Ninepoint Partners released the results of its survey conducted at last week’s second annual Ninepoint Alt Thinking Global Investment Forum in Toronto. The survey polled over 100 of the financial advisors, institutional investors and other industry participants who attended the Toronto event.

Nearly two-thirds (63%) of financial advisors surveyed said they expect to increase their client or model portfolios’ exposure to private credit in the next 12 months, while 83% said they expect to increase their exposure to alternative assets over the same period.

By comparison, 83% of advisors surveyed said that currently fewer than 10% of their clients have a portion of their portfolio allocated to private credit.

“Canada is significantly behind other developed countries when it comes to retail investors allocating to alternative investment strategies, including private credit,” John Wilson, co-CEO and managing partner of Ninepoint Partners, said. “But our pension plans – some of the most sophisticated investors in the world – have been early adopters, allocating as much as 50% or more of their assets to alternative strategies, including private credit.”

The survey results seek to shed more light on the current state of the Canadian private credit market as well as the alternative investments market, reflecting the theme of the 2023 conference: “Asset Allocation and the Smoother Investor Journey.”

The survey asked respondents about the broader market sentiment surrounding alternative assets in Canada. Findings include:

  • Canadian Market Sentiment on Private Credit Skews Neutral to Positive: 30% of advisors surveyed described the general market sentiment toward private credit in Canada as very positive or somewhat positive. 38% of advisors described the current market sentiment as neutral.
  • Diversification Shines as Private Credit’s Advantage: 45% of advisors surveyed identified improving diversification as the most compelling advantage of private credit in the current market. Other advantages identified by advisors included enhancing returns (23%), offering distinctive solutions (19%) and providing income (13%).
  • Persistent Inflation Drives Opportunity in Infrastructure and Private Credit: When asked which alternative asset classes they would be most likely to increase allocations to if inflation continues, 44% of advisors surveyed selected infrastructure, followed by private credit (41%), equities (41%) and real estate (38%). [Note: Respondents could select more than one option.]

“Our journey has been to help educate advisors on the benefits that alternative investments can have for their clients’ portfolios,” Wilson said. “Private credit and other alternative investments help to smooth out returns over the long run because they are less correlated to traditional equity and fixed income products, which means that in times of extreme volatility, they have the potential to act as a ballast in an investor’s portfolio.”