What this module covers
Private investments in Canada reach individual investors through a small number of channels. This module describes four of them: commitments made directly to a fund manager, funds of funds, exempt market dealers and online platforms. For each it sets out what the channel does, what it costs and where its conflicts of interest sit. It then describes the checks commonly applied to any intermediary, including how to look up a registration, and the warning signs that diligence practice treats as reasons for concern.
The four channels
A private investment is not bought through a brokerage account the way a listed share or an exchange-traded fund is. It is sold under an exemption from the prospectus requirement (module 03 describes the investor categories those exemptions rely on), and it reaches investors by one of four routes:
- Direct commitments. The investor commits capital to a fund as a limited partner, working with the manager itself.
- Funds of funds. The investor commits to one vehicle, which in turn commits to several underlying funds.
- Exempt market dealers. Registered intermediaries distribute securities sold under prospectus exemptions.
- Online platforms. Websites present a range of private offerings, often with lower minimums and an online subscription process.
The channels differ less in what they sell than in who selects the investment, who carries out the diligence and who is paid along the way. None of them removes the need for the investor's own review.