White Paper Summary: Unlisted Closed-End Funds: Platform Perspectives and Market Update

Summary: white paper by FUSE Research Network and UMB Fund Services

· The growth of closed-end interval funds (“interval funds” and “CEIFs”) and tender-offer funds (collectively, “unlisted CEFs”) has been attracting attention in the investor community.

· Investor interest in unlisted CEFs is driven by: growing demand for access to alternative investment strategies, which can produce non-correlated returns; lower investment minimums compared to traditional private investments; and simplified tax reporting, replacing the oft-maligned Form K-1 with the streamlined Form 1099.

· While interval funds have traditionally been distributed through RIAs and well-known brokers, FUSE believes the eventual target market for interval funds will be the broadly-defined retail investor (i.e. neither accredited nor institutional investors).

· Technological and operational issues have limited distributors’ ability to further accelerate growth of the interval fund space; UMB Fund Services has been actively involved in promoting “straight-through processing” through the DTCC AIP, which it believes will allow for increased distribution of interval funds, especially to investors outside of a manager’s traditional client base.

Source

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