Welcome to the first post in our new Conversations series, offering you insight into what’s trending at Ninepoint.
As you know, our entire reason for being in business is to give investors like you access to unique investment solutions that can help better diversify your portfolios. As you face a complex and changing investment environment, we strive to be the managers you trust to think outside the box in helping you to meet your investment goals.
Thanks to our innovative strategies in equities, real assets, and alternative income, we continue to enjoy very strong growth in our business. We reached a milestone $8.4 billion in total assets under management and advisement this month.
Our Ninepoint Energy Fund has successfully capitalized on the turnaround in oil, and today we are expanding our footprint in the Canadian energy sector with the launch of the Ninepoint Energy Income Fund, offering investors consistent income to complement their other income-producing holdings. Our Ninepoint Carbon Credit ETF launched in February as the first-of-its-kind alternative mutual fund in Canada. Learn more about the Carbon Credit investment opportunity here.
The combination of these three funds gives investors access to both sides of the multi-decade energy transition story which we’re seeing unfold now.
We have several other funds ready to go in the coming months, so stay tuned!
Our first-in-Canada launch of our Carbon Credit fund made us reflect on how, back in 2010, we launched Canada’s first private credit fund, the Sprott Private Credit LP. Now called the Ninepoint-TEC Private Credit Fund (NTEC), that strategy has seen no down years and has delivered an average annual net return of 10.6%.
The Ninepoint-TEC Private Credit Fund, with $1.36 billion in assets, is sub-advised by Third Eye Capital (TEC) whose entire private credit portfolio equals $3 billion in AUM. Over 50% of TEC's AUM is held by institutional investors. In February 2022, a Canadian Corporate pension manager allocated an additional $100 million to its institutional account with TEC, increasing the pension manager’s total allocation to the fund to over $300 million.
Ninepoint currently offers three private credit funds and one multi-manager alternative income fund (NAIF):
These funds currently represent $2.1 billion or 24% of Ninepoint’s total assets under management and advisement.
Alternative investments can be a confusing asset class, so we strive to offer ongoing investor education which you can explore here to help you make better-informed investment decisions.
What’s trending this week?
There have been some understandable concerns around private debt in the marketplace recently, and these concerns have had some impact on the Ninepoint-TEC Private Credit Fund (NTEC). When redemption requests exceeded 5%, we made the decision in early February to extend redemption payments by an additional four to six months, an option available to us as detailed in our fund offering memorandum.
Redemption limits are common practice and built into the terms of many private credit funds to help ensure that managers can continue to properly execute on the underlying strategy during temporary periods of increased redemptions. As such, redemption limits are a natural means for open-ended private credit funds to manage liquidity in the best interests of all investors.
Certain dealers reacted to our decision to extend redemptions in NTEC by closing new purchases of NTEC and the Ninepoint Alternative Income Fund (NAIF), which executes a multi-fund strategy with holdings in NETC. Subsequently, redemption requests in NTEC and NAIF rose further. On February 28th, we made the decision to pause redemptions in our four private credit funds.
We implemented this pause because it is our responsibility to preserve the integrity of our investments to the benefit of all our unitholders who do not want to sell faster than planned in our investment strategies. By doing so, we avoid selling into a disorderly market where our unitholders would have a harder time benefiting from their investment today and the exceptional upside we expect in the future. Unitholders of these funds will continue to receive distributions and their units remain fully invested.
During this pause, we are engaging directly with unitholders, investment advisers, and our dealer partners, including offering presentations, due diligence and Q&A sessions with the respective investment management teams. Our goal is to provide additional investor education on the asset class and ensure all our business partners have the opportunity to share concerns and ask questions about the funds.
It is important to note that this decision to suspend redemptions on all the aforementioned funds is not related to the quality or performance of any of the Fund portfolios or the integrity of their respective investment management teams. Each of the funds' portfolios is well positioned to continue to generate strong risk-adjusted returns for investors, particularly in this market environment.
The Ninepoint Team!