Institutional-Style Investments accessible to individuals

For affluent investors with an elevated net worth, it is now possible to have access to the same research, strategies and investment techniques used by institutional investors via private investment pools offered by several major Canadian mutual fund companies.

Previously, investors had to invest millions of dollars to have access to an institutional type of portfolio management. However, there exists today the possibility to invest an initial investment of only 150,000$, which allows investors to take advantage of several different programs of private investment pools. The main objectives of these pools are to preserve the invested capital and to deliver stable, consistent returns.

One of the main advantages of the private investment pools is the access to top quality money managers as well as competitive lower management fees leaving more of your money in your account in which to grow. Let's look at the "Balanced Private Pool" mandate for example: management fees represent 1.65%(well below the average management fee) for the first 250,000$ invested which results in a saving of about 75 basis point in comparison with a traditional balanced fund. This slight difference in fees can add up to thousands of dollars in savings after a few years.

Additionally, the management fee is degressive. That is, it is reduced as the amount invested increases. It is also possible to combine accounts (Ex. Spouse,) in order to further the savings in fees.

Beyond the competitive management fees, investors who take part in a private investment pool can enjoy important tax benefits from its unique corporate structure (also known as capital structure). This structure allows investors to transfer their assets between investment pools which results in NOT triggering any taxable capital gain, therefore delaying capital gains payable. For example, if an investor initially invests in the Canadian Equity Private Pool, and after holding it for a period of time decides he wants something more conservative and then switches it into the Balanced or Fixed Income Private Pool, this switch will not be considered taxable.

The corporate structure also offers the advantage of not triggering any taxable gains due to rebalancing as each pool automatically rebalances the asset mix as indicated in its objectives. It is important to be aware that investors can choose a rebalancing method that is fix (which maintains a strategic composition) or progressive (which readjusts progressively the composition of assets as time passes).

For investors who would prefer to receive a steady stream of monthly income deposited directly into their bank account, another tax advantage offered by the private pools is that they are available in T5 or T8 versions. This means that there exists two versions which distribute either 5% or 8% yearly, on a monthly basis. And, this monthly distribution is mostly considered Return of Capital which is NOT taxable compared to Interest Income, Dividends or Capital Gains which are taxable.

Investors holding the private pools would also enjoy a personalized website dedicated solely to them which include the most recent portfolio manager commentaries as well as information concerning the performance of your portfolio, holdings, etc...

There also exists a toll free telephone number where a dedicated team of client service representatives are available to answer any question you may have.

Besides receiving detailed account statements and annual personalized reports, the private investment pool program greatly simplifies the preparation of your tax return as all calculations of any possible capital gains, dividends, or interest income to be declared are sent by ONE fund company.

Overview of Private Investment Pools

Tax Efficiency Benefit Of The Capital Structure

Sample of Account Statement

List of Different Private Pools Offered

Private Investment Pool Characteristics