Private capital may be the key to mitigating the volatility of public markets while achieving greater portfolio diversification
Investing in companies that are not publicly traded presents investors several key advantages. “In order to achieve greater multi-asset diversification, investors need to invest in more than just publicly traded securities,” says Bijal Patel, CFO and head of private capital at Nicola Wealth. “In fact, the number of listed companies on public exchanges has declined over the past two decades.”
Another advantage is that private company valuations are to a greater extent based on actual earnings versus outside factors that often influence public market valuations. And finally, private companies are less influenced by a shorter-term focus on quarterly earnings. Staying private often allows investment for long-term earnings generation and enhanced growth.
Historically, private markets were largely only accessible to institutional investors, such as pension funds, due to barriers such as high minimum investment thresholds, concentration of investments and lack of liquidity. But Nicola Wealth’s private capital funds offer a unique way for investors to participate in this hard to access market.
“We remove the barriers to entry, offering low thresholds to invest in individual pools,” Patel says. “We provide an evergreen structure, so investors get immediate diversification in all the existing investments within each fund, and we support liquidity needs if the clients’ asset allocations change in the future.”
Nicola Private Capital investment funds offer choices across a broad risk-return spectrum. “Our lowest risk offering is in our commercial mortgage fund, where clients can get exposure to a diversified source of cash flow generating loans secured by real estate,” Patel says. “Here, we focus on investments in multi-unit residential, industrial and office properties.”
Next, Infrastructure is where Nicola Wealth invests in companies and projects focused on renewables, transportation, utilities and commodities, providing investors with long-term attractive returns, low correlation to other asset classes, and inflation protection.
“Our Nicola Private Debt Fund focuses on lending to private middle-market companies through funds and direct lending,” Patel says. “This asset class provides access to a growing market, with historically strong risk-adjusted returns.”
Nicola Wealth also has two funds that focus on providing capital in exchange for equity to private companies.
“Our recently launched Nicola Venture Capital Fund participates in helping companies through the early growth stage,” Patel says. “Meanwhile, our Nicola Private Equity LP invests in more mature companies with positive cash flows, but still has ability for above market growth.”
“Part of the team’s strategy is pivoting to more direct deals as we grow,” he adds. “Historically, we invested in other manager’s funds, and now at over $2B in AUM, we have become large enough to internalize the sourcing and underwriting of our investments.”
Discover today how its team of expert private capital managers can identify the best investment opportunities for your investment needs.
This investment is intended for tax residents of Canada who are accredited investors. Residency restrictions apply. Please read the relevant documentation for additional details and important disclosure information, including terms of redemption and limited liquidity. All investments contain risk and may gain or lose value. Please speak to your Nicola Wealth advisor for advice based on your unique circumstances. Nicola Wealth is registered as a Portfolio Manager, Exempt Market Dealer and Investment Fund Manager with the required provincial securities commissions.
Created by BCBusiness in partnership with Nicola Wealth
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
