Interest in interval funds and tender offer funds is surging in the marketplace
CINCINNATI, Dec. 07, 2021 (GLOBE NEWSWIRE) — Ultimus Fund Solutions® (Ultimus®), a leading independent, tech-enabled provider of full-service fund administration, accounting, and investor solutions is playing a significant role in an increasing number of launches and conversions of unlisted closed-end funds that include both interval funds and tender offer funds.
Interval funds continued to experience a surge in popularity and growth which is expected to accelerate. At the close of 2021Q3, aggregate net assets of all active public interval and tender offer funds were $44.8B, a 34% increase over the $33.5B reported at the close of 2020Q3 according to IntervalFundTracker.com1. As non-correlated investments with strategies that include credit, private equity and real estate, these funds have grown in popularity with institutional and retail investors as risk mitigators and portfolio diversifiers.
Partnering with asset managers to bring innovative new funds to market, Ultimus is playing key roles in an increasing number of interval and tender offer fund launches and conversions of other structures into unlisted closed-end funds. A central factor is a combination of Ultimus’ experience and depth of knowledge with these more complex fund structures in addition to our technology stack and processing tools which streamline sensitive transfer agent touchpoints such as enabling capital calls and tender offer processing, investor performance calculations, expense processing and more. Overall the firm helps to support fund managers’ efforts in areas such as initial product design, during fund launch or conversion, managing regulatory requirements, evaluating the distribution landscape, providing unique applications for advisers to understand their portfolio and shareholder activity, and helping to regiment the valuation environment.
To assist advisers considering the unlisted closed fund wrapper for new products, Ultimus collaborated with XAI Investments LLC (“XAI”) on its recent whitepaper “Launching an Interval Fund: Clear-eyed approach critical to a successful launch.” The paper highlights ways successful firms have used to enter the market and offers best practices in structuring and seeding new products. XAI has a product structuring consulting practice and helps alternative managers with their go-to-market strategies for new closed end funds. Kimberly Flynn CFA, Managing Director at XAI, stated “Ultimus provides a valuable perspective on strategies advisers can take to reach critical mass, with experience supporting a wide variety of asset classes in these structures.” According to Nick Darsch, Senior Vice President at Ultimus “In our experience, $100 million is a critical point for interval fund viability. We advise new interval fund sponsors to consider converting an existing private fund to an interval fund. Successful interval fund sponsors also join niche alternative investment communities to reach receptive advisers.”
Earlier this year Ultimus assisted in the conversion of private funds into the unlisted closed-end fund structure participating in a much-needed consultative role to help advisers navigate that process. By the end of 2021, Ultimus will have assisted in the conversion or launch of 6 new unlisted closed-end funds investing in private equity, venture capital, real estate and credit. Previously, Ultimus supported the unique launch of Primark Capital’s Private Equity interval fund, one of the first private equity strategies available to retail investors. Furthermore, Ultimus’ fund administration business unit ranked highest in the Global Custodian 2021 Private Equity Fund Administration Survey, an independent survey that measures the quality of services provided by fund administrations firms by surveying private equity firms.
According to CEO Gary Tenkman, Ultimus’ service approach uniquely positions the firm to address the special requirements and nuances of launching these types of funds. “The unique nature of these products in a registered format requires a very high level of expertise, service experience and a consultative approach to servicing fund sponsors,” he says. “Our service and operational model approach is directly aligned for servicing firms who manage these products—from how we help design the product to our operational model—for every engagement. We provide a unique level of support, from product structuring for launches to regulatory requirements to the distribution.”
Nick Darsch added that Ultimus’ technological capabilities are critical to the firm’s ability to work with clients and these types of funds. “We have a specialized technology environment that provides a comprehensive, agile operational infrastructure from which advisers can launch these funds, have access to shareholder activity and receive real-time reporting,” he said. “We are bullish on the appetite of high-net-worth, mass affluent and retail investors to access illiquid strategies through these structures and as we see more of these in the market, our collaborative approach with clients continues to be centered around efforts that put clients and their investors in what we believe to be the best position amongst a crowding marketplace.”
Keeping abreast of industry trends regarding alternative funds, Ultimus participates on the NICSA Alternative Investments Committee and recently became a member of the Institute for Portfolio Alternatives (IPA). In September, Ultimus sponsored the IPA Vision event in Chicago, supporting the effort to help educate the industry on alternative investments, and the IPA Connect event in New York City where Darsch participated in a panel to discuss Key Operational Considerations for the structures. Earlier this year, Darsch moderated a NICSA panel, Democratization of Alternatives, featuring panelists Michael Stricker from FS Investments, Michelle Morris from Morgan Stanley, and Richard Horowitz from Dechert.
“We’re delighted to have Ultimus Fund Solutions join IPA’s membership to help drive transparency and innovation in the marketplace,” stated Tony Chereso, President at IPA. “Product evolution is happening at a rapid pace, and Ultimus is plugged in to stay informed and understand the latest trends. With Ultimus’ consultative approach, they help us educate investment managers and RIAs about the alternative product options they could bring to market.”
1Interval Fund Tracker, 2021.
Ultimus Fund Solutions (Ultimus) is a leading provider of full-service fund administration, accounting, and investor solutions to support the launching and servicing of registered funds, private funds, and public plans. The company also offers customized structures designed for the unique needs of pensions, endowments, foundations, and other large institutions. Ultimus’ deep commitment to excellence is achieved through investments in best-in-class technology, compliance programs, organization-wide cyber security efforts, and hiring seasoned professionals.
Headquartered in Cincinnati, Ohio with offices in other major cities such as Chicago and New York, Ultimus employs more than 700 seasoned accountants, attorneys, paralegals, application developers, fund administrators, compliance specialists, and many others with years of experience in the financial services industry. Servicing over 1,300 total traditional and alternative funds, Ultimus helps investment managers and fund families flourish in today’s increasingly sophisticated and dynamic investment landscape. For more information, visit www.ultimusfundsolutions.com.
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