Q: Why expand this partnership now?

Paul Savage: We’ve had a long-standing relationship with WFG in other areas of our business. This next phase is about reach and access. Too many Canadians don’t have the insurance coverage they need. In fact, recent data from the Life Insurance Marketing and Research Association (LIMRA) indicates that 31 per cent of Canadians are either uninsured or underinsured. By bringing life insurance and Manulife Vitality into this partnership with WFG, our goal is to connect more Canadians with trusted agents who can help them understand what their insurance needs are, find solutions that meet their unique needs, and help them live longer, healthier, better lives.      

Todd Buchanan: At World Financial Group, our motto is ‘No family left behind.’ We recognize that middle-income Canadians have often been overlooked by the insurance industry, leaving many families underserved. Our expanded partnership with Manulife is working to change that. We are dedicated to sitting down with families one-on-one, providing education on insurance and financial solutions to secure a brighter future. This initiative goes beyond offering products; it’s about empowering our agents to forge long-term relationships built on trust. Many WFG agents live and work in the very communities they serve, often seeing themselves in the clients they support. This personal connection enables us to make a meaningful impact.

Q: What does this look like in practice for agents?

TB: It starts with comprehensive onboarding. Following the completion of required training, WFG agents have access to a full suite of Manulife offerings, including Term, Universal, and Participating life insurance, plus guaranteed wealth solutions like segregated funds and annuities. More importantly, they’re focused on ways to connect these solutions with customer needs and goals, whether that’s protecting a young family or supporting retirement readiness.

PS: Manulife Vitality is also a big part of our offering and WFG agents, upon completion of their onboarding, will receive their Vitality certification. Manulife Vitality is backed by behavioural science and is the only program of its kind in Canada that offers clients helpful tools, as well as access to the latest technology, resources, and rewards, to help them take steps towards better health. The features of Manulife Vitality can provide value to anyone, regardless of their age, health status or protection needs – empowering agents to tap into new customer markets. 

Q: Why is WFG the right partner for this?

PS: We’ve been working with WFG since 2017, including successful collaborations on travel, health, and dental insurance benefits for Canadians. Expanding to life insurance products and segregated funds felt like a natural progression. WFG’s growing network also brings deep community insight and expertise, serving local communities across Canada who haven’t traditionally had access to personalized financial advice. This aligns with our mission to make insurance more accessible and tailored to Canadian families.

TB: Exactly! We share a common goal of closing the coverage gap for middle-income families in North America. Recognizing their needs, we’ve joined forces to better serve this community. This partnership highlights our dedication to Canada and ongoing investments in our back office. We are enhancing our digital capabilities and compliance oversight to provide the best support for our agents. By equipping our agents with robust tools and resources, we ensure they can effectively meet the needs of their clients and build lasting relationships rooted in trust and reliability.

Q: What’s next?

PS: Our expanded partnership with WFG aligns with our goal of ensuring Canadians who need insurance have access to Manulife solutions. This collaboration is a testament to our dedication in reaching diverse markets and ensuring inclusivity in insurance coverage.  

TB: WFG agents can play a crucial role in helping everyday Canadians safeguard their families’ future. Their advice and ongoing support are essential in ensuring that families are protected and prepared for whatever life may bring. Together with Manulife, our collective goal is to reach the under and uninsured in Canada and set a new standard in how financial advice and protection are delivered.

To learn more about the Manulife and WFG partnership, visit 
https://advisor.manulife.ca/advisors/insurance/newsroom/manulife-and-world-financial-group-news-release.html

Kim¹ came to Norman Galanto’s office in Calgary, Alberta, seeking help to save money for her children’s education. Norman, a World Financial Group (WFGIAC) independent agent² for more than 14 years, helped Kim secure financial protection at a critical time.  “Through the financial needs analysis, I discovered Kim had a decent income and savings, but she didn’t have life insurance,” recalled Norman. “Her primary concern was to provide protection for her children’s education, but her current financial strategies didn’t reflect that priority.” As a result of their conversation, Kim decided that life insurance should be part of her financial plan and purchased a policy. Unfortunately, she was later diagnosed with a terminal illness and passed away while her children were still very young. Insurance agents are in the rare position to help bring peace to grieving families, and in this situation, Norman was able to deliver a death benefit that helped to secure the future of Kim’s children’s education.

“There’s no core curriculum in our school systems today teaching principles of making smart financial investments,” said Norman. “I believe that all Canadians inherently want what’s best for their families. Once we show available options and they determine what is best for their family, the right solutions can change the destiny of multiple generations.”

Like many Canadians who come from humble beginnings, financial education wasn’t part of Norman’s upbringing. He often lived paycheck to paycheck, before becoming an agent, and worked multiple simultaneous jobs—in restaurants, hotels, wholesale grocery stores, as an auditor, and an aircraft mechanic—to make ends meet. “And if there was time, my wife and I would throw newspapers for extra money,” recalls Norman.

Elizabeth Zetazate was a midwife in the Philippines before moving to Canada. Now based in Toronto, Elizabeth joined WFGIAC 24 years ago to start her own insurance business.  She was drawn to becoming an agent because it offered both work/life flexibility with the opportunity to continue to help families. “WFG is committed to giving everybody a chance,” said Elizabeth. “When I joined, the financial industry was mostly men; but WFG’s commitment to inclusivity gives everyone a chance. I want to teach proper protection. I can help families achieve financial security.  I want to empower others like I have been empowered.”

Norman and Elizabeth, both first-generation Canadians from the Philippines, often see themselves in their clients.  “The immigrant population in Canada is growing and these new Canadians are often well educated,” said Elizabeth, “but when they come to Canada they are shocked because they feel they have to start all over without connections or support. They fear they don’t have options. They may not have strong financial knowledge on how things work here. We are here to help them, no matter their background. That’s why our system works.”

Steve Holbrook joined WFGIAC when he was 23 years old. As the oldest son of a Slovenian family, Steve had been groomed to take over his family’s masonry business after college. “Before becoming an agent, I was working as a bakery chef in Edmonton, buying time before taking over our family’s construction company. Those plans changed when I was presented with the chance to build my own business, and the ability to help educate Canadian families. I felt like this was the mountain I was destined to climb,” recalls Steve. “Today, I have more than 500 licensed agents on my team all working across Canada to offer people the financial knowledge that helps them live their best lives.”

Today, Norman, Elizabeth, and Steve each run their own businesses, with multiple office locations to help middle-income families across Canada gain financial protection. WFGIAC – and the very real people behind the business – have one purpose: to close the protection gap, leaving no family behind.

 “We want our customers and agents to have an amazing experience when they walk through our door,” said Steve. “You know there’s a part of me that is really not proud of how the industry has largely ignored so many middle-income families and underserved their needs. But the other side of it is that it makes me want to work even harder, to do an even better job for these families that have been forgotten.” “We are seeing the impact on our clients firsthand,” continued Steve. “I had a client who was diagnosed with a chronic disease as a young adult. Her medication was very expensive for her, but she was protected by a policy that significantly defrayed her costs.

Another client had just lost her husband. She was mourning her family’s loss; a truly devastating time. However, his life insurance policy was able to be a sliver of peace in her life moving forward by alleviating some of the financial burden that she was feeling. That’s why we do what we do.”

Agents play a crucial role in helping everyday Canadians safeguard their families’ future. Their expert advice and ongoing support are part of ensuring that families are protected and prepared for whatever life may bring. By closing the protection gap and providing access to financial education, WFGIAC agents are making a significant impact on the lives of middle-income families across Canada.

About WFGIAC: World Financial Group Insurance Agency of Canada Inc. (WFGIAC) offers life insurance and segregated funds through a distribution network of more than 20,000 independent agents across Canada. These independent agents are dedicated to helping individuals, families, and businesses achieve financial security through life insurance, retirement, and wealth-building strategies.  WFG Securities Inc. (WFGS) offers mutual funds by properly licensed individuals. WFGIA, WFGIAC and WFGS are affiliated companies. The WFG companies are wholly owned indirect subsidiaries of Transamerica Corporation.

