Aug 28: BEST FROM THE BLOGOSPHERE

August 28, 2023

Private investing, common for institutions, is a mystery to individuals: IPSOS

A whopping 60 per cent of Canadians say they don’t know anything about private investments — common amongst institutional investors. And one in four surveyed think “they are missing out” on such investments.

A media release from B.C.-based Harbourfront Wealth Management shares the results of a poll it commissioned, which was carried out by IPSOS.

The private investments category, the release begins, accounts for “market capitalization double in size compared to the public market in various countries.” But despite “Canada’s large institutional involvement” with private investing, “and a track record of success in the space,” a “stark majority” of us have no knowledge of it whatsoever, the release continues.

Private investments “may include private lending, private equity, such as investing capital into companies that are not publicly traded, and private real estate, such as student housing, seniors living facilities, and infrastructure.”

Since this type of investing basically involves big institutional funds directly owning things, it hasn’t generally been something for individual investors to be able to take part it, the release says. But they do want in.

“Canadians need a broader toolkit, that includes private investments, to plan for their futures,” states Harbourfront’s Christine Tessier in the release. “The IPSOS study clearly demonstrates that among Canadians, a quarter feel their financial institution doesn’t give them access to all types of investment products. New technologies, combined with increased oversight, are changing the face of this industry,” she states.

The study found that 24 per cent of Canadians don’t feel they are getting full access to all investment products, and a further 27 per cent feel “they do not have access to every type of investment product they want.” Forty-two per cent, the release continues, say they would be willing to change financial institutions for such access, and 43 per cent would be willing to change advisors to do so.

The release cites the fact that the Ontario Teachers’ Pension Plan achieved a four per cent rate of return in 2022 in its private investments portfolio; the Canada Pension Plan Investment Board and Public Sector Pension (PSP) Investments are said to be investors in this space.

Harbourfront offers a range of pension-fund-like, “retail friendly” private investment products for individuals, the release concludes.

This is an interesting piece, because the fact that big pension funds and other institutions directly own things like office towers, airports, shopping malls, warehouses and the like is not well known. Private equity — where an institutional investors directly owns all or part of a non-trade private company — has also been around for years in the pension plan world. The Saskatchewan Pension Plan is also involved in private investments. As of Dec. 31, 2022, 18 per cent of SPP’s Balanced Fund was invested in infrastructure, 11 per cent in real estate, and 10 per cent in private debt. That means those of us who are members of SPP already have private investing at our fingertips! Check out SPP today!

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Canada Pension Plan Investment Board and Public Sector Pension, Christine Tessier, Harbourfront Wealth Management, Ipsos, PSP

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