As the economy reopens, and many companies are able to successfully raise funds, investment opportunities in IPOs, private equity and venture capital could take off, particularly in the second half of this year.
Interval funds are growing in popularity, in large part, because investors are able to access private markets in a way they have not been able to through traditional mutual funds.
With Higher Yields and Strong Growth Potential, Now is a Great Time to Invest in a Real Estate Interval Fund()
The real estate sector was hit hard by the COVID-19 pandemic and forced lockdowns, but as the economy reopens the strong growth potential has the sector poised for a strong rebound year.
As banks have faced greater regulatory scrutiny since the adoption of Dodd-Frank in 2008, interval funds are becoming the new liquidity provider in structured credit finance. During the Alternative Credit Investing panel during the Active Investment Company Alliance’s (AICA) Interval Fund Boot Camp and Manager Spotlight on March 31, Christian Aymond, a Principal at A3 Financial Investments, noted that alternative credit assets work best in an interval fund structure, in large part because the funds do not have to offer daily liquidity.
Low Interest Rates and Wider Spreads Providing Greater Opportunities for Fixed Income Interval Funds()
Credit investments can be seen as an insurance policy, and the best time to make these investments is right after a great deal of dispersion and volatility in the markets, as we saw in 2020. Following last year’s market volatility, spreads are currently widest, and managers and investors are essentially paid to take on more risk right now.
The SEC’s decision in May to rescind the Boulder No-Action letter, allowing a closed-end fund to opt into a state control share statute without risking an enforcement action, could have a chilling effect on activism, and could face litigation for violating the Investment Company Act.
Despite Headwinds caused by the Covid-19 Pandemic, Many Industries Still Present Investment Opportunities in Real Estate()
Many industries and sectors have been affected by the pandemic but despite how the current situation has so far changed the industry, the investment outlook is still positive.
Many asset classes offered today through interval funds have historically only been available through private LP structures and have generally not been accessible to retail investors.
BDCs with $4 billion or more in investments are weathering the impacts of the COVID-19 pandemic better than those that are targeting lower and middle market businesses.
With the US presidential election next month, the ongoing impact of the coronavirus pandemic and the question of whether the economy is still in a recession or in a recovery, it can be tough for managers in the closed-end fund (CEF) space to navigate that uncertainty while preserving capital.
Goldman Sachs has added interval funds to its growing offerings of retail alternative investments. During a keynote address at AICA’s Summer Summit on August 13th, Collin Bell, Managing Director and Global Head of Client Portfolio Management for Fundamental Equity within Goldman Sachs Asset Management, said Goldman has been involved in managing money in the form of traditional ‘40 Act funds and separately managed accounts for decades, but entered the interval fund space in May with the acquisition of a real estate interval fund.
While closed-end funds (CEFs) have traditionally been perpetual offerings, more CEFS have term offerings that allow investors to liquidate at net asset value and minimize premium discounts.
The BDC industry will evolve toward favoring the largest players who can make use of their scale to both address more attractive parts of the market and leverage their cost bases.
As traditional fixed-income portfolios and allocations are becoming a thing of the past, individual investors are starting looking at alternative fixed income solutions such as closed-end funds.
Although indiscriminate volatility has caused valuations to decline significantly since March, managers have been able to take advantage of lower prices to cheaply buy some company equities.
The need to differentiate from the competition is essential as the competitive BDC landscape tightens up, with more lenders bidding on the same deals and many BDCs trading below net asset value.
Following the lockdowns and onset of impacts of the coronavirus, when the stock markets went into turmoil, many business development companies (BDCs) took a step back to avoid the worst of the effects.
In today's low-interest-rate environment, principal perseveration a key fundamental present in bond strategies and managers must find yield without taking on too much undo risk.
There has been an ongoing trend of new issuances in taxable municipal closed-end funds (CEFs), particularly from institutional and foreign investors as yields have been higher than other debt products.
The average closed-end fund through Friday March 20th is down around 40%. Discounts widened; NAVs and market prices both fell. NAV movements reflect both bear market pricing and a lack of trading in the market, a shortage of bids. Most funds are levered (including 90% of bond funds), and leverage magnifies results on the way up and down.