Toronto-based Purpose Investments has launched three private funds and an accompanying platform for advisors as manufacturers compete to bring private investments to retail investors.
Purpose has partnered with CAIS Group, a U.S.-based fintech, on a platform that offers information for advisors about alternative investment strategies, as well as fund diligence and monitoring services from Mercer.
The asset manager also launched three offering memorandum funds that will be available on the platform: the Purpose Pantheon Private Equity Fund, the Purpose Apollo Private Credit Fund and the Purpose Bluerock Private Real Estate Fund.
“There’s a large opportunity, in our view, to expand into private markets, where investors can see the benefits of diversification and uncorrelated returns over the past few years,” said Tyler Meyrick, head of corporate strategy and private assets at Purpose.
Assets in private investments grew tremendously during the low-rate environment of the past decade as investors sought yield outside of public securities. More recently, investors watched balanced portfolios sink over the last 18 months as stocks and bonds fell in tandem.
Managers are now looking for growth from the relatively untapped retail space, making the case that individual investors should be able to benefit from private markets the way institutional investors have for years.
Last year, Mackenzie Investments launched the Mackenzie Northleaf Private Credit Interval Fund, which allowed limited quarterly redemptions. Wealthsimple launched a private credit fund with Sagard last month.
The Purpose funds, which are available to accredited investors, use a similar structure that allows for limited quarterly redemptions (see descriptions below).
“They aren’t designed to be your liquid trading strategies,” Meyrick said. “But for life events or personal circumstance changes, there are opportunities to get your capital out.”
Private investment funds often have redemption limits, a practice commonly referred to as “gating.” Last year, Blackstone Inc. limited withdrawals from its flagship private REIT after redemption requests hit the fund’s pre-set limits, and private mortgage lender Romspen froze redemptions.
The Purpose funds accept investments daily (in the case of the real estate fund) or on the first of every month. Meyrick said this “evergreen” design makes them better suited to being used as core portfolio strategies than a vintage private fund that raises capital over a certain period and is then closed to new investors.
“It’s easier from an allocation perspective for advisors to use it as that cornerstone allocation of a certain percentage of their portfolio,” he said.
Meyrick said Purpose launched the private asset platform to accompany the funds after noting advisors’ “excitement and hesitation” about private assets. That’s why it was important to address some of the challenges with alternatives through transparency and educational tools.
The platform is free but advisors must register to use it.
About the funds
The Purpose Pantheon Private Equity Fund’s underlying fund is the AMG Pantheon Fund, which has a seven-year track record. The fund has a minimum investment of $5,000 and charges management fees of 2.7% for Class A and 1.7% for Class F.
The fund offers quarterly redemptions (with 40 days’ notice) up to 5% of the master fund’s assets. There may also be a 2% trading fee for redemptions in the first 12 months after purchasing.
The Purpose Apollo Private Credit Fund’s underlying fund is the Apollo Debt Solutions BDC, which launched in January 2022. The minimum investment is $2,500 and the management fees are 2.5% for Class A and 1.5% for Class F. There’s also a 12.5% incentive fee with a 5% hurdle on the master fund.
The credit fund offers quarterly redemptions (with 30 days’ notice) with the same restrictions as the equity fund.
The Purpose Bluerock Private Real Estate Fund’s underlying fund is the Bluerock Total Income+ Real Estate Fund, which has a 10-year track record investing in U.S. institutional private real estate assets.
The minimum investment is $5,000 and the management fees are 2.75% for Class A and 1.75% for Class F. The fund offers quarterly redemptions (with 50 days’ notice) with the same restrictions as the funds above.
With files from Greg Meckbach