About 15 years ago, Glenn Griffin, a retired graphic designer, started looking for investment opportunities beyond the traditional stock market, and during his search he came across a Toronto-based fund manager called Kensington Capital that looked perfect.
For decades, investing in private companies and private equity funds, which often offered outsized returns, had been limited to large institutional investors. But in 2009, Kensington established a fund with the explicit goal of making these opportunities available to the broader investing public.
Intrigued, Mr. Griffin and his wife, a retired technology executive, put some money in. For multiple years they marvelled at the gains. From 2012 to 2020, Kensington’s Private Equity Fund, which invests in companies across sectors such as manufacturing, health care and consumer products, delivered a 255-per-cent compounded return and never had a negative year. The S&P/TSX Composite Index, meanwhile, delivered a return of 191 per cent over the same period.
Lately, though, Mr. Griffin is angry about poor returns – the fund is down 11 per cent over the last three years, while the S&P/TSX Composite Index has soared 79 per cent – and Kensington’s request to rewrite its fund rules. The fund manager has halted investor redemptions since September and it is currently soliciting votes, due by March 23, to give Kensington enhanced discretion over halting redemptions. If approved, it could mean investors are locked into the fund for years.
Typically, institutional investors in private equity funds have their money locked in for at least five years. Kensington offered an evergreen fund that promised continuing redemptions, which gave investors the potential to cash out when they chose.
The prospect of having a $135,000 investment trapped for years has made Mr. Griffin realize he never fully appreciated the risks of investing in private, illiquid assets. “I never thought it was much more dangerous than public equity funds,” he said.
The situation is nuanced. While some investors are frustrated with the possibility that their money could be locked in for years, Kensington argues it might be the best thing for unitholders over the long term. That’s because if the company had to sell assets at fire sale prices in order to let some investors cash out, it could undermine the value of the fund to the detriment of clients who remain.
But the fight highlights the confusion that can arise when a broader range of investors are given access to private investments, and it has landed a particularly fraught moment. In February The Globe and Mail reported that Ontario’s securities regulator has faced pressure from Premier Doug Ford’s government to authorize a new class of mutual funds aimed at retail investors that can hold higher-risk private assets.
With its voting deadline approaching, Kensington is pitching its proposed rule changes as a measured way of balancing the needs of all its clients.
“Over the last four months, as we developed our proposal, we solicited feedback from our investors to ensure they understood the proposals and that they had the opportunity to provide feedback,” marketing director Rui Hu wrote in an e-mail to The Globe and Mail.
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Kensington has stressed that many private equity managers are having trouble selling assets. Since 2022, the fund wrote in a client memo, there has been the lack of liquidity across all private markets, “with IPO activity at generational lows alongside significant reductions in M&A transaction volumes through the past three years.” Because of this, funds have had more muted returns, and that has driven elevated redemption activity across private asset classes and created industrywide liquidity challenges.
Owing to this tough market, the value of Ontario Teachers’ Pension Plan’s private equity portfolio dropped 5.3 per cent in 2025, and its real estate portfolio lost 3.1 per cent.
Mr. Griffin, the investor, is the first to acknowledge that he should have done more homework. “I didn’t know all of the details and their terms, I must admit,” he said. His excitement “was all based on past performance.”
Mr. Griffin’s situation has played out at other Canadian funds that invest in private assets. In these cases, investor frustration is compounded by the fact that they can’t cash out, but are still required to pay management fees.
Acknowledging this frustration, Kensington told clients it would temporarily reduce its management fee by 10 basis points, or 0.1 per cent annually. The fund currently sells multiple classes of units, and before the redemption halt, its most expensive, the Class E units sold through financial advisers, cost 2.65 per cent annually – with one percentage point of that going to the adviser.
With the vote deadline looming, Mr. Griffin wishes there was a way for the fund to be wound down so that clients could get their money back as its investments are sold.
Kensington, meanwhile, is optimistic the vote will be approved. The fund is also stressing that private assets aren’t for everybody.
“Private equity is obviously not for all investors,” the fund manager wrote in an e-mail to The Globe. “As a general principle, any investor should be fully conscious of the risks associated with any investment or investment category they are considering entering. The more complex the investment, the more imperative it is for individual investors to possess that expertise and/or have the counsel of a qualified advisor who can highlight risks and opportunities.”
Kensington is also stressing that its fund shouldn’t be considered as a short-term hold. “As an investment class, private equity is a long-term investment, and it is not something that should be invested in if the investment capital is needed in the short-term.”
Mr. Griffin, though, has invested for over a decade, can’t get his money out, and has no sense of how long he’ll be trapped in the fund.