadly for the universe in emerging markets given dispersion that is prevalent and owing to some perceived inefficiencies in those markets. Certainly an area where we think security selection can continue to add value. We've been more reliant on absolute return strategies, portable alpha strategies, global equities for excess return in general.
Some of our peers would take a similar approach but at the total portfolio level. As we are organized as an asset manager, our clients are changing their asset mix at the total portfolio level, asset return happens to fall within our tool set in public markets.

I noted that it's certainly fair to say that concentration risk in US large cap equities is affecting all pension funds and institutional asset managers, making security selection there a lot more difficult and also impacting private market benchmarks as they are gauged against US and global markets dominated by US securities (US large caps make up more than 60% of the MSCI Global Index).

It's also worth noting that AIMCo is similar to BCI and CDPQ as it's a pension fund that manages assets for many clients with different demographics and liabilities so they work with them and their investment staff and consultants to recommend the optimal asset mix but the asset mix final decision lies with clients.

I shifted my attention to currencies as all peers reported varying degrees of losses as the US dollar got hit over the first six months.

Justin responded:

We do have US dollar exposure and this has certainly been a topic of conversation with our clients overall. They've been asking similar questions, have similar concerns as the broader institutional investment community.
As mentioned, we work with clients to build their long-term portfolios based on those sets of individual goals whether they are pensions or endowment plans. Any changes to our product platform would take into account those concerns, opportunities or potential shift in asset allocation more broadly.
Some of our clients do have hedging policies described in their SIP&Gs (statement of investment principles and governance). There has been interest in a better understanding of F/X exposures, hedging strategies, certainly brought to the forefront based on the long-term outlook for the US dollar.
We haven't seen any major changes as of late. Our own view is while there is a lot of noise surrounding the US dollar, we do expect it to retain its reserve status for now.
We have seen client allocation shifts perhaps reducing that US equity exposure more as a function of valuations and lower capital market assumptions, lower return assumptions for global equities over the coming years. And that's really a function of the current valuation backdrop in equities.
Those funds are being reallocated across depending on the client and risk across different asset classes: private credit being one of those, some clients looking at infrastructure allocations as well as fixed income or some duration exposure at the current date.
As you'll note by the release as well, just given the asset mix composition, our clients might be less exposed to the illiquid asset classes at approximately 34% of their asset mix at the Balanced Fund.
I'll come back to your private debt and loan question now, that sits within our Private Markets team but works very closely with our Public Market Fixed Income team given the overlap in risk characteristics and similarities as well.
When talking about the impacts of reallocating capital from global equities to private debt and loan, that asset class naturally increases our exposure to Europe given the footprint the team has across the European credit market.

I asked him what is the exposure and approach for private credit, do they also use strategic partners to ramp up their exposure there?

He replied:

Private debt and loan is approximately 9% but that would include mortgages as well so we'd be about 5% of Private Debt and Loan as an asset class as an allocation level within AIMCo.
This strategy is benchmarked to a combination of private credit indexes as you'd expect.
The team managed by Peter Shen under Peter Teti manages a strategy that really does lever strategic partnerships and opportunities across our platform in both a fund, direct or co-invest fashion more broadly.
We have seen more competition for capital in that space as a number of clients both institutionally and across the investment landscape are increasing allocations to that space in search for return and certainly as a function of elevated valuations in large cap equities.
The team has done a very good job of remaining disciplined, maintaining high credit quality in the portfolio and looking for those relative value opportunities across the asset class within the sub categories of the private credit asset class to meet and exceed their targets quite effectively with very little loss ratio over the last number of years.

I told Justin that AIMCo's former CIO Dale MacMaster once gave me a crash course in private credit explaining how floating rates provide an embedded inflation protection and they were targeting high single-digit returns.

He agreed: "Yes, it's predominantly a floating rate product and offsets some of the inflation risk embedded within the traditional fixed income space."

