Mackenzie introduces interval private credit fund

Mackenzie Investments launched a new private credit fund for retail investors that uses an interval structure to allow for quarterly redemptions.

The Mackenzie Northleaf Private Credit Interval Fund is different from other private investment funds in that it will allow quarterly redemptions of up to 5% of the fund’s assets.

“This provides retail investors with a new way to access illiquid private credit investment strategies that have traditionally been reserved for accredited and institutional investors and typically feature significant minimum investment requirements,” the release said.

The minimum initial investment is $5,000.

Mackenzie partnered with Toronto-based Northleaf Capital Partners Ltd., a private investment fund manager, in 2020. Last year Mackenzie launched private credit and private infrastructure funds with Northleaf.

While those funds had no “hard” lockup, investors who redeemed within a given period paid an early redemption fee. The minimum investment for those funds was also higher, at $25,000.

The interval fund doesn’t have a lockup period, but the 5% limit on quarterly redemptions means investors may not be able to redeem the desired amount in any given quarter, the fund facts document said.

The fund combines exposure to private credit funds and fixed-income ETFs. Investors will get exposure to floating-rate loans to mid-market private companies through Northleaf’s private credit funds for institutional investors. Between 35% and 65% of assets will be invested in these illiquid securities, according to the fund facts document.

The rest will be invested in Mackenzie fixed-income ETFs, providing liquidity.

The fund’s risk rating is medium, and it’s intended as a long-term investment for clients comfortable with limited liquidity.

“We believe the Mackenzie Northleaf Private Credit Interval Fund will appeal to long-term investors who are seeking to diversify their portfolios with non-traditional asset classes that have the potential for above average yields from private senior secured loans,” said Michael Schnitman, Mackenzie’s head of alternatives, in the release.

The management fee is 2.25% for Series A, and 1.25% for Series F. The interval fund is Mackenzie’s ninth alternative fund.

Last summer Mackenzie president and CEO Barry McInerney said the firm was looking to make alternatives more accessible to retail investors.

“[Some institutional funds] allocate 40%–50% of their portfolios into private alternatives,” McInerney said. “Now, that might be too much for an individual investor given liquidity needs, but why is it 0% for individual investors and 50% for the institutional investor?”