Ontario’s securities regulator is considering introducing a new investment fund category, the Ontario Long-Term Asset Fund, to allow regular Canadians to invest in private assets and infrastructure projects. This new fund would provide opportunities for residents of Ontario to invest in assets that are typically only accessible to pension funds, professional asset managers, and wealthy individuals, such as private debt, equity, and infrastructure projects.
Raymond Chan, the senior vice-president of investment management at the regulator, highlighted that long-term assets offer a unique opportunity for investors to diversify their portfolios and potentially achieve higher returns over an extended period. This initiative could also benefit businesses by helping them lower their funding costs and secure the capital needed for growth.
While Canadian investors currently have some exposure to private markets through pension plans, the proposed fund category would enable them to invest in a public investment fund that requires co-investment by institutional investors. The new funds would be semi-liquid, allowing investors to redeem them at least annually, and possibly monthly.
In Canada, retail investors can access illiquid investments through mutual funds, but there are restrictions on the size of these investments relative to the total fund. Under the proposed structure, long-term funds would be required to invest between 50% and 90% of their net asset value in long-term assets.
Similar long-term investment vehicles, like interval funds, are already available in the US, UK, and Europe. The Ontario Securities Commission is seeking feedback on the proposal until Feb. 7, indicating a willingness to consider input from various stakeholders before finalizing the new rules and regulations.
Overall, this development could democratize access to private assets and infrastructure projects, providing ordinary Canadians with opportunities to diversify their investment portfolios and potentially benefit from long-term growth and returns. By expanding ownership of private assets, Ontario aims to create a more inclusive investment landscape that benefits both investors and businesses alike.
