BMO’s asset management arm plans to launch the BMO Carlyle Private Equity Strategies Fund around May. Towers of the TD Centre (left) and the Bank of Montreal, in Toronto, on Dec. 6, 2017.Fred Lum/The Globe and Mail
Bank of Montreal BMO-T is joining forces with Carlyle Group Inc. CG-Q to launch a fund targeting high net-worth clients, as part of a push to open up markets for privately-owned assets to a broader array of individual investors.
BMO’s asset management arm plans to launch the BMO Carlyle Private Equity Strategies Fund around May. The bank, which announced the partnership with the U.S.-based private equity giant on Friday, is pitching it as a way for individual investors to buy and sell a fund with exposure to an array of private equity investments that are typically long-term commitments, available exclusively to the largest institutions and the ultra-wealthy.
Where most traditional private equity funds lock up investor money for years, the BMO Carlyle one has no fixed end date and has monthly windows when investors can redeem at least some of their money, within limits. The fund also has a comparatively low minimum investment of $25,000.
When it launches, the BMO Carlyle fund will be a companion to one that BMO launched last year as a joint venture with Swiss-based private equity firm Partners Group AG. That fund, which opened last June, invests in a mix of infrastructure, real estate, private equity and private credit assets, and is marketed as a one-stop way to get broad exposure to private markets.
From June to Dec. 31 last year, the BMO Partners Group fund attracted $131-million from about 1,000 individual investors. Most often, those were investors with $1-million to $10-million in assets, though it has also attracted ultra-high net-worth investors and some mutual fund clients from BMO’s asset manager.
The BMO Carlyle fund, meanwhile, will offer exposure strictly to private equity, primarily through secondaries investments – stakes in a broad range of funds purchased at a discount from earlier fund investors – with some direct and co-investments in new private equity deals.
“You get access to institutional-quality private markets in a format that is you can buy when you want, sell if you need,” said Jeffrey Shell, head of alternative investments at BMO Global Asset Management, in an interview. “Our hope is that over time this becomes our next great success story alongside ETFs,” or exchange-traded funds.
The market for private assets has been exploding in size, with private capital under management in North America reaching US$7.7-trillion last year, including US$3.6-trillion in private equity, according to data from Preqin. Major private capital investors have been rushing to create investment products tailored to retail investors, seeking to tap into a vast source of wealth with the promise of higher returns compared with public stocks and bonds.
In joining forces with Carlyle, BMO is trading on the credentials of the private-equity heavyweight, with US$426-billion of assets under management, including US$66-billion through its Alpinvest division, which will manage the BMO Carlyle fund. In return, Carlyle gets quick access to the Canadian market through BMO’s established brand and large network of advisers to market the fund to clients.
The head of Carlyle Wealth Strategy, Shane Clifford, said in a statement that the partnership with BMO “is a significant milestone for Carlyle’s wealth business in Canada, as we continue to broaden our reach in the channel globally.”
The secondaries market for selling private equity stakes is booming, in part because many of the world’s largest institutional investors are trying to pare back their exposure to private equity to stay within target allocations. Private equity has also been going through a rough patch, as high interest rates put a chill on deal making, which makes it harder for private equity investors to sell portfolio companies and return cash to fund investors.
That creates an opportunity for secondaries specialists such as Carlyle’s Alpinvest, as major investors look to sell fund stakes at a discount to raise cash. And because private equity investors don’t want to crystallize losses from assets in their portfolios that may be struggling, “what they’re selling right now, and what’s clearing in the market, is the very best assets,” Mr. Shell said.
One of the challenges to attracting retail investors to private markets is convincing them they are truly getting access to those top-quality assets, which have historically been reserved for multibillion-dollar investors. Mr. Shell said BMO chose to work with Carlyle because of the rigorous way it assigns assets to its funds, and its experience at doing the work to make companies more valuable.
“They don’t say, ‘Okay, this is a great investment, it’s going to the largest institutions in the world. Whatever’s left over, we’re going to put into a retail vehicle.’ That’s not how they operate,” Mr. Shell said. “They have a fair process where all the best assets go in the places where they’re needed.”
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.
