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Invest Well. Live Well: Can investors achieve returns of five to eight per cent? – Kamloops This Week

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As economies worldwide attempt to recover from the COVID-19 crisis, many investors may feel unsure of what to do. At the time of writing, a 10-year Government of Canada bond yields only 0.3% and interest rates are near 0%.

Given this, where can investors turn and what are some strategies to consider? One opportunity is private debt (PD), can potentially yield 5-8%.

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What is private debt?

Regulatory changes have forced banks to scale back their lending, creating a void and an opportunity for other lenders to attain attractive returns. Private debts are privately negotiated loans to companies or individuals with a comprehensive set of covenants (terms and conditions) that typically have penalties and remedies should non-compliance occur.

Benefits of private debt

1. Lenders tend to rely on a variety of risk controls through covenants, collateral and a direct relationship with the borrower. Often, frequent detailed and timely reporting is required to monitor performance. Lower default rates historically due to strong covenants and other safeguards.

2. A higher yield than offered by similarly rated public debt to compensate for illiquidity.

3. Most private debts are not priced daily, which can result in lower correlation and volatility compared to stocks and bonds as it does not zigzag at the same time.

4. Most loans are between one and three years and do not carry as much interest rate risk when compared to a traditional bond fund ,which is closer to seven years’ duration.

5. Many investors believe private debt is represented by distressed debt and high yield bonds which are relatively risky when compared to public investment grade bonds. However, in 2016, the American Society of Actuaries concluded that PD exhibits lower losses than public bonds.

Risks of private debt

1. Loans tend to be illiquid as they do not trade daily. Redeeming investors often have to wait between three and 12 months to get their capital back. In times where liquidity is reduced, investments may trade at a significant discount as fewer buyers may exist.

2. Despite the fact most PD loans have security or collateral, these investments are not 100% guaranteed and there can be a wide variance in risk between strategies. Some of the key variables to consider are the 5Cs of credit: character (credit history/bureau), capacity (ability to repay), capital (down payment), collateral (property, inventory, equipment, etc.) and conditions (rates, terms, etc.).

3. There can be a lack of transparency because these companies may not list on exchanges and they are not regulated in the same way and not required to publicly disclose all their business dealings.

4. Because there is wide dispersion between the risk and returns of each strategy, it is best to work with an experienced firm that has been through various economic cycles and has boots on the ground.

Who invests in private debt?

Although mostly an institutional investor base (pension funds, foundations, insurance companies and endowments), new structures are providing greater access to retail investors. These types of investments are typically available to accredited investors that need to meet a certain level of income, net worth or investable assets. We consider private debt an alternative to income or bond strategies.

We believe private debt with yields between 5% and 8% have many benefits, as well as considerable risks, but overall is under-utilized. Carefully selected PD can enhance diversification and smooth returns. Because many investors prefer liquidity, we encourage other parts of their portfolio remain accessible.

We encourage investors to consult an experienced team that specializes in the alternative and private debt space.

Until next time, Invest Well. Live Well.

Written by Eric Davis. This document was prepared by Eric Davis, vice-president, portfolio manager and investment advisor, and Keith Davis, investment advisor, for informational purposes only and is subject to change. The contents of this document are not endorsed by TD Wealth Private Investment Advice, a division of TD Waterhouse Canada Inc.-Member of the Canadian Investor Protection Fund. All insurance products and services are offered by life licensed advisors of TD Waterhouse Insurance Services Inc., a member of TD Bank Group. For more information, call 250-314-5124 or email Keith.davis@td.com.

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Latest COVID-19 research investment supports knowledge exchange on social, cultural and economic impact of COVID-19 – Canada NewsWire

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Research funding will help equip public, private and not-for-profit organizations to respond to challenges posed by pandemic

OTTAWA, ON, Sept. 21, 2020 /CNW/ – As Canada continues to manage the impacts of the COVID-19 pandemic, supporting the work of Canadian researchers is key to building a healthy, more resilient and prosperous country. Working together with government, industry and not-for-profit organizations, researchers from across the social sciences and humanities can help provide data, insight and evidence to guide our actions in the months to come while we navigate postpandemic economic and social recovery.

