Private credit has historically offered clients the potential for equity-like returns with lower risk. Returns can exceed public markets credit due to manager skill and illiquidity premiums. Private credit may be suitable for a wide range of investors, including retirees seeking income from their portfolios or savers who desire a diversifying high-yield component to their portfolio. This should be thought of as one component of a diversified portfolio with a history of attractive risk-adjusted returns.

Still not sure? The private credit account opening process will ask you questions to allow our team of fiduciary portfolio managers to determine if private credit is right for you and if so, what dollar value allocation is optimal. We'll give you a recommendation based on the information you provide us.

Yes, there is a minimum investment of $10,000 required to invest in Wealthsimple's Private Credit Fund. You must also have at least $50,000 in liquid assets with or outside of Wealthsimple to qualify.

You can hold this fund in a managed RRSP, TFSA or non-registered account. This fund cannot be held in a self-directed investing account. This is because Wealthsimple will be acting as a fiduciary and determining whether this investment is suitable for you based on your personal situation and other assets. An investment comes with access to advice from a Wealthsimple Portfolio Manager.

You have a few options to add or transfer funds into your private credit account. You can:

• Transfer funds from another Wealthsimple account
• Make a deposit from a linked bank account
• Deposit funds with a linked debit card
• Fund your account with Interac e-Transfer®
• Wire funds to your account
• Transfer an account to Wealthsimple

The fund invests in loans to middle-market companies, primarily senior-secured, alongside asset-backed loans, structured credit, and specialty finance strategies, including pharmaceutical and music royalties, and real-asset lending. 

The Wealthsimple Private Credit Fund employs a multi-strategy, multi-manager approach designed to provide diversified exposure across a broad range of private credit loans and structures. This diversification helps mitigate concentration risk. For example, if a particular credit strategy or manager underperforms, the remainder of the portfolio remains resilient. The fund allocates to established managers with long track records, disciplined underwriting, and differentiated approaches across the private credit spectrum, with the goal of delivering consistent income and robust risk-adjusted returns.

Private credit returns come from two main sources: distributions, which refers to each investor’s share of loan payments, and changes in the value of the underlying loans and investments. While distributions are generally stable as long as borrowers continue to make scheduled payments, the value of the underlying loans is influenced by broader market conditions and company-specific developments, making it more volatile. As a result, overall returns can fluctuate due to changes in loan valuations, even when distributions remain stable.  

The overall asset class typically offers 2-5% higher returns than institutional bonds and other types of public credit.*

*From March 2007 to September 2022, private credit returned 8.9% annualized while U.S. Corporate Bonds returned 4.1% annualized. Data compiled by J.P. Morgan Asset Management (p11). Sources: Cliffwater Direct Lending Index; NCREIF Property Index (U.S. real estate only); MSCI Global Quarterly Infrastructure Asset Index. All data represent the period from 12/31/2011 to 12/31/2021.

Yes, but investors are typically rewarded for taking on that additional risk. Private credit is considered riskier than investment-grade public bonds predominantly because of four factors: 1. Illiquidity. Unlike publicly traded bonds, privately originated loans are difficult to sell, limiting the liquidity of the overall fund. 2. Default risk. The risk that some borrowers may be unable to repay their loans is higher than for investment-grade bonds. 3. Leverage. Funds may borrow money to invest in an attempt to amplify returns, but this also comes with the risk of amplified losses. 4. Less transparency. Unlike public markets, where bond prices and related information are readily available and publicly disclosed, privately originated loans often have more limited information transparency, as borrowers may prefer not to disclose their financial details publicly. In addition, because these loans are not traded on a public market, they are not priced on a daily basis. Instead, third-party valuation firms typically assess their value monthly.

Our managers conduct rigorous due diligence and invest only in industries where they possess deep expertise. Plus, our loans and investments have built-in investor protections, like being first in line to get paid back in the event of default, or adding prepayment penalties should a borrower choose to refinance.

Managed accounts (including private credit accounts) are offered by Wealthsimple Inc., a registered portfolio manager in each province and territory of Canada. Assets in your managed account are held in an account with Wealthsimple's affiliated custodial broker, Wealthsimple Investments Inc. ("WSII"). WSII is a member of the Canadian Investment Regulatory Organization. Customer accounts held at WSII are protected by CIPF within specified limits in the event WSII becomes insolvent. A brochure describing the nature and limits of coverage is available upon request or at CIPF. Wealthsimple Inc. is not a member of CIRO nor a member of CIPF.

(note that this does not protect against market fluctuations).

In order to enhance diversification and strengthen the fund’s ability to provide consistent returns, Wealthsimple is currently partnered with three private credit managers with complementary strategies: Cliffwater, Dawson Partners, and Sagard.

Cliffwater
Their strategy: Cliffwater lends to middle-market businesses backed by private equity sponsors like Blackstone or KKR. It focuses on diversification, capital preservation, and consistent income, often through enhanced lending strategies including music and pharmaceutical royalties.