I then quickly moved on to private markets where I noted higher for longer is impacting private equity and real estate and some infrastructure, and also noted that AIMCo is more exposed to office buildings in Alberta but let him give me more details.

He replied:

On the private equity front, certainly transaction activity has been challenged in the private equity world and continues to remain muted. That's impacting distributions received by LPs in general comparing to historic levels.
We are seeing some secondary activity in a few places that is demonstrating the GPs ability to raise liquidity.
I'd say we are cautiously optimistic with respect to capital markets, the IPO pipeline as a source of liquidity for private equity but will reiterate cautiously optimistic over the next 12 to 18 months. The industry is certainly working through some of the exposures and fundraising over the last five years.
We still are extremely confident in the asset class as a whole. Peter Teti and the team have done a fantastic job managing the exposure over the last number of years and have produced results that have met or exceeded our clients' expectations.
Difficult backdrop with public markets as a benchmark right now, difficult to assess over shorter periods of time as well and would refer to our long-term strategy there over equity benchmarks more broadly.

I also noted it's a mid-market focus in PE and he told me that has not changed.

He moved on to Real Estate and Infrastructure:

With respect to Infrastructure, also noting some of the market volatility, geopolitical volatility creating some challenges in the space. We continue to have conviction in the long-term businesses within our portfolio remain vigilant on inflationary pressure, interest rate movements, other risks that are related to evolving global economic uncertainty.
Our portfolio appears to be well positioned currently and we would note the potential for increased activity in the future as it would relate to client allocations and some of the potential infrastructure spend that is being talked about more broadly in North America and Europe as it relates to responding to some of the geopolitical trade tensions, etc..
Ben Hawkings and the team, like our PE team, have done a fantastic job over the last number of years managing the portfolio. We have a fantastic suite of partners and a capable team internally from a direct perspective to navigate the current environment.

I told Justin that I spoke to Ben Hawkings back in November 2022 (see comment here) and more recently covered his comments on the success of the AirTrunk sale and think very highly of him.

I also told him I liked Albert Premier Danielle Smith's post on LinedkIn yesterday on how nuclear energy is Alberta's next frontier and think AIMCo's Infrastructure team can play an important role there if the opportunities arise and it meets clients risk/return objectives:

We continued on to AIMCo Real Estate portfolio where I noted there are still challenges in some sectors but it seems to finally and slowly be turning the corner.

Justin replied:

As like most of our peers, Real Estate has been a challenged asset class over the last number of years.
Policy uncertainty continues to affect the recovery in that sector. As you know, real estate responds to interest rates. Interest rate increases combined with economic uncertainty more broadly have caused a cyclical decline in the market.
I would say over the last six months we are starting to see liquidity returning to the market, signs of a bottoming in some sectors and some interesting deal flow as well.
The foreign real estate portfolio particularly in the US continues to show some sign of strain due to further decline in some office exposures and some specialized sectors. We do expect this to moderate through the end of the year and into 2026.
Other markets such as Canada and Europe we believe have stabilized more quickly but there are continuing risks there that remain as a function of global trade, tariff actions, etc.

The pandemic produced further structural changes in tenant needs but the team is focused on that, both portfolio management and positioning, being able to take advantage of opportunities as they come our way.
I can't speak specifically as to the active weights across our peers but we have had a slight overweight in Office that adversely impacted the portfolio.
As we work through the strategy revamp with the team in Real Estate, we really are focused on a number of top-down investment themes be it demographic shifts, healthcare, technology, structural housing supply or shortages as key themes for portfolio positioning and deal flow.

I asked Justin if they named a new leader for the Real Estate group and he told me Peter Teti is leading that group for now as he's in charge of Private Markets but he added "we will be looking for a new head of that asset class very quickly, Peter and I are having discussions on that process now."

