The Fund invests in U.S. publicly traded companies (as opposed to private equity) that possess characteristics similar to what private equity firms select for investments, such as high quality companies with elevated profitability that trade at attractive valuations. The aim is to outperform a broad U.S. small-mid cap index, which most closely represents the focus area for private equity. Financial leverage will be employed to resemble the process private equity firms use in leveraged buyouts, and a tail risk hedging strategy is intended to help manage volatility.
“Generally, private equity has historically exhibited less downside than traditional investments during periods of market stress and has outperformed public markets during challenging economic conditions,” said Michael Schnitman, Senior Vice President and Head of Alternative Investments, Mackenzie Investments. “To date, retail investors have had limited access to private equity risk-return opportunities. We believe that through dedicated research and quantitative expertise, public markets can be leveraged to achieve similar returns and volatility levels to that of U.S. private equity in a format that offers investors daily liquidity, high transparency, and low investment minimums.”
The investment rationale was developed through extensive research in an exclusive partnership with Harvard Business School’s Randolph Cohen, Ph.D. The new Fund will be managed by Arup Datta, Senior Vice President, Head of the Mackenzie Global Quantitative Equity Team and Nelson Arruda, Senior Vice President, Portfolio Manager and Co-Lead of the Mackenzie Multi-Asset Strategies Team. Professor. Cohen’s firm, PEO Partners, will also act as a sub-advisor to the Fund.
“We believe the collaboration between specialist teams from our boutiques and thought leadership from our academic partnership will result in disciplined security selection, portfolio construction and downside mitigation processes,” Mr. Schnitman explained.
This is Mackenzie Investments’ sixth fund offering in the liquid alternatives space since it launched Canada’s first absolute return fund for retail investors in May 2018. Liquid alternatives are expected to grow to $100 billion in assets under management in Canada within the next few years.¹ Mackenzie is well positioned to capitalize on this growth and its approach to Accessible AlternativesTM aims to help investors better understand and embed alternative strategies into their portfolios.
The Mackenzie Private Equity Replication Fund is now available for sale.
About Mackenzie Investments
Mackenzie Investments (“Mackenzie”) is a leading investment management firm with over $153 billion in assets under management as of November 30, 2020. Mackenzie provides investment solutions and related services to more than one million retail and institutional clients through multiple distribution channels. Founded in 1967, Mackenzie is a global asset manager with offices across Canada as well as in Boston, Dublin, London, Hong Kong and Beijing. Mackenzie is a member of IGM Financial Inc. (TSX: IGM), one of Canada's premier financial services companies with approximately $205 billion in total assets under management as of November 30, 2020. For more information, visit mackenzieinvestments.com.
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