Manulife Real Asset Investment Fund

Let’s get real about alternatives

Real challenges

  • Canadian investors are living in a world in which their portfolios are increasingly threatened by factors outside of their control:

    • Low yields
    • High valuations
    • Volatile markets
    • Increasing asset class correlations.
  • To mitigate these risks, the world’s most sophisticated investors have turned to real assets, investing in infrastructure, real estate, timberland and farmland, to name a few. But high minimum investment amounts, complicated investment processes, low liquidity and restricted access mean that these diversifying investments have traditionally been available to only the largest institutional investors.

    Traditional funds can offer some exposure to parts of the real economy by holding securities issued by firms in the infrastructure, agriculture and real estate sectors. But since their holdings are traded on public exchanges, they’re still exposed to public market shocks. This has resulted in retail investors missing out on the key benefits that real assets can offer. At Manulife Investment Management, we believe it’s time to change that.

Key differentiators between real assets and traditional investments

 

Mutual funds and ETFs focused on public investments in the real economy

Liquid alternative mutual funds & ETFs

Private real asset strategies

What they are and what they hold

Public equities and bonds of companies in sectors focused on the real economy, such as agriculture, utilities, infrastructure, and REITs

Public equities & bonds; commodities; often with the use of short selling, leverage and derivatives

Direct real estate; Timberland; Farmland; Infrastructure assets

What they can do

Provide some exposure to real assets owned by public companies; can be bought and sold on a stock exchange or from a network of bond dealers at any time with relative ease.

Provide some diversification through exposure to non-traditional strategies such as long/short and equity market neutral; provide liquidity

Diversification thanks to income and growth patterns unrelated to public markets; help protect against inflation

What they don’t do

Provide direct exposure to real assets; capture the liquidity premium; diversify against adverse market events

Provide direct exposure to real assets; capture the liquidity premium

Provide daily liquidity

May be suitable for

Traditional investors who need liquidity, can tolderate market drawdowns, and want exposure to some elements of the real economy

Investors looking for strategies that can be less correlated with traditional markets

Long-term accredited investors focused on steady and diverse sources of income that have low correlations with traditional asset classes, and who want to hedge against inflation

The benefits of real assets

Real assets provide exposure to the real economy, such as roads and bridges, power lines, apple orchards, corn fields and office towers. This benefits investors by offering diversification and value. Assets like this have low correlation with traditional asset classes like equities and bonds, can help protect against inflation since their revenues are often tied to the Consumer Price Index (CPI), and have differentiated yield profiles that may be useful in a low-rate environment. Since they typically provide critical products and services, real assets may also have a potential for lower volatility levels than traditional assets.

20-year annualized returns as of December 31, 2022

Bar chart illustrating the 20-year annualized return for a selection of private and public assets for the period ending December 31, 2022. Range of returns span from 11.7% to 3.1%. In order from highest return to lowest return, assets listed are: Farmland, Canadian Real Estate, Infrastructure, U.S. Equities, Canadian Equities, U.S. Real Estate, Timberland, Canadian Bonds, and U.S. Bonds.

Source: Morningstar Direct, January 1, 2003 to December 31, 2022. Representative indexes: Farmland: NCREIF Farmland; Infrastructure: Burgiss Global Infrastructure Pooled Composite; Canadian Real Estate: MSCI Canadian Property Index (01/01/2003 – 12/31/2004) & MSCI/REALPAC Canada Quarterly Property Fund Index (01/01/2005 -9/30/2022); U.S. Real Estate: NCREIF US Real Estate; U.S. Equities: S&P 500 TR Index; Canadian Equities: S&P/TSX Composite TR Index; Canadian Bonds: FTSE Canada Universe Bond Index; Timberland: NCREIF Timberland; U.S. Bonds: Bloomberg U.S. Agg. Bond Index. All returns are in Canadian dollars. 

What does this mean for investors?

The result of these characteristics is the potential for improved risk and reward and better long-term outcomes. Thanks to their lower volatility levels and lower correlations with traditional asset classes, adding real assets can improve investors’ efficient frontiers – the set of portfolios that offer the highest expected return for a given level of risk.

Line graph for illustration purposes only. Graph shows how for any level of risk, adding private assets to a portfolio of public assets increases the return potential.


For illustrative purposes only.

Traditional users of real assets

Thanks to their low correlation with traditional asset classes, their potential to protect against inflation and their potential to generate strong income, real assets can provide the diversification and value that Canadian investors need. So why don’t investors have greater exposure to real assets? The fact is, they do. For years, institutional investors such as public and private pension plans have enjoyed the benefits of real assets since they can more easily navigate the main challenges retail investors face when investing in real assets. Chances are that many investors are already benefitting from real assets without even knowing it.

Canadian Pension Plans' Allocation to Real Assets (%)

Line graph with date range from 2015 to 2020 showing the top 5 Canadian Pension Plans’ allocations to Real Assets steadily increasing over time. Allocations ended Dec 31, 2020 ranged from 18.6%, for the British Columbia Investment Management Corporation, to as high as 31.2% for the Canada Pension Plan Investment Board.


