CLMPC research has found that, along with enhanced capital commitments since the early 1990s, pension funds are broadening the scope of their investment activity. As in other countries (e.g., Australia, the United States), several of the largest funds have become especially attuned to non-venture private equity. At the moment, there is not enough data and analysis pertaining to the national middle market to confirm the meaning of these trends for financing established enterprises that are medium-sized or larger.

There is evidence of a gap, however, in the supply of mezzanine financing in Canada as compared to the United States - a concern considering this instrument's unique role in event-driven, middle market transacting. Pension funds may be in a good position to help fill this gap. Like life insurers and some of their counterparts south-of-the-border (see In Debt to Pension Funds), they may also be disposed to participating more in this market's supply of sizeable intermediate and long-term loans. In CLMPC interviews, several Canadian pension managers thought this plausible given shifts in the traditional make-up of fixed income assets.^{Endnote 78}

This said, a host of questions are without answers. Exactly what are supply trends relative to middle market demand in Canada? Are inordinate capital resources going to leveraged buyouts at the expense of other events and investment projects? Are restructurings getting their fair share? Is there a "crunch" in the provision of senior debt that hampers the modern development of medium-sized manufacturers and other traditional firms? How specialized are merchant banks? Are SMEs sufficiently aware of private placement options in the middle market? Are benefits being regionally-distributed? What role should pension funds play to address these and other market challenges? Such questions have been raised (and, to some extent, answered) in relation to the American middle market. Further research is needed to clarify these issues in a Canadian context.

The topic of pension funds in the middle market is further explored in Pension Barriers to Financing New Economy Investment.