The Real Opportunity In Real Assets
Real Assets Help Solve the Income Challenge

In a world of structurally low interest rates, earning sufficient income from traditional investment sources such as government bonds has become ever more difficult. For many investors, including large institutions and pension plans1, the solution has been found in real assets.

What are Real Assets?

There are many types of real asset investments that have the ability to generate income. At CI Investments, we focus on real assets that are backed by tangible, cash-flow generating assets with long-duration contracts, visible cash flows and strong business models with high barriers to entry. Here are a few examples :

  • Infrastructure : toll roads, railways, airports, ports, pipelines, cell towers, data centers
  • Real estate : REITs and property companies that invest in office towers, apartment buildings, industrial and warehouse space
  • Utilities : traditional and alternative energy companies, gas delivery, water filtration plants.

 

What are the key potential benefits?

Enhanced portfolio income
Real assets have several features that help them to generate higher yields than more traditional asset classes through fees such as lease, rental, or royalty payments. Many benefit from strong demand, a position of importance in the global economy and long-term contracted revenue streams that are linked to inflation. For investors, they offer safe, predictable income and portfolio protection against unexpected increases in inflation.

Improved total returns
Many real assets investments are scarce or act in the marketplace as near-monopolies (think toll roads and airports), so the direct link to physical assets tends to support the value of the underlying assets throughout the economic cycle. At the same time, they also offer the potential for capital gains as the value of their underlying assets, such as real estate, increases. This augments their steady income streams, adding additional value for investors.

Diversification benefits
Given their defensive characteristics, real assets tend to behave differently than traditional equity and bond investments, particularly during market downturns. Real assets have not been highly correlated to other asset classes, indicating that real assets can provide diversification and stability to a portfolio.

 

Enhanced portfolio Income relative to traditional assets: Real Estate 4.14%, Infrastructure 4.14%, Canadian Equities 3.28%, Global Equities 2.14%, U.S. Equities 1.79%, Canadian Bonds 1.20%, U.S. Investment Grade Bonds 1.07%


Source: Bloomberg, as of July 31, 2020.
U.S. Equities = S&P 500 TR estimated dividend yield; Canadian Bonds = FTSE Canada Universe Bond Index yield to maturity; Global Equities = MSCI World TR estimated dividend yield; U.S. Investment Grade Bonds = Bloomberg Barclays U.S. Aggregate USD Hedged Index yield to maturity; Canadian Equities = S&P/TSX Composite TR estimated dividend yield; Real Estate = FTSE EPRA NAREIT Developed TR estimated dividend yield; Infrastructure = S&P Global Infrastructure TR estimated dividend yield.

1Large institutional investors have allocated an increasing percentage of their portfolios to real assets to fund their long-term pension obligations. For example, The Canada Pension Plan Investment Board annual report shows that nearly 24% of the fund's investments were in real estate, infrastructure and other real assets as at March 31, 2020.

Experienced Management Counts

CI Investments offers several options to access the attractive non-traditional source of income available through real assets. The team at Signature Global Asset Management has developed deep expertise investing in these areas on a global basis and manages over $7.5 billion2 in real assets across a variety of mandates to help investors access the opportunity.

Fund Codes
MandateClass A (ISC)Class FTicker Symbol
CI First Asset Canadian REIT ETFRIT
CI Global REIT Private Pool*CIG2349CIG4349CGRE
CI Global Infrastructure Private Pool*CIG2344CIG4344CINF
CI Global Real Asset Private Pool*CIG2348CIG4348CGRA
First Asset REIT Income FundFAF5803FAF5805
First Asset Utility Plus FundFAF5903FAF5905
Signature Global REIT Fund CIG50205CIG54205
Signature Global Infrastructure Fund CIG50230CIG54230
Signature High Income Fund CIG686CIG447
Signature Diversified Yield Fund CIG11111CIG11011

All funds and ETFs offer monthly distributions with the exception of First Asset Utility Plus Fund.
*Minimum investment was recently reduced to $25,000 per Private Pool

2 Source: Signature Global Asset Management as at June 30, 2020.

 


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Important Disclaimers

Commissions, trailing commissions, management fees and expenses all may be associated with an investment in mutual funds and exchange-traded funds (ETFs). Please read the prospectus before investing. Important information about mutual funds and ETFs is contained in their respective prospectus. Mutual funds and ETFs are not guaranteed; their values change frequently and past performance may not be repeated. You will usually pay brokerage fees to your dealer if you purchase or sell units of an ETF on recognized Canadian exchanges. If the units are purchased or sold on these Canadian exchanges, investors may pay more than the current net asset value when buying units of the ETF and may receive less than the current net asset value when selling them.

