From Private Markets to Public Markets
Hi, !
It’s March already, how did that happen?
It’s Adrian with you today, and I’ve just returned from three days snowboarding in Montreal where we had conditions ranging from +15° and very soft, to actively raining with pea-soup fog, to frozen solid and icy at -11°, on three back-to-back days! What a crazy “winter” we’ve had.
I’m smiling in the photo below, promise!
Now on to the business at hand. We talk a lot at Cherry Hill about the private investment markets and the incredible access we have through our partnership with Harbourfront. It’s our access to (and careful curation of) the private markets that makes us such a unique opportunity.
However, we offer and manage public market securities as well.
Today we’ll highlight the Percy Harris Global Equity Pool. This is a key component in many of our Watermark Private Portfolios, so there’s a good chance that you own it, or could in the future. It should be noted that it is separate and distinct from our Laurier Private Equity Pool. These funds and others are manufactured for us by Willoughby Asset Management, a Harbourfront subsidiary.
Why create a pool rather than investing in separate securities directly? Great question! By grouping up assets, we’re able to go to sub advisors with meaningful sized investments of capital, and this gives us access to some incredible institutional-only 3rd-party managers. You can see below that as of December 31st we have significant allocations to Mawer, GQG, and two Addenda Capital strategies, as well as a few more typical iShares ETFs which help us to provide liquidity for our clients.
From the Q4 2023 Percy Harris commentary linked below, the Willoughby Portfolio Management team shares, “As is typical of the Percy Harris Global Equity Pool, our external manager allocations are set to reflect long-term objectives, with limited shift in positioning over short-term periods by the Portfolio Management team. Over the past quarter, we have marginally increased our position in GQG Global Quality Equity while decreasing our allocation to Mawer Global Equity, Addenda Canadian Equity, and Addenda US Equity. This slight allocation shift reflects an increased manager diversification and re-balance in the allocations.” In other words, the strategy is actively managed but minimally traded, helping to remain balanced while preventing costs from spiralling.
Having said that, as of February 1st 2024 and after months of an extensive manager search, the Portfolio Management team added the Leith Wheeler Equity strategy as a core position. Since the inception of their Canadian Equity mandate in 1994, the strategy has generated an annualized rate of return of 10.5% versus the S&P/TSX Composite index of 8.0%. While consistently producing top quartile performance amongst their peers, along with a high active share, we feel strongly that we have added one of the top institutional money managers in the business.
As of January 31st, 2024:
The decision to remove Addenda Canadian Equity came down to several factors, but ultimately the changing economic environment and need for a more active Canadian equity manager outweighed maintaining the allocation. The Addenda Canadian Equity strategy outperformed its benchmark on an annualized basis by 1.44% over a three-year period. However, after an extensive review and due diligence process, it was determined Leith Wheeler’s active management style added an additional 3.88% of annualized value over the same period versus the Addenda Canadian Equity strategy.
The pool is an OM fund, meaning it’s sold by offering memorandum. Typically this means it would only be available to accredited investors. Accredited Investors have large enough assets and incomes that they are assumed to have the appropriate skills and prowess to understand investments in detail. Thankfully, our Watermark Private Portfolios (WPP) program allows our Portfolio Managers to include these funds for our clients without needing to qualify as accredited. This makes our exceptional institutional-quality funds available to more of our clients.
The Percy Harris Global Equity Pool is another example of the unique asset management we can bring to our clients. With access to institutional quality asset managers with daily liquidity, we’re offering you something that other’s simply can’t.
For the complete commentary from Willoughby Asset Management including important disclosures and details, click here:
Q4 2023 Percy Harris Commentary
Until next week, Happy Investing!
Adrian Blake, CFP
Investment Advisor, Cherry Hill Private Wealth
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