Fidelity, Brookfield Partner to Offer Private Canadian Real Estate Exposure

The alts manager will invest in a new portfolio of real estate assets in Canada.



Fidelity Investments Canada has signed an agreement with Brookfield Asset Management, which will invest in and manage a newly created portfolio of Canadian real estate assets on behalf of Fidelity. 

The new portfolio will allow individuals to invest in private real estate investments usually available only to institutional investors. According to the announcement, Fidelity plans to allocate the portfolio to some of its Fidelity Private Investment Pools and is also looking into other ways to use it.

“The portfolio will further scale our real estate asset management franchise and will aim to provide strong returns for investors by leveraging our best-in-class real estate operating platforms,” Brian Kingston, CEO of Brookfield’s real estate business, said in a release.

According to investment manager Invesco, private real estate has had the highest rolling 10-year average annual returns in 11 out of 20 time periods, compared with equities, bonds and Treasury bills. According to Invesco, real estate income, represented by net operating income growth, has outpaced inflation over the past 29 years. 

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The firm noted that institutional investors such as pension funds, foundations and insurance companies historically have invested about 6% to 12% of their portfolios in real estate.

Invesco also cited three additional benefits of investing in private real estate:

  • Diversification: U.S. private real estate has a historically low correlation to stocks and bonds;
  • Income potential: The 20-year average income return for U.S. private real estate is 5.45%, compared with 6.68% for U.S. fixed income and 1.76% for U.S. equities; and
  • Tax advantages: Private real estate can pay three types of distributions: ordinary income, capital gains or return of capital, which are each taxed at different rates.

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‘Transformative’ Artificial Intelligence May Still Present Conflicts of Interest

At a talk hosted by the National Press Club, SEC Chair Gary Gensler explained that while AI presents many economic opportunities, there is also major potential for conflicts of interest.



Gary Gensler, the chair of the Securities and Exchange Commission, described artificial intelligence and machine learning as the “most transformative technology of our time” at a speech hosted by the National Press Club in Washington on Monday.

Gensler’s focus regarding AI was, and has been for some time, on its influence on financial advice. AI has been used in sentiment analysis and predictive analytics. But Gensler said AI can create or aggravate conflicts of interest, depending on how the AI is programmed and what data it is trained on. He noted that if an adviser uses AI optimized in such a way that places an adviser’s interest ahead of the client’s, even on a highly conditional basis, then that could represent a serious conflict of interest.

Gensler went further and said that if AI software even “takes into consideration the interest of an adviser, this introduces conflict.”

The potential for conflicts stems from a number of factors. For one, AI models can be opaque and difficult for the investing public to understand, making it more difficult for investors and regulators to recognize a conflict. The outcomes of predictive analytics “might reflect old biases” if they rely on dated data or reinforce “prejudice for protected characteristics.”

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Gensler remarked, as he has previously, that he has directed the SEC staff to develop recommendations for rule proposals related to these concerns.

The chairman also touched on cryptocurrency and climate disclosure during a question-and-answer period following the speech.

In response to a question he is frequently asked—Why rely on enforcement instead of new rules for crypto?—Gensler responded that existing laws cover crypto already, and no new ones are needed. He added that the crypto industry is “rife with fraud and abuse,” and the “rules are on the books already.”

He compared his enforcement-first approach to fighting insider trading. No new rule-makings are necessary, violations should be dealt with through enforcement, and crypto is the same, he explained. He said the SEC is “speaking to the market through enforcement actions.”

On climate disclosure, Gensler was asked about opposition to Scope 3 greenhouse gas emissions disclosure that has come from Congressional Democrats in agricultural districts, such as Representative David Scott, D-Georgia. Scope 3 disclosure requires issuers with an environmental or emissions goal or mission to disclose emissions in their value chain, or a reasonable estimate thereof. Scope 3 has been sharply opposed by agricultural interests on the grounds that it would be prohibitively costly for farmers to implement.

Gensler answered that more than half of issuers already make climate risk disclosures, and a significant minority also disclose emissions. Perhaps more importantly, this proposal received high investor demand and positive feedback and is done to “bring consistency and comparability” to these disclosures.

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