Asset management vehicles, especially those regulated under the Investment Company Act of 1940 (the 1940 Act), are frequently painted with a broad brush and described as having the same or virtually indistinguishable characteristics. For a long while, many fund vehicles, like interval funds and tender offer funds, were not popular, barely attracting any attention from mainstream asset managers. Open-end funds, especially mutual funds, and subsequently exchange traded funds, accounted for the majority of U.S. assets under management. Now, with the coalescence of increased interest in alternative assets, including private credit, and the desire to provide retail investors access to private markets through registered securities, these, as well as other fund alternatives, have become increasingly relevant. This makes it important to gain a better understanding of various permanent capital alternatives, which might be said to exist on a spectrum or continuum, with each having distinct features. Once these sometimes fine distinctions are highlighted it becomes possible to structure or match the fund type to the asset mix, the sponsor’s desired compensation arrangements, the distribution channel and target audience.
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