'I always get the same question – why don’t we own more of that?' – Portfolio Manager
With volatility and uncertainty permeating US stock markets, investors and advisors have been shifting their portfolios to find shelter from the impacts of US President Donald Trump’s unpredictable global tariff policies.
Music royalties have provided Rob Tetrault and his clients with a bulwark against volatility for a decade, and the asset’s defensive qualities have only grown in value since the start of 2025. He says the asset has provided annual double digit returns and has never seen a negative month with the asset.
While alternatives are becoming increasingly attractive to provide insurance against today’s volatile stock markets, Tetrault says he has always had an aversion to allocating his clients’ money into unpredictable markets. He says he keeps a close eye on the activities of institutional investors, and noticed their gradual shift away from stock markets and the volatility associated with them. After researching the asset, Tetrault says he became the first Canadian retail advisor to invest into the popular music royalties group ICM Asset Management.
Outside of music royalties, Tetrault also finds value in farmland, infrastructure and even sports teams to stay diversified from the publicly traded market. He says weighting in alternatives ranges from 20 to 50 per cent depending on the client, while music royalties usually range from two to five per cent.
“The bigger argument about alternative asset classes to me is a no brainer,” said Tetrault, senior portfolio manager at the Tetrault Wealth Advisory Group with CG Wealth Management. “Most of our clients are up this year, in a year where the stock market is down quite a bit. So our clients have performed well, not just because of music royalties – it’s a small piece of our portfolio. But the bigger picture is alternative assets as a whole, and how they fit into our portfolios.”
Unlike alternatives like real estate, music royalties assets are largely shielded from external pressures such as market crashes or interest rate changes. Tetrault even suggests there can be a reverse correlation between stock markets and music royalties, as poor markets could influence users to stream more during market downturns.
“There's no correlation between streaming revenues on a music catalogue and the stock market returns,” he said. “In fact, maybe there’s a reverse correlation when the stock markets are down. Because people arguably listen to more music at home and go out less, and maybe there's more streaming revenue.”
A bullish feature of the asset is its potential for growth, according to Tetrault. He points to the amount of music streamed through technological advancements – whether it be at a hockey game, in a commuter’s car or while watching a movie – and suggests streaming will only continue to grow into the future as streaming technology becomes even more integrated into our daily lives.
“In addition to all the other arguments – uncorrelated assets, nice cash flow, low volatility, consistent distribution – they also have the advantage of being in a growing market,” he said. “I'll never forget the time when the light bulb went off in my head 10 years ago. My kids were watching something on one device, listening to a song on another device and my peloton was playing another song. I started thinking of all the ways that we are streaming music now.”
According to Tetrault, clients have given rave reviews of the asset since he entered the music royalty space – so much so that he often has to temper their desires to increase the asset’s weighting in their portfolios. He says some risks can be present when an artist gets “cancelled” or a catalogue loses its long-term popularity, while regulatory changes are also a concern that must be worked around.
“I always get the same question – ‘why don't we own more of that?’” he said. “There are risks. I don't want 100 per cent of my assets in this. But our clients absolutely love it. Imagine if you made 11 per cent over the last decade with zero volatility. Wouldn't you be happy?”
While investing in music royalties can provide some security in today’s volatile markets, Tetrault explains that backing the right catalogue makes all the difference in the asset’s performance. He emphasizes diversity within music royalty shares, saying the investment firm he works with stays away from “A-list” artists, preferring artists and songs that remain popular for long periods of time, but still at a reasonable rate.
“The fund manager that we work with, they don't buy the sexy stuff,” he said. “They buy stuff that's been out for five years is still being streamed and is going to stay popular for a while. They might not get billions of views, but are getting maybe hundreds of thousands of streams.”
For retirement age clients, Tetrault says the asset can provide steady income. But he does warn that accessing liquidity can be a challenge with music royalties, describing the process of pulling clients’ money out as “clunky.” He says it usually takes 30 to 90 days to access liquidity, meaning he determines allocation of the asset by his clients’ immediate liquidity needs.
“They're not illiquid, you just have to wait a little bit,” he said. “If the liquidity needs are higher, then the allocation has to change.”
Outside of the financial benefits, Tetrault also enjoys the novelty of hearing his assets pay out in real time.
“There's something pretty powerful about owning a piece of a soundtrack of your life,” he said. “You could own that special song that you and your wife first danced to, and you get a revenue every time it was paid. That’s different than any other experience you can get in the investment world.”
