CI Global Asset Management has released two private market products that use a fund-of-funds structure, joining the ranks of manufacturers rolling out alternative solutions.
The new open-ended private market growth and income funds will be offered to accredited investors through offering memorandums, with a minimum investment of US$25,000. The growth fund launched in February but until now was only available for investment by other CI GAM funds.
The CI Private Market Growth Fund is focused on private equity (30% tactical allocation), private credit (35%) venture capital (10%), private real estate (10%) and private infrastructure (5%), with a 10% liquidity sleeve invested in public equities and bonds.
The CI Private Market Income Fund is yield-focused, investing in private credit (50% tactical allocation), private real estate (10%), private infrastructure (15%), and private equity with the characteristics of preferred shares (15%), with a 10% liquidity sleeve invested in public credit and government bonds.
Marc-André Lewis, CI GAM’s chief investment officer, told Advisor.ca earlier this year that CI wanted to provide a one-stop solution that gives investors exposure across private market asset classes.
“It’s really us taking over the burden of doing the manager selection from the individual investors and offering a well-diversified portfolio,” he said.
Many asset managers believe the appeal of private markets has grown after the havoc wreaked on balanced portfolios of stocks and bonds last year. Manufacturers are pushing private markets as a diversification tool that can also provide enhanced returns and income.
In June, BMO Global Asset Management introduced a multi-asset-class private markets fund that was also intended to make private markets more accessible.
While BMO provides access to private equity, private credit, private real estate and private infrastructure in one fund, the CI GAM funds use an open architecture fund-of-funds structure.
The CI products are currently invested in funds from Adams Street Partners, Apollo Global Management, Avenue Capital Group, CBRE Investment Management, Demopolis Equity Partners, HarbourVest Partners and Whitehorse Liquidity Partners.
CI GAM said the open-architecture approach allows it to change allocations and add investment managers within the different classes to manage the portfolios.
After launching in February for investments by other CI GAM funds, the CI Private Markets Growth Fund had $420 million in assets under management as of July 31.
The funds allow quarterly redemptions of up to 5% of the fund’s assets, and there’s a 3% redemption fee within a three-year lockup period. The series F management fee is 0.80% for the growth fund and 0.65% for the income fund.
The CI GAM funds themselves don’t charge performance or incentive fees but the underlying funds may. Those expenses are in addition to the CI funds’ management fees and operating expenses.
CI said it now offers five private markets solutions, as well as liquid alternative funds that have about $3.7 billion in assets (as of July 31).
Horizons finalizes changes to asset-allocation funds
Horizons ETFs Management (Canada) Inc. has made a number of changes to its suite of total return index (TRI) asset-allocation ETFs, which now have new names, fees and objectives.
As of Aug. 25, the Horizons Conservative TRI ETF Portfolio is called the Horizons Conservative Asset Allocation ETF (TSX: HCON). The Horizons Balanced TRI ETF Portfolio is now the Horizons Balanced Asset Allocation ETF (TSX: HBAL) and the Horizons Growth TRI ETF Portfolio (HGRO) is now the Horizons All-Equity Asset Allocation ETF, with a new ticker (TSX: HEQT).
The funds, which have about $407 million in assets under management among them, also saw tweaks to their investment objectives and hedging strategies. Previously, the TRI funds used currency forwards to hedge non-Canadian-dollar currency exposure at all times. Now, HCON and HBAL may elect to hedge foreign currency exposure but only on fixed-income investments. HEQT won’t hedge its currency exposure.
Horizons also updated the ETFs’ fee structures, with management expense ratios for the three funds expected to rise to approximately 0.20%, plus trading expense ratios for each of approximately 0.02%.