Real Assets, Real Income: A Solid Foundation for Canadian Portfolios

Real Estate

Real estate assets provide the foundation for economic activity in global economies.

Subsectors

Cell Towers
Data Centres
Health Care
Hospitality
Industrial
Multifamily

Residential
Retail
Self-Storage
Student Housing
Triple Net Lease

Infrastructure

Infrastructure assets provide essential services for the functioning of global economies.

Subsectors

Cell Towers
Communications
Data Centres
Payment Processors & Networks

Power Generation
Renewable Energy
Transportation
Utilities

Starlight Capital Subsectors in Focus

Real Estate

Housing Shortage
A growing housing deficit in Canada and the U.S., fueled by immigration, is creating strong demand for residential real estate.

Global Trade
The rise of e-commerce and an expanding global middle class are driving demand for industrial and logistics properties.

Digital Real Estate
The increasing reliance on digital technologies is fueling the need for data centres and communication infrastructure.

Subsectors in Focus

Industrial REITS

Private Investments

Residential REITS

Retail REITS

Specialized REITS

Infrastructure

Decarbonization
Government policies and corporate sustainability goals are accelerating investments in renewable energy infrastructure.

Infrastructure Renewal
Chronic underinvestment has created a pressing need for infrastructure upgrades and replacements.

Digital Connectivity
The growing demand for digital services is driving investments in cell towers, data centres, and fiber-optic networks.

Subsectors in Focus

Energy

Industrials

InfraTech

Private Investments

Utililties

Featured Funds

Discover how the Starlight Capital real asset mutual funds can help your clients meet their investment goals.

View All Starlight Capital Mutual Funds

The Benefits of Real Assets

Consistent and Rising Income

Portfolio Diversification

Inflation Protection

Enhanced Risk-Adjusted Return Potential

Real assets tend to have consistent and rising cash flow streams supported by regulated or contractual revenues and attractive operating margins.

Retail investors' allocations to real assets have historically lagged that of large institutions and pension plans, despite the historically low correlations and resulting diversification benefits.

History shows that real assets have outperformed stocks and bonds in periods of unexpected inflation. We believe this is because the cash flows of the underlying assets are positively-correlated to inflation.

Real assets securities possess unique risk-return profiles and we believe the addition of these securities to a portfolio should yield higher total returns for the risk incurred.

Real Estate

The contractual nature of the revenue streams and the requirement to pay out 90% of pretax income to unitholders means REITs have historically generated consistent income for investors.

Income and Capital Appreciation of Listed Equity U.S REITs, 25-year Period

Source: 25-year period is represented by 1988Q4-2013Q3. Income and Capital Appreciation from Real Estate Investing: The Participation Trophy and the Performance Record, NAREIT Market Commentary, 29 August 2017.

Historically, real estate securities have shown relatively low correlations to stocks and bonds¹. This means that adding real estate securities to a portfolio should enhance diversification and result in the portfolio generating higher returns for the same amount of risk.

Real estate correlations July 2000 - September 2015

Source: Infrastructure Investing: A Distinct Asset Class, InstarAGF, October 8, 2015.

Many REITs have annual rent increases that are tied to inflation and/or revenues that are sensitive to economic activity. As a result, rising inflation leads to cash flow growth and asset appreciation in these REITs*.

Average U.S. REIT Dividend Growth vs.
Average CPI 2006 - 2019

Source: Bloomberg, as at December 31, 2019.

Over the long-term, REITs have outperformed other major asset classes*. REITs have generally provided strong total returns comprised of tax efficient regular and growing distributions, and long-term capital appreciation driven by Net Operating Income growth.

REITs outperform other major asset classes

Source: Bloomberg Financial L.P. and Starlight Capital. Data from December 31, 2002 to December 31, 2019. Global REITs, Global Equities, Global Bonds and Global Commodities are represented by the FTSE EPRA/NAREIT Developed Total Return Index (CAD), MSCI World Index (CAD) and FTSE World Broad Investment-Grade Bond Index (WorldBIG) (CAD) and S&P GSCI Official Close Index TR, respectively. Past performance is no guarantee of future results. Chart is provided for illustrative purposes and reflects hypothetical historical performance.

Infrastructure

Many infrastructure assets operate as government-regulated monopolies and, as a result, enjoy high barriers to entry. These monopolies last for decades and produce consistent cash flow and dividends that are positively levered to economic growth.

Dividend Yield Comparison

Source: Fiera Capital, Bloomberg, dividend yield as of December 31, 2017. Global Infrastructure, Global Bonds, Global Equities and Emerging Market Equities figures are represented by the following respective indices: S&P Global Infrastructure Index, DofA Merrill Lynch Global Government Bond II Ex Canada Index, MSCI World Index and MSCI Emerging Markets Index.

Historically, the performance of infrastructure securities has exhibited low correlation with other asset classes¹. This means that adding infrastructure securities to a portfolio should enhance diversification and result in the portfolio generating higher returns for the same amount of risk.

Infrastructure correlations July 2000 - September 2015

Source: Infrastructure Investing: A Distinct Asset Class, InstarAGF, October 8, 2015.

Revenues for many infrastructure assets are tied directly to inflation, providing a natural hedge and real long term returns. For other infrastructure assets, such as water and electricity utilities, the necessity of their services generates strong revenue and cash flow growth over the long term as consumers absorb price increases*.

