Versus Capital Real Assets Interval Fund

Versus Capital Launches Another Interval Fund

The Versus Capital’s new real assets interval fund was declared effective by the SEC on August 17, 2017. Versus Capital Real Assets Fund, LLC is seeking to raise $450 million in a continuous offering. Minimum initial investment is $10 million(RIAs can aggregate accounts to get to the minimum). The fund will have one share class. and the management fee will be 1.50% of net assets.

Versus Capital is familiar with the interval fund space. It also manages Versus Capital Multi-Manager Real Estate Income Fund LLC, an investment company with $1.7 billion in assets. See Active Interval Funds for more information on this fund.

Closed End Funds, Mutual Funds, and Interval Funds

The Investment Company Act of 1940: 77 Years Later

On this day in 1940, President Roosevelt signed the Investment Company Act of 1940.  Previously, both houses of congress had approved the ’40 Act unanimously. The ’40 Act, is the primary source of regulations for the multi-trillion dollar investment industry. The ’40 act defined and regulated investment companies, and provides investors with protections against conflicts of interest, misappropriation of funds, excessive fees, and undisclosed risks.

As he signed the bill, President Roosevelt declared:

We have come a long way since the bleak days of 1929…. I have great hopes that the act which I have signed today will enable the investment trust industry to fulfill its basic purpose as a vehicle to diversify the small investors risk.

What is a ’40 Act Fund?

The investment companies that the 1940 Act protections apply to are known as 1940 Act Funds, or ’40 Act Funds Broadly speaking, there are three types of  ’40 Act Funds: Closed End Funds, Open End Funds, and Unit Investment Trusts. Open end funds and closed end funds are the most common type of

Interval Fund Transfer Agents

Interval Fund Service Providers

Interval funds rely on a variety of third party fund service providers in order to operate.  An administrator oversees the operational performance ensuring it complies with regulatory requirements. An independent accounting firm performs annual audits and certifies the fund’s financial statements. The interval fund transfer agent keeps ownership records, and handles transaction processing. A CSV file with information on service providers for all active interval funds is available at the bottom of this post.

Interval Fund Transfer Agent Market Share

Several users of this site have asked about interval fund transfer agents. DST Systems leads the market, and currently serves as transfer agent for 26% of active interval funds.  See this whitepaper that DST Systems recently produced on exploring new product structures. UMB Services serves as transfer agent for 21% of interval funds. UMB Services recently wrote about its turnkey interval fund solutions in HedgeWeek.

The following chart summarizes interval fund transfer agent market share, as of August 2017:

 

Interval Fund Transfer Agents

Pathway Energy Infrastructure's Portfolio

Pathway Energy Infrastructure Converts to Interval Fund

On July 26, 2017, Pathway Energy Infrastructure’s board of directors approved the Company’s plan to convert to an interval fund. The change of this fundamental policy will be submitted to shareholders for a vote in a forthcoming proxy. The Company is also making adjustements to its investment strategy to focus on broader infrastructure opportunities. The new Company name will be “Pathway Capital Opportunity Fund.” Shareholders will need to vote on the change in an investment strategy as well. Details on the new structure and strategy are included in a draft registration statement

PIMCO Interval Fund

Where PIMCO Sees Attractive Opportunities

PIMCO recently launched the Flexible Credit Income Fund(PFLEX). The fund has a a flexible mandate to capitalize on a variety of credit market opportunities. On the fund’s website, PIMCO describes the opportunities it is expecting to find:

Q: Where do you see attractive opportunities for the Flexible Credit Income Fund today and in the future?
A: While we believe valuations on many traditional credit sectors (investment grade, high yield and bank loans) are relatively fair at current levels, we are seeing several robust opportunities today.
First, despite strong performance in U.S. real estate markets since the financial crisis, we continue to find value in both public and private mortgage debt, especially on the residential side. These opportunities include traditional legacy non-agency mortgage-backed securities (MBS), legacy loans that Fannie Mae and Freddie Mac continue to dispose, and opportunities to purchase newer origination non-agency mortgage loans directly. (We see many loans being made at significantly high interest rates given the regulatory burden associated with making non-traditional loans.)

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