Conversation for March 30, 2022

Conversation for March 30, 2022

Global growth in private capital

Earlier this year, Prequin forecasted that global private debt AUM will double to USD$2.69 trillion by 2026, following a decade of growth averaging 13.5%.

Global asset management strategy consultant Casey Quirk, a Deloitte business, expects that retail assets under management in the alternatives market will grow 8.5% in the next few years, compared to 4.7% for institutions. Importantly, retail holdings of private credit products are predicted to jump 12.9% by 2025.

The Financial Times elaborated on the topic last week:

   

"Asset managers are going after [the private market] space because their investors are asking for it,” said Ju-Hon Kwek, head of asset management consulting at McKinsey. “Investors are fighting for allocations to high-quality private market strategies. Everyone wants more.”

"Fund companies are concentrating on private lending, real estate, infrastructure and stakes in private companies, all areas where institutional clients have been increasing allocations in recent years."

Financial Times, March 25, 2022

Blackstone Group has recently been discussing the same theme:

 

“The retail channel is dramatically under-allocated to alternatives... it’s sort of… where do you put your money? Where you think its safe and where you’re playing the trends? That’s what we’re doing and we’re doing it all over the world. I think this is an enduring kind of trend... We’ve taken the approach of bringing our institutional quality products to the retail market.”

Steve Schwartzman, CEO, Blackstone Group, 2021-Q4 Earnings Q&A

 

The Tax Advantages of Flow-Through Investing

Flow-through investing remains one of the most effective tax reduction strategies available to Canadians.

The cost of flow-through limited partnerships is 100% tax-deductible in the year they are purchased, the proceeds from the disposition of the partnership are taxable as capital gains, and investing in flow-through shares effectively converts income into capital gains, so investors can take advantage of any capital loss carry-forwards they have. All good things.

The Ninepoint Team!