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¹ In this article, policyholders’ names have been changed to protect confidentiality and their stories may be representative of multiple clients.

² All agents referenced in this article are independent licensed insurance agents contracted with World Financial Group Insurance Agency of Canada (WFGIAC).

Amid a backdrop of lower interest rates and improving economic growth, asset allocators have recently gravitated toward Real Estate Investment Trust (REIT) investments.¹ However, the potential for ongoing political turmoil in the U.S. tied to presidential turnover is keeping the market on edge, fuelled by angst about a smooth transfer of power.² This is causing heightened volatility in underlying U.S. equity indices where REIT issuers trade, which is a matter of great significance to Canadian investment portfolios. 

The first thing to consider is an elevated correlation between performance in the S&P 500 and S&P/TSX Composite, which historically reaches 80%.³ The following chart suggests that Canadian equities will not be able to sidestep corresponding declines should markets roil down south. 

Further, there are considerable questions surrounding the Trump presidency’s impact on the Canadian economy related to foreign tariff policy, which could impact the bottom line of Canadian businesses. According to Randall Bartlett, senior director of Canadian economics at Desjardins, “direct impacts of the 10 per cent or up to 20 per cent tariff” could be applied to imports from Canada.⁴ Such a scenario would materially impact the bottom lines of domestic industrial heavyweights and impact their capital investment strategies. 

While such correlations and uncertainties may unduly impact public REITs in Canada – many of which are dual-listed on U.S. exchanges – private REITs are not subject to the same volatility. 

The key reason lies in the more stable valuations of private REITs, which are not influenced by the daily fluctuations of sentiment or performance correlations between equity indexes and their underlying components. Instead, private REIT valuations are based on quantifiable metrics, such as the underlying value of real estate assets and the rental income they produce. Additionally, the application of quarterly (or longer) appraisal-based valuation methods mean unit value changes are more adaptive over time and less subject to daily/weekly market variance.  

Put another way, public market REITs are more influenced by investor emotion, analyst reports, and peer valuation correlations, while private market investments are based on data-driven calculations to reflect underlying unit value. The investment risks of each are not linear. 

According to Wayne Byrd, Chief Financial Officer of Skyline Group of Companies, the difference between public and private REITs can be characterized as ‘emotional’ versus ‘computational’: “The value of the investments in the public markets is determined by the market, by sentiment, by market analysts, by the ‘buy, hold, sell’ rating and what the market decides the underlying assets are worth… [whereas] the value of the investment in the private market is determined by data under a Net Asset Value (NAV) per share calculation driven from the market value of the underlying assets, removal of emotion, and the ebbs and flows that we see in the public space.”⁵

Canadian Political Uncertainty Looms in 2025 

Irrespective of the shifting power dynamics down south, Canada’s political landscape is bound for change in 2025. This may cause volatility to increase in Canadian markets similar to what has generally been seen in the U.S. during federal election years. Given the tenuous hold on power Justin Trudeau and the Liberal Party maintain in parliament,⁶ odds are elevated that a snap election could even take place before the mandatory October 20, 2025, electoral deadline.⁷

The makeup of the current Liberal government is a cause for present ongoing instability. In 2021, the Liberal Party won 160 seats (up from 155 seats in 2019) but fell short of the 170 seats needed for a majority in the House of Commons. The lack of electoral mandate led to the Liberals to enter into a Supply and Confidence Agreement with the New Democrat Party (NDP) in 2022, which was subsequently ended in 2024.⁸ This makes the Liberals subject to a no-confidence motion in parliament, fostering ongoing uncertainty in the marketplace. 

Whether or not a snap election takes place, Trudeau’s hold on power appears shaky. In late October, at least twenty disgruntled backbenchers presented an ultimatum to Trudeau to decide whether he wants to stay on as party leader or face the prospect of a revolt.⁹ Although he survived this ultimatum with his power intact, the maneuver casts doubt about the Liberals’ ability to emerge victorious in the next general election. 

Although we cannot predict which political party will take power next year on either side of the border, heightened uncertainty is expected. This uncertainty typically impacts public market pricing, particularly in election years, and public REITs are not immune to these fluctuations. 

Skyline Private REITs: A Pure-Play Real Estate Investment Hedge 

Skyline offers pure-play investments focusing on specific sectors known for their resilience, historical stability, and growth potential. We connect portfolio managers and institutional investors to several private alternative investment opportunities available through Fundserv. These include three REITs: Skyline Apartment REIT (SKY2006), Skyline Industrial REIT (SKY2012), and Skyline Retail REIT (SKY2013), as well as Skyline Clean Energy Fund (SKY2018). Our deep understanding of market dynamics, and our expertise in each of these sectors, has enabled us to identify resilient asset classes and investment opportunities that largely insulate our funds from market volatility.

Each segment aims to buffer against cyclical downturns by focusing on asset classes with high occupancy rates and insulated pricing power. These sectors, such as multi-residential real estate, logistics, essential retail, and renewable infrastructure, are often characterized by stable demand and the ability to withstand market fluctuations. By concentrating exclusively on these areas, we have developed a deep level of expertise, allowing us to manage risk more effectively.  

Build a diversified portfolio with an investment strategy grounded in the needs of Canadians. Contact a Skyline representative today to learn more about Skyline’s private alternative investments and explore how dividend investing in these stable sectors can help quiet the noise of market volatility. 

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1 Reits Rise 6.4% in August, Institutional Real Estate Inc. https://irei.com/news/reits-rise-6-4-in-august/

2 Top Dem Jamie Raskin Warned That Congress Will Ban Trump If He Wins Presidential Election, Glenn Grunwald. https://www.youtube.com/watch?v=SWW4R3k4wzY

3 Do U.S Elections Affect Canadian Markets? Raymond James. https://www.solustrust.ca/-/media/rj/dotcom-canada/files/commentary-and-insights/insights-and-strategies/market-commentary—do-us-elections-affect-canadian-markets_en.pdf

4 Second Trump presidency would put ‘meaningful drag’ on Canada’s economy: Desjardins, BNN Bloomberg. https://www.bnnbloomberg.ca/business/economics/2024/10/09/second-trump-presidency-would-put-meaningful-drag-on-canadas-economy-desjardins/

5 Investment opportunities in essential private alternatives, Investment Executive. https://www.investmentexecutive.com/tools_/webinars/investment-opportunities-in-essential-private-alternatives/

6 Group of Liberal MPs plan to verbally ask Trudeau to step down next week, CTV News. https://www.ctvnews.ca/politics/group-of-liberal-mps-plan-to-verbally-ask-trudeau-to-step-down-next-week-1.7075764

7 Canada’s government under threat as Trudeau’s parliamentary partner exits, Financial Times. https://www.ft.com/content/33114c07-2b7f-4946-bf59-d64f5f943a01

8 Singh ends Supply and Confidence Agreement with Liberals, NDP. https://www.ndp.ca/news/singh-ends-supply-and-confidence-agreement-governing-liberals

9 Justin Trudeau pressured to resign by backbench MPs within own party, The Guardian. https://www.theguardian.com/world/2024/oct/23/justin-trudeau-canada-pressured-to-resign

Canada has become one of the fastest-growing countries in the G7,¹ with its population growth currently outpacing even China and India.² In 2023, Canada’s population reached a record high of 40.77 million with an influx of 1.27 million people, up 3.2% from 2022, marking the highest growth since 1957.³

According to StatsCan, 97.6 % of Canada’s population growth in 2023 came from international migration.⁴ In fact, from January to October 2023, Canada accepted more than 1 million new residents, with another 1.5 million expected over the next three years.⁵ Canada is already facing a lack of housing supply that has hit crisis levels, and the Canadian Mortgage and Housing Corp. (CMHC) estimates that in order to restore housing affordability and meet growing demand, the country needs to build 3.5 million more homes by 2030.⁶

Rapid population growth is not without its challenges, but it also spurs on opportunities for sectors rooted in the population’s essential needs, such as real estate and clean energy infrastructure. Immigration in particular plays an integral role in Canada’s economic growth, driving up the demand for housing, places to shop, product warehousing, distribution, and logistics facilities, and energy production.

