Tender offer funds are non listed closed end funds that offer shares on a continuous basis. Typically they provide periodic liquidity to investors by conducting tender offers to repurchase shares on a consistent basis.
Tender offer funds are registered under the Investment Company Act of 1940, as amended, and shares in them are registered under the Securities Act of 1933, as amended. They are also typically classified as regulated investment companies under Subchapter M of the Internal Revenue Code of 1986. Shareholders will need to pay taxes on the distributions they receive. Normally investing in alternative assets involves complex tax reporting requirements. Tender Offer funds, in contrast, report on form 1099, making them the preferred vehicle for a lot of financial advisors.
Tender Offer Fund Strategies
Tender offer funds can follow a variety of investment strategies. Some of the most common strategies include:
Fund of Hedge Funds
Based on total net assets, the most popular tender offer fund category is hedge funds. There are 28 active funds in this category, with the largest offered by SkyBridge and Ironwood.
Private Equity
There are more than 20 active private equity tender offer funds. The largest sponsors include Partners Group, and Central Park Group.
Real Estate
Tender Offer Funds can offer retail investors exposure to institutional quality real estate funds . Real estate is more popular in interval funds than it is in tender offer funds.
Credit
The Tender offer structure can also be used to invest in credit. There are a few specialist funds that such as John Hancock that use this setup. BDCs and Interval Funds are more popular structures for retail credit funds.
Transparency
Since all tender offer funds are registered under the 1940 act, and consequently must provide regular updates in SEC filings. On a semi annual basis, unlisted closed end funds file detailed financial statements on form N-CSR. These semi annual reports must be accompanied by certification by key executives. In their first and third fiscal quarters, tender offer funds must file form N-Port, which contains monthly portfolio holdings. As a result, investors have a transparent view of how the fund manager is implementing their strategy.Tender offer funds are registered under the Investment Company Act of 1940, as amended, and its shares are registered under the Securities Act of 1933, as amended, An asset manager launching an interval or tender offer fund must be prepared to keep up with ongoing reporting requirements.
Tender Offer Funds have flexibility to value periodically (daily, weekly, monthly).
This information can all be found on the SEC’s EDGAR database. Although it can be difficult to dig through the massive amount of information in SEC Filings, you can Click Here to access key information in an easy to analyze format.
Historically it has been difficult for investors to find unbiased information on tender offer funds. . all that changed with the launch of Ockham Data Group’s Tender Offer Funds guide. For Broker Dealers and RIAs, there are a variety of due diligence firms that provide in depth coverage of unlisted closed end funds , as well as other alternative investments.
Other Resources
Tenderofferfunds.com is an affiliate site with detailed data and research on tender offer funds.
What is the difference between and Interval Fund and a Tender Offer Fund?
Database of Active Tender Offer Funds