Unlisted closed end funds can seem opaque. It can be hard to get basic information, let alone detailed research. Part of our motivation for launching Interval Fund Tracker and Tender Offer Fund websites was to increase transparency in the sector, and help investors get access to the information they need to make informed decisions.
We curate research resources from around the web, and make them easily accessible here. Areas covered include industry background whitepapers, legal and fund structuring guides, as well as industry whitepapers from fund sponsors. Additionally, the Tender Offer Funds blog frequently highlights proprietary research on fund sponsors and investment strategies.
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Premium members have exclusive access to additional research reports on topics that impact asset managers and investors. Here are three recent reports that we published.
This report provides a broad overview of fees across the unlisted CEF market. It covers the different fee structures that fund managers use and contains detailed data on fee levels for different investment strategies for both tender offer funds and interval funds. Topics covered include management fee structures, average management and incentive fee levels by strategy, other fund expenses, and expense limitation agreements. Asset managers considering launching an unlisted CEF can use this report to better understand the competitive landscape for tender offer funds and interval funds. Allocators and investors can use this report in their due diligence process to ensure that they are getting the best value for their money.
Most tender offer and interval funds demonstrated resilience during a chaotic 2020. In fact, several funds reported solid absolute performance Although some strategies struggled, most unlisted CEFs helped support investor portfolios by minimizing overall volatility.
More fund sponsors expressed interest in launching funds. Nine new interval funds launched in 2020, and at the end of the year there were another 26 in registration, pending SEC approval. The sector actually grew both in terms of active funds and AUM.
More importantly, most funds in the market managed challenging liquidity issues during the worst part of the crisis. As expected, tender offers were heavily oversubscribed during the first part of the year as Covid-19 broke out. Although interval fund managers prorated redemption requests, no interval fund needed to suspend redemptions. An excerpt from this report is available for free on the Interval Fund Tracker blog, but the full report is available only to premium members.
Due diligence analysts need to be prepared for worst case scenarios. One way to do this is to “stress test” capital markets assumptions. Market history also provides examples of things that can go wrong. The 2008-2009 financial crisis is a particularly salient example. Although each crisis is unique, understanding investments performed during past crisis can help analysts better understand what might happen in the future during challenging circumstances.
Redemption requests were heavily oversubscribed as markets plummeted, and investors sought cash wherever they could find it. However, investors who held on to interval fund investments through the volatility of the financial crisis were generally rewarded with positive returns. Of course getting through that “in between phase” can be psychologically challenging. This is where financial advisors can play a key role in helping clients make the best long term decisions.
This report highlights four funds that are still around today today that went through the 2008-2009 financial crisis. s. The predecessors to Invesco Senior Loan Fund and Voya Senior Income Fund both invest in high yield credit, and over a decade later under their current management are among the largest active interval funds. Zazove Convertible Securities Fund is a privately offered fund focusing on convertible bonds and related arbitrage strategies. Blackrock Enhanced Government Fund invests in short term government debt and is publicly traded on an exchange.
These research reports all emphasize a top down approach to understanding the market. We can also provide research and due diligence covering specific individual funds upon request. Additionally, we can also provide custom research for asset managers, service providers and investment advisers. Please email email@example.com with any research inquiries.
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