Investment Q&A

Private equity can be attractive as it is not correlated to other assets. Owning 100% private equity of course kind of offsets this negative correlation since only one asset is owned. Private equity can do very well at times. In the past 10 years, companies have had less need to go public and there are many success stories that remain private. We think some exposure can make sense, and an ETF eliminates the liquidity issue on private equity. Most privates are very illiquid and if selling one often needs to find their own buyer (through the company or a broker). PSP can be suggested as an ETF here, with a high yield and 5-year annualized 8.14%. Note MERs are high in this category. NGPE is a Canadian listed option, with assets of $440M and 3-year 8.85%. It also holds public companies that invest in private companies. Private credit is a category that did really well when interest rates were 0%, but it has been a disaster in Canada. Many funds have been 'gated' and restrict sales. Bridging Finance lost investors $1B+ and was in a view a total fraud. There are too many leeways in funds to record asset values and interest-in-kind rather than cash. Not all are bad, of course, but more diligence is needed. VPC is a small US fund doing well. INCM is a small new fund recently launched in Canada. Generally speaking, unlike with private equity, we do not think the extra yield on private credit offsets the additional risks that investors incur.