Private alternative investments may hedge against volatility

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Volatility continues to impact major markets across the globe. In fact, as of mid-October 2022, the S&P 500 was down almost 25% year to date, and the TSX was down about 14% during the same period.

Consequently, investors are looking for ways to protect their portfolios from ongoing public market volatility. While some reallocate their portfolios to fixed income investments, large-cap companies, or simply cash, many Canadian investors are turning to private alternative investments.

Private alternative investments may provide a stable yield and returns as a result of the investments not being correlated to the public market volatility like traditional publicly traded stocks,” says Ray Punn, Vice President of Skyline Wealth.

Individual investors can access these types of investments through exempt market dealers, such as Skyline Wealth, which offers four alternative investment products: Skyline Apartment REIT, Skyline Industrial REIT, Skyline Retail REIT, and Skyline Clean Energy Fund.

Through these funds, Skyline Wealth offers investors access to institutional-quality real estate and clean energy assets made available to most accredited Canadian investors.

“The average individual investor would find it difficult to purchase a 300-suite apartment building, a distribution warehouse, a grocery store plaza, or a solar field,” says Punn.

“Skyline’s investments are structured such that investors can benefit from all the assets and returns in the entire portfolio for the fund they’re invested in.”

Adds Punn, “The funds seek to strategically acquire assets that fall within their specific asset classes. Each fund is managed independently with its own Asset Management team and president.”

Skyline’s Apartment, Industrial, and Retail REITs generate monthly income through the collection of monthly rent from tenants.

“Every month, the REITs take their rent cheques and remove expenses, and what’s left over is divided to all of the unitholders,” says Punn.

In contrast to the REITs, Skyline Clean Energy Fund is a growth-oriented fund that owns solar energy systems and biogas facilities that generate power in Canada. Its assets that produce power are backed by long-term government contracts.

All four funds are classified as private investments; this classification has helped them maintain a historically steady and stable performance amid turbulent public market conditions.

“Because the funds offered are private investments, the unit price of each fund is based on the underlying value of the assets themselves, plus the respective cash flow,” says Punn.

“Variables that create volatility in the public market, such as political instability, emotional investing, are much less likely to impact the performance of private investments, such as the funds we offer.”

Punn shares that 60% of Skyline Wealth’s REIT investors have chosen to enroll in a Distribution Reinvestment Plan (DRIP), where an investor earns compound growth by reinvesting their monthly distributions back into the fund.

“Each of the funds also offers tax efficiency through capital gains and return of capital or simply holding the funds in a registered account” he remarks.

Skyline Wealth’s investment products have historically experienced double-digit returns to date and since inception.

“Not only do we provide our investors with stable yield on their investments, but hard assets have seen significant uptick in value over time, which are reflected in historically rising unit prices,” says Punn.

“Our investors appreciate the fact that while our funds are fixed income products, there’s a built-in equity component.”

Punn states that investors seeking to hedge against volatility and potentially earn passive income—while gaining exposure to real estate and clean energy assets—should consider Skyline Wealth’s products, eligibility pending.

“They put a checkmark beside all of those things,” he says.

Learn more about Skyline Wealth’s private alternative investments: https://skylinewealth.ca/alternative-investments.

Ray Punn Vice President of Skyline Wealth

Skyline Wealth Management Inc. (“Skyline Wealth”) is a boutique investment dealer offering a shelf of privately owned and managed alternative investment products. We provide access to investments that are generally de-correlated from the public markets and are driven by the underlying asset value. Skyline Wealth is the preferred Exempt Market Dealer of four pure play investment products: Skyline Apartment REIT, Skyline Industrial REIT, Skyline Retail REIT, and Skyline Clean Energy Fund. By only offering private alternative investments, Skyline Wealth has provided investors with historically stable investment performance while realizing potential tax-efficiency.