According to ETFGI, assets invested in US ETFs/ETPs have exceed the $2 trillion mark for the first time as of December 22, including a record $232 billion in new assets this year alone. For more information, click here.
In this edition of CEF Launch, an overview of filings from:
BlueArc Multi Strategy Fund
Princeton Private Equity Fund
Griffin-Benefit Street Partners BDC Corp.
Yorke Capital Corporation
Wildermuth Endowment Strategy Fund
BNY Mellon Alcentra Multi-Strategy Credit Fund, Inc.
On December 23, BlueArc Capital Management, LLC and Keel Point Advisors, LLC filed paperwork with the SEC for the launch of the BlueArc Multi Strategy Fund. The fund will only be offered to “accredited investors” through a private placement and will pursue an investment objective of long-term capital appreciation by investing in hedge funds. The co-advisers collectively have $1.4 billion of assets under management as of October 31.
On December 22, Princeton Fund Advisors filed amended paperwork with the SEC for the launch of the Princeton Private Equity Fund. The fund will only be offered to “accredited investors” through a private placement and will pursue an investment objective of long-term capital appreciation by investing in private equity funds. The adviser had $1.21 billion in assets under management as of July 31, managing managed futures, midstream energy infrastructure, event driven/long-short fixed income and tactical long/short US equity strategies. The adviser is an affiliate of Mount Yale Capital Group, LLC, which had approximately $.25 billion in assets under management as of July 31, managing assets using the following strategies: private equity leveraged buyout, international equity, absolute return, equity hedged global multi-strategy, and low volatility multi-strategy.
On December 22, Griffin Capital BDC Advisor, LLC filed amended paperwork with the SEC for the launch of Griffin-Benefit Street Partners BDC Corp., another unlisted business development company that is expected to launch in 2015. The fund, which will pursue an investment objective of generating both current income and capital appreciation, is seeking to raise up to $1.5 billion. The fund is sub-advised by Benefit Street Partners L.L.C., an affiliate of Providence Equity Partners L.L.C., a private equity and credit firm that manages over $40 billion.
On December 18, Yorke Capital Management, LLC filed amended paperwork with the SEC for the launch of Yorke Capital Corporation, another unlisted business development company that is expected to launch in 2015. The fund, which will pursue an investment objective of generating current income from its debt investments in lower middle market companies and obtaining capital appreciation from equity and equity-related investments, is seeking to raise up to $200 million.
On December 17, Wildermuth Advisory, LLC filed its final amended paperwork with the SEC for the launch of the Wildermuth Endowment Strategy Fund, a closed-end interval fund that launched on December 22. The fund, which will be distributed by Realty Capital Securities, will pursue an investment objective of seeking total return through a combination of long-term capital appreciation and income generation through replicating allocation strategies used by endowment funds. In particular, the fund is expected to be diversified across a broad range of assets:
• Up to 65% in U.S. and non-U.S. equity securities, including private equity investments
• Up to 25% in publicly-traded and non-traded REITs and other real estate investments
• Up to 25% in energy and natural resource investments, including, but not limited to MLPs, oil and gas funds and other energy and natural resource funds
• Up to 25% in commodity investments, including, but not limited to, commodity pools and precious metal holdings
• Up to 25% in absolute return investments, including but not limited, to managed futures funds, hedge funds and other absolute return investment vehicles such as registered investment companies pursuing absolute return strategies
• Up to 30% U.S. and non-U.S. fixed income securities, including, but not limited to, notes, bonds, and asset-backed securities
The advisor is affiliated with Kalos Financial, Inc. and its affiliated RIA and broker dealer businesses. The fund is seeking to raise up to $250 million.
Following the success of Alcentra Capital Corp.’s IPO earlier this year, BNY Mellon Alcentra are seeking to launch an unlisted limited duration closed-end fund in a joint project with affiliate The Dreyfus Corporation. On December 16, Dreyfus filed its initial paperwork with the SEC for the launch of the BNY Mellon Alcentra Mult-Strategy Credit Fund. The fund, which will be distributed by Dreyfus’ affiliated distributor MBSC Securities Corporation, will pursue an investment objective of seeking a total return consisting of capital appreciation and income by investing across the credit spectrum, including senior secured loans, subordinated loans, special situations, structured credit, and corporate debt. The fund will only be offered to those that meet the “qualified client” standard.
