Product news: CIBC, Franklin Templeton expand private offerings

CIBC Asset Management and Franklin Templeton Canada are the latest fund managers to roll out private market strategies for accredited retail investors, with new credit and real estate products, respectively.

On Friday, CIBC Asset Management released the CIBC Ares Strategic Income Fund, a private credit strategy that provides access to the Ares Strategic Income Fund managed by Los Angeles-based Ares Capital Management LLC.

Three-quarters of the fund is invested in private credit — the vast majority in directly originated first lien loans to U.S. companies, and a smaller portion in structured credit, real assets lending and distressed debt. The other quarter is in liquid public credit assets, including corporate bonds and high-conviction syndicated corporate loans.

Last December, CIBC expanded its partnership with Ares by investing $400 million into Ares private credit funds via existing CIBC funds. At the time, CIBC said it planned to launch new products for high-net-worth clients that provide evergreen access to Ares funds. The CIBC Ares Strategic Income Fund is the first.

In the past year, several fund managers have moved into private markets with new evergreen products designed for wealthy retail investors looking to diversify their portfolios.

Last month, Franklin Templeton Canada introduced access to a fund in partnership with New York-based real estate investment firm Clarion Partners. The private real estate strategy is focused on multi-family apartments, industrial warehouses and science facilities. Its target allocation is 60% private real estate and 40% real estate securities, including commercial and residential mortgage-backed securities.

The CIBC fund, which has a minimum investment of $10,000, has monthly subscriptions and distributions, with quarterly redemptions up to 5% of the fund’s assets. There’s a 2% penalty for redemptions within the first year.

The management fee is 0.50% for series F of the CIBC fund, which doesn’t have a performance fee. The underlying Ares fund has a management fee of 1.25% as well as a two-part performance fee: 12.5% of net income subject to a 5.0% annualized hurdle; and 12.5% cumulative realized capital gains net of realized and unrealized losses.

Terminations and mergers

Horizons ETFs Management (Canada) Inc. is closing three ETFs, including its bull and bear marijuana products.

Horizons said this week that its BetaPro Marijuana Companies 2x Daily Bull ETF (TSX: HMJU) and BetaPro Marijuana Companies Inverse ETF (TSX: HMJI) will close in February.

HMJU, which seeks to provide returns corresponding to two times the daily performance of the North American MOC Marijuana Index, has about $635,000 in assets. Launched in May 2019 after the run-up in marijuana stocks in anticipation of legalization in October 2018, HMJU’s returns have, unsurprisingly, been terrible. The ETF is down more than 85% annually since inception.

Its bearish sister product, launched at the same time, has fared much better. HMJI has $3.4 million in assets and has returned 27.44% annually since inception.

The closures leave only a few marijuana ETFs in Canada. The Horizons Marijuana Life Sciences ETF (TSX: HMMJ), launched in April 2017, topped $1 billion in assets in 2018. Though assets have fallen to $81.3 million, it’s still by far the largest marijuana ETF in Canada.

The Horizons US Marijuana Index ETF (Cboe Canada: HMUS) has $4.6 million, and the Purpose Marijuana Opportunities Fund (Cboe Canada: MJJ) has $5.6 million.

The third fund closing is the $3.3-million Horizons Active ESG Corporate Bond ETF (TSX: HAEB), launched in September 2021.

CI Global Asset Management, meanwhile, said Friday that it’s streamlining its product lineup by merging 19 mutual funds and ETFs into existing mandates. The terminating ETFs and mutual funds cover a range of strategies including fixed income, value and momentum factors, dividends and corporate class.

CI also filed preliminary prospectuses for two smart beta U.S. equity ETFs that are expected to begin trading in January.