The Current Economic Landscape in Canada

An increasing population spurred by immigration can promote economic growth. Newcomers not only increase overall consumption of goods and services, but they also add supply to a tight labour market.⁷

“As Canada experiences population growth due to both immigration and natural increase, we are seeing a trend of ‘de-urbanization’ where residents are moving away from major markets like Toronto and Vancouver,”

said Wayne Byrd, Chief Financial Officer, Skyline Group of Companies.

“They are instead choosing smaller, secondary communities that offer comparably affordable housing and an overall lower cost of living, which may equate to an improved quality of life. As the population grows, these secondary communities present valuable opportunities for investors and developers alike.”

Demand for essential assets continues to rise in these markets, attracting new commercial investment to meet the needs of a growing population.

Essential Assets as a Perpetually Strong Investment

While some sectors, such as office real estate, remain under pressure years after the initial economic effects of COVID-19, other asset classes are thriving and continuing to find growth opportunities. Essential asset classes—those considered indispensable to the economy—are particularly resilient to any market environment or economic cycle, and receive the largest benefit from immigration and population growth:

Multi-residential Real Estate

Demand for high-quality rental housing remains high, and supply has not been able to keep up with demand—now not only in urban areas, but also in secondary markets. According to CMHC’s 2024 Housing Outlook, many households continue to struggle to afford homes, leading to increased demand for rentals—which is further fueled by immigration due to newcomers tending to rent upon arrival in Canada.⁸ 

“As we open our doors to 500,000 new Canadians each year, the current economic environment boils down to demand significantly outpacing supply,” said Wayne Byrd, Chief Financial Officer, Skyline Group of Companies.

“Rental apartments not only remain one of the most affordable types of housing, but they are also the housing choice of many newcomers to Canada. While demand has hit a crisis point in many of our major population centres, it has also steeply climbed in many outlying secondary and tertiary markets. It has become more crucial than ever for new, high-quality, purpose-built rental housing to be delivered in those areas. Investment in these markets can help accelerate Canada’s progress toward meeting its housing supply targets, in addition to presenting a strong opportunity.”

Retail Real Estate

When it comes to retail, there is a distinction between the “must haves” (essential retail, such as grocery and pharmacy) and the “nice-to-haves.” In-person essential retail-anchored real estate has shown lasting resilience amid recent economic uncertainty. CBRE’s 2024 Canada Real Estate Market Outlook noted “limited vacancy amongst the most in-demand formats, namely grocery-anchored centres.”⁹

“As the population grows incrementally, so too does the demand for essential goods retailers: grocery stores, pharmacies, quick service restaurants, et cetera,” said Byrd.

“Further, in secondary and tertiary markets, these essentials-based retail properties are often the singular, or near-singular, community shopping hub in the area, essentially creating an additional level of built-in resilience for this type of asset.”

Industrial Real Estate

As demand heightens for essential consumer products, it also drives the need for purpose-built storage, warehousing, distribution, and logistics centres for these goods.

“Population growth not only spurs demand for convenient shopping locations for essential products, but all the infrastructure surrounding those goods, including their storage and delivery,” said Byrd.

“Additionally, the current trend of de-urbanization further increases the need for warehouse and distribution space, to allow for the more efficient movement of goods to Canada’s secondary markets.”

Energy Infrastructure

High levels of immigration are a key driver of increasing energy demand. The Canada Energy Regulator predicts that energy demand in Canada will grow as much as 135% by 2050.¹⁰

“Demand for energy is increasing right alongside population growth, and just like housing, essential retail, and distribution, Canada needs to increase its energy capacity in order to meet these needs,” said Byrd. “Support for renewable energy continues to grow, with governments worldwide implementing incentives and new funding mechanisms to ensure renewable energy plays a significant role in the global energy mix.”

Strategic Advantage of Skyline’s Private Alternative Investments

With Canada’s consistently rising population, investment in essential asset classes may be a smart move toward portfolio security and stability. Further, choosing private alternative investments rooted in these asset classes may ensure additional stability due to their lack of correlation to the public markets. Skyline’s private alternative investment funds are rooted in institutional-quality real estate and clean energy infrastructure that has demonstrated historically strong performance and consistent returns throughout challenging economic periods.

“Each asset class within Skyline’s funds has been chosen on the basis of stability and resilience,” said Byrd.

“Skyline offers investment opportunities in the asset types that have proven to withstand economic slowdowns, volatility, and overall uncertainty: multi-residential housing, essential retail, industrial facilities, and clean energy infrastructure. Each investment is well-positioned to benefit from Canada’s ongoing immigration targets as well as organic population growth.”

Whether through organic growth or immigration, population growth is a natural catalyst for each of Skyline’s chosen sectors. As Canada’s population continues to grow, demand for housing will continue to increase, as will the need for essential retail and distribution of these goods, and so too will the demand for energy.

Conclusion

The narrative of the Canadian economy over the last few years has been one of uncertainty and challenges. However, with anticipated surges in demand for essentials fueled by sustained immigration, Skyline’s private alternative investments are poised to continue their growth trajectory.

Build your clients’ portfolios with an investment strategy grounded in the needs of Canadians. Contact a Skyline representative today to learn more about Skyline’s private alternative investments.

¹Government of Canada, Statistics Canada. (2023, September 27). The Daily — Canada’s demographic estimates for July 1, 2023: record-high population growth since 1957. https://www150.statcan.gc.ca/n1/daily-quotidien/230927/dq230927a-eng.htm?HPA=1 

²Population growth in Canada hits 3.2%, among world’s fastest. (2023, December 19). Financialpost. https://financialpost.com/pmn/business-pmn/population-growth-in-canada-hits-3-2-among-worlds-fastest 

³Serebrin, J. (2024, March 27). Statistics Canada says population growth rate in 2023 was highest since 1957 | CBC News. CBCnews. https://www.cbc.ca/news/politics/population-growth-canada-2023-1.7157233  

⁴Government of Canada, Statistics Canada. (2024, March 27). The Daily — Canada’s population estimates: Strong population growth in 2023. https://www150.statcan.gc.ca/n1/daily-quotidien/240327/dq240327c-eng.htm 

⁵Immigration, R. a. C. C. (2023, November 1). Notice – Supplementary information for the 2024-2026 Immigration levels Plan. Canada.ca. https://www.canada.ca/en/immigration-refugees-citizenship/news/notices/supplementary-immigration-levels-2024-2026.html 

⁶Younglai, R. (2023, September 14). Canada needs 3.45 million more homes by 2030 to cut housing costs as population grows, CMHC predicts. The Globe and Mail. https://www.theglobeandmail.com/business/article-canada-needs-345-million-more-homes-by-2030-to-cut-housing-costs-as/ 

⁷Moquillaza-Bello, P. (2024, June 25). How population growth impacts the Canadian economy — and you. https://www.cibc.com/en/asset-management/insights/navigating-the-markets/population-growth-impacts-canadian-economy.html#:~:text=Generally%20speaking%2C%20a%20growing%20population,by%20extension%2C%20your%20equity%20portfolio. 

⁸2024 Housing Market Outlook. (2024, April 4). CMHC. https://www.cmhc-schl.gc.ca/professionals/housing-markets-data-and-research/market-reports/housing-market/housing-market-outlook 

⁹ Canada Real Estate Market Outlook 2024. (n.d.). CBRE Canada. https://www.cbre.ca/insights/reports/canada-market-outlook-2024 

¹⁰Government of Canada, Canada Energy Regulator. (n.d.). CER – Fact Sheet: Results from the Canada Net-Zero scenario. https://www.cer-rec.gc.ca/en/about/news-room/fact-sheets/canada-net-zero.html 

With Canada’s population continuing to rise and expected to grow by 44% by 2050[1], the country’s energy demand is projected to surge in response – by up to 47%[2].

