With a whole slew of credit interval funds hitting the market this year, its time to compare the basic structures and fee arrangements. The chart below consists of funds that have been declared effective within the past year, all from familiar sponsors. Within the broader category of credit, there are a lot of substrategies, but its no coincidence, that all of the Sponsors for these funds have marketed BDCs to retail investors in the past.
Recently launched credit funds(as of April 2017*):
|Fund||FS Energy Total Return Fund- A||FS Energy Total Return Fund -I||Griffin Institutional Access Credit Fund- A||Griffin Institutional Access Credit Fund- C||Griffin Institutional Access Credit Fund- I||Sierra Total Return Fund||Cion Ares Diversified Credit Fund|
|Advisor||FS Energy Advisor LLC||FS Energy Advisor LLC||Griffin Capital Credit Advisor, LLC||Griffin Capital Credit Advisor, LLC||Griffin Capital Credit Advisor, LLC||STRF Advisors, LLC (Medley Management)||Cion Ares Management, LLC|
|Sub-Advisor||Magnetar Asset Management LLC||Magnetar Asset Management LLC||BCSF Advisors, LP||BCSF Advisors, LP||BCSF Advisors, LP||NA||Ares Capital|
|Minimum Initial Investment||$2,500||$1,000,000||$2,500||$2,500||$1,000,000||$2,500||$2,500|
|Strategy||Equity and Debt securities of natural resource companies.||Equity and Debt securities of natural resource companies.||High yield debt securities||High yield debt securities||High yield debt securities||Debt and Equity||Diversified Credit|
|Targeted Capital Raise||Up to $2 billion||Up to $2 billion||Up to $1 billion||Up to $1 billion||Up to $1 billion||Up to $1 billion||Up to $1 billion|
|Redemption Program||5% per quarter||5% per quarter||5% per quarter||5% per quarter||5% per quarter||5% per quarter||5% per quarter|
|Maximum Total Sales Load||5.75%||None||5.75%||None||None||2.00%||5.75%|
|Dealer Manager Fee||0.75%||None||0.75%||None||None||1.25%||0.75%|
|Distribution Fee||None||None||None||0.75%||None||0.75% of average daily net assets until cap is reached||None|
|Shareholder servicing expenses||0.25% average daily net assets||None||0.25% average daily net assets||0.25% average daily net assets||None||0.25% of average daily net assets||0.25% of average daily net assets|
|Management Fee||1.60 % of total assets||1.60% of total assets||1.85% of net assets||1.85% of net assets||1.85% of net assets||1.5% of total assets||1.5% of total assets|
|Contingent Deferred Sales Charge||None||None||None||1.0% during first year||None||1.0% during first year||1.0% during first 18 months|
|Incentive Fee||None||None||None||None||None||15.0% of net investment income over 6.0% hurdle, with catch up provision||20% of net investment income over 6% hurdle, with catch up provision|
*table updated to reflect reduced management fees at FS Energy Total Return Fund. For continuously updated data on new funds launched since April 2017, see the Premium Membership section.
A few highlights to note:
- Most interval funds targeting retail investors have redemption programs set at 5% per quarter. However, there are a few older interval, mainly institutional interval funds that have annual redemption programs.
- Sierra Total Return fund is relatively unique in that it is directly run by a lower middle market lending shop. All the other funds in this chart outsource most of the credit underwriting.
- Griffin is charging its management fee based on net assets, but the other new credit funds in the table below are charging management fees based on total assets.
- Medley and Ares are both charging incentive fees, unlike Griffin and FS Investments.
We’ll be adding more fee comparison information in the Tools and Data section in the near future.