Robo platform for private market investments launching this week

A new service is launching this week that aims to increase individual investors’ access to private markets, with two multi-asset funds offered on a robo platform.

Toronto-based Obsiido Alternative Investments Inc. received regulatory approval in Ontario, Alberta and British Columbia for Obsiido Direct, an online platform that allows investors to purchase private market funds. Two funds — the Obsiido Alternative Growth Portfolio and the Obsiido Alternative Income Portfolio — are also available to advisors on Fundserv.

The new platform comes as more fund managers look to market alternative investments, traditionally reserved for institutional investors and family offices, to retail investors after last year’s broad declines in stocks and bonds.

Robo-advisor and DIY provider Wealthsimple has launched private credit and venture funds, while BMO Global Asset Management and CI Global Asset Management released multi-asset private market funds this year.

“We think the next substantial growth engine for retail private wealth is this allocation into alts,” said Nimar Bangash, Obsiido’s co-founder and CEO.

“We want to bring technology and investment solutions to make that a safer and easier experience for wealth managers and individual investors.”

Bangash, formerly a product manager with AGF Investments and CIBC, said Obsiido is preparing to launch a digital platform for advisors before the end of the year to help automate the paperwork and compliance for alternative investments.

“It’s still really complicated to invest in this space, and it’s not something that we feel a prudent allocator should be doing off the side of their desk,” he said.

Obsiido Direct takes investors through a digital onboarding process and a call with a portfolio manager to explain the investments and assess suitability. The minimum investment in the funds is $25,000, and Bangash said investors must have $250,000 in investable assets to be eligible.

In addition to co-founder and chief investment officer Sean O’Hara, Obsiido uses third-party firm Asset Consulting Group, based in St. Louis, Mo., for fund selection and due diligence.

The Obsiido Alternative Growth Portfolio invests in private equity (45%), private credit (20%), real assets (real estate and infrastructure; 20%), hedge funds (multi-strategy and long-short equity; 10%) and cash (5%).

Bangash said the firm looks for complementary pieces within an asset class — within private equity, for example, a mix of funds focused on originating buyout opportunities, co-investments with secondaries and venture capital.

The Obsiido Alternative Income Portfolio invests in private credit (45%), real assets (40%), hedge funds (10%) and cash (5%).

Both funds invest in underlying funds offered by Blue Owl Capital, Oaktree Capital Management, Polar Asset Management Partners Inc., Waratah Capital Advisors Ltd. and others.

In addition to the $25,000 minimum investment, the funds have a $1,000 subsequent investment minimum. The management fee for both funds is 1% for the robo platform and 0.5% for advisors. There are also early redemption fees of 3% in the first year and 2% in the second year. The funds don’t charge performance fees, but Bangash said the underlying funds charge an average of 12% carried interest.

Both are evergreen funds offering monthly subscriptions and quarterly redemptions, which may be limited to 5% of assets.

Like Purpose Investments, which launched three private market funds earlier this year, Obsiido has a learning hub with research, white papers and articles about private markets.

Research has shown that lack of investor education can be a barrier to accessing private markets. A report released last week from Cerulli Associates and Invesco said many U.S. advisors seek general material to help them discuss private markets with clients.

The report also said many advisors see private markets as a way to differentiate their practices, attract high-net-worth clients and retain assets.

“If advisors have a focus on wealthy clients, implementing alternatives may also prove to be a common-sense way for a practice to move upmarket toward a coveted wealthier client base,” said Daniil Shapiro, director at Cerulli, in a release.

Editor’s note: This article has been updated because the Obsiido funds will not be investing in Blackstone funds at this time.