Canada has one of the highest per-capita energy consumption rates in the world due to its climate and widely dispersed population. According to a 2023 report from the Public Policy Forum, Canada will need to increase supply by two to three times its current volume in order to meet demand and also reduce reliance on fossil fuels[3].

As Canada looks to increase its supply, it must also face the additional challenge of phasing out fossil fuels, which still comprise a significant portion of Canada’s energy mix. Government and private corporations have begun to look at alternative energy sources such as solar and biogas. These clean energy sources have the potential to directly address some of the major challenges faced by the current energy grid. For example, they can keep supply in balance with demand by storing energy via batteries during off-peak hours and redistributing it to the grid when demand is at its peak.

 As part of Canada’s goal to reach Net Zero by 2050, the Federal government is aiming to create low- or zero-emission electricity grids across Canada by 2035. Reaching these ambitious targets will require a collective effort from all the provinces as well as the private sector. Private alternative investment funds based in clean energy, like Skyline Clean Energy Fund (SCEF), have a critical role to play in helping Canada meet its net-zero goal and address the growing energy demand.

Skyline’s Strategic Response

Skyline Clean Energy Fund (SCEF) strategically focuses on acquiring and optimizing infrastructure assets, such as solar and biogas, backed by long-term government contracts. SCEF’s solar assets contribute to renewable energy generation by harnessing the power of the sun to create electricity, and its biogas plants convert organic waste into electricity or Renewable Natural Gas (RNG). In addition, SCEF’s portfolio includes the opportunity to continue to produce energy well past the expiration of its current offtake contracts and to increase the production of the assets due to advancements in technology and a developing private market.

For more information on how solar assets generate electricity, read this article.

For information on how biogas assets generate electricity, read this article.

Portfolio Overview

Skyline Clean Energy Fund’s portfolio of 83 clean energy assets, offers a diversified approach to renewable energy. In total, the portfolio represents $412.74 million in asset value, 68.74% allocated to solar and 29.86% to biogas[5]. The projected revenue streams from SCEF’s top ten assets is distributed between 38.63% stemming from biogas and 61.37% from solar[6].

From an investment perspective, SCEF reinvests its cash flows to optimize clean energy production and drive further investment growth for its unitholders. Redeploying all capital into new accretive opportunities creates a compounding effect, helping grow the Fund’s unit value. This approach not only maximizes returns for investors but also ensures SCEF’s continued expansion and contribution to the renewable energy sector without diluting current unitholders.

SCEF also benefits from diversified revenue streams. Within clean energy infrastructure, SCEF could potentially generate revenue through:

1. The monetization of environmental attributes. For example, at SCEF’s Lethbridge biogas facility, the Fund receives carbon credits for processing organic waste that may have otherwise ended up in a landfill, expecting around $1.4M in revenue in 2024 from Carbon Offsets via Alberta TIER and approximately $1M annually from the Federal Clean Fuels Regulation.
2. Tipping fees to dispose of waste in landfills that are backed by contracts to divert organic/green bin waste to biogas facilities to be turned into electricity or Renewable Natural Gas.
3. Digestate sales. This by-product of biogas facilities can be sold to farmers as an organic fertilizer and is preferable to traditional fertilizers.

Economic and Environmental Impact

SCEF is a privately managed investment fund, focused on investing in renewable and clean energy production. SCEF sells its energy through long-term government or private contracts, providing the Fund with stable and predictable revenue streams and enabling it to withstand various economic environments.

SCEF’s contribution to the clean energy sector is substantial and impactful: its assets have demonstrated year-over-year growth in expected annual energy generation and currently supply 117,415 MWh [MM2] annually[7]. By capitalizing on opportunities in the renewable sector and aligning its portfolio with the anticipated continuation of high energy demand, SCEF plays a pivotal role in advancing Canada’s transition to a cleaner future.

Skyline Clean Energy Fund: A Resilient Investment with a Bright Future

SCEF’s operations complement the national, and indeed international, objective to expand renewable electricity capacity, which is forecasted to rise by over 60% globally by 2026[8] compared to 2020 levels. As demand increases and the clean energy sector continues to grow, so too will Skyline Clean Energy Fund.

By investing in clean energy solutions like Skyline Clean Energy Fund, investors can enjoy the benefits of the Fund’s growth while having a direct positive impact on Canada’s transition to clean energy.

Visit www.SkylineWealthManagement.com/Advisory to learn more about Skyline’s private alternative investment funds.

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[1] Government of Canada, Statistics Canada. (2022, August 22). This report presents the results of ten population projection scenarios by age group and sex up to 2042 for the provinces and territories and up to 2068 for Canada. using the July 1, 2021 population estimate as the starting point, these projections are based on assumptions that take into account the most recent trends relating to the components of population growth, specifically fertility, mortality, immigration, emigration and Interprovincial Migration. https://www150.statcan.gc.ca/n1/pub/91-520-x/91-520-x2022001-eng.htm

[2] Government of Canada, C. E. R. (2023b, November 24). Canada energy regulator / Régie de l’énergie du Canada. CER. https://www.cer-rec.gc.ca/en/data-analysis/canada-energy-future/2021/key-findings.html#:~:text=Canadians%20use%20more%20electricity%2C%20from,electric%20vehicles%20and%20hydrogen%20production

[3] Public Policy Forum Forum Des Politiques Publiques . (2023, July). Pg. 2, Project of the Century: A Blueprint for Growing Canada’s Clean Electricity Supply – and Fast. ppforum.ca. https://ppforum.ca/wp-content/uploads/2023/07/Canada%E2%80%99sCleanElectricitySupply-PPF-July2023-EN-1.pdf

[4] As at December 31, 2023.

[5] As at March 31, 2024.

[6] As at March 31, 2024. Based on expected revenue numbers that are forward looking.

[7] As at December 31, 2023

[8] United Nations Climate Change. (n.d.). Renewables Growth Must Double to Achieve Paris Goals – IEA. Unfccc.int. https://unfccc.int/news/renewables-growth-must-double-to-achieve-paris-goals-iea#:~:text=The%20report%20forecasts%20that%20by,fossil%20fuels%20and%20nuclear%20combined

Structured notes were typically recognized as niche, highly customized solutions. Why did BMO GAM choose to launch a fully managed exposure to this asset class?

AP One reason—investors asked for it. The market for structured notes is growing rapidly, but so too are the challenges for individual Advisors. More than 100 to 150 new notes are issued each week in the Canadian market, and managing all of a client’s positions can be difficult. We heard these challenges loud and clear in our conversations and thought there might be a more efficient solution. The BMO Strategic Equity Yield Fund (SEYF) was designed to help Advisors provide their clients access to the benefits of structured notes without the additional burdens associated with managing a large number of issuances.¹

Moreover, many Advisors did not have access to these highly customized solutions. Individual notes have typically been reserved for high-net-worth individuals and IIROC advisors. But with the introduction of SEYF, we hope to widen access to this rapidly growing asset class and open the door to all.

CM The Fund is also evergreen, which ensures greater consistency across client portfolios. For example, if you onboard a new client tomorrow, SEYF puts them on the same track as the clients who came before. If one of your existing clients contributes more assets, you don’t need to scour the universe of notes for an appropriate fit. You can simply invest the dollars evenly with previous contributions. All of the assets go to the same Fund, with the same risk and reward characteristics as before.² Individual structured notes, on the other hand, work on a subscription-based model. Which means once the selling period is over, the Advisor is unable to add to that allocation again.

