A Wealthsimple Trade app icon is shown on a smartphone.Jesse Johnston/The Canadian Press
Online investment manager Wealthsimple is now providing Canadian retail investors easier access to some of the largest venture capital firms in Silicon Valley that invest in health care and tech companies.
Through a partnership with Washington-based Accolade Partners, the company is launching the Wealthsimple Venture Fund I, a venture capital and growth equity fund that will be sold directly to retail investors. The fund will include firms such as Accel, Andreessen Horowitz and Kleiner Perkins – among some of Silicon Valley’s largest firms who put early bets on social-media platform Instagram, Airbnb and mobile payment provider Stripe.
The fund is one of the country’s first VC funds for retail investors, allowing for clients with as little as $5,000 to participate. Investors must lock in for the life of the fund, which the company estimates to be about 10 years. Funds can only be withdrawn in cases where it is legally required, such as death, divorce and bankruptcy.
Wealthsimple chief investment officer Ben Reeves said that it is an investment best suited for people who have a high degree of certainty that they won’t need to use their money for about 10 years.
Venture capital funds provide financing – typically raised through a group of institutional or ultra-high-net worth investors – to early-stage companies that have long-term growth potential. Traditionally, it is a market that has not been accessible to retail investors.
Mr. Reeves said opening up access to the VC market for retail investors has been on the company’s radar for “quite a long time.”
“We know that in private markets there are some really great investment opportunities as long as you provide access to the right funds and in the right structure – so for us it was just a matter of making sure we could provide the really good high-quality access,” Mr. Reeves said in an interview.
“Venture capital – and other private asset markets like private equity, credit and real estate – have been a core part of successful investors’ portfolios for years, but high account minimums, net worth requirements, and arcane paperwork have made these opportunities out of reach for most investors.”
The access Mr. Reeves was looking for was found in alternative asset manager Accolade, which specializes in technology and health care-focused venture capital and growth equity fund investments.
Clients will be able to invest in the fund through the company’s robo-adviser platform, Wealthsimple Invest. Contributions to the fund will be invested with multiple venture capital and growth equity managers, allocated primarily to technology and health care companies.
Mr. Reeves said the venture capital portion will be invested across the full venture lifecycle – seed stage, early stage and expansion stage. Growth equity capital will be invested in two types of firms: “founder-led, bootstrapped software companies” that are at or near profitability, and would need to increase their scale or to invest in sales and marketing, and “companies with strong business models in fragmented industries.”
Clients will have to speak with a registered portfolio manager to ensure the investment – particularly the longer investment timeline – is suitable to their financial goals.
“When we looked at our investors, a lot of them are really disciplined and long-term investors,” Mr. Reeves said.
Similar to other products on the Wealthsimple Invest platform, investors will pay a management fee of between 0.4 per cent to 0.5 per cent, plus the cost of the underlying security.
For the VC fund, those underlying costs include three layers of fees: a fund administration fee covering costs of about 0.2 per cent; incentive fees paid to Accolade of about 10 per cent; and fees paid to the underlying fund managers – the VC and private equity firms – which could include up to a 2-per-cent management fee and 20-per-cent incentive fee. Like most VC funds, incentive fees are only paid if returns exceed a certain threshold, and the fee only applies to returns, not the total investment amount.
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(Bloomberg) — BP Plc said it will look again at its investment plans in the UK after the government announced a £5 billion windfall tax on oil and gas profits.
The statement raises the possibility of reversal from the London-based company, which previously said its plan to invest £18 billion in the country wasn’t contingent on whether or not the government raised taxes. Offshore Energies UK, a lobby group, said the new levy would damage the oil and gas industry.
The UK government announced on Thursday that it will impose a 25% windfall tax on oil and gas companies, bowing to mounting pressure to support Britons facing a record squeeze on living standards. Chancellor of the Exchequer Rishi Sunak appeared to try to head off criticism that the measure was anti-business, including an 80% new-investment allowance that allows energy companies to reduce the amount they pay if they commit to capital expenditure.
“We know just how difficult things are for people across the UK right now and recognize the government’s need to take action,” BP said in an emailed statement. The tax changes will have a multiyear effect and “we will now need to look at the impact of both the new levy and the tax relief on our North Sea investment plans.”
Vanguard Group achieved “meaningful progress” in achieving net-zero carbon emissions by 2050 across its investment portfolios, according to its first progress report released on the money manager’s website Wednesday.
The report said progress has been made across both of its actively managed and index-based products as “companies embrace greater disclosure of climate risks and plans and set specific science-based risk mitigation targets.”
Specifically, Vanguard said that as of April 30, $290 billion, or 17% of Vanguard’s $1.7 trillion in actively managed assets under management, are invested “in a manner that aligns with achieving net-zero emissions by 2050 or sooner.” A portion of these assets is in actively managed ESG products with “net-zero commitments as part of the product design,” the firm noted.
