Mackenzie launches new fund as it seeks to 'democratize access to alternative investments'
Following the success of its first collaboration with Northleaf Capital Partners earlier this year, Mackenzie Investments is launching its second fund – the Mackenzie Northleaf Private Infrastructure Fund – today.
“We’re on a mission to democratize access to alternative investments at Mackenzie,” Michael Schnitman, Mackenzie’s Senior Vice-president and Head of Alternative Investments, told Wealth Professional just before the launch.
He’s pleased with the partnership that Mackenzie formed with Northleaf a year ago. It has infrastructure, private equity, and private credit programs and $17 billion in capital invested in the world’s leading pensions. It’s made 45 infrastructure investments in private infrastructure in the last decade, and it invests in infrastructure across Organisation for Economic Co-operation and Development (OCED) countries’ mid-market companies. Its strategy is also segmented into core and super core infrastructure, meaning low risk, stable assets in OECD countries with consistent returns.
Schnitman said that, since they launched their first fund – the Mackenzie Northleaf Private Credit Fund – in March, “we’ve got excellent traction with significant numbers of advisors infusing it in their clients’ portfolios.”
This new fund aims to achieve long-term capital appreciation and income generation primarily through investing in conservative infrastructure projects, such as wind farms, fibre-networks, and toll roads in OECD countries. Public investments will represent about 25% of the fund’s net asset value.
“We have the broadest suite of capabilities across the spectrum of alternative assets, alternative strategies, and direct private markets investments and launching a private infrastructure fund is a natural extension to that,” said Schnitman. “Institutional investors have benefited from access to true infrastructure projects and infrastructure access for decades, and retail investors haven’t had those benefits.”
Schnitman added that as pensions have shifted from defined benefit (DB) to defined contribution (DC), more participants in DC plans don’t have access to infrastructure investments, even though they were a fundamental component of the overall asset allocation for the DB plans that they used to have.
“Our goal is to provide access to infrastructure to all accredited investors,” he said. “That’s why we’re offering it in a $25,000 minimum with monthly subscriptions, annual redemptions, and no hard lockup. The vast majority of the funds will be in actual infrastructure, investments in things like sustainable infrastructure, communications infrastructure, and tank storage. There’ll be attractive expected total return that will, over time, be made up of roughly half capital appreciation and half yield.”
This is Mackenzie’s eighth fund offering in the alternative space since it launched the first offered the first such fund to retail investors in May 2018. Schnitman said it plans to continue to further broaden its product line-up in the private markets in partnership with Northleaf in 2022.
“There are significant diversification benefits to private infrastructure. It is a very attractive way for individual investors to diversify their portfolios, and it has a very low correlation to global bonds and equities,” said Schnitman. “With those features, as well as the attractive expected total return, this is a product that every investor should have some piece of in his or her overall portfolio.”