March 14, 2024

New world, new investment approaches

As an innovative investment manager, we have developed “alternative” investment approaches that clients can integrate into a long-term portfolio strategy.

Alternative investments

Alternative investments refer to any investment strategy that does not take a conventional approach to investing in traditional equities or bonds. Each class of alternatives works to address some of the variety of challenges that investors face while providing diversification benefits within a portfolio and return opportunities. Real estate, private infrastructure, and private equity are the most common forms of alternatives. Others, including hedge funds, alternative income sources, and equity investments in emerging economies, are also gaining attention.

Alternative asset classes have been well-researched, their merits and value proven with institutional investors. Alternatives are commonplace in the portfolios of notable and sophisticated institutional pension funds, such as the Canada Pension Plan, the Ontario Teachers’ Pension Plan, and the British Columbia Investment Management Corporation.

The main barrier to alternative asset classes has been accessibility for individual investors, with minimum investment thresholds often beyond reach and no public exchange for buying and selling assets cost-effectively. With growing demand, we have embraced innovation, introducing several alternatives for potential inclusion in our clients’ portfolios where appropriate.

Our approach to alternative investments

At CC&L Private Capital, we have a long history of providing alternative investments to institutional investors. We have taken a leadership role in giving individual investors access to these asset classes without losing the pension-calibre approach. For over a decade, the challenges associated with balancing return and income objectives with risk have been at the forefront of our client conversations. During that time, we have expanded our investment platform to give our clients access to a broader range of alternatives while educating them on how they play into meeting their long-term objectives.

Real Estate: An asset class that provides stable income and return potential, although not commonly held by individual investors due to the value of most transactions and the difficulty associated with gaining significant diversification. At CC&L Private Capital, our real estate investments include over 235 commercial and residential properties across Canada. They give our clients access to a diversified source of portfolio growth and cash flow, with rent escalation clauses in lease agreements hedging inflation. Our real estate investments include office buildings, industrial manufacturing facilities, distribution warehouses, retail centres, and multi-unit residential properties – assets typically outside the reach of most individual investors.

Infrastructure: Traditional infrastructure and energy assets are a less familiar option for most high-net-worth investors, given the complexity and high cost associated with access to the asset class. Institutional investors, however, have proven the value of infrastructure investments. For investors who do not require their capital in the short term, infrastructure can be a relatively safe and low-risk way to generate income and long-term growth. Infrastructure investments have the added benefit of acting as a buffer from economic turbulence in an investment portfolio. At CC&L Private Capital, our infrastructure investments are primarily in Canada, the US, and Chile. We expect to add infrastructure assets in other geographies over time in a measured and disciplined way.

Our portfolio is focused mainly on small- and medium-sized traditional infrastructure projects (e.g., roads, rail, hospitals) and energy infrastructure projects (i.e., hydro, wind, and solar).

Private loans: Lending to private, middle-market companies is a way for investors to obtain stable interest payments secured by liens against corporate assets. While it is not a common asset class in Canada, it is often seen in other markets, such as the USA and Europe. Private loans also contribute to the diversity of a portfolio, providing an uncorrelated source of income. At CC&L Private Capital, we offer private loans to middle-market Canadian companies, typically in the range of $20 to $60 million.

Hedge strategies: The use of hedge strategies offers investors enhanced diversification in their portfolio by providing an uncorrelated source of return driven by analyst insights rather than by market-driven factors. At CC&L Private Capital, we use four distinct hedge strategies in our portfolio—Canadian small-cap equities, a range of Canadian and global bonds, and global equities—in a manner that can decrease a portfolio’s exposure to core bonds.

Private Equity: Providing capital in exchange for equity in private Canadian companies can be an excellent source of potential return for investors when coupled with the oversight of experts. At CC&L Private Capital, we utilize the investment management team at Banyan Capital Partners, part of the CC&L Financial Group. Banyan invests in companies with a historical track record of strong operations and consistent cash flow – working with owners and managers to drive efficiencies and spur growth.

Diversification

If you would like to find out more about our approach to alternatives investing or learn how we can help you grow your investment returns, please contact us.

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