Sensitivity to Unexpected Changes in Inflation 1991-2017

As at December 31, 2017. Source: Bloomberg and Cohen & Steers.

Data quoted represents past performance, which is no guarantee of future results. There is no guarantee that any historical trend illustrated herein will be repeated in the future and there is no way to predict precisely when such a trend will begin. Stocks represented by the S&P 500 Index. Bonds represented by the BofA Merrill Lynch U.S. 7-10 Year Treasury Index. Infrastructure represented by a 50/50 Blend of the Datastream World Piplelines and Datastream World Gas, Water & Multi-Utilities through July 2008 and the Dow Jones Brookfield Global Infrastructure Index thereafter. Inflation sensitivity based on a linear regression analysis of 1-year real returns and the difference between the realized inflation rate (y/y change in the Consumer Price Index) and the lagged 1-year ahead median inflation estimate from the University of Michigan survey of consumers.

Over the last decade, global infrastructure securities have delivered higher total returns than global equities and global bonds. The strong operational leverage in most infrastructure firms' business models, combined with high barriers to entry produce sustainable, long-term returns in the form of attractive dividend income and capital appreciation*.

10-Year Income Returns and Capital Appreciation: Global Listed Infrastructure vs. Equities & Bonds

Source: Bloomberg as of March 31,2016. Global Infrastructure represented by the Dow Jones Brookfield Global Infrastructure Index; Global Bonds represented by the Barclays Aggregate Global Corporate Bond Index; Global Equities represented by the MSCI World Index.

Pension funds increase real asset investments

Globally, institutions continue to allocate more capital to real assets and away from listed debt and equity securities.

The 10 largest Canadian pension plans have an average allocation of 28.1% to real assets².
US endowment funds with over $1 billion in assets have on average over 60% allocated to real assets³.

² Source: Pension Plan Annual Reports.
³ Source: WisdomTree, 2022 NACUBO-TIAA Study of Endowments. Data represent asset allocations by AUM cohort as of 6/30/22.

Canadian Pension Plan Private Alternative Investment Allocations

Access global real assets with Starlight Capital

Starlight Capital is an independent Canadian asset management firm. We are investment led and client-focused and we believe investing is about finding great businesses that will do well over long periods of time. When we find these businesses, we conduct our own independent analysis and take meaningful positions when the risk/reward outlook is favourable. Our uniqueness is demonstrated through:

1

Differentiated Investment Solutions

Concentrated global portfolios of high-quality real estate or infrastructure businesses offered through mutual funds, exchange-traded funds, structured products, and private investment pools for accredited investors.

2

Disciplined Investment Approach

We strive to deliver superior, risk-adjusted, long-term returns for investors through our proprietary investment strategy Focused Business Investing. We build concentrated portfolios of high-quality businesses when they offer us sufficient return for the risk incurred.

3

Deep Expertise

Dennis Mitchell, CEO & CIO of Starlight Capital, has led investment teams of more than 30 people and exercised oversight of more than $18 billion in AUM. He brings over 20 years of experience managing an investment team responsible for more than $2 billion of global real estate and infrastructure securities.

Starlight Global

Real Estate Fund

The Starlight Global Real Estate Fund offers investors the opportunity to invest in investment-grade real estate assets located in world-class cities, generating stable income and long-term growth potential.

Watch Video Fund Profile Investor Brochure Whitepaper

Starlight Global Real Estate Fund

The Starlight Global Real Estate Fund offers investors the opportunity to invest in investment-grade real estate assets located in world-class cities, generating stable income and long-term growth potential.

Watch Video Fund Profile Investor Brochure Whitepaper

The Case for Global Real Estate

Starlight Global Infrastructure Fund

The Starlight Global Infrastructure Fund offers investors the opportunity to invest in large-scale infrastructure assets that provide essential services in cities around the world, generating reliable returns and long-term value creation.

Watch Video Fund Profile Investor Brochure Whitepaper

Starlight Global Infrastructure Fund

The Starlight Global Infrastructure Fund offers investors the opportunity to invest in large-scale infrastructure assets that provide essential services in cities around the world, generating reliable returns and long-term value creation.

Watch Video Fund Profile Investor Brochure Whitepaper

The Case for Global Infrastructure

Portfolio Managers & Real Assets Team / Resources

Starlight Capital’s strength comes from our portfolio managers and the expertise and experience that they provide.

Insights

Portfolio managers from Starlight Capital Real Assets team offer views and insights on current market and strategies, and news about opportunities they see today.

Real Assets and Real Income

Speak to your advisor

For more information on Starlight Capital Real Asset Mutual Funds, contact your financial advisor.

^*Commissions, trailing commissions, management fees and expenses all may be associated with investment funds. Investment funds are not guaranteed, their values change frequently and past performance may not be repeated. Please read the prospectus before investing. Investors should consult with their advisors prior to investing.

This material is for informational and educational purposes only. The information contained herein is not an offer to sell nor a solicitation to buy any security. Such an offer can only be made by prospectus or other applicable offering document.

There are ongoing fees and expenses associated with owning units of an investment fund. An investment fund must prepare disclosure documents that contain key information about the fund. You can find more detailed information about the fund in these documents.

Starlight Investments, Starlight Capital and all other related Starlight logos are trademarks of Starlight Group Property Holdings Inc.

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Real Assets, Real Income: A Solid Foundation for Canadian Portfolios

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