According to Bank of America Merrill Lynch, hedge funds were down 0.8% for the week of December 17, trailing the S&P 500 by 0.1%. Merger arbitrage funds stood out as the best performers with a 0.1% return. For more information, click here.
On December 12, Goldman Sachs, which currently manages two ETNs, but no ETFs, filed paperwork with the SEC to launch up to 11 ETFs focused on so-called "smart beta" and hedge fund replication strategies. Six of the funds will be marketed using an "ActiveBeta" brand, focusing on international, EM, Europe, Japan, US large cap, and US small cap equity. The other five funds will focus on hedge fund strategies such as relative value, equity long short, event driven and macro, as well as a multi strategy offering. For more information, click here, here and here.
According to Morningstar’s Alternative category research, alternatives managed $254 million in net inflows in the month of November notwithstanding another month of massive outflows in MainStay's Marketfield Fund. The funds with passive strategies, which typically comprise less than a third of the Alternative category, maintained positive asset flows sufficient to overcome outflows to actively managed funds. For more information, click here.
Gemini Alternative Funds, LLC has launched the Galaxy Plus Fund, a Delaware series limited liability company offering qualified investors access to a select group of commodity trading advisors, including Buttonwood, LLC, Quantica Capital AG, Revolution Capital Management, LLC, Row Asset Management, LLC and SkyBridge Capital II, LLC. For more information, click here.
According to data released by alternative asset research firm Preqin, secondary private equity strategies exhibited a significantly better risk-return profile as compared to other PE strategies from 2001 to 2011. For more information, click here.
New York Governor Andrew Cuomo vetoed a bill that would have allowed New York state, city and teachers pension funds, with combined assets in excess of $445 billion, to allocate a larger percentage of their investment assets to hedge funds, private equity and international bonds. The bill would have increased the cap on such investments to 30 percent from 25 percent. In rejecting a proposal that not only passed the state legislature, but also had the strong backing of NYC Controller Scott Stringer, Governor Cuomo cited concerns similar to those raised by CalPERs in September - namely low returns in exchange for the higher fees, risk, and complexity associated with such strategies. For more information, click here and here.
On the heels of Goldman Sachs' application to the SEC to launch alternative ETFs, Janus Capital Group filed an application to the SEC on December 18 to launch alternative ETFs as part of its efforts to capitalize on its recent acquisition of VelocityShares. At least initially, Janus is seeking to launch ETFs with long/short strategies that have both long (130/30) and short biases. For more information, click here and here.
The Federal Reserve extended the deadline to July 2016 for banks to sell investments in private equity and hedge funds to as part of the Volcker Rule. The delay only affects funds owned by banks prior to December 31, 2013. The Fed also indicated that it intended to grant a further extension of the deadline to July 2017 sometime in 2015. The Volcker Rule's ban on proprietary trading remains unchanged. For more information, click here.
In this edition of CEF Launch, an overview of fund filings from:
Resource Credit Income Fund
Pomona Private Equity Fund
Altegris KKR Private Equity Fund
Forefront Income Trust
On December 16, Resource Financial Fund Management, Inc. filed paperwork with the SEC for the launch of the Resource Credit Income Fund, an unlisted closed-end interval fund that has an investment objective of producing current income, with a secondary objective of achieving long-term capital appreciation with moderate volatility and low to moderate correlation to the broader equity markets. The fund intends to meet its investment objectives by investing in the debt of small- to middle-market companies, including investments in fixed-income oriented funds.
The adviser is affiliated with Resource America, Inc., an asset management company that manages approximately $19.4 billion as of September 30. The fund is seeking to raise up to $500 million and will be distributed by ALPS Distributors. For more information, click here.
On December 15, Pomona Management, LLC filed amended paperwork with the SEC for the launch of the Pomona Private Equity Fund, an unlisted closed-end fund. The fund will be offered to “accredited investors” through a ’33 Act registered offering and will pursue an investment objective of long-term capital appreciation by investing in private equity funds, with a primary focus of investing in PE secondaries.
Pomona Management, the adviser, was founded more than 20 years ago and manages more than $8.5 billion in committed capital, is a global, value-oriented private equity firm specializing in investing across the private equity spectrum. The fund will be distributed by Voya Investments Distributor, LLC. For more information, click here.
