Tender offer funds are an investment vehicle that can be used to access a wide range of asset classes and investment strategies. In this post we discuss different categories of tender offer funds available in the market. Hedge funds of funds are the most popular strategy, followed by private equity, accounting for a combined ⅔ of total net assets. Credit strategies are the third most popular strategy, accounting for 15% of net assets. Public equity, real estate and real estate strategies are also available in a tender offer fund structure.
This chart shows the percentage of net assets in each tender offer funds category.
Note that many tender offer funds use a master-feeder structure, in which multiple registered feeder funds invest all of their assets into the same master fund. To avoid double counting, when a master fund has multiple feeder funds, we count it as one fund, including only the assets in the master fund. To access detailed information on all share classes of all active funds, including both master and feeder funds, click here.
Fund of Hedge Funds
Traditionally, hedge funds have been reserved for an elite group of institutions and family offices. Fortunately, tender offer fund structure allows a wider audience of investors to access hedge fund strategies.
There are 28 active tender offer funds with a combined net assets of $11.5 billion implementing fund of hedge fund strategies. SkyBridge Multi Adviser Hedge Fund Portfolios is the largest hedge fund currently active in the market with $2.9 billion in net assets . We covered the SkyBridge platform of hedge fund solutions in a previous post. Ironwood Institutional Multi-Strategy Fund is another major hedge fund product, with $2.8 billion in net assets.
Private equity tender offer funds will combine investments in other private equity funds with direct investments in private companies, or in co-investments alongside private equity sponsors. As with hedge funds, private equity funds have traditionally been inaccessible for all but the largest investors. Unlisted closed end funds have proved an effective way for retail investors to access the benefits of private equity.
There are currently 23 active tender offer funds with combined net assets of $31 billion implementing a private equity strategy. Partners Group Private Equity (Master Fund) is the largest private equity tender offer fund, with $.6.7 billion in net assets. We covered the Partners group private equity platform in a previous post. Central Park Group is another major sponsor of private equity tender offer funds. Their CPG Carlyle Commitments Fund, which offers access to a portfolio of funds sponsored by Carlyle, has nearly $1 billion in net assets. Click here to learn more about Central Park Group’s private equity offerings.
There are twelve tender offer funds implementing a credit strategy. Funds in this category engage in a variety of secured and unsecured lending activities, directly originating credit instruments, or buying bonds and loans on the secondary market. John Hancock GA Mortgage Trust is the largest credit fund, with $1.5 billion in net assets. Following up on this fund, John Hancock recently launched the John Hancock Senior Loan Trust as well. FS Global Credit Opportunities fund also has nearly $1.5 billion in net assets. FS Capital has successfully raised capital from retail and institutional investors, using a variety of other fund structures, including interval fund, BDC, and REIT.
Credit strategies have proven to be far more popular for interval fund structures than tender offer funds, although they would work equally well in either fund structure.
There are two tender offer funds that invest primarily in public equity markets. Advantage Advisers Xanthus Fund, with $3.7 billion in net assets is by far the largest. The recently launched CPG Cooper Square International Equity has $32 million in net assets as of the most recent public filings. Given Central Park Group’s success with its private equity funds, it’s likely that their new public equity strategy will end up being quite large as well.
Multistrategy funds combine different strategies such as private equity, public equity, and credit into one holistic vehicle. There are five multistrategy tender offer funds with combined net assets of approximately $1 billion. BlackRock Multi-Sector Opportunities Trust Series I, with $360 million in net assets, is the largest fund in this category.
There are three tender offer funds with a combined $600 million implementing a real estate strategy- typically buying interests in private equity real estate funds. Blackstone Real Estate Income Master Fund is the largest fund in this category, with $545 million in net assets.
Real estate has also proven to be far more popular for interval fund structures than tender offer funds, although they would work equally well in either fund structure.
When deciding on an investment strategy, or selecting a fund allocation, it is important to compare to other funds in the same category.
More Strategy Information
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