Why veteran alternative provider is ramping up its product line
Invico Capital Corporation began selling alternative investments long before it was an asset class, so was pleased to win an award that acknowledges that it’s survived 18 years and is reaping the benefits of the current interest in its alternative products.
“We founded the firm in 2005 when I think, at the institutional level, alternatives were somewhat known,” Allison Taylor, Invico’s chief executive officer and co-founder, told Wealth Professional.
“At the time, we were focused on private equity strictly. That is just one sector within the alternative space, which we now know is much broader. So, I think one of the reasons why we were recognized with the award was because we were one of the first players to come into the space and we’re still in existence today because a lot of other people have come and gone.”
Although the Calgary-based Invico may be best known for its Diversified Income Fund, which has contributed to its success and now has $465 million of the firm’s $2.5 billion of assets, the 50-staff firm recently won the award for the Alternative Investment Solutions Provider of the Year.
Jason Brooks, Invico’s president and co-founder, attributes the company’s success to its tenacity since it launched just before the 2008 great financial crisis.
“Even while we weren’t enjoying tremendous returns in those difficult times earlier in the life of the firm, we still enjoyed what we did each day,” said Brooks. “That still holds true today. We’ve been through a number of business cycles and we’ve learned something new by being tenacious and driven because every cycle presents a lot of opportunity.”
Brooks noted that Invico launched its private debt as it came out of the 2008 global financial crisis because it wanted more security and less volatility. It realized that the Canadian market, particularly, served smaller and mid-size companies on the private credit side very well.
“Each crisis gives you a chance to learn new things,” he said. “By the time we got to the pandemic, which was probably the toughest of all, we were battle hardened. We worked even harder over that period, and we’ve had the best success since the pandemic that we’ve had in the firm’s history. So, we’re welcoming the next crisis with open arms and we will figure that one out, too, and grow.”
While Invico is largely centred around real estate in Canada, it has a lot of REITs and energy. It also provides diversification in quality strategies outside of real estate. So, it’s aware that, in this rising interest rate environment, advisors want more than average yield and Invico can provide it because energy is a great inflation hedge and private credit is rising. Its interest rates are still above the banks, so, as Taylor said, “We’re able to provide higher rates of cash distribution.”
Invico measures its success by the returns on its Diversified Income Fund, which has had compound returns of 11.5%. It’s also been doubling its assets every two years for the past six years. While, like many companies these days, one of its challenges is attracting and retaining the right talent, it’s also proud of the diversity in its firm and how the people they work with have grown. One-quarter of its employees were born outside of Canada and more than half of its staff is female, and the co-founders are excited about the team they now have in place.
“Ultimately, what gets you up in the morning and into the office is the opportunity to work with great people,” said Brooks.
Taylor said Invico wants to continue to expand its offerings for both advisors and investors, so it’s working to bring some new alternative products to market, especially now that retail investors have shown an uptick in interest in alternatives since just before the pandemic.
She noted that there’s also been a rise in products coming to the retail platforms that allow people to have liquidity on a more regular, though still not daily, basis. Invico brings liquidity to investors on a quarterly basis, so investors’ assets are not tied up for five to ten years at a time.
“That’s really where the trends have been going, and that’s what’s been helping us grow,” said Taylor. “Our aim is to have that broader market on the retail level recognize the benefits of having alternatives in their portfolios.”
The two co-founders are optimistic about the future, especially after weathering the pandemic while operating their businesses remotely and also seeing energy options take a hit.
“The wind is at our back. We have increasing yields and better deal flow, and the opportunity right now is to capture than in our product and just leverage our ten-year track record of doing it right and being able to survive business cycles, which we fully expect will come back at us,” said Brooks.
“We have a very real work hard atmosphere that will serve us well over the next few crises, and I’m sure there’ll be more ahead. But, we’re very focused on building the firm, just not too rapidly.”
