Many of our private equity clients have recently asked us about the feasibility of offering their investment strategies through registered fund products. We have set forth below some of the questions that we frequently receive.
1. What types of registered funds have been launched by private equity firms?
To date, private equity firms (including KKR this past July) have launched or filed to launch registered funds that leverage off of their activities for private funds, primarily with respect to strategies involving fixed income securities.
2. What is a registered fund?
It is a fund that has been registered as an investment company under the Investment Company Act of 1940 (commonly referred to as a mutual fund). It can take two forms – open-end (the fund engages in a continuous offering of shares, and investors have a right to daily redemption at net asset value) and closed-end (the fund, with limited exceptions, engages in a one-time offering of shares, investors have no redemption rights and the shares trade on a stock exchange).
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