BMO releases all-in-one private markets fund in push to simplify access

BMO Global Asset Management has introduced a multi-asset-class fund that aims to make private markets more accessible to high-net-worth clients.

The BMO Partners Group Private Markets Fund provides exposure to private equity, private credit, private real estate and private infrastructure through a single vehicle.

The evergreen product, which is available to accredited investors with a minimum $25,000 investment, comes to market as asset managers push into the private investment space with retail investors in mind.

“It is really hard to buy private markets even when you have an advisor — even when you have the time and energy and resources to be able to dig into different managers and strategies,” said Jeff Shell, head of alternatives with BMO Global Asset Management.

“Our design principle was making it simple without compromising on the quality of what you’re investing in.”

Asset managers believe the appeal of private markets has grown after a brutal 2022 that wreaked havoc on balanced portfolios of stocks and bonds. Manufacturers are pushing private markets as a diversification tool that can also provide enhanced returns and income.

Earlier this year, CI Global Asset Management developed a private market product offered only through existing CI GAM funds, with a standalone offering memorandum fund for accredited investors to follow later this year.

Marc-André Lewis, the firm’s chief investment officer, said CI wanted to provide a one-stop solution giving investors exposure to private equity, private credit, real estate, infrastructure and venture capital.

“It’s really us taking over the burden of doing the manager selection from the individual investors and offering a really well-diversified portfolio,” he said.

Purpose Investments launched three evergreen private market funds in April along with a platform to help advisors understand the investments.

BMO is pitching its new fund as the first in a series of three “simplified” private market funds. It plans to release a private equity fund and a private credit fund later this year.

The new private markets fund, managed by Switzerland-based Partners Group, consists of roughly 40% real assets (infrastructure and real estate), 40% private equity, and 20% credit and cash to provide liquidity for redemptions.

Monthly redemptions are available with 90 days’ notice up to limits of 7.5% of fund assets per month, 20% per quarter and 25% per year. There’s a 2% early redemption fee in the first two years.

The fund’s management fee is 1.65%, plus a performance fee of 15% on returns above a high-water mark.

Shell said BMO’s been working on the fund for more than a year and that it chose Partners Group, which manages US$135 billion, for its scale in all four asset classes and track record with evergreen funds. The firm has 1,800 global employees, he said, which allows it to evaluate deals in various local markets.

CI partnered with Adams Street Partners, CBRE Global Investment Partners and HarbourVest Partners for its fund, which uses a fund-of-funds structure, while BMO provides access to the four asset classes in one fund.

While the appropriate allocation will depend on the client, Shell said the BMO fund could make up roughly 10% of a portfolio.

“For many people, this is going to be the entry point into private markets or the easy-to-use way to dial it up to get to the allocation that you want,” he said.

Investors looking for enhanced returns or income could tack on private equity or private credit funds to bring their private market allocation to 15% or 20%, as is the case for many ultra-high-net-worth investors, Shell said.

The new fund is BMO’s second private markets fund, following the BMO Georgian Alignment II Access Fund LP, a venture capital fund released earlier this year.