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ALTERNATIVE INVESTMENT UPDATE
A different approach to private equity A new fund aims to help retail investors access the benefits of private equity in a more traditional vehicle
Randy Cohen, who has researched private equity replication for more than two decades. It’s different from other private equity strategies, which involve investing in illiquid companies or buying equity in non-traded companies, holding it, making operational improvements and selling it later. “We’re not actually buying private companies,” Schnitman says. “We are buying publicly traded companies that have similar
“We are buying publicly traded companies that have similar characteristics to private companies” Proponents of private equity have long touted its benefits in portfolios, but it’s not always accessible to investors due to issues like high investment minimums and long lock-up periods. Mackenzie Investments’ latest mutual fund offering aims to replicate the characteristics, volatility and profile of private equity for the retail space. With the Mackenzie Private Equity Replication Fund, launched earlier this year, “we have created an 81-102 liquid alternative mutual fund which replicates the return and volatility profile in a daily liquid mutual fund,” says Michael Schnitman, SVP and head of alternative investments at Mackenzie. “We
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have databases which enable us to understand which industries US buyout firms are amplifying and emphasizing so we can replicate the industry allocation that private equity firms are getting into.” He adds that Mackenzie can also replicate return characteristics, as well as manage volatility profiles with a tail-risk hedging strategy, which enables a smoother volatility profile. “We look at the Cambridge Associates Private Equity Benchmark, and we approximate over time the return and volatility profile of that benchmark,” Schnitman says. The fund was developed in partnership with Harvard Business School professor
New VC fund aims to support next-gen technology
Boreal Ventures has launched as Quebec’s first venture capital fund dedicated to ‘deep tech’ companies. Created in partnership with Montreal-based incubator Centech, the fund has initial investment capital of $26 million, which will be used to support the development of science and engineering companies in the pre-seed and seed stages. The startups targeted by Boreal Ventures operate in applied science sectors, including artificial intelligence, medical technologies, Industry 4.0 and connected objects.
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characteristics to the private companies that private equity firms buy.” He notes that private equity has historically seen less downside than traditional securities during times of market stress and has even outperformed the public markets during challenging economic conditions. “To date, retail investors have had limited access to private equity risk/return opportunities,” he says. “We believe that through dedicated research and quantitative expertise, public markets can be leveraged to achieve similar returns and volatility levels to that of US private equity in a format that offers investors daily liquidity, high transparency and low investment minimums.”
CI GAM joins Canada’s Bitcoin ETF fray
Canada got its third Bitcoin ETF option in March as CI GAM launched the CI Galaxy Bitcoin ETF (BTCX) on the TSX, with units trading in both unhedged Canadian dollars (BTCX.B) and US dollars (BTCX.U). With a management fee of just 0.4%, CI GAM’s offering undercut the sticker price for Evolve’s EBIT, making it the new lowest-cost entry point for Bitcoin exposure via an ETF. BTCX’s portfolio consists of direct investments in Bitcoin, and its holdings are priced using the Bloomberg Galaxy Bitcoin Index.
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30/04/2021 4:39:01 AM