Manulife launches real asset fund for Canadian HNW investors

Global head of OCIO and fiduciary services Eric Menzer says private ag debt, farmland and timber vehicles are within scope for a 'hybrid' vehicle that also includes investments in public companies.

Manulife Investment Management‘s new Canadian high-net-worth vehicle could invest into third-party private ag and timber funds.

Senior portfolio manager Eric Menzer told Agri Investor that Toronto-headquartered Manulife intends to raise about C$500 million ($399.9 million; €353.6 million) for the Manulife Real Asset Investment Fund.

It will support a combination of private and public real asset investments across real estate, infrastructure, transportation, timber, farmland and other categories. The effort builds on the firm’s experience with a similar vehicle launched in 2015 targeting small pensions, endowments and other institutions, he explained.

“On the ag side, the draw we are hearing is the income component,” said Menzer, who also serves as global head of Manulife’s OCIO and fiduciary services, according to his LinkedIn profile.

“We are sitting in an environment where interest rates are extremely low and folks are looking to diversify away from their fixed income portfolios and are also concerned with the frothiness in equity markets and looking to diversify. We’re really seeing it on both fronts.”

The ‘hybrid’ vehicle launched this month will aim for a split of about 70 percent private and 30 percent public investments, according Menzer. Geographically, its strategy focuses on the US, Canada and Europe and will incorporate public investments likely to include REITs and at least one ETF related to an ag-related commodity, he added.

Among the “core” private fund investments from the prior iteration of the vehicle, he said, was the Hancock Timberland and Farmland Fund, which is managed by Manulife subsidiary Manulife Investment Management Timber and Agriculture, known as Hancock Natural Resource Group until a rebrand late last year.

The fund also invested in agribusiness lending through a third-party manager that Menzer declined to identify, and in Canadian row crops through another manger he declined to discuss. The fund is identified elsewhere as Bonnefield’s open-end Canadian Farmland Evergreen LP Fund.

The Manulife Real Asset Investment Fund itself is an open-end vehicle that will open on a quarterly basis from May. While Menzer expects the relationship with the Hancock Timberland and Farmland Fund to continue, he said Manulife will also consider investments in open-end vehicles managed by other firms to help meet the deployment demands of investors.

“The challenge with these assets is the supply-demand imbalance and desire for investors to want to get money put to work in a reasonable time frame,” Menzer said.

“Institutional investors are typically more patient than high-net-worth individuals that don’t want to wait a year. With this vehicle, we can call capital on a quarterly basis – it will go into the public sleeve, so it will get invested right away – and then we will, over the next six-to-12-month period, deploy that capital into the private investments. Having the third-party access gives us the ability to do that.”

Though most high-net-worth individuals do not have strong preferences among different types of farmland, for example, Menzer said there is growing awareness at the higher end of the market of investment opportunities throughout the value chain.

“We’re seeing a lot of investors starting to look at not just owning the physical property, but also looking at the processing of almonds or the processing of soy,” he said. “There are capital needs there and there are certain funds out there that will fulfil those capital needs where they can’t otherwise get it at reasonable rates of return.”

Manulife Investment Management has $C154 billion in assets under management.