Canadian fund managers

Mackenzie Investments

and Northleaf Capital Partners are extending their strategy of offering private assets to

retail investors

with a new product that aims to mimic a traditional growth and income portfolio.

The new fund will hold a mix of mid-market private assets, with about 60 per cent exposure to equity and 40 per cent to credit and infrastructure. It’s the fifth fund in a five-year partnership for the two Toronto-based companies.

Private asset managers are increasingly targeting sales to retail investors as regulations loosen. In the U.S., President Donald Trump recently signed an order making it easier for Americans to access

private equity

, real estate, cryptocurrency and other alternative assets in 401(k) accounts. Retail investors in the U.S. had access to almost US$450 billion of semiliquid funds as of June, according to a Morningstar analysis, a 77 per cent increase from 2022.

Adoption appears to be slower in Canada so far. “There’s been an information or knowledge gap, as the adviser community and their clients learn about private markets and what’s different about them,” said Allan Seychuk, senior investment director at Mackenzie.

Private markets have also seen rising risks, especially across private credit, with the implosion of auto lender Tricolor Holdings and car-parts supplier First Brands Group. JPMorgan Chase & Co. chief executive Jamie Dimon caused a stir when he talked about the appearance of cracks in the credit market: “When you see one cockroach, there are probably more.”

Seychuk said that the education provided to financial advisers can help them understand private markets’ operating model. There are “many avenues in high-quality portfolios to reduce and even eliminate the likelihood of those types of problems cropping up,” he said.

In 2020, Mackenzie and Great-West Lifeco Inc. together agreed to buy a non-controlling interest in Northleaf to expand private-markets products across their distribution channels.

The five Mackenzie and Northleaf funds now total over $600 million in net asset value. The products offer a liquidity mechanism, which includes an 80 per cent allocation to private assets and a 20 per cent liquid sleeve through exchange-traded funds to manage redemptions, generally capped at five per cent quarterly.

Northleaf has Canada Pension Plan Investment Board and Caisse de Depot et Placement du Quebec among its institutional clients. The firm has so far raised $30 billion in commitments.

Mackenzie, parent IGM Financial Inc. and Great-West are all controlled by Power Corp. of Canada, the financial holding company of Montreal’s Desmarais family.

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Bloomberg.com