CPPIB
: Canada Pension Plan Investment Board, CDPQ: Caisse de dépôt et placement du Québec, OTPP: Ontario Teachers’ Pension Plan, PSP: Public Sector Pension Investment Board, BCIMC: British Columbia Investment Management Corporation

Source: Manulife Investment Management, as of January 21, 2021. Data compiled using each plan's latest annual reports. "Real assets" includes infrastructure, real estate and natural resources. Due to differences in each plan's presentation of their assets, figures are not necessarily comparable to each other. The selected plans are the five largest plans in Canada by AUM.

  • Traditional barriers to entry for accessing real assets

    • Minimum investments – can be in the millions of dollars
    • Access – individual retail investors can’t easily access most private investment opportunities
    • Transparency – can be difficult to get a clear view of underlying holdings
    • Liquidity – it can take years to redeem capital
    • Complexity of investing - capital calls process can be complicated and can take years to actually get client funds invested
  • Requirements of both institutional and retail investors

    • Diversification from traditional asset classes
    • Protection against inflation
    • Income in a low-rate world
    • Liquidity provisions
    • Access to a variety of real asset classes
    • Simple investment process

How Manulife Investment Management can help

To help solve this disparity, we’ve leveraged our experience and expertise in real assets to create the Manulife Real Asset Investment Fund, a solution that brings institutional-grade management of real assets to Canada’s accredited retail investors. Manulife Real Asset Investment Fund combines the diversification and yield benefits of real assets with the liquidity of public market investments-with transparency and investor access at its core.

  • The Manulife Real Asset Investment Fund overcomes the traditional barriers to entry facing retail investors by offering:

    • Access to multiple complementary real assets - the diversification, yield and inflation-protection benefits of real assets, in a single ticket
    • Liquidity windows – when you need to cash out
    • Managed capital call process – private/public hybrid design, so investor capital is invested in a portfolio of publicly traded real asset proxies on day 1 pending the call into the private investments.
    • Transparency of its underlying holdings – so clients know what real assets they're invested in
    • Low minimum investment – CAD$25,000
    • Attractive fee level

A private/public hybrid approach

The strategy is made up of two investment sleeves; one providing exposure to assets driving the real economy, the other comprising public market investments that seek to mirror the private assets exposures. This second sleeve provides investors with liquidity and the ability to manage capital flows.

The end result is a fund with the benefits of institutional quality real asset exposures, combined with the access, liquidity and transparency that Canadian accredited investors deserve.

Manulife Real Asset Investment Fund

Private assets sleeve
Direct investment into Manulife Real Asset Fund:

  • Real Estate
  • Infrastructure
  • Timber
  • Farmland
  • Global Transportation
  • Infrastructure Debt
  • Agricultural Lending

Public assets sleeve
Publicly-traded investments in:

  • REITs
  • Listed Infrastructure
  • Energy
  • Commodities
  • Precious Metals
  • Government Bonds / TIPS
  • Corporate Bonds
  • Cash / FX
Pie chart for illustration purposes only. Indicating a long-term expected target allocation of Manulife Real Asset Investment Fund to be 70% private assets and 30% public assets.

See important information below.

For illustrative purposes only. Over the long-run, the Fund is expected to maintain approximately a 70% allocation to the Private Assets Sleeve, implemented through units of Manulife Real Asset Fund ("MRAF”) and approximately a 30% allocation to the Public Assets Sleeve. MRAF invests primarily in affiliated Underlying Funds and may invest in Underlying Funds managed by unaffiliated investment managers providing direct exposure to real estate, timberland and farmland, infrastructure, private debt and other private market asset classes. MRAF is an affiliated Underlying Fund and is managed by Manulife Investment Management Limited (the “Manager”) and advised by the Manulife Investment Management (US) LLC and Manulife Investment Management Limited. The Fund may invest in affiliated mutual funds and pooled funds under the public sleeve. The Fund may also invest in mutual funds and pooled funds managed by unaffiliated investment managers if there are no suitable investment opportunities in affiliated funds. For more information, please consult the Fund’s Offering Memorandum.

Partner with a manager with experience and expertise in real assets

It takes deep experience, talent and global collaboration to manage real assets so that investors reap the benefits. Manulife has them all. Manulife Investment Management has been investing in real assets for almost a century and today we’re the world’s largest timber investment manager and second largest agriculture investment manager. Now, we’re democratizing real assets and bringing that expertise to accredited retail investors across Canada. Investing in real assets since 1925.

  • World’s largest timberland investment manager

    Timber

    World’s largest timberland investment manager1

    $14.1 billion in AUM2

  • number 2

    Agriculture

    World’s second‑largest agriculture investment manager3

    $5.1 billion in AUM4

  • 35 +

    Infrastructure

    35+ years of experience

    $13.9 billion in AUM

  • 63.8

    Real estate

    63.8 million square feet of commercial property globally5

    $23.9 billion in assets under management (AUM)5

  • Combining the strength of the Multi-Asset Solutions Team and private markets group to create a unique value-added solution for clients.