I asked him if anyone will be replacing him in Public Markets and he replied:

From a Public Markets perspective, we have a strong leadership team with Jason Chang leading Fixed Income and David Tiley managing Fundamental Equities.
We have a couple of initiatives withing the Public Market portfolio broadly as we look to assess the efficiency of beta management and the consistency of alpha generation.
So, when looking at one of my main objectives over the first three to six months in the role, Public Markets focus on the efficiency and consistency of alpha generation and really designing the strategy and structure that is required for our clients to be successful on that front.
As it relates to Private Markets, we touched on the Real Estate focus more broadly.
I'd just add a third comment, really integrating our client portfolio management process to the investment process is the third key item I'm focused on.

I ended by asking him what keeps him up at night, noting it's been an insanely volatile year so far, but inflation risks are rising, valuations are high and I asked him if he thinks markets will be calming down or if there are material risks that will lead to a significant retrenchment in the appetite for risk assets.

He replied:

Not to provide an overly commoditized answer, those items in no particular order would be geopolitical tension, trade and policy uncertainty. Any sudden and unexpected change in monetary and fiscal policies globally.
Really the next shock to global markets is really a surprise involving any one of those broad categories that I mentioned. The result will be disruption in liquidity trade, consumer activity, consumer sentiment thereby impacting valuations.
It is concerning to enter an environment like that with high valuations. High valuations equals more downside in those periods of uncertainty.
But I'd say we combat that uncertainty by portfolio diversification, by maintaining sufficient liquidity across our products and client portfolios to be able to respond to those scenarios.
Last but not least, perhaps most importantly, having the right team in place to be able to respond to those opportunities that arise in those situations when managing a portfolio is key.

I thank Justin Lord for a great discussion and judging by my first conversation with him, he's a truly solid CIO who knows his markets, products, clients and values his internal team across public and private markets.

Who knows, he might make me rethink my conviction that Dale MacMaster remains AIMCo's best CIO ever but he has many more years to go before I change my mind on that.

In all seriousness, Justin is a great guy, glad we spoke, look forward to speaking with him again and AIMCo's clients and staff are lucky to have him as their CIO.

Once again, the in-depth discussions I bring my readers cannot be found in newspapers or anywhere else so I thank everyone who supports my work and truly appreciate it.

Below, AIMCo CIO Justin Lord offers some insight on the mid-year results.

Also, Alberta Premier Danielle Smith says she expects the private sector to lead the way on potentially bringing nuclear power to the province. (Aug. 25, 2025)

Smart lady, one of the few politicians in Canada that knows what she's talking about and isn't afraid to tell it like it is.

Anyway, as I stated above, don't be surprised if in the future AIMCo owns a stake in a nuclear power plant in Alberta (if it makes sense for all parties, why not?).

BCI's Daniel Garant on Private Debt and More

August 26, 2025 - 9:12pm

Sarah Rundell of Top1000funds reports on BCI's masterclass in private debt:

British Columbia Investment Management Corporation (BCI), the C$295 billion ($214 billion) asset manager for public sector bodies in Canada’s western most province, oversees a C$20 billion ($14.5 billion) allocation to private debt in a strategy that is defined by a few key characteristics: a large and growing allocation to co-investments, an avoidance of mega deals and an expansion into Europe and APAC.

Around 65 per cent of the private debt allocation is direct or in co-investments via partnerships with external firms, which although not unique, sets BCI apart from many other investors and reaps benefits like diversification, deeper relationships, deal selectivity and lower fees.

“Not everyone can do direct or co-investments but having an overall portfolio of 65 per cent in direct and co-investments is a high number, and we are looking to do more,” says Daniel Garant, executive vice president and global head of public markets, in conversation with Top1000funds.com.

BCI has been doing direct lending in the US ever since the portfolio was launched in 2018. But moribund M&A activity continues to push private credit firms to jump on every opportunity. It’s drawn huge investor flows into US private debt and tightened credit spreads. The fiercely competitive market for lenders has propelled BCI into new geographies – first Europe and more recently, Asia Pacific.

