Fiddich Review Centre
Alternative Investment

Canadian investors are ‘underserved’ in alternative investments and private capital

This is Globe Advisor’s weekly newsletter for professional financial advisors, published every Friday. If someone has forwarded this newsletter to you via e-mail, or you’re reading this on the web, you can register for Globe Advisor, then sign up for this newsletter and others on our newsletter sign-up page.

Blue Owl Capital Inc., a New York-based leading alternative asset manager and provider of capital to private markets, sees great opportunity for its Owl Rock Core Income Corp. (ORCIC) in Canada now that Canadians can invest in the direct lending income fund.

“It’s a massive market that has very little penetration” with alternative investments and private capital, says Sean Connor, managing director at Blue Owl Capital and president of Blue Owl Securities.

The firm had US$132.1-billion in assets under management at the end of September and has 10 offices around the globe.

He describes the Canadian market as “underserved,” which presents “a really unique opportunity to build a business.”

Globe Advisor spoke with Mr. Connor about how the company’s products are different from what’s already available to investors here and where they see the opportunity for growth.

Why did you decide to expand your business into Canada?

Canada is a top 10 economy with lots of savers who want their investments to provide income, which is the vast majority of our products.

In January, Blue Owl began allowing Canadian accredited investors, through their advisors, to buy the institutional share class (class I) in ORCIC and receive distributions from the income earned by the fund. These shares are eligible for registered accounts such as registered retirement savings plans or tax-free savings accounts.

What’s been the reception among Canadian investors so far?

There is some real appetite for the fund among Canadians and it has brought in more than $100-million in capital in six months.

There’s very little alternative investment adoption in the individual investor space as far as we can tell despite the fact some of the largest and most sophisticated institutional investors are in Canada.

Canadians are viewing [the fund] as the way we designed it, which is as a differentiator in your portfolio. It’s designed to be less volatile, have meaningful downside protection and generate high current income.

Blue Owl wants to fill the gap in alternative investment investing in Canada and sees investors wanting to learn more about these options, and that’s the long-term trend we’re excited about.

How should investors use ORCIC in their portfolios?

I equate it to the fixed-income portion of a portfolio. The first close of the fund was in March. There’s an option to buy into the fund monthly, but liquidity is limited to 5 per cent of the fund per quarter.

As of Sept. 30, the Canadian fund’s annualized distribution rate was 8.85 per cent, and it has a total year-to-date return of 2.12 per cent at a time when most fixed-income assets have fallen sharply. ORCIC invests in mainly mid-size U.S. companies with annual revenue of between US$50-million and US$2.5-billion. Credit investments are diversified by industry and region and have a maturity between three and 10 years.

Blue Owl also has real estate and general partner capital solutions divisions for institutional and private wealth clients that it would also like to bring to Canada in the future.

This interview has been edited and condensed.

– Gillian Livingston, special to The Globe and Mail.

Must-reads from Globe Advisor this week

How employees can benefit from exercising stock options in a down market

With stock markets on a steep slide this year, is this an opportunity for employees with in-the-money stock options to exercise them, pay less in taxes and reap the benefits in the future? Most of the time, employees exercise stock options when their company’s stock price is at a peak to benefit from the wider spread between the exercise price and the current fair market value of the shares. But when markets have fallen, there’s a way for stock option holders to gain from that dip in price, according to advisors. But each individual’s situation is unique. Gillian Livingston weighs the pros and cons of exercising stock options right now.

Big Three fast-food chains remain a bright spot for investors as the economy slides into a recession

The Big Three global fast-food chains emerged from the pandemic much stronger than when they entered it. They adapted to changing circumstances by closing outlets, slimming down menus and investing in technology to speed up online ordering and delivery. As the global economy slides into recession, they still remain a bright spot for investors. Price increases at quick-serve restaurants have less impact on consumers because the amounts spent are smaller than those typically spent at grocery stores, which makes it less noticeable. Adam Mayers looks at opportunities in this space.

Want to know which way markets are headed? There’s a popcorn index for that

Move over so-called hemline, Big Mac, Super Bowl and lipstick indexes. There’s a new oddball economic indicator coming to a portfolio near you – daily box office earnings. Should advisors and portfolio managers pass the popcorn – or take a hard pass? This one might be worth a look. According to a new University of Waterloo study, the amount of money U.S. theatregoers spend on tickets to see the latest flicks can predict stock market returns accurately in the short term. The study examined data from 1997 to 2019 and found box office earnings – an early sign of superfluous spending – could foretell if the S&P 500 index would dip or swing for up to five days. Kira Vermond reports on unusual economic indicators that are meant to explain where the market is headed, but some are more informative than others.

Four reasons why it’s time to revisit a will

For many clients, preparing a will is considered as unpleasant as a root canal. If they have finally managed to complete a will, they often tuck it into a safe drawer that’s opened rarely. But life happens, assets change, and what made sense five years ago may no longer now. Thus, having an updated will that reflects someone’s current life situation is just as important as having a will in the first place. A review of a client’s existing will is often part of the intake process for advisors. Even for advisors with longstanding clients, reviewing a will should be a customary part of their client service offering. Jessica Feldman Chittley of Bales Beall LLP breaks down four factors to consider when engaging in that review.

Also see:

How to prepare for health scares and protect financial well-being

PIMCO ETF makes history with move to open outcry pit

Four ways advisors can build an impactful online presence

Why Canada’s regulatory approach to crypto should ‘encourage’ investors

Shift from active to passive funds is accelerating, J.P. Morgan reports

What you and your clients need to know

Strategy eyes rebound potential among this year’s ‘dogs’

Some believe the top-performing equities of 2023 could be the “dogs,” or worst performers, of 2022. The belief is that they become oversold partially for tax purposes, and have the potential to bounce back the following year. Markets are down sharply this year, making for a large number of negative performers, unlike 2021. With the calendar year and tax-loss season approaching an end, Sean Pugliese and Allan Meyer of Wickham Investment Counsel take a closer look at this year’s dogs using their safety and value investment philosophy. Here’s what they found.

The lines between professional and personal are blurring – that can be a good thing

For those who shifted to working remotely, the pandemic has shredded the conceit that there are firm barriers between our personal and professional lives. It’s hard to maintain the mirage of a work-life divide when your toddler is yelling in the background of your Zoom call or your cat takes a mid-meeting stroll across your keyboard. And good riddance. A career is not just the work you do for a paycheque. It’s a constellation of the many roles people play throughout their lives. So, when we think about career satisfaction, Cindy Ho of University of Fraser Valley, looks at why we have to consider the whole person.

‘Tis the season to get creative with your charitable donations

If you go to a shopping mall over the next few weeks, take a look at five random strangers. There’s a strong probability that one of them will turn to charities for essential services in the next six months. A recent Ipsos poll reported that 22 per cent of Canadians expect to rely on charities for help over the next six months, and 20 per cent of Canadians plan to give less to charities this year than last. About 74 per cent of these folks who expect to donate less have cited the rising cost of living as a key reason. Tim Cestnick of Our Family Office Inc. shares some ideas that could make giving more meaningful this year.

– Globe Advisor Staff

Source link

Related posts

The $17 Trillion Market Opportunity You Can’t Afford to Miss

Mandy

MO Alternate Investment Advisors invests ₹225 cr in Asian Footwears

Mandy

Listed private equity firms target discounted investments as share prices fall

Mandy

Leave a Comment