Today, the Honourable Navdeep Bains, Minister of Innovation, Science and Industry, announced an investment of over $4 million in funding through the Social Sciences and Humanities Research Council‘s (SSHRC) Partnership Engage Grants, to support 172 projects and almost 600 researchers working with businesses and community partners from across Canada. These grants provide short-term and timely support for partnered research activities that will inform decision-making in the public, private or not-for-profit sector.

In response to the early phases of the pandemic crisis, the latest Partnership Engage Grants competition included a special call to address COVID-19 related research. Over $3 million of the investment announced today will directly support 139 projects addressing this call. Some of these projects funded will study changes in the teaching profession, the pandemic’s impact on small- and medium-sized enterprises, mental health among entrepreneurs, and impacts on seniors and their community support services.

Quotes

“The ongoing COVID-19 pandemic has posed unprecedented challenges around the world. While much of the focus to date has been on developing and testing effective countermeasures to control the spread of the virus, the work these researchers will be doing to examine the longer-term impacts of the pandemic on individuals, businesses and communities will better position Canada for a strong recovery.” 
—The Honourable Navdeep Bains, Minister of Innovation, Science and Industry

“SSHRC’s investment in these diverse partnered research projects will advance critical knowledge needed to address the impacts of COVID-19 and the social, cultural and economic challenges facing citizens, communities and businesses in Canada and around the world.”
Ted Hewitt, President, Social Sciences and Humanities Research Council

Quick facts

  • SSHRC’s Partnership Engage Grants provide short-term and timely support for partnered research activities that will inform decision making at a partner organization from the public, private or not-for-profit sector.
  • The Partnership Engage Grants COVID-19 Special Initiative provides researchers and their partners a unique opportunity to foster knowledge exchange on COVID-19 crisis-related issues, challenges and impacts. It offers a unique opportunity to exchange knowledge between postsecondary researchers and different sectors of society, including graduate students, postdoctoral researchers and other highly qualified personnel.
  • The Partnership Engage Grants COVID-19 Special Initiative call is ongoing. Recipients of the September-deadline applications will be announced soon.
  • The application intake for this first ever COVID-19 Special Initiative competition exceeded expectations. To ensure an appropriate response to this demand, SSHRC reallocated just over $3 million more to this initiative. This additional funding brings the total amount for the June and upcoming September competitions to almost $5 million.

Associated links

Follow SSHRC on social media: Twitter, Instagram, Facebook

Follow @CDNScience on social media: Twitter, Instagram, Facebook

SOURCE Social Sciences and Humanities Research Council of Canada

For further information: John Power, Press Secretary, Office of the Minister of Innovation, Science and Industry, 343-550-1456, [email protected]; Media Relations, Innovation, Science and Economic Development Canada, 343-291-1777, [email protected]; Media Relations, Social Sciences and Humanities Research Council, 343-549-6141, [email protected]

Related Links

http://www.sshrc-crsh.gc.ca/

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CI Financial buying U.S. investment adviser Bowling Portfolio Management – Vancouver Courier

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TORONTO — CI Financial Corp. says it has signed a deal to acquire U.S. investment adviser Bowling Portfolio Management LLC.

The firm based in Cincinnati has US$450 million in assets under management.

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Financial terms of the transaction were not disclosed.

Bowling provides financial planning and investment management services to high-net-worth clients.

CI has been expanding its operations in the U.S. this year in a series of acquisitions.

It says when all pending transactions close, it will hold interests in wealth management firms across the U.S. with combined assets of approximately US$11.5 billion.

This report by The Canadian Press was first published Sept. 21, 2020.

Companies in this story: (TSX:CIX)

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CI Financial buying U.S. investment adviser Bowling Portfolio Management – Prince George Citizen

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TORONTO — CI Financial Corp. says it has signed a deal to acquire U.S. investment adviser Bowling Portfolio Management LLC.

The firm based in Cincinnati has US$450 million in assets under management.

article continues below

Financial terms of the transaction were not disclosed.

Bowling provides financial planning and investment management services to high-net-worth clients.

CI has been expanding its operations in the U.S. this year in a series of acquisitions.

It says when all pending transactions close, it will hold interests in wealth management firms across the U.S. with combined assets of approximately US$11.5 billion.

This report by The Canadian Press was first published Sept. 21, 2020.

Companies in this story: (TSX:CIX)

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