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Why liquid alts are ‘more of the old same’

Liquid alts may be en vogue but they do not represent true alternative investments, which is where demand is greatest among clients, according to a portfolio manager.

John Courtliff, managing director at Calgary-based ICM Asset Management, believes his ICM Property Partners Trust provides direct access to the underlying assets rather than going through the public markets.

He said such a fund is timely given the see-saw nature of equities and investors’ search for less volatility, and added that it’s a genuine alternative pitch rather than a repackaged hedge fund-style product that offers nothing news.

He told WP: “To be honest, those changes if you look at what liquid alts cover and the recent regulation changes, it’s a list of more of the old same.”

He believes that liquid alts, with the exception of private credit, are simply focused on public markets and the alternative strategies are primarily related to public market securities. He said: “It doesn’t actually cover what you call true alternative investments, which are private and provide direct access to real estate, infrastructure, private credit, private equity and things like that.

“Yes, hedge funds have their place but I think the legislation is always behind where where the market actually is. Liquid alts are going to have their place but what is actually in demand right now, in our view, among advisors and investors is direct access to the underlying strategy rather than repackaging hedge funds that have been around for a long time.”

ICM began in Germany, started by Bruce Timm, a Calgarian, in 2003 before moving its HQ to his homeland and establishing a presence in the Canadian market in 2012, which doubled the firm’s size. The real estate fund provides access to North American real estate in US, Canada and Mexico and the firm, which also provides provide equity and private debt solutions, aims to launch an infrastructure platform in the next couple of years.

The ICM Property Partners Trust, which is available through advisors, requires a minimum investment of $5,000. Courtliff urged those looking for an alternative allocation in their portfolio to look at the fund, which he believes provides greater stability than the public markets if you can handle the lesser liquidity of these structures.

He said: “I really believe the public markets have a way of mispricing assets rather than pricing efficiently. Certainly, volatility can be understated in private asset classes but I think that’s what investors are looking for – they don’t want the yo-yo, they want the stability that we are able to provide by not having to mark to market as frequently obviously as public security entails.”

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