  • Multi-asset solutions

    Active allocation, deeper diversification, and tailored solutions built over 25 years of multi-asset innovation.

    60

    Investment professionals

    25+

    Years of multi-asset Investing

    $211.2B

    in assets under management6

  • Private markets

    Capitalizing on inefficient markets, diversification potential, and seeking attractive risk-adjusted returns.

    246

    Investment professionals7

    95+

    Years of experience8

    $154.0B

    in assets under management9

All AUM calculated on a fair value basis in Canadian dollars (CAD); all data is as of September 30, 2021, unless otherwise noted. Data includes assets managed by Manulife Investment Management and its affiliates on behalf of Manulife's Canadian and U.S. General Accounts, and also certain third-party investors. Investment advisory services to third party investors and certain affiliated investors are offered by Manulife Investment Management Private Markets (US) LLC ("Manulife IM PM (US)") a U.S. Securities and Exchange Commission registered investment adviser with $42.1B assets under management.

1 RISI Global Timberland Ownership and Investment Database as of June 30, 2020. 2 AUM of Hancock Timber Resource Group, an operating division of Hancock Natural Resource Group, Inc., managed on a discretionary and non-discretionary basis for the General Account, its affiliates and third-party clients. 3 Manulife Investment Management’s agricultural investment group was ranked #2 out of the top 30 agriculture investors by AUM according to the Global AgInvesting Rankings and Trends Report 2019.  4 AUM of Hancock Natural Resource Group, Inc., managed on a discretionary and non-discretionary basis for the General Account, its affiliates and third-party clients. 5 As of September 30, 2021, the real estate equity team manages $1.0B in AUM on a discretionary basis; AUM reported on a fair value basis; The methodologies used to compile the total AUM are subject to change and may not reflect regulatory AUM as reported on certain affiliates' Form ADV. 6 AUM includes $7.9 billion AUM adjustments driven by $4.7 billion non-discretionary general fund AUM and $3.2 billion external clients AUM. The methodologies used to compile the total assets under management are subject to change. 7 Investment professionals includes individuals who manage assets on behalf of both the Manulife General Account and external third parties. 8 Includes significant experience investing on behalf of the Manulife general account. 9 AUM reported on a fair value basis; includes $73.6 billion of general fund assets and $427M of unfunded committed capital of Manulife IM Private Markets (US) LLC. The methodologies used to compile the total AUM are subject to change and may not reflect regulatory AUM as reported on certain affiliates’ Form ADV.


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© 2023 Manulife Investment Management. All rights reserved. Manulife Investment Management, the Stylized M Design, and Manulife Investment Management & Stylized M Design are trademarks of The Manufacturers Life Insurance Company and are used by it, and by its affiliates under license.

This communication is not and under no circumstances is to be construed as an invitation to make an investment in the Manulife Real Asset Investment Fund (the “Fund”), nor does it constitute a public offering to sell the securities of the Fund. The offering of units of the Fund is made pursuant to its Confidential Offering Memorandum only to those “accredited investors” in certain jurisdictions of Canada who meet certain eligibility and cannot be sold in Canada to the general public.  The offering memorandum contains important information regarding the fund's investment objectives, strategies, restrictions, risks, fees, redemption limitations, liquidity and other matters of interest. There are no assurances that the stated investment objectives of the fund will be met.

Applications for investment in the Fund will only be considered on the terms set out in the Confidential Offering Memorandum, a copy of which can be obtained from us. Eligible investors should review the Confidential Offering Memorandum carefully before deciding to purchase units and should note that alternative investments can involve significant risks. The Fund is not guaranteed, its values may change frequently and past performance may not be repeated. The Fund is managed by Manulife Investment Management Limited. Manulife Investment Management is a trade name of Manulife Investment Management Limited.

Investing involves risks, including the potential loss of principal. Financial markets are volatile and can fluctuate significantly in response to company, industry, political, regulatory, market, or economic developments. These risks are magnified for investments made in emerging markets. Currency risk is the risk that fluctuations in exchange rates may adversely affect the value of a portfolio’s investments. The information provided does not take into account the suitability, investment objectives, financial situation, or particular needs of any specific person. You should consider the suitability of any type of investment for your circumstances and, if necessary, seek professional advice.

This material, intended for the exclusive use by the recipients who are allowable to receive this document under the applicable laws and regulations of the relevant jurisdictions, was produced by, and the opinions expressed are those of, Manulife Investment Management as of the date of this publication, and are subject to change based on market and other conditions. The information and/or analysis contained in this material have been compiled or arrived at from sources believed to be reliable, but Manulife Investment Management does not make any representation as to their accuracy, correctness, usefulness, or completeness and does not accept liability for any loss arising from the use of the information and/or analysis contained. The information in this material may contain projections or other forward-looking statements regarding future events, targets, management discipline, or other expectations, and is only as current as of the date indicated. The information in this document, including statements concerning financial market trends, are based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons. Manulife Investment Management disclaims any responsibility to update such information.

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