These assets also include actively managed funds “without explicit ESG mandates that nonetheless align to net-zero objectives because of the existing philosophy and process used by the investment managers to maximize total returns for investors,” Vanguard added in the report.
Separately, Vanguard noted in the report that of its total $5 trillion in its equity index assets, $3.8 trillion is invested in companies with some form of emission reduction goals. Of that, $1 trillion is invested in companies with specific net-zero targets, a Vanguard spokeswoman confirmed.
“Our investment stewardship teams will continue to engage with our index fund portfolio companies about their commitments,” Vanguard added in the report.
The firm also said as it “continues to engage, introduce new products, and evolve our approach,” it expects the portion of assets managed in alignment with net-zero objectives to increase.
As a signatory to the Net Zero Asset Managers initiative, a group of 236 money managers pledging to support net-zero greenhouse gas emissions by 2050 or sooner, Vanguard also said it has “pledged to engage with companies, policymakers and other investment industry participants about the transition to net-zero, and to identify the proportion of assets to be managed in line with the attainment of net-zero greenhouse gas emissions by 2050 or sooner.”
However, “The Asset Managers Fueling Climate Chaos,” a report issued on April 20 by environmental campaigners led by Reclaim Finance, a non-governmental institution seeking to move the world’s largest financial institutions away from fossil fuels, said Vanguard was one of the world’s largest investors in fossil fuels. As of Nov. 30, of 30 large U.S. and European asset managers that it surveyed with combined holdings of $82.5 billion in companies involved in coal expansion, Vanguard and BlackRock together accounted for $60 billion of that amount.
BlackRock and Vanguard were also the two biggest investors in 12 major oil and gas companies, including Gazprom, Saudi Aramco, BP, Shell, TotalEnergies, Chevron and ExxonMobil, with total stocks and bonds held in those companies of $133.5 billion and $129.8 billion, respectively, as of March 31. The 30 managers had combined holdings of $468 billion in those 12 major oil and gas companies.
LONDON — Britain must pay for increased support to households in a way that does not deter investment, Cabinet Office minister Steve Barclay said on Thursday ahead of an expected announcement of new measures to cope with rising energy bills.
Facing intense political pressure to provide more support for billpayers coping with what opponents and campaigners have called a cost-of-living crisis, finance minister Rishi Sunak will give a statement to parliament setting out details of the government’s response.
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“In terms of paying for that, as we look at the balance between how much is done through debt, and how much is done through revenue raising, we need to do that in a way that doesn’t deter investment,” Barclay told Sky News.
Sunak’s announcement is expected to include a 10 billion pound ($12.6 billion) package of support, an energy industry source said, funded in part by a windfall tax on oil and gas producers companies.
Barclay said the government had decided to act after an announcement by the energy regulator earlier this week that a cap on gas and electricity bills was set to rise by another 40% in October.
“What we do recognize … is the government needs to have targeted support, particularly for those most affected by those higher bills,” Barclay told the BBC.
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Global gas prices soared last year when the reopening of world economies from pandemic lockdowns caused demand to return sharply and supply could not keep up. The war in Ukraine has pushed up prices further in 2022.
The government has previously said it is opposed to a windfall tax on energy suppliers because it would deter them from investing in new energy projects.
But that position has shifted as political pressure for action has mounted, with the highest inflation among G7 nations and rising bills pushing many household budgets to the limit.
Prime Minister Boris Johnson is also keen to move the conversation away from a damning report detailing a series of illegal lockdown parties at his Downing Street office.
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The opposition Labour Party has campaigned for a windfall tax on oil and gas companies to raise around 2 billion pounds ($2.5 billion), with opinion polls showing public support for such a move.
Asked about a windfall tax, Barclay said he disagreed with the Labour proposal, but declined to give any further details of the government’s new plan, saying it was for Sunak to set out the package to parliament later.
Sunak is expected to speak around 1115 GMT.
INFLATION RISK
Inflation reached a 40-year peak of 9% in April and is projected to rise further, while government forecasts last month showed living standards were set to see their biggest fall since records began in the late 1950s.
In February, the government announced a 9 billion pound support package, including a targeted tax rebate worth 150 pounds per year for 80% of households in England and a 200 pound discount on electricity bills, repayable over five years.
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Media reports said that discount could be increased in Sunak’s package, and the need to repay it dropped.
The Institute for Fiscal Studies (IFS) economic think tank said any support needed to be aimed at the poorest households, warning that a universal giveaway, including for those who did not need the extra cash, could fuel inflation.
“We do need to be careful,” IFS director Paul Johnson told BBC radio. “Putting … tens of billions into the economy at a time of high inflation could stoke additional demand and make the inflation much more permanent.” ($1 = 0.7963 pounds) (Reporting by Muvija M, writing by William James, editing by Hugh Lawson and Frank Jack Daniel)
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