Institutions cut Canadian stock exposure as global equities and alternatives gain traction
Canadian institutional investors are preparing to scale back their exposure to domestic equities, with capital expected to flow into global passive strategies and alternative assets over the coming years.
New findings from Crisil Coalition Greenwich’s latest Canadian Institutional Investors Study show that 25% of institutions intend to significantly reduce holdings in both active and passive Canadian equities. At the same time, none of the surveyed organizations plan to meaningfully boost allocations to passive domestic stocks, while just 8% anticipate a notable increase in active Canadian equity exposure.
A portion of the capital being withdrawn from Canadian equities will be redirected into traditional global markets. Around 30% of institutions indicated plans to substantially increase allocations to passive global equities, highlighting a clear shift in geographic focus.
“Many of the assets shifting out of Canadian equities will move to alternative asset classes,” says Crisil Coalition Greenwich Global Co-Head of Investment Management, Mark Buckley. “Private markets are making up a bigger part of institutional portfolios in Canada and around the world, and Canadian institutions are clearly committed to increasing exposure further in the next three years.”
Private markets are emerging as a key destination for institutional capital. Approximately one-third of respondents plan to significantly raise their exposure to private credit, while 36% expect to make major increases in private infrastructure equity. In both segments, fewer than 10% anticipate cutting allocations.
Private equity presents a more mixed outlook. While 38% of institutions are targeting substantial increases in allocations, roughly one-quarter are planning reductions, suggesting a more selective approach within the asset class.
As allocations shift toward higher-return alternatives, expectations for overall portfolio performance are also rising. The study found that Canadian institutions lifted their five-year return forecasts to 6.1% in 2025, up from 5.9% the previous year.
The growing reliance on private assets is also reshaping how institutions engage with asset managers. The inherent complexity and lower transparency of private markets are prompting calls for improved communication and reporting standards.
“Canadian institutions are calling on asset managers in private markets to report more frequently, communicate more clearly and otherwise increase transparency,” says Noam Cotton, Relationship Manager at Crisil Coalition Greenwich.