On December 3, Altegris Advisors, L.L.C. filed amended paperwork with the SEC for the launch of the Altegris KKR Private Equity Fund, an unlisted closed-end fund that will invest all of its assets in a related master fund. The fund will be offered to “accredited investors” through a ’33 Act registered offering and will pursue an investment objective of long-term capital appreciation by investing in private equity funds, with at least 70% of its assets invested in KKR funds.
Altegris Advisors, L.L.C., the adviser to the master fund, is part of the Altegris Group of Companies and managed more than $1.08 billion in assets of alternative strategy mutual funds as of December 31, 2013. StepStone Group LP, which is an independently-owned investment firm focused exclusively on private markets and managed approximately $10 billion in assets as of December 31, 2013, will act as the master fund’s sub-adviser. The fund will be distributed by Altegris Investments, Inc. and is seeking to raise up to $360 million in the feeder fund (load shares) and $375 million in the master fund (no load shares). For more information, click here and here.
On December 1, Forefront Capital Advisors, LLC filed its final amended paperwork with the SEC for the launch of Forefront Income Trust, an unlisted closed-end interval fund that launched on December 8. The fund will pursue an investment objective seeking current income, primarily by investing in junk bonds, high yield loans and debt instruments with maturities of generally not more than three years that represent what the adviser believes to be deep value opportunities.
The fund will not pay its investment adviser, Forefront Capital Advisors, a management fee, but will pay it an advisory fee only after shareholders receive the first 8.00% of annual pre-advisory fee net investment income. Thereafter, the adviser will receive 80% of such income above 8.00% to and including 18.00% (while shareholders receive 20%), and 20% of such income above 18.00% (while shareholders receive 80%). The fund is distributed by Northern Lights Distributors, LLC and is seeking to raise up to $100 million. For more information, click here.
Henderson Global Investors, an independent global asset manager specializing in active investment with assets under management of $127.7 billion (as of June 30, 2014), launched the Henderson International Long/Short Equity Fund on December 9. The fund is the first mutual fund with an international long/short equity strategy, with long duration investments in international equities hedged back to the US dollar. For more information, click here.
Palmer Square Capital Management has launched its sixth '40 Act Fund, a long/short credit mutual fund, as part of UMB's Investment Managers Series Trust. The firm's other '40 Act funds include the following:
- Absolute Return Fund
- Income Plus Fund
- Opportunistic Income Fund
- Alternative Income Fund
- Fountain Short Duration High Income Fund
Palmer Square, which manages approximately $4.3 billion in assets, is part of Montage Investments, a group of institutional investment managers that together manage nearly $27 billion for a wide range of investors. Montage supports Palmer Square’s distribution efforts through its team of 38 distribution professionals located throughout the US. For more information, click here and here.
With one of the largest "liquid alts" funds already in its roster - the MainStay Marketfield Fund - New York Life added a $950 million multi-strategy tracker ETF among other assets to its alternative offerings with the acquisition of IndexIQ. The financial terms of the transaction were not disclosed. For more information, click here.
In WealthManagement.com's 2014 Advisor Benchmarking Trend Report, 70% of advisors recommend alternative investments for either many or a select few of their clients, which represents a decline from 2013 and several years of upward trends. Further, the percentage of advisors reporting that they are unlikely to recommend alternatives increased from 17% to 24%. For more information about this section of the Trend Report, click here.
After the SEC denied applications from BlackRock and Precidian Investments, active managers seeking to launch less-transparent ETFs need to address not only the agency's concerns about the lack of portfolio transparency, but also those of the market makers that act to prevent investors from being exposed to book to ETF share price arbitrage. For more information, click here and here.
The shift from transaction-fee accounts to fee-based accounts continues to be a major focus of the wires, as some firms continuing to report revenue increases from these changes while others remain flat as overall conversion seems to be slowing. For more information, click here.
Janus Capital Group, the traditional mutual fund provider that hired Bill Gross from PIMCO several weeks ago, has jumped headfirst into the active ETF market with the acquisition of VelocityShares for at least $30 million. VelocityShares had raised approximately $2 billion in assets across 21 investment products through the end of September. For more information, click here.
Investment News reports that Fidelity Investments joined BlackRock, PowerShares, State Street and Eaton Vance in seeking permission to offer actively managed ETFs that do not have to regularly disclose underlying portfolio holdings.