Different Objectives. Different Outcomes.

What are investors really optimizing for?

The right investment structure depends on what an investor is trying to achieve. Existing portfolio exposure, investment horizon, liquidity needs and even past experiences can shape whether an institution prefers the discretion of a fund or greater control over how and where its capital is deployed. CEO Rob Kumer and Chief Capital Officer Aliyah Mohamed discuss why those different perspectives matter and what they mean for investment managers.

Video Transcript

Aliyah Mohamed: First and foremost, it's looking at their overall portfolio balance, where they are invested today, where they would like to be more invested or less invested. I think, as, you know, Rob shared earlier, everyone has a different view in the world. And so, I think that's going to factor into some of those objectives on how they want their portfolio to be constructed. I think alongside that, you know, we have touched on it, but governance is critical in this day and age. I think the ability to have transparent reporting, a clear understanding of how investments are performing, that relationship and kind of engagement with the manager is really important as they think about where, you know, capital is going to be deployed and what that means for them over the next several years, because these are generally longer-term investments.

The duration, the liquidity, the ability to transact, I think there's a whole list of other criteria that come into play, but overall portfolio fit, given how they view the world and where they'd like their portfolio to go, as well as the reporting, the transparency, and the government, to me, are kind of at the top of the list.

Rob, what do you think of that? Rob Kumer: Yeah, well, I agree with all of that. And I think the only thing that I might add is, let's face it, everyone brings their own history to investment decisions, and to strategy. And there are certain investors who, for example, may have had negative experiences with fund investments and decide that going forward, we're going to do SMA investing. We control our own destiny. We pick our asset class. We pick our duration. We control liquidity. We make the decisions. And that strategy makes a lot more sense and is a lot more comfortable in the context of their history.

There are other investors who have tried direct investing and what I'd call asset selection strategies on their own, previously, and have had very negative experiences with that and may migrate more towards a fund investment. I don't have to pick asset classes. I don't have to pick sectors. I don't have to pick timing. I hand it all over to a fund manager and that manager makes all the strategic decisions going forward and it's out of my hands. And I pick a manager who has a good track record, good governance, good values, and I basically trust them to do it.

So I think that's probably the last piece. But as you mentioned, I mean, there's all of those things – portfolio construction, governance, liquidity, investment horizon – that will dictate what it is. And then I think the last part is sort of an emotional component where people bring their own histories, their own track records, and their own experiences to making decisions as to how they're going to allocate capital. Aliyah Mohamed: It's so interesting you say that. I would, you know, if I think about what we're hearing from some of our existing relationships, but also new potential relationships in the market, there is exactly as you described, some groups that have a history of investing directly that have decided we don't want to be the ones in the market trying to figure out where to go, where the next, you know, opportunity is. We want someone who does exactly that all day, every day, buying, selling, leasing, financing. And so here you go. Go find those opportunities for us, you know, with the right reporting, transparency, governance, all of that.

And then there's the exact opposite where, you know, groups are saying, this is the box that I want to deploy capital into. Can you help me invest within that box? And it's great that we can do both, but it's really interesting that we're seeing, you know, these different perspectives in the market. And I think what it means for us as managers is we really need to level up our awareness of where we can act best for LPs.

I don't think we can, you know, in general, managers can be all things to all investors. And so, you know, we may not be leading the charge with a segregated account for seniors housing. But we absolutely can do retail, whether it's enclosed or necessity-based, high street, office, you know, from Scotia Plaza to Vancouver, Calgary, Montreal, industrial, you know. And so knowing where we can act best—

Rob Kumer: And add the most value.

Aliyah Mohamed: And add the most value, I think is increasingly important to discuss with investors how they want to go about managing their capital.

Rob Kumer: Yeah, I agree with all of that.