We also learned from Advisors that individual note buyers can suffer from “line-item fatigue.” Keeping track of coupon dates, call dates and strike prices is tedious and time-consuming. One of the reasons we launched the Fund was remove the hassle of managing structured notes, giving you the opportunity to instead focus on the larger issues of portfolio construction, client servicing, and prospecting.

The BMO Strategic Equity Yield Fund

Can you explain why some investors and Advisors were historically shut out of this market?

AP Sure. Since their inception in the 1990s, structured notes have rarely been broadly offered. One of the main barriers to entry was cost. It can be expensive to build, distribute and monitor individual notes, which is why they were only available to IIROC Advisors or ultra-high-net-worth investors.

During the same period, the idea of a standard portfolio of 60% equities and 40% fixed income came into question. Remember, interest rates were historically low and investors were looking for new and innovative solutions. Income-focused structured notes happened to sit somewhere between stocks and bonds—a sweet spot between the traditional asset classes—which meant they could provide a useful form of diversification. However, the cost barrier still needed to be lower in order for more Canadian investors to have access.

This is why we launched SEYF. The format is easy to access and use, plus mutual funds come in multiple series and purchase options to better align with the Advisor’s practice model. Most importantly, a mutual fund offers economies of scale. The ability to pool assets with a dedicated team of structured product experts delivers efficiencies not only on cost, but also on workflow.

Chris, can you explain on how the BMO Strategic Equity Yield Fund is constructed?

CM The Fund replicates exposure to a basket of autocallable coupon and memory notes,³ two of the most popular and well-established kinds of structured notes in the Canadian market. The term “autocallable” simply refers to the fact that the note will be redeemed if certain conditions are met; for example, the note could specify that a market increase of 5% would automatically redeem the contract. This would force the holder to reinvest their returns in another note with comparable risk-return characteristics. Typically, an Advisor buying individual notes would have to do this themselves, but with SEYF, the dollars simply roll over within the Fund.   

From a sectoral standpoint, the Fund is well diversified across financials, telecoms and utilities. And while the allocation is heavily tilted to North America, there is also some European index exposure for some additional diversification. The goal is to not only replicate exposure to a wide assortment of structured notes, but also to spread out the underlying reference assets so that our eggs are in many different baskets. Markets are always moving, and our job is to generate consistent yield while mitigating downside risk in any one particular area.

Reference Asset Exposure and Regional Exposure*.

Finally, from an allocation standpoint, how should Advisors position the BMO Strategic Equity Yield Fund in a client’s portfolio?

CM The BMO Strategic Equity Yield Fund is all about delivering stable cash flows. That’s how we define success for this Fund. Rather than trying to beat the benchmark, the goal is to target a high level of distributions while maintaining a low to medium risk rating. Since launching in June 2023, the Fund has consistently delivered a monthly distribution yield that tracks toward the 8% annual target⁴—an inflation-beating income source that is differentiated from traditional fixed income. We expect that investors seeking higher income from their portfolios will likely be drawn to this strategy, as will those who want to reduce their overall portfolio risk without impacting their yield generation. In other words, Advisors may choose to reallocate anywhere from 5 to 15% of either their bond or equity sleeves. Both scenarios work well, because in either case the objective is to add an elevated yield exposure without taking on a substantial amount of risk to your client portfolios.   

For more information on the BMO Strategic Equity Yield Fund, contact your Regional BMO Global Asset Management Representative.

¹ The BMO Strategic Equity Yield Fund will focus on replicating exposure to notes focused on income generation, while also maintaining contingent downside protection.

² Risk is defined as the uncertainty of return and the potential for capital loss in your investments.

³ Autocallable notes are a subset of structured notes that seek to provide enhanced yield plus contingent downside protection. The autocallable note exposure in the fund is currently obtained through the use of total returns swaps, which replicate the exposure of a portfolio of autocallable notes.

⁴  Target annualized distribution is for Series F. The target distribution yield was calculated by using the most recent regular distribution, or expected distribution, (which may be based on income, dividends, return of capital, and option premiums, as applicable) and excluding additional year end distributions, and special reinvested distributions) annualized for frequency, divided by current net asset value (NAV). Distribution yield is not an indicator of overall performance and will change based on market conditions, NAV fluctuations, and is not guaranteed. As of January 31, 2024.

Disclosures:

IMPORTANT DISCLAIMERS

FOR ADVISOR USE ONLY. 

Distribution yields are calculated by using the most recent regular distribution, or expected distribution, (which may be based on income, dividends, return of capital, and option premiums, as applicable) and excluding additional year end distributions, and special reinvested distributions annualized for frequency, divided by current net asset value (NAV). Distributions are not guaranteed, may fluctuate and are subject to change and/or elimination. Distribution rates may change without notice (up or down) depending on market conditions and NAV fluctuations. The payment of distributions should not be confused with a BMO Mutual Fund’s performance, rate of return or yield. If distributions paid by a BMO Mutual Fund are greater than the performance of the investment fund, your original investment will shrink. Distributions paid as a result of capital gains realized by a BMO Mutual Fund, and income and dividends earned by a BMO Mutual Fund, are taxable in your hands in the year they are paid. Your adjusted cost base will be reduced by the amount of any returns of capital. If your adjusted cost base goes below zero, you will have to pay capital gains tax on the amount below zero.

Distributions, if any, for all series of securities of a BMO Mutual Fund (other than ETF Series) are automatically reinvested in additional securities of the same series of the applicable BMO Mutual Fund, unless the securityholder elects in writing that that they prefer to receive cash distributions. For ETF Series securities of a BMO Mutual Fund, distributions, if any, may be paid in cash or reinvested automatically in additional ETF Series securities of the applicable BMO Mutual Fund and the ETF Series securities will be immediately consolidated such that the number of outstanding ETF Series securities following the distribution will equal the number of ETF Series securities outstanding prior to the distribution. If a securityholder is enrolled in a distribution reinvestment plan, distributions, if any, will be automatically reinvested in additional ETF Series securities of the applicable BMO Mutual Fund pursuant to the distribution reinvestment plan. For further information, see the distribution policy for the applicable BMO Mutual Fund in the simplified prospectus.

No portion of this communication may be reproduced or distributed to clients as it may not comply with Sales Communications requirements.

Any statement that necessarily depends on future events may be a forward-looking statement. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Although such statements are based on assumptions that are believed to be reasonable, there can be no assurance that actual results will not differ materially from expectations. Investors are cautioned not to rely unduly on any forward-looking statements. In connection with any forward-looking statements, investors should carefully consider the areas of risk described in the most recent simplified prospectus.

The information in this trade idea is for information purposes. The information contained herein is not, and should not be construed as, investment, tax or legal advice to any party. Investments should be evaluated relative to the individual’s investment objectives and professional advice should be obtained with respect to any circumstance.

The portfolio holdings are subject to change without notice and only represent a small percentage of portfolio holdings. They are not recommendations to buy or sell any particular security.

This communication is intended for informational purposes only and is not, and should not be construed as, investment and/or tax advice to any individual. Particular investments and/or trading strategies should be evaluated relative to each individual’s circumstances. Individuals should seek the advice of professionals, as appropriate, regarding any particular investment.

The BMO Strategic Equity Yield Fund will focus on replicating exposure to notes focused on income generation, while also maintaining contingent downside protection. Our dedicated team of structured product professionals seeks to achieve above market returns and exposure to North American and/or global equity markets through the use of derivatives and/or structured products.

BMO Global Asset Management is a brand name under which BMO Asset Management Inc. and BMO Investments Inc. operate.

^®/™Registered trademarks/trademark of Bank of Montreal, used under licence.

By Bill Bamber, Chief Executive Officer, BMO Global Asset Management

When Deland Kamanga became the Group Head of BMO Wealth in late 2021, this set in motion a new chapter for BMO Global Asset Management. Given Deland’s background in both Wealth Management and Capital Markets, his appointment brought to the fore the concept of better uniting products and ideas that have typically resided on the Capital Markets side of the business and the beneficial capabilities offered by an asset management platform.