Why we chose them: Cliffwater is both an alternative asset manager and investment advisor. That combination is what makes them exceptional: the company’s advisory business has direct influence over the investment of $80 billion, which opens a lot of otherwise closed doors when it’s time for Cliffwater to invest its own private asset funds. The company’s Core Fund has outperformed several of the largest and most respected credit funds by more than 1% since 2022, and their Enhanced Strategy Fund has outperformed the Core Fund by 2% over the same period. We’ll be investing in both.

Dawson Partners
Their strategy: founded by alumni of the CPP and Ontario Teachers’ Pension Plan, Dawson specializes in something called structured credit. Instead of lending to companies, Dawson lends money to private equity managers who use their portfolios as collateral.

Why we chose them: Dawson’s strategy of lending to private equity portfolios rather than corporations is different from traditional private credit investing, making it highly diversifying in our fund. Their approach protects client capital and builds in possible upside that you don’t get in traditional private credit loans (which simply pay lenders a certain amount of interest). As a borrower’s portfolio generates income, Dawson receives all of the money coming in until it hits a predetermined minimum, then a portion of the income beyond that.

Since launching in 2015, Dawson has delivered an average annual return of 11%. Last year, the firm introduced its first open-ended fund to give investors greater liquidity. Providing that liquidity requires the fund to hold more cash, which slightly reduces returns. As a result, Dawson expects this fund — the one we’re investing in — to generate annual returns of about 10%.

Sagard
Sagard has been managing our fund since it launched in 2023, so you are likely already familiar with them. But as a refresher, many of the firm’s private credit partners were responsible for launching the CPP’s private credit arm. Sagard focuses on middle-market companies that are not controlled by traditional private equity owners. That space is less competitive, allowing for higher lending rates and more built-in protections for lenders.

Together, these managers provide diversified exposure across corporate lending, structured and enhanced credit, and private market financing solutions. Looking ahead, we plan to continue expanding the fund’s manager lineup and adding complementary strategies as opportunities arise. This should further strengthen diversification across market cycles — and your returns.

You will be charged an asset management fee of 1.25%, on top of Wealthsimple's standard managed account fees, to invest in the Wealthsimple Private Credit Fund. If the fund returns more than 5%, a 15% carry fee applies to those returns.

Private investment fees are generally higher because you need a manager in order to access these opportunities. Management fees are designed to cover the costs of diligence and sourcing to find attractive credit opportunities, and to structure the terms of those loans to aggressively manage risk. The asset class has historically provided attractive net returns, despite these fees.

Private investments have very different fee structures than public investments (where you should certainly keep costs well under 1%). The reason being these types of investments take a large amount of skill and there is a big difference between the results of the best performing managers and those of the worst. Again, unlike public markets, a performance fee kicks in if the manager achieves a certain threshold of returns for investors and is designed to incentivize performance. In this case, if the manager makes investors 5% or more, a 15% performance fee is charged on the entire return. The equity like 9% return that we are targeting is net of all fees.

Private investments have historically only been available to individual investors through high-minimum, high-fee advisors. We're thrilled to be able to provide access to Private Credit at our standard, low management fees, which are about half of the fees a typical advisor would charge.

Yes, if the funds are deposited into an RRSP Private Credit account prior to March 1, 2026, you will receive a tax slip for these deposits. You will receive this tax slip even if the funds haven't yet been officially invested in the private credit fund.

Private investments have a delayed return on their monthly valuation updates and distributions.

Wealthsimple purchases private credit funds on behalf of clients once a month around the 15th of every month (the monthly deadline). However, cash settles into the fund on the 1st of the following month, and your performance starts on that following month.

There is a delay in re-evaluating the price of the fund (this is expected with private investments), and the performance of any given month is reflected in your account near the end of the following month (to give time for the fund to be marked to market).

Example: If you add money to your private credit account on June 10, we'll purchase the private credit fund around June 15. The cash would settle into the fund on July 1. Your first month of performance would be July and the July performance would be reflected in your account around the end of August.

Example in the event you miss the monthly deadline: If you miss the monthly deadline — say you add the money to your private credit account on June 16 — we'll invest your funds temporarily in a high-interest savings portfolio to generate some interest until around July 10. We'll sell the fund to raise cash and purchase the private credit fund around July 15. The cash would settle into the fund on August 1. Your first month of performance would be August, and the August performance would be reflected in your account around the end of September.

Distributions are paid out every month and will automatically be reinvested into the fund unless you elect to receive your distributions in cash. You can learn more about how to change your distribution preferences here. 

Because private credit is a relatively illiquid asset, we expect cash redemptions of up to 5% of the fund's value to be available to clients each quarter.

Redemption requests must be submitted at least 60 days before the end of a quarter (for example, by January 31 for a March 31 withdrawal, if April 1 was the first day of a new quarter). The withdrawal request must be submitted by the last trading day prior to that day.

Redemptions will be subject to a settlement period of up to 30 days after the end of the quarter in which the redemption is requested.

In the event that total cash redemption requests exceed any cash redemption limits, we will allow clients to redeem their units in the Fund for cash on a prorated basis. Redemptions may be suspended in certain circumstances and may vary depending on the liquidity of the Fund's portfolio. Redemption requests in excess of any cash redemption limit may be satisfied by the issuance of redemption notes, which are non-transferable.