This document is provided as a general source of information and should not be considered personal, legal, accounting, tax or investment advice, or construed as an endorsement or recommendation of any entity or security discussed. Every effort has been made to ensure that the material contained in this document is accurate at the time of publication. Market conditions may change which may impact the information contained in this document. All charts and illustrations in this document are for illustrative purposes only. They are not intended to predict or project investment results. Individuals should seek the advice of professionals, as appropriate, regarding any particular investment. Investors should consult their professional advisors prior to implementing any changes to their investment strategies.

Signature Global Asset Management is a division of CI Investments Inc. Certain funds associated with Signature Global Asset Management are sub-advised by CI Global Investments Inc., a firm registered with the U.S. Securities and Exchange Commission and an affiliate of CI Investments Inc.

The CI First Asset Exchange-Traded Funds (ETFs) are managed by CI Investments Inc., a subsidiary of CI Financial Corp., which is listed on the Toronto Stock Exchange under the symbol "CIX".

CI Investments, the CI Investments design, Signature Global Asset Management, the Signature Global Asset Management design and Trusted Partner in Wealth are registered and unregistered trademarks of CI Investments Inc., its subsidiaries or affiliated entities.

©CI Investments Inc. 2020. All rights reserved.

EXPERIENCED MANAGEMENT COUNTS

Eric Bushell
Eric Bushell, CFA
Senior Vice-President and Chief Investment Officer

Eric Bushell, Senior Vice-President, Portfolio Management and Chief Investment Officer, began his career as an equity analyst and trader at BPI Mutual Funds in 1993 before becoming a portfolio manager at the firm. He joined CI Investment Inc.'s ("CI") Signature team in 1999 when BPI became part of CI Investments. He became Chief Investment Officer of Signature in 2002.

Lee Goldman
Lee Goldman, CFA
Senior Portfolio Manager

Lee Goldman is a portfolio manager with a successful long-term track record of managing real estate assets. He joined Signature Global Asset Management in 2018 following 12 years as a lead manager at First Asset. Lee holds a Bachelor of Science (Statistics) degree from the University of Western Ontario and a Master of Business Administration (Finance) degree from York University. He also holds the Chartered Financial Analyst designation.

Kate MacDonald
Kate MacDonald, CFA
Portfolio Manager

Kate MacDonald joined Signature Global Asset Management in 2018 as a portfolio manager responsible for a number of dedicated real estate funds, as well as real estate allocations across various strategies. Prior to joining Signature, Kate co-managed the real estate portfolios at First Asset for five years. Kate holds a Masters in Finance from Queen's University, the Chartered Investment Manager designation, and the Chartered Financial Analyst designation.

Joshua Varghese
Joshua Varghese, CFA
Portfolio Manager

Joshua Varghese has been involved in global real estate investing since joining Signature in 2011, most recently as Portfolio Manager with responsibility for over $2.5 billion in global real estate assets across Signature funds. He is a frequent speaker at national real estate conferences such as RealPac and RealREIT. Joshua joined CI Investments in 2006 and has over 10 years of financial industry experience.

Kevin McSweeney
Kevin McSweeney, CFA
Vice-President, Portfolio Management and Portfolio Manager

Kevin McSweeney has 12 years of financial services and investment management experience and is a member of the team responsible for infrastructure and REITs. He moved to this team from the high-yield, convertible bond and leveraged loan assets team in 2016. Prior to joining Signature, Mr. McSweeney worked for six years with Scotiabank, most recently in corporate credit risk management. Prior to that, Mr. McSweeney worked with Finance Canada as a financial economist in the international trade and financial markets divisions. Mr. McSweeney holds a Bachelor of Arts (Honours) from St. Mary's University a Master of Business Administration from Dalhousie University, and the Chartered Financial Analyst designation.

Massimo Bonansinga
Massimo Bonansinga,
Vice-President, Portfolio Management and Portfolio Manager

Massimo Bonansinga has 21 years of financial, managerial and consulting experience. He focuses on industrials. Prior to joining Signature in 2005, he spent five years in investment banking in London with Bankers Trust and Morgan Stanley and five years in the automotive industry in Europe with Ford Motor Co. and Fiat Group, holding positions in finance. He has a Master of Business Administration from the Wharton School and a bachelor's degree in economics and accounting from Università Bocconi in Milan.

Geof Marshall
Geof Marshall, CFA
Senior Vice-President, Portfolio Management and Head of Credit

Geof Marshall, Senior Vice-President, Portfolio Management and Portfolio Manager, heads the corporate bond team and manages the high yield bond assets at Signature Global Asset Management. Mr. Marshall has extensive experience analyzing, managing and trading corporate bonds, leveraged loans and private credit. He is the lead manager of Signature High Yield Bond Fund and co-manages several Signature funds, including Signature High Income Fund, Signature Global Income & Growth Fund and Signature Corporate Bond Fund. He joined CI Investments Inc. in 2006 from Manulife Financial, where he was a portfolio manager. Mr. Marshall holds a Bachelor of Arts from the University of Western Ontario and the Chartered Financial Analyst designation. He is a member of the Finance and Investment Committee at the Royal Ontario Museum.