Private credit, real assets growing amid public market volatility: Strategist
Mackenzie Investments Corp. launched a new fund that aims to attract Canadian retail investors to private credit assets by allowing an initial stake as small as $5,000.
The fund allows individuals to invest in loans to mid-market private companies through a private credit fund managed by Northleaf Capital Partners Ltd.
Private credit funds have grown rapidly in recent years amid a hunt for higher yields and will probably surpass real estate by next year to become the second-largest private capital asset class, according to research firm Preqin Ltd. But the funds have mostly been the preserve of institutional investors and wealthy individuals, who must typically accept long lockup periods as their money is tied up in direct loans to companies.
The new Mackenzie product doesn’t give retail investors the unrestricted right to withdraw money, but it does allow for quarterly redemptions up to a maximum of five per cent of the fund’s assets -- a structure known as an interval fund. It will incorporate some fixed-income exchange-traded funds to help liquidity, the firm said in a statement.
“The most important thing is that an interval fund enables all retail investors to access private markets,” Michael Schnitman, Mackenzie’s head of alternative investments, said in an interview. The fund will generate a yield between five per cent and seven per cent over time and will be open for investment at the end of the month, he said.
Winnipeg, Manitoba-based IGM Financial Inc. owns Mackenzie and has a majority stake in Northleaf. IGM managed and advised $277 billion in assets as of Dec. 31