Starlight Investments Capital‘s new Starlight Hybrid Global Real Assets Trust will help fill a niche in the marketplace by giving retail investors access to a type of fund usually accessible only to institutions, says Starlight Capital’s CEO and CIO Dennis Mitchell.
The real assets trust will combine investments in global real estate and infrastructure and require a minimum investment of only $1,000. Its management fee will be 1.25 per cent.
Retail investors have “been historically under-allocated to these two sectors which institutional investors have increasingly become over-allocated to, as they generate very strong returns,” Mitchell told RENX in an interview.
Mitchell said while Canadian retail investors can choose from thousands of Canadian, global and U.S. equity mutual funds and a wide variety of precious metals and energy funds, there are very few real estate mutual funds or ETFs available to them, and even fewer infrastructure mutual funds or ETFs.
“We saw an opportunity to provide this type of investment to retail investors in this country.”
Trust to invest in three vehicles
The Starlight Hybrid Global Real Assets Trust will invest at least 60 per cent of net capital raised into a subsidiary, Starlight Global Real Assets LP, which will hold an actively managed global portfolio of real estate and infrastructure securities, managed by Mitchell, the investment manager of the trust.
The trust will also allocate up to 20 per cent each to the Starlight Canadian Residential Growth Fund, and to the EagleCrest Infrastructure Canada LP, managed by Fiera Infrastructure. The Canadian residential growth fund is a new fund which invests in multi-residential real estate properties and portfolios — primarily in Toronto and Vancouver but also in Winnipeg, Ottawa, Victoria and Calgary.
Fiera Infrastructure has a diversified pool of 24 infrastructure assets in Canada, the U.S., the U.K. and Spain that includes solar energy and wind farms, telecom and waste energy assets. “They have a very healthy pipeline they’re looking at acquiring stakes in,” Mitchell said.
He expects the trust to raise at least $100 million in its initial offering.
Mitchell said the trust will provide retail investors “with direct investments with an uncorrelated nature to the equity markets that are attractive in a market like we’ve seen over the last two weeks, where you’ve had extreme volatility.”
Unique structure to fund
Mitchell has been marketing the trust to advisors across the country and says reaction has generally been positive.
“There’s no disputing the uniqueness of the structure. There simply isn’t another vehicle like this that offers retail investment advisors access to 40 per cent private investments. There’s certainly nobody that has offered the type of exposure that we’re offering in terms of direct real estate and direct infrastructure.”
The idea for the trust began about six months ago and Starlight actively began structuring it and seeking out partners about three months ago.
Mitchell says Starlight decided a combination of real estate and infrastructure would make the trust appealing to investors and also make it harder for competitors to replicate.
Real estate and infrastructure are similar assets that “tend to generate strong returns over the long term and do well in both declining and rising interest rate environments.”
Two other new Starlight funds
In early October, Starlight launched the mutual funds and ETFs Starlight Global Real Estate Fund and Starlight Global Infrastructure Fund.
Starlight Global Infrastructure Fund invests in publicly listed global infrastructure companies and Starlight Global Real Estate Fund invests in REITs and equity securities of corporations which participate in residential and commercial real estate.
There are synergies for launching the funds and the trust within days of each other as they are all targeted to investment advisors, Mitchell says.
Mitchell, who joined Starlight Capital in March (see Dennis Mitchell named CEO of new Starlight Capital venture), has more than 15 years of experience in the investment industry and has held executive positions with Sprott Asset Management, where he was senior vice-president and senior portfolio manager of several funds, and Sentry Investments.
He says he has “historically generated very strong returns” for investors.
Asset management firm Starlight Capital is a wholly owned subsidiary of Starlight Investments.
Starlight Investments is a private, full-service real estate investment and asset management company. It manages more than $9 billion of capital on behalf of pension funds, family offices, high-net-worth investors, retail investors and public REITs.