It’s no secret that those who have traditionally looked to invest money in bank savings accounts, Guaranteed Investment Certificates (GICs) and high-quality government and corporate bonds face a difficult environment with interest rates at such low levels.
Most one-year GICs offer a rate of about 0.75%, while five-year GIC rates are in the 1.5% range. Canadian government bond yields are similarly paltry – even the ten-year government of Canada bond offers an annual return of only about 1%. And most investment grade corporate bonds carry returns of no more than 2%.
Interest rates are at their lowest level in the past century. Many overseas governments and corporate bonds even offer negative interest rates, meaning investors actually lend money knowing they will receive a less back in the future!
With this backdrop in mind, the question most frequently asked by investors today is how to earn a reasonable and stable income stream on their savings in this ultra-low interest rate environment. We think one solution to this problem is to invest in a diversified portfolio of income-generating, private assets which target returns of approximately 8%+ per year.
To this end, several years ago we launched the Bridgeport Alternative Income Fund to take advantage of this opportunity. While you may already be aware of opportunities to invest in individual real estate mortgages or mortgage funds, our Alternative Income Fund goes far beyond those strategies which may only focus on a single property or one or two Canadian geographies, exposing investors to singular risks.
In contrast, Bridgeport’s Alternative Income Fund has investments in thousands of assets spread over more than 15 unique investment strategies including:
Private Corporate Debt – this investment category provides the Fund with exposure to hundreds of loans to private companies in Canada, the US and Europe.
Commercial Real Estate Lending – through investments in three separate portfolios, our Fund has exposure to over 700 loans secured against apartment buildings and other types of commercial real estate in over 15 US markets and several Canadian cities.
Music Royalties – through its investment partner which focuses on this specialized investment area, the Fund owns publishing rights to hundreds of music compositions which generate a steady stream of royalty income from downloads from digital music services like Spotify and Apple Music, placement in various media, live performance and use by other companies such as Peloton.
Film Tax Credit/Distribution Rights Finance – this investment segment generates income from a diverse global portfolio of loans secured by government film tax credits and film distribution rights.
Railcar Leasing – income is generated for investors though the leasing of over 35,000 rail cars to a diversified group of U.S. shippers, railway companies and other large corporate clients.
Accounts Receivable Factoring – a well-established investing area which offers investment returns by lending money to hundreds of businesses secured against amounts owed from credit worthy customers.
Residential Real Estate Lending – provides exposure to over 2,000 mortgages secured against residential properties across Greater Toronto and Vancouver.
Consumer Lending – generates income by providing unsecured and secured loans to thousands of consumers in North America.
Preferred Private Equity – provides returns through structured preferred investments backed by portfolios of hundreds of third-party private equity-backed companies in the North America, Europe and around the world.
Aircraft Leasing – an investment made by the Fund which should enable us to take advantage of recent opportunities created by COVID-19 through the leasing of airplanes to airlines around the world.
The diversity of investment strategies in which the Alternative Income Fund invests enables it to generate more stable investment returns than any one of the individual strategies could on its own.
Bridgeport’s Alternative Income Fund has invested in all of the above asset categories in partnership with large, well-established institutional asset managers which specialize in each of the niches. Typically, investing with these managers would be difficult for private investors to access due to high minimum investment amounts, however because our Alternative Income Fund is able to pool our client capital together we are able to meet these thresholds.
The Alternative Income Fund is structured in a similar manner to our other Bridgeport pooled funds, offers a quarterly redemption option, is registered account eligible and can be held directly in your brokerage account like any other fund. Please feel free to reach out to us at firstname.lastname@example.org should you like more information about Bridgeport’s Alternative Income Fund.