“For the last three years, we have increased our allocation to Europe for the simple reason that credit spreads and returns are currently attractive. Having a portion in Europe, and a growing portion in Asia Pacific, is helping us as these markets will develop over the years. They won’t get to the same size as the US, but private debt in Europe and Asia will get a growing share of this portfolio,” he predicts.

Another important seam to strategy involves avoiding mega deals where “everyone” is bidding. It’s not that these deals aren’t interesting, says Garant, it’s just that they are competitive and tightly priced. Instead, he is focused on transactions that are less crowded to get a better spread, calling on BCI’s strong partners to bring deal flow in the upper middle market and middle market.
Another reason to avoid mega deals in private debt includes competition in the space from broadly syndicated loans (BSLs), which corporate borrowers can tap into as an alternative to private debt. BSLs are usually cheaper, and lenders don’t ask for as much spread as private credit investors. In return, they don’t have the same flexibility.

“A private debt loan is more flexible, but it is more expensive,” he says.
Adjacent opportunities
Another successful seam to strategy includes adjacent opportunities. In one example, the team has broadened its remit and ventured into more asset-backed lending. Garant says it’s less competitive and offers a better risk return, and although deals are more complex, BCI can draw on its deep internal expertise and talent pool for support – around 85 per cent of BCI’s total assets are managed internally.

Traditionally, asset-backed lending where loans are secured against property or equipment, consumer loans or credit card balances, used to be the domain of banks. Unlike direct lending which involves analysis of the corporation, financial projections and strategy, investors in the asset-backed space must also ensure they have the capacity and infrastructure to successfully select the assets that sit behind each deal.

“This is where the secret lies,” he says, adding that managers (and their selection) play a key role in sourcing the assets that back the loans. “Asset-backed lending is usually part of a broad diversified portfolio and that requires technology, including AI tools, to better enable us to see the portfolio behind it because this is where the risk sits.”

Adjacent opportunities also include looking for openings in investment-grade (private) debt where investment-grade corporates go to the private market in search of a more flexible portion of funding.

It’s a strategy that also plays into another inherent strength of the portfolio.

The public markets team oversees both the allocation to private debt and absolute return strategies, alongside more obvious public allocations to passive and active public equities, government and corporate bonds, derivatives, trading and FX and managing portfolio leverage. Garant believes the hybrid portfolio works particularly well given today’s demands on investors to remain flexible, and the fact that the lines that used to define markets are increasingly blurred.

“Investment grade private debt is a hybrid between corporate bonds which are investment grade, and private debt per se, so having the view of both markets is essential in my view to do a good job in terms of capital allocation and risk return.”
Absolute return and synthetic index replication
The C$12 billion ($8.7 billion) absolute return portfolio, the other slight anomaly in BCI’s public markets allocation, seeks opportunities that are uncorrelated to equity – namely unique, idiosyncratic investments that are expected to perform well in all market environments.

The strategy provides a welcome corner of active risk in an equity allocation that has steadily moved into passive.

At 23.6 per cent, BCI’s current allocation to public equities is a smaller proportion of assets under management than it used to be and subjects the portfolio to less volatility than in the past. Of that, the majority is passive in index strategies for rebalancing.

Absolute return investment opportunities have a specific risk-return profile that typically comprises low downside risk and a capped upside, but which is above the market beta return. Absolute return implementation comes via an overlay above public, indexed equities whereby BCI’s clients receive the beta of equities, and a value add over the benchmark from uncorrelated strategies.

“Of course, the quid pro quo is if the downside is capped and limited, the upside is also going to be capped. The key success factor is the right partnership and sourcing, as well as the skill of the team and being agile and nimble to look at opportunities that are a bit different,” he says.

The largest exposure is to a long-short market-neutral credit manager. Other uncorrelated instruments providing strong returns in the overlay strategy include transactions in litigation finance and structured debt instruments with penny warrants. Here, the downside credit protection caps potential losses and the upside comes via the interest rate paid on the debt instrument and potential equity returns from the penny warrants.