As we know, the Advisory model has undergone transformational change over the past decade as more and more advisors moved from being ‘commission-based’ to being ‘fee-based’. Most would agree that for both Advisor and client alike, this change has been beneficial. That said, some popular products, like structured notes, are still very much geared towards the commission-based model. At BMO GAM, we felt it was time to adapt the most popular product in the structured note space for those who sought a well-managed, efficient solution that worked well for fee-based Advisors and, by extension, their clients. Enter the BMO Strategic Equity Yield Fund (SEYF).

The SEYF, simply put, replicates a portfolio of autocallables that are representative of the most popular autocallable structured note offerings in the Canadian marketplace, with an investor-centric twist. As Advisors know, the Canadian structured note market is dominated by the ‘Big Six’ Canadian bank issuers. These issuers have served the market very well and offered an incredible array of notes throughout the years. Juxtaposed against the migration to a fee-based model, however, the array of transactions required to manage a portfolio of Notes can become taxing in time and effort. “Line-item fatigue” is an often-used phrase to describe the build-up of a large number of singular note positions across an Advisor’s book. The solution is a one-ticket strategy—namely, an allocation to the SEYF. The concept of a fund holding and/or replicating a portfolio of notes is not necessarily new; some of the first ones emerged in the 1990s abroad, but it is a newer concept in Canada. Much like the emergence of bond funds, a fund focused on replicating autocallable notes is new to many, but here to stay.

At any given time, there are between 150 and 200 notes available in the Canadian market. The sea change that the BMO Strategic Equity Yield Fund represents is that it recreates that exposure in an evergreen, one-ticket solution. Instead of having to do the considerable leg work associated with structured products yourself, an Advisor can leave it to our experienced Portfolio Managers, buying the Fund whenever it makes sense for clients and adding to your client’s position when needed. The Fund also satisfies investors’ ongoing hunt for yield with an attractive 8% target¹ and low-to-medium risk rating.² For Advisors who already utilize structured notes for some clients, it can serve as a time-saving solution—you could, for instance, continue to customize notes for larger clients while utilizing the SEYF for other clients who would benefit from a similar exposure.

Guided by our team’s 100+ years of combined experience in capital markets, BMO GAM is prepared to fully harness forward-thinking solutions like the BMO Strategic Equity Yield Fund and bring unique solutions to investors nationwide.

By Sara Petrcich, Head of ETF & Structured Solutions, BMO Global Asset Management

I began my career in Capital Markets over 20 years ago. My focus then was on building custom solutions for a select group of investors—now, my goal is to bring those types of tools to a wider swath of Canadians.

One of the primary advantages of bringing Capital Markets tools into a mutual fund or ETF is, as Bill mentioned, the evergreen nature of the format. Whereas Capital Markets are transactional, there’s a certain permanence to investment funds—Canadians could potentially remain invested in the SEYF for decades to come, with the flexibility to adjust their position whenever necessary.

In my view, the three key benefits of the BMO Strategic Equity Yield Fund are convenience, cost, and accessibility. Unlike most structured outcomes products, you don’t need to be a large institution or put down a large minimum investment in order to access the fund—the SEYF is available at an MER of 0.73%³ and lower purchase minimums compared to buying an individual structured note. For IIROC Advisors, the Fund is a one-ticket alternative to building a portfolio of structured notes and makes it easy to invest new assets with consistency. For MFDA Advisors, it offers access to an entirely new asset class and yield profile, all in a familiar mutual fund format.

Our ETF & Structured Solutions team prides itself on collaboration and innovation. With both our experienced PMs and Structured Solutions professionals all under one roof, we strive to lead the market with cutting-edge ideas that lead to valuable solutions for Advisors and investors.

To learn more about the BMO Strategic Equity Yield Fund, contact your BMO Global Asset Management Regional Sales Representative.

¹ Hypothetical Distribution Yield: For the F Series ̶ The hypothetical distribution yield was calculated by using the most recent regular distribution, or expected distribution, (which may be based on income, dividends, return of capital, and option premiums, as applicable) and excluding additional year end distributions, and special reinvested distributions) annualized for frequency, divided by current net asset value (NAV). Distribution yield is not an indicator of overall performance and will change based on market conditions, NAV fluctuations, and is not guaranteed.

² For the F series. Risk is defined as the uncertainty of return and the potential for capital loss in your investments.

³ For the F series. The listed target Management Expense Ratio (MER) is estimated. As the fund is less than one year old, actual MER costs will not be known until the fund financial statements for the current fiscal year are released.

Disclosures:

FOR ADVISOR USE ONLY. No portion of this communication may be reproduced or distributed to clients as it may not comply with Sales Communications requirements.

Commissions, trailing commissions (if applicable), management fees and expenses all may be associated with mutual fund investments.  Please read the fund facts or prospectus of the relevant mutual fund before investing.  Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated. Distributions are not guaranteed and are subject to change and/or elimination.

For a summary of the risks of an investment in BMO Mutual Funds, please see the specific risks set out in the prospectus. 

BMO Mutual Funds are managed by BMO Investments Inc., which is an investment fund manager and a separate legal entity from Bank of Montreal.

Any statement that necessarily depends on future events may be a forward-looking statement. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties, and assumptions. Although such statements are based on assumptions that are believed to be reasonable, there can be no assurance that actual results will not differ materially from expectations. Investors are cautioned not to rely unduly on any forward-looking statements. In connection with any forward-looking statements, investors should carefully consider the areas of risk described in the most recent simplified prospectus.

This article is for information purposes. The information contained herein is not, and should not be construed as, investment, tax, or legal advice to any party. Investments should be evaluated relative to the individual’s investment objectives and professional advice should be obtained with respect to any circumstance.

Distribution yields are calculated by using the most recent regular distribution, or expected distribution, (which may be based on income, dividends, return of capital, and option premiums, as applicable) and excluding additional year end distributions, and special reinvested distributions annualized for frequency, divided by current net asset value (NAV). Distributions are not guaranteed, may fluctuate and are subject to change and/or elimination. Distribution rates may change without notice (up or down) depending on market conditions and NAV fluctuations. The payment of distributions should not be confused with a BMO Mutual Fund’s performance, rate of return or yield. If distributions paid by a BMO Mutual Fund are greater than the performance of the investment fund, your original investment will shrink. Distributions paid as a result of capital gains realized by a BMO Mutual Fund, and income and dividends earned by a BMO Mutual Fund, are taxable in your hands in the year they are paid. Your adjusted cost base will be reduced by the amount of any returns of capital. If your adjusted cost base goes below zero, you will have to pay capital gains tax on the amount below zero.

Distributions, if any, for all series of securities of a BMO Mutual Fund (other than ETF Series) are automatically reinvested in additional securities of the same series of the applicable BMO Mutual Fund, unless the securityholder elects in writing that that they prefer to receive cash distributions. For ETF Series securities of a BMO Mutual Fund, distributions, if any, may be paid in cash or reinvested automatically in additional ETF Series securities of the applicable BMO Mutual Fund and the ETF Series securities will be immediately consolidated such that the number of outstanding ETF Series securities following the distribution will equal the number of ETF Series securities outstanding prior to the distribution. If a securityholder is enrolled in a distribution reinvestment plan, distributions, if any, will be automatically reinvested in additional ETF Series securities of the applicable BMO Mutual Fund pursuant to the distribution reinvestment plan. For further information, see the distribution policy for the applicable BMO Mutual Fund in the simplified prospectus.

BMO Global Asset Management is a brand name under which BMO Asset Management Inc. and BMO Investments Inc. operate.

®^/™ Registered trademarks/trademark of Bank of Montreal, used under license.

Building a Future—Brick by Brick

For more than 20 years, I’ve made a successful living in financial services, with most of that time spent as a Wealth Advisor. But it might surprise you to know that when it comes to operating a business and servicing clients, some of the most important lessons I’ve learned came from my first career: bricklaying.

