Video transcript
When you're putting together multiple streams of returns that are very different from each other, investors can gain access to alternatives, but do it in a more stable and less volatile way.
Why do you believe we've seen greater interest in alternative investments over the last few years?
Over the last several decades, we've seen growing involvement in alternative assets from institutional investors globally, from the likes of pension funds to endowments to insurance companies as well. Notably, Canadian pension funds have been very involved in alternative assets. And these investors have typically wanted to allocate to those asset classes for a few reasons. One of them was to obtain exposure to return streams that offer stable and reliable returns over the long run, but which are relatively uncorrelated to the other asset classes that they own, namely equities and fixed income.
This really came to light in 2022 when both equities and fixed income struggled at the same time amidst an inflationary shock. While this is a relatively rare occurrence, for example, this coordinated fall in both bonds and equities happened in only five of 125 years since 1900, yet it really highlighted the need for portfolio resiliency. And this kind of resiliency can be built by obtaining exposure to alternative assets and strategies, and that's a key reason, which in my opinion explains the growing interest in alternatives from retail investors.
What are the underlying funds in the IA Clarington Multi-Strategy Alternative Pool?
So there are six underlying funds that are part of the pool. The largest one, which covers about a quarter of the pool, is our own iA Global Asset Management, Global Macro Advantage Fund, which is managed by ourselves. There's also the Picton Mahoney Fortified Market Neutral Alternative Fund, which is essentially an equity market neutral strategy managed by Picton Mahoney, which is a Toronto-based alternative asset manager with a long track record of managing these kinds of strategies. Picton Mahoney also manages another portion of the pool, which is the Fortified Income Alternative Fund, which is a long-short credit strategy focusing on the high-yield segment of the bond market. And in the long-short credit space, we also included another investment-grade-focused strategy, which this time is managed by RPIA, which is the RP Alternative Global Bond Fund.
Finally, there are two private asset strategies, which together comprise anywhere from zero to 8% of the fund. The first one is the Partners Group Holdings Partners Fund, which invests in private equity, infrastructure, real estate, and private debt. Partners Group Holdings AG is a Swiss private asset manager with a long track record of managing alternative and private assets going back to 1996. Some people call them the Blackstone of Europe. And the second one is the Blue Owl Credit Income Trust, which is a private debt fund. Blue Owl is one of the leaders in the fast-growing private credit space.
Why should investors consider this fund?
I think the multi-strategy nature of the pool makes it very interesting and attractive to investors. When you're putting together multiple streams of returns that are very different from each other, investors can gain access to alternatives, but do it in a more stable and less volatile way. When each strategy experiences its peaks and valleys at different times, this can smooth the ride for investors. That's essentially the theory behind multi-strategy funds.
Recorded on February 3, 2025. For definitions of technical terms, please visit iaclarington.com/glossary and speak with your investment advisor.
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