In keeping with BCI’s overarching approach, the structure of the overlay is managed internally with capital allocated to partners where BCI will co-invest if the team decide they want more exposure to particular opportunities. “The positions are not short-term, we target transaction maturities to be within five years – we don’t aim for short-term tactical positions that are, say, three months.”

It’s a topical point. As more investors explore tactical asset allocation in the current climate, Garant remains lukewarm.

“I’m not a strong believer in tactical asset allocation. Our strategy is not based off short-term market moves.”

“Tactical asset allocation requires coping with significant mark-to-market volatility with features such as stop losses, and although some firms are good at it, many aren’t because it’s extremely difficult to time market movements. If you want to perform, you need to change positions quickly, and positions need to be large to have a meaningful impact on your return. For example, relative value trades between equity and bonds consume a lot of active risk.”

BCI has no edge investing tactically, he continues. It’s much better to invest the way they are, whereby partners bring opportunities, the internal team hunts for specific returns and risk profiles, and where transactions are less crowded.

A second active equity strategy in addition to absolute return comes via synthetic indexation, where the team move investment between physical and synthetic index replication according to market opportunities.

The physical allocation involves trading a basket of stocks alongside a synthetic index replication exposure via swaps, he explains. Every year, the team has added value by doing synthetic index replication and he concludes that the strategy is important because active equities are difficult in the current market.

“In public equity markets, we have never seen this type of market concentration before. In Canada, we are used to having a few stocks dominating the benchmark, but in the US, this is a new feature in the modern era. It adds complexity for long-only public equity active investors.”

Excellent interview with Daniel Garant, EVP and Global Head of Public Markets at BCI where he goes over their approach to private debt, absolute returns and other strategies.

He also explains why he's not a big believer in tactical asset allocation and how synthetic indexing adds value to the fund.

How did BCI grow its private debt portfolio to an C$20 billion ($14.5 billion) allocation in seven years?

They seeded the right funds like Hayfin Capital in Europe which they sold back in February, got an equity stake, negotiated lower fees and co-investment rights and they're continuing on this track.

BCI recently announced that BCI-backed Brinley Partners secured an additional US$4 billion commitment from a leading US insurance company.

BCI also recently announced the signing of a strategic minority investment agreement to support Three Hills, a private markets investment firm specialised in providing bespoke capital solutions to entrepreneurs and management teams in Europe and North America to help long-term corporate development and growth objectives

The structure of these deals gives BCI important leverage to negotiate lower fees and co-investment opportunities.

What else did BCI do to grow its private debt portfolio? Early on, it invested in CPP Investments' Antares Capital, a leader in US middle market lending.

But the key point in all of this is they structure their deals intelligently to negotiate better terms (lower fees, more co-investments) and they also get huge upside from their equity stakes in these firms.

Daniel Garant states this:

“Not everyone can do direct or co-investments but having an overall portfolio of 65 per cent in direct and co-investments is a high number, and we are looking to do more”

That's a huge percentage in direct and co-investment and to do more, they need to structure the right deals with strategic partners.

What else? Similar to what IMCO's Jennifer Hartviksen told ION Analytics (see my recent post here), their credit team is flexible across the capital structure and even does hybrids between corporate bonds and private debt.

The ability to do more directs and co-investments and be flexible across different credit products requires a strong credit team that can gauge opportunities as they arise and solid technical knowledge to provide bespoke investment solutions to capitalize on hybrid opportunities.

Lastly, the time frame for co-investments is three to five years because it increases the probability that they will not get caught in a short-term storm, it's just a smarter risk-adjusted framework than short term tactical asset allocation which is fraught with risks.

Equally important, they avoid mega deals where spreads are tight and look to capitalize in less crowded strategies where spreads are wider (that carries more risk but better returns and if the team knows how to analyze these deals properly, it's a smarter strategy than chasing mega deals where returns are lacklustre).

Alright, let me wrap it up there.

