Why Fund-like Investments Are Doing So Well

I typically use this segment to discuss various exchange traded fund (ETF) options for investors, but in this article, I’m going to discuss some ETF-like equities that resemble ETFs or other fixed income bonds tied to a basket of securities. In particular, I’m going to cover why Brookfield Asset Management (TSX:BAM.A)(NYSE:BAM) fits this profile.

As most Canadian investors already know, Brookfield Asset Management and the Brookfield subsidiaries are, in a way, portfolios of holdings. The holdings covered by Brookfield are typically private properties and assets. The securities which trade (which are actually very similar to REITs or ETFs in terms of structure) act as a diversified portfolio for investors in a similar way to ETFs.

Brookfield Asset Management, the parent of various subsidiaries, thus provides Canadian investors with a well-diversified portfolio of alternative assets with no management expense ratio (ignoring trading costs) and a dividend yield around 1.4% at the time of writing (still better than most government bonds today).

Many institutional investors actually prefer Brookfield Asset Management to ETFs in the real estate space or REITS because of the greater level of diversification in Brookfield’s holdings (renewable power asset, private equity exposure, etc.).

These holdings also importantly provide excellent exposure to high-quality long-lived assets with a return better than most bond yields. If this investment works for pension funds, it ought to work for retail investors as well.

Invest wisely, my friends.