The Maple 8 are refocusing on liquidity risk and diversification as market regimes change
NEW YORK / July 6, 2026 / — Canada’s largest pension funds, the so-called Maple 8, have been recognized for their forward thinking and strong performance relative to many of their global peer institutions. Now, as market volatility and risk hit new highs, these same institutions are working through ways to navigate uncertainty.
Funds within the Maple 8 have been strong adopters of alternative investments and have pioneered new approaches to diversification – practices which are now replicated in many other institutional portfolios. But the ground is shifting. Higher interest rates and inflation along with unprecedented levels of global equity market concentration are impacting the risk/return profiles of many investments. Credit investments that were once thought of as diversifiers might not hold up as well in the current environment compared to a decade ago.
The challenge for forward thinking institutions now, is to identify what a strong portfolio looks like for the future taking into account the change in market regime as well as structural impacts to the global economy.
Refocusing on liquidity, scenario analysis
60% of respondents to Northern Trust’s recent 2026 Asset Owner Survey said they were refocusing on liquidity given higher interest rates and inflation. That’s also causing institutional investors to put a bigger emphasis on scenario analysis to ensure that their portfolio modeling assumptions will hold up as these conditions exist.
The Canadian Association of Pension Supervisory Authorities’ most recent set of risk management guidelines for Canadian allocators highlights the need for robust scenario analysis. The report says specifically that decision advantage will help the Maple 8 navigate the current market environment. Effective decision advantage is defined as combining robust scenario analysis with liquidity planning and analyzing their cross-asset exposures through that lens.
In April, CPP Investments offered a primer into how it thinks through liquidity management and diversification. CPPIB uses a total portfolio approach that has been refined over several decades and in its most recent paper on how to navigate the current regime in said this of liquidity risk – “when liquidity and risk are governed in silos, market stress can convert long-horizon assets into short-term liabilities.”
In the paper, CPPIB approaches liquidity management using a two pronged approach. “The ability to transact without excessive price impact (market liquidity) and the ability to meet cash obligations under stress (funding liquidity). The modeling framework simulates future liquidity across multiple horizons, incorporating margin requirements, debt maturities, capital calls, benefit payments, and rebalancing needs before stress materializes,” the paper says.
This gives the investment team the ability to understand portfolio resilience over several different time horizons. The investment team can also game out how the portfolio might react to abrupt market shocks like the ones we have seen in recent years including covid-19, the war in Ukraine, the Liberation Day tariffs, and most recently the conflict in Iran. The result is greater visibility into potentially latent correlations between asset classes as well as an improved understanding of what to expect during periods of market turbulence.
Private markets under the microscope
The Maple 8 have been significant investors in private markets for decades using a process many peer institutions outside of Canada have learned from and tried to emulate in their own portfolios. But we are starting to see headwinds emerge in some alternative asset classes.
In their explanation of the total portfolio approach, CPPIB explains that they take great pains to look beyond headline IRRs when assessing private markets dealflow and instead use their liquidity management framework to assess whether a deal or a fund makes sense. “Private investments consume scarce balance-sheet capacity, particularly liquidity. They reduce flexibility precisely when flexibility is most valuable. Required returns must therefore compensate not only for systematic risk but also for liquidity consumption and reduced optionality,” the paper says.
Meeting these conditions is harder to come by in asset classes like private equity and private credit which have had persistent challenges keeping up the rate of exits investors have grown accustomed to over the past few years. Investors are also finding some limits in what they can offload through the secondaries market. CPPIB and Caisse de Depot et Placement du Quebec decided to suspend a planned set of secondaries transactions after receiving a valuation on the stakes that amounted to a 50% discount. CPPIB has done other, subsequent stake sales at a higher valuation. Taken together, the data suggests that the secondaries market, while active, is still sensitive to asset quality and investors may find that this liquidity lever isn’t always the easiest one to pull when distributions are slow.
In its most recent annual performance report, CPPIB underlined that while the total portfolio approach has embedded a high level of resilience in the portfolio, as a result of changes in these asset classes valuations and benchmarking matter more than they have in the past and are playing a bigger role in scenario analysis and liquidity management.
All of these issues will be discussed in detail at the upcoming AIF Institute Canadian Investors Symposium held on July 9 in Montreal, QC. For more information on how to participate, please contact us.