Key Takeaways
- • Wealthsimple launched a private equity fund in partnership with LGT Group (the private banking and asset management firm owned by the Liechtenstein royal family), marking its third private asset product offering alongside existing private credit and venture capital funds.
- • The private equity fund features a 1.5% management fee with a 12.5% performance fee triggered at an 8% hurdle rate, with quarterly redemptions capped at 5% of fund assets, and requires a minimum $100,000 in deposits with a $10,000 minimum investment.
- • The private equity fund is structured as an open-ended fund investing in both secondary positions at discounts to market value and new company investments, distinguishing it from existing private equity funds that may be valued at inflated mark-to-market prices.
- • Wealthsimple's private credit fund, launched in March 2023 with Sagard, has accumulated more than $130 million in assets under management, demonstrating retail demand for alternative asset access.
- • Asset managers including BMO Global Asset Management, Purpose Investments, and CI Global Asset Management have similarly introduced private market funds for retail investors in 2023, reflecting broader industry momentum toward democratizing alternative investments.
Summary
Wealthsimple has expanded its alternative asset offerings by launching a private equity fund developed in partnership with LGT Group, a Liechtenstein-based private banking and asset management firm owned by the royal family. This represents the Canadian robo-advisor and trading platform's third private asset product, joining previously launched private credit and venture capital funds as part of a strategic push to provide retail investors access to traditionally institutional asset classes.
The fund's fee structure consists of a 1.5% management fee paired with a 12.5% performance fee that activates once the fund achieves an 8% hurdle rate. Access is restricted to Wealthsimple clients with at least $100,000 in deposits, with a minimum investment of $10,000. The fund operates as an open-ended structure permitting quarterly redemptions up to 5% of total fund assets, providing greater flexibility than many traditional private equity vehicles while maintaining liquidity constraints necessary for the asset class.
According to Ben Reeves, Wealthsimple's chief investment officer, the fund's investment strategy focuses on acquiring secondary stakes in existing funds at discounts reflecting current market valuations, alongside deploying capital into newly identified companies. Reeves emphasized that this approach allows investors to acquire positions at current market prices rather than the potentially inflated mark-to-market valuations present in legacy private equity fund portfolios. The partnership with LGT was selected based on the firm's strong historical performance and willingness to co-invest alongside the fund.
The private credit fund launched alongside Sagard in March 2023 has already accumulated more than $130 million in assets under management, demonstrating meaningful retail appetite for these products. Wealthsimple has considered but declined to launch a private real estate fund, citing ongoing valuation concerns in that sector. The broader market is moving in this direction: BMO Global Asset Management, Purpose Investments, and CI Global Asset Management have all introduced private market funds for retail investors during 2023.
The fund's fee structure consists of a 1.5% management fee paired with a 12.5% performance fee that activates once the fund achieves an 8% hurdle rate. Access is restricted to Wealthsimple clients with at least $100,000 in deposits, with a minimum investment of $10,000. The fund operates as an open-ended structure permitting quarterly redemptions up to 5% of total fund assets, providing greater flexibility than many traditional private equity vehicles while maintaining liquidity constraints necessary for the asset class.
According to Ben Reeves, Wealthsimple's chief investment officer, the fund's investment strategy focuses on acquiring secondary stakes in existing funds at discounts reflecting current market valuations, alongside deploying capital into newly identified companies. Reeves emphasized that this approach allows investors to acquire positions at current market prices rather than the potentially inflated mark-to-market valuations present in legacy private equity fund portfolios. The partnership with LGT was selected based on the firm's strong historical performance and willingness to co-invest alongside the fund.
The private credit fund launched alongside Sagard in March 2023 has already accumulated more than $130 million in assets under management, demonstrating meaningful retail appetite for these products. Wealthsimple has considered but declined to launch a private real estate fund, citing ongoing valuation concerns in that sector. The broader market is moving in this direction: BMO Global Asset Management, Purpose Investments, and CI Global Asset Management have all introduced private market funds for retail investors during 2023.
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