Below, a panel discussion form last year's Milken Institute Global Conference featuring Daniel Garant, EVP and Global Head of Public Markets at BCI. The panel discusses trends in private markets including private debt and you can fast forward to around minute 9 to hear Daniel's insights (there's more, entire panel is worth watching).

Dovish Fed Remarks Revive Animal Spirits on Wall Street

August 22, 2025 - 10:52pm

Amalya Dubrovsky, Karen Friar and Laura Bratton of Yahoo Finance report Dow jumps 800 points to record, S&P 500, Nasdaq soar as Powell's Jackson Hole finale fuels bets on September rate cut:

US stocks soared on Friday as Federal Reserve Chair Jerome Powell opened the door to a September rate cut during his highly anticipated speech at Jackson Hole.

The Dow Jones Industrial Average rose 800 points or 1.9% to close at a fresh record, while the S&P 500 moved up about 1.5%, and the tech-heavy Nasdaq Composite climbed 1.9%. Friday's surge came on the heels of a downbeat week for markets, as tech stocks took a hit amid AI trade doubts.
His remarks shook up rate-cut bets, which had been waning after a weak monthly jobs report. Traders on Friday were pricing in about 91.5% odds of a September cut compared to 70% earlier in the morning and 85% a week ago.

Meanwhile, the 10-year and 30-year Treasury yields fell after Powell's remarks. The commentary also spurred a gain in bitcoin and other cryptocurrencies, with ethereum leading the crypto gains.

The White House watched Powell's speech closely, as President Trump has continued to push the Fed and Powell to lower rates. Trump opened a new front in his public pressure campaign on central bank independence by calling for the resignation of Fed governor Lisa Cook for alleged mortgage fraud. On Friday, Trump said he'll "fire" Cook if she doesn't resign, though legally, presidents cannot easily dismiss Fed governors.
On the earnings front, Zoom (ZM) stock popped Friday after reporting an AI boost, and Ross Stores (ROST) jumped as shoppers sought discounts amid tariffs. Intuit (INTU) and Workday (WDAY), meanwhile, slid.
Shares of Intel (INTC) jumped 5% after President Trump said the government will take a 10% stake in the ailing chip giant, calling it a "great deal."

Pia Sigh and Sarah Min of CNBC also report Dow surges more than 800 points to post record close as Powell speech fuels rally:

The Dow Jones Industrial Average rallied to an all-time high Friday after Federal Reserve Chair Jerome Powell signaled the central bank could begin easing monetary policy next month.
The Dow climbed 846.24 points, or 1.89%, reaching a fresh high and closing at a record level of 45,631.74. The S&P 500 rose 1.52% to end at 6,466.91. At its session high, the broad market index came within three points of its record. The Nasdaq Composite gained 1.88% and settled at 21,496.53.
Shares of megacap technology stocks soared on Powell’s comments. Nvidia added 1.7%, while Meta Platforms jumped more than 2%. Alphabet and Amazon each climbed more than 3%. Tesla shares jumped about 6%.
In a tepid speech at the central bank’s annual conclave in Jackson Hole, Wyo., Powell said that “the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.” The Fed chief added that “the balance of risks appear to be shifting” between the central bank’s dual mandate of full employment and stable prices. He cited “sweeping changes” in tax, trade and immigration policies.
Expectations for a quarter-point rate cut in September surged to roughly 83% following the speed from about 75% earlier in the week, according to the CME Group’s FedWatch tool.
“The bar is extremely high now for the Fed to leave rates unchanged in less than a month,” said Chris Zaccarelli, chief investment officer at Northlight Asset Management.
Friday’s performance came in contrast to much more downbeat market action this week. The major averages entered the session lower week to date due to pressure in megacap tech. The latest rally helped investors claw back most of the losses from earlier in the week.
For the week, 30-stock Dow advanced 1.5%, and the S&P 500 gained 0.3%, while the Nasdaq slipped 0.6%.