I began working in construction in my teens, and it was during that time that I learned the value of taking initiative. In order to best contribute, I knew that I should always be doing something; my hands should never be empty. I also came to understand the importance of paying attention to detail. Measure twice, cut once was the saying—or, to put it another way, always do your due diligence.

There has always been something about building things from the ground up that has appealed to me—laying brick on top of brick to create a solid foundation. This is just as true now in my career as an Advisor, in which I construct customized wealth management and retirement plans for my clients, as it was during my time as a tradesman.

“Never Stop Learning”

After several years as a junior Advisor, I shifted into a role as a wholesaler with a boutique asset management company. My current firm, Ecivda Financial Planning Boutique, were valued clients, and when I made the decision to return to Advising in 2017, that longstanding relationship served as the perfect bridge to the next stage in my professional development.

If there’s one big take-away for Advisors that I can share from my personal experiences, it’s this: never stop learning. There are always new skills and knowledge that you can add to your toolkit, and that will ultimately improve the level of service that you can deliver for your clients. For instance, it was during my time as a wholesaler that I became well acquainted with structured notes, an asset class that was equally appealing and time-consuming. The notes offered value to clients’ portfolios, both because of the above-market yields and the contingent downside protection that buffered against potential drawdowns. However, as an investment representative registered to sell mutual funds, I was unable to access them.

That’s why I welcomed the introduction of the BMO Strategic Equity Yield Fund (SEYF), an actively managed fund that replicates exposure to a diversified basket of autocallable notes.  It’s a standard mutual fund, which means no additional licensing, and a huge time saver—one I only found because I’m always on the lookout for innovative strategies to help my clients meet their investment goals, based on their individual investment profiles.

A Foundation for Success

Over the past six years, Ecivda has more than doubled its assets under management (AUM). That type of growth doesn’t happen by accident. My business partner, Shawn Todd, and I have purchased two small books of business from departing Advisors, and on the referral side, we benefit from word-of-mouth within the Ottawa business community. Our sizable group benefits and pension department also helps drive interest in our services.

Just prior to the pandemic, we also launched a podcast, Mind and Money, which features market commentary and interviews with business leaders from across the country. Though recruitment is not its primary purpose, it does help prospective clients envision what it would be like to sit across from us and have a coffee—in other words, to establish that we’re people they can trust.

BMO Strategic Equity Yield Fund: The Right Building Block for Client Portfolios

As my years in construction taught me, a solid structure requires the right building blocks. Building client portfolios is similar—your foundation is only as solid as the strategies used to put it together.

Structured notes have long been a tool available to IIROC Advisors, but they’ve been out of reach for MFDA professionals. The BMO Strategic Equity Yield Fund (SEYF) fills that gap, offering contingent downside protection with a steady 8% target yield¹. That’s pretty attractive for a wide variety of clients, especially at a low-to-medium risk rating² and an MER of 0.73.³ For Advisors, it’s as simple as adding the Fund to your model base portfolio.

The BMO GAM structured products team is composed of highly tenured professionals with a combined 100+ years of experience in capital markets. That provides a lot of confidence and reassurance for both me and my clients.

To learn more about the BMO Strategic Equity Yield Fund, contact your BMO Global Asset Management Regional Sales Representative.

¹ Hypothetical Distribution Yield: For the F Series – The hypothetical distribution yield was calculated by using the most recent regular distribution, or expected distribution, (which may be based on income, dividends, return of capital, and option premiums, as applicable) and excluding additional year end distributions, and special reinvested distributions) annualized for frequency, divided by current net asset value (NAV). Distribution yield is not an indicator of overall performance and will change based on market conditions, NAV fluctuations, and is not guaranteed.

² For the F series. Risk is defined as the uncertainty of return and the potential for capital loss in your investments

³ For the F Series. The listed target Management Expense Ratio (MER) are estimated. As the series of funds are less than one year old, actual MER costs will not be known until the fund financial statements for the current fiscal year are released. Risk is defined as the uncertainty of return and the potential for capital loss in your investments

Quadrus Disclosures:

Financial advice, financial planning in the areas of financial management, risk management, asset management, estate planning, tax planning and retirement planning, are offered through Ecivda Financial Planning Boutique/Ecivda Financial Group Ltd. Investment Representative Corey Butler offers mutual funds and referral arrangements through Quadrus Investment Services Ltd.

BMO Global Asset Management Disclosures:

FOR ADVISOR USE ONLY. No portion of this communication may be reproduced or distributed to clients as it may not comply with Sales Communications requirements.

Commissions, management fees and expenses (if applicable) all may be associated with investments in mutual funds. Trailing commissions may be associated with investments in certain series of securities of mutual funds. Please read the fund facts, ETF facts or prospectus of the relevant mutual fund before investing.  Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated. Distributions are not guaranteed and are subject to change and/or elimination.

For a summary of the risks of an investment in the BMO Mutual Funds, please see the specific risks set out in the prospectus.  ETF Series of the BMO Mutual Funds trade like stocks, fluctuate in market value and may trade at a discount to their net asset value, which may increase the risk of loss.  Distributions are not guaranteed and are subject to change and/or elimination.

BMO Mutual Funds are managed by BMO Investments Inc., which is an investment fund manager and a separate legal entity from Bank of Montreal.

Any statement that necessarily depends on future events may be a forward-looking statement. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties, and assumptions. Although such statements are based on assumptions that are believed to be reasonable, there can be no assurance that actual results will not differ materially from expectations. Investors are cautioned not to rely unduly on any forward-looking statements. In connection with any forward-looking statements, investors should carefully consider the areas of risk described in the most recent simplified prospectus.

This article is for information purposes. The information contained herein is not, and should not be construed as, investment, tax, or legal advice to any party. Investments should be evaluated relative to the individual’s investment objectives and professional advice should be obtained with respect to any circumstance.

Distribution yields are calculated by using the most recent regular distribution, or expected distribution, (which may be based on income, dividends, return of capital, and option premiums, as applicable) and excluding additional year end distributions, and special reinvested distributions annualized for frequency, divided by current net asset value (NAV). Distributions are not guaranteed, may fluctuate and are subject to change and/or elimination. Distribution rates may change without notice (up or down) depending on market conditions and NAV fluctuations. The payment of distributions should not be confused with a BMO Mutual Fund’s performance, rate of return or yield. If distributions paid by a BMO Mutual Fund are greater than the performance of the investment fund, your original investment will shrink. Distributions paid as a result of capital gains realized by a BMO Mutual Fund, and income and dividends earned by a BMO Mutual Fund, are taxable in your hands in the year they are paid. Your adjusted cost base will be reduced by the amount of any returns of capital. If your adjusted cost base goes below zero, you will have to pay capital gains tax on the amount below zero.

Distributions, if any, for all series of securities of a BMO Mutual Fund (other than ETF Series) are automatically reinvested in additional securities of the same series of the applicable BMO Mutual Fund, unless the securityholder elects in writing that that they prefer to receive cash distributions. For ETF Series securities of a BMO Mutual Fund, distributions, if any, may be paid in cash or reinvested automatically in additional ETF Series securities of the applicable BMO Mutual Fund and the ETF Series securities will be immediately consolidated such that the number of outstanding ETF Series securities following the distribution will equal the number of ETF Series securities outstanding prior to the distribution. If a securityholder is enrolled in a distribution reinvestment plan, distributions, if any, will be automatically reinvested in additional ETF Series securities of the applicable BMO Mutual Fund pursuant to the distribution reinvestment plan. For further information, see the distribution policy for the applicable BMO Mutual Fund in the simplified prospectus.

BMO Global Asset Management is a brand name under which BMO Asset Management Inc. and BMO Investments Inc. operate.

®^/™Registered trademarks/trademark of Bank of Montreal, used under license.

