Fidelity’s registration of a non-traded BDC and an interval fund represents a watershed moment for the alternative investments sector. In a prior article we examined the structural and strategic differences between these two funds. In this article we will discuss the broader meaning for the investment management industry.
First of all, Fidelity is gigantic compared to NT BDC and Interval Fund sector. In order to move the needle at all, Fidelity will need to raise one of the largest BDCs and Interval Funds. According to its website, Fidelity has a total of $3.7 trillion in discretionary assets under management, mostly in mutual funds and ETFs. Compared to these traditional markets, the NT BDC and interval fund sectors are almost comically small.
Total assets in the NT BDC market are ~$124 billion, and the total assets in the interval fund market are $60 billion. If Fidelity were to raise enough capital to double the size of the BDC and interval fund markets, their new funds would still account for less than 5% of their AUM.
Of course BlackRock, which has over $9 trillion in AUM is also active in the retail alts space, with three non-traded BDCs and two interval funds. Yet there is another unique angle to the Fidelity story.
Fidelity is more well known for its equity mutual funds, but its entrance into this niche indicates that they recognize that alternative investment strategies are essential components of a diversified portfolio. Fidelity will be expanding the alternative investments market, rather than just competing with other asset managers.
To learn more about new BDC registrations and launches click here.
To access a list of NT BDCs currently active in the market, click here.
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