Jeff Cox of CNBC also reports Powell indicates conditions ‘may warrant’ interest rate cuts as Fed proceeds ‘carefully’:

Federal Reserve Chair Jerome Powell on Friday gave a tepid indication of possible interest rate cuts ahead as he noted a high level of uncertainty that is making the job difficult for monetary policymakers.
In his much-anticipated speech at the Fed’s annual conclave in Jackson Hole, Wyoming, the central bank leader in prepared remarks cited “sweeping changes” in tax, trade and immigration policies. The result is that “the balance of risks appear to be shifting” between the Fed’s twin goals of full employment and stable prices.
While he noted that the labor market remains in good shape and the economy has shown “resilience,” he said downside dangers are rising. At the same time, he said tariffs are causing risks that inflation could rise again — a stagflation scenario that the Fed needs to avoid.
With the Fed’s benchmark interest rate a full percentage point below where it was when Powell delivered his keynote a year ago, and the unemployment rate still low, conditions allow “us to proceed carefully as we consider changes to our policy stance,” Powell said.
“Nonetheless, with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,” he added.
That was as close as he came during the speech to endorsing a rate cut that Wall Street widely believes is coming when the Federal Open Market Committee next meets Sept. 16-17.
However, the remarks were enough to send stocks soaring and Treasury yields tumbling. The Dow Jones Industrial Average showed a gain of more than 600 points following the public release of Powell’s speech while the policy-sensitive 2-year Treasury note saw a 0.08 percentage point fall to around 3.71%.
In addition to market expectations, President Donald Trump has demanded aggressive cuts from the Fed in scathing public attacks he has lobbed at Powell and his colleagues.
The Fed has held its benchmark borrowing rate in a range between 4.25%-4.5% since December. Policymakers have continued to cite the uncertain impact that tariffs will have on inflation as a reason for caution and believe that current economic conditions and the slightly restrictive policy stance allow for time to make further decisions.
Importance of Fed independence
While not addressing the White House demands for lower rates specifically, Powell did note the importance of Fed independence.
“FOMC members will make these decisions, based solely on their assessment of the data and its implications for the economic outlook and the balance of risks. We will never deviate from that approach,” he said.
The speech comes amid ongoing negotiations between the White House and its global trading partners, a situation often in flux and without clarity on where it will end. Recent indicators show consumer prices gradually pushing higher but wholesale costs up more rapidly.
From the Trump administration’s view, the tariffs will not cause lasting inflation, thus warranting rate cuts. Powell’s position in the speech was that a range of outcomes is possible, with a “reasonable base case” being that the tariff impacts will be “short lived — a one-time shift in the price level” that likely would not be cause for holding rates higher. However, he said nothing is certain at this point.
“It will continue to take time for tariff increases to work their way through supply chains and distribution networks,” Powell said. “Moreover, tariff rates continue to evolve, potentially prolonging the adjustment process.”
In addition to summarizing the current conditions and potential outcomes, the speech touched on the Fed’s five-year review of its policy framework. The review resulted in several notable changes from when the central bank last performed the task in 2020.
At that time, in the midst of the Covid pandemic, the Fed switched to a “flexible average inflation targeting” regime that effectively would allow inflation to run higher than the central bank’s 2% goal coming after a prolonged period of holding below that level. The upshot is that policymakers could be patient with slightly higher inflation if it meant insuring a more comprehensive labor market recovery.
However, shortly after adopting the strategy, inflation began to climb, ultimately hitting 40-year highs, while policymakers largely dismissed the rise as “transitory” and not needing rate hikes. Powell noted the damaging impacts from the inflation and the lessons learned.
“As it turned out, the idea of an intentional, moderate inflation overshoot had proved irrelevant. There was nothing intentional or moderate about the inflation that arrived a few months after we announced our 2020 changes to the consensus statement, as I acknowledged publicly in 2021,” Powell said. “The past five years have been a painful reminder of the hardship that high inflation imposes, especially on those least able to meet the higher costs of necessities.”
Also during the review, the Fed reaffirmed its commitment to its 2% inflation target. There have been critics on both sides of the issue, with some suggesting the rate is too high and can lead to a weaker dollar, while others seeing a need for the central bank to be flexible.
“We believe that our commitment to this target is a key factor helping keep longer-term inflation expectations well anchored,” Powell said.