Private alternative investments are distinguished amongst Canadian investments in recent years with their resiliency and stability, as they are generally uncorrelated from the stock markets and potential to enhance portfolio diversification— relevant amid the current landscape of market volatility. The private alternative investment space has a unique blend of growth potential and asset diversification. Within it, Real Estate Investment Trusts (REITs), particularly multi-residential REITs, stand out for their potential of steady income and growth prospect. Since 2006, Skyline Apartment REIT, a leading private Canadian REIT made up of multi-residential assets in secondary markets, has demonstrated the strength and consistency that investors seek in apartment real estate investing.

Skyline Apartment REIT has become one of Canada’s largest multi-residential portfolios. It offers a compelling option for those looking to strengthen their investments against the unpredictability of the public market, while adding historical stability and a track record of consistent returns. Access to this investment can be further explored at www.skylinwealth.ca or Fundserv code SKY2006.

Below, we explore three key aspects that make Skyline Apartment REIT an investment of choice for investors seeking exposure to the Canadian real estate housing market.

Historical Performance and Stability

Skyline Apartment REIT has a historically consistent track record, with just under $5 billion in investment property fair market value, and a stable occupancy rate of 95.88%. This is across over 22,000 units and 243 properties. Additionally, from September 2022 to September 2023, in what was a challenging market, the REIT saw an increase of 8% in the investment property fair market value.

Since inception in 2006, the REIT has attracted investors and Advisor portfolios who value reliability, access to real estate, and stable performance in their holdings. Skyline Apartment REIT’s strategic focus within the Canadian multi-residential sector puts it in the medium-risk profile , balancing potential returns with thoughtful risk management.

Skyline Apartment REIT’s strategic approach extends beyond market positioning in the REIT’s financial management, demonstrated by its strategic staggering of mortgage maturities. With most of the REIT’s mortgage debt maturing in 2025 and beyond, accounting for over 80% of its portfolio, the REIT has skillfully minimized exposure to the current fluctuating interest rate market. The weighted average mortgage interest rate of the REIT is 3.17%, with total debt to investment property fair market value (or LTV) standing at 57.40%. With a long-term view on rates, the weighted average mortgage term to maturity is 4.58 years.

Strategic Advantages of Skyline Apartment REIT

Skyline Apartment REIT is focused within the secondary markets of the Canadian multi-residential sector. It has a strategically diversified portfolio across seven provinces and 60 communities in Canada. The geographical spread demonstrates the REIT’s substantial footprint in the national market and provides a hedge against regional economic fluctuations while providing a home to over 35,000 Canadians.

The strategic investment in secondary markets is a deliberate move that capitalizes on the typically lower acquisition costs in these markets, allowing for greater value maximization. These markets present a unique opportunity during Canada’s intensifying housing crisis. The demand for affordable housing solutions continues to grow, and Skyline Apartment REIT addresses this need effectively. Skyline Apartment REIT has historically maintained its stability and growth and is well-equipped to capitalize on the ongoing demand, asserting its role as a contributor to the multi-residential investment sector.

Financial Benefits and Tax Efficiency

Skyline Apartment REIT offers potential for a tax-efficient structure that is designed to enhance overall after-tax returns for investors. By focusing on value growth, capital gains efficiency, and Return of Capital (RoC), the REIT can optimize tax implications for many of its unitholders so their investments are productive and efficient from a tax perspective. The REIT facilitates redemptions on a monthly basis with no fees, allowing for greater liquidity and financial flexibility.

Benefits of Portfolio Efficiency

Skyline Apartment REIT has long seen the benefits of implementing environmental efficiencies at its properties and integrating sustainability into all levels of its business operations. The REIT aims to increase electricity conservation through retrofitting its buildings with high-efficiency equipment and submetering. It also mitigates the over-use of water through practices such as consumption tracking and monitoring, early water leak detection sensors, and other innovative technologies.

Notable environmental initiatives by the REIT and its parent entity, Skyline Group of Companies, include producing 38,299 MWh1 of electricity through solar assets (many of which are located at Skyline Apartment REIT properties); saving approximately 13,223 MWh through electrical submetering; avoiding an average of 67% in water loss/wastage monthly through continuous use of leak detection systems; diverting an anticipated 241,624 kg of compost from landfill through organic compost services; and diverting 10,434 lbs. of e-waste from landfill.²

Additionally, earlier in 2023, the REIT announced an EV installation program in partnership with Natural Resources Canada (NRCan) that will see over 900 EV (electric vehicle) charging stations installed at its properties by March 2024.

By facilitating these types of initiatives, programs, and policies, the REIT ultimately adds efficiency to its operations and value to its property portfolio, positioning the portfolio to achieve increases in value for its investors.

Conclusion

Skyline Apartment REIT offers advisors/dealers and their clients a focused and tax-efficient investment in the Canadian multi-residential sector. With its low MER and potential for greater liquidity, the REIT has proven a historically sound investment option that doesn’t sacrifice growth potential.

Promising yet challenging prospects may be ahead for the Canadian real estate market, with anticipated further surges in housing demand spurred by demographic shifts and sustained immigration. Skyline Apartment REIT stands ready to navigate these conditions.

¹ MWh: A measurement of energy usage; the amount of energy one would use if keeping a 1,000-kilowatt machine running for an hour.
² All figures in this paragraph are as of December 31, 2022.

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Disclaimer for SkylineWealth.ca:

Skyline Wealth Management Inc. (“Skyline Wealth Management”) is an Exempt Market Dealer registered in all the provinces of Canada.The information provided herein is for general information purposes only and does not constitute an offer of securities. Sales of interests in any investments offered by Skyline Wealth are only made to certain eligible investors pursuant to regulatory requirements and available exemptions.

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PAID CONTENT

Do your clients need help meeting their retirement income needs? With inflation taking a bite out of savings, accessing cashflow can be a real challenge. That’s why many Canadians are turning to one of their biggest assets – their homes – to supplement their income in retirement. A home equity line of credit (HELOC) and a reverse mortgage are two of the most popular ways for Canadians to tap into their home equity and boost cashflow.

The benefits of a HELOC

With a HELOC, homeowners can access up to 65% of the value in their homes and are only charged interest on the amounts they draw from their credit line. Unlike a mortgage, there are no scheduled payments on the loan’s principal, and homeowners can pay off their line of credit when it’s convenient for them. However, they must make minimum monthly interest payments on any amounts drawn.

• HELOC rates are usually lower than other lines of credit because the loan is secured by your client’s home 
• Once approved for their HELOC,  clients can access cash as they need it
• When they start to pay down the principal, the amount they can borrow increases to their original credit limit, providing ongoing access to cashflow

The reverse mortgage advantage

The other way for homeowners to access the equity in their homes is through a reverse mortgage. The CHIP Reverse Mortgage by HomeEquity Bank allows Canadian homeowners age 55+ to access up to 55% of their home’s value and turn it into tax-free cash. Your clients can receive the funds from a reverse mortgage as a lump sum or in regular monthly deposits. Clients can use the money for any of their financial needs, including health care costs, debt consolidation or lifestyle expenses.

A big advantage of the CHIP Reverse Mortgage is that monthly mortgage payments are not required – the full amount of the loan only becomes due when clients move or sell their home or through their estate if they pass away. Some of the other benefits of a reverse mortgage include:

• No income requirements. Reverse mortgages are specifically designed for Canadians 55+ who may have difficulties qualifying for a HELOC and other loans. 
• No need to requalify. A regular HELOC from a bank may subject the borrower to credit score checks over time, which can affect their ability to access the line of credit down the road. 

Interest rates converging

Until recently, one of the major advantages of a HELOC compared to a reverse mortgage was its lower interest rate. At the end of last year, the average HELOC rate was about 2% less than the average reverse mortgage rate. But the difference today is slim. In fact, the CHIP Reverse Mortgage 5-year Special Rate was slightly lower than the average HELOC rate in early April 2023.

To learn more about helping your clients tap into their home equity with the CHIP Reverse Mortgage, visit us online or contact a Business Development Manager today.