Alright, the week ended with a bang but it wasn't such a great week prior to today.

Powell confirmed the Fed will in all likelihood cut rates in September.

I said so last week when I covered top funds' activity in Q2, I expect a "one and done" rate cut in September.

The thing Fed officials are grappling with now is the lagged effects of tariffs on inflation.

Specifically, there were major inventory buildups as tariffs were announced but as those inventories wear off, producers will have to pass on the tariffs to consumers or eat them and suffer margin compression (ie. less profits).

But the US economy is definitely slowing, Powell is right to highlight the Fed's dual mandate and employment conditions certainly warrant a rate cut next month (fed funds rate is restrictive).

Alright, let me move straight to the stock market action this week in US markets.

As shown below, Energy, Real Estate, Financials and Materials were the top performing sectors this week (data from barchart):

And here are the top performing US large and mid cap stocks this week (data from barchart):

And here are the worst performing US large and mid cap stocks this week (data from barchart):

A lot of the high flyers like Palantir got clobbered this week.

Among the mid cap, shares of Viking Therapeutics (VKTX) were down more than 40% Tuesday after their phase 2 trial showed a high dropout rate relative to placebo control group.

I'm not going to bore you with the details but the data also showed extremely impressive weight loss results in just 12 weeks where larger competitors take much longer to show same results.

The trial design was too aggressive, the dropout rate was 28% vs 20% for placebo group (which is high) and it was in the highest dose subgroup.

In my opinion, this is THE biotech dip of the year to buy and there's no question in my mind that Pfizer is going to snap this company up (or some other big pharma).

I would invite you to read this post on X from Hataf Capital:

Viking Therapeutics Just Got a Reality Check

I’ve followed Viking Therapeutics $VKTX long enough to know one thing: when Wall Street builds up a biotech story, reality almost always comes crashing down harder than expected. That’s exactly what happened this week when Viking… pic.twitter.com/ZQeAokx99Y
— Hataf Capital (@hataf_capital) August 19, 2025

I also suggest you look at the top institutional holders of Viking shares here.

As I explained last week, I've been trading biotech long enough to know how Wall Street works, they manipulate these shares.

In my humble opinion, the dip in Viking Therapeutics shares this week was not warranted, the data was a lot better than what investors interpreted and this presents a great buying opportunity at these levels:

[Full disclosure: Viking is my biggest biotech position by far and I will ride it out no matter what.]

Alright, let me wrap it up there.

Below,Ryan Detrick, Carson Group chief market strategist, joins 'The Exchange' to discuss the market rally, Fed Chair Powell's speech and the bond market.

Also, Tom Lee, Fundstrat head of research and chief investment officer of Fundstrat Capital, joins CNBC's 'Squawk on the Street' to discuss his reaction to Fed Chair Powell's speech at Jackson Hole, market expectations, and much more.

Third, Jeremy Siegel, WisdomTree chief economist and Wharton professor emeritus, joins 'Closing Bell' to discuss the emphatic nature of the market response to Powell's Jackson Hole comments, the argument the Fed should cut rates and much more.

Fourth, Aswath Damodaran, NYU professor of finance, joins 'Power Lunch' to discuss if valuations of gotten out of control, if the markets overreacting to the latest Fed news and much more.

Fifth, Warren Pies, 3Fourteen Research co-founder, joins 'Closing Bell' to discuss the market's reaction to the Powell's Jackson Hole comments, if there's downside risk to the macroeconomy and much more.

Lastly, The CNBC Investment committee debate the "Post-Powell Playbook" following Fed Chair Jerome Powell's speech in Jackson Hole.