Rising Trends in Non-Listed Closed-End Funds: A 2024 Analysis
CHICAGO, December 23, 2024 (GLOBE NEWSWIRE) — XA Investments LLC (“XAI”), an innovative investment management firm, closely monitors the non-listed closed-end fund (CEF) landscape, with updates provided monthly and quarterly. This market encapsulates all interval and tender offer funds, showcasing the evolving nature of alternative investments.
Acceleration in New Filings
As we approach the end of 2024, XAI President Kimberly Flynn expressed optimism regarding the significant increase in new N-2 filings with the SEC for interval and tender offer funds. “In November alone, five new filings were recorded, contributing to a total of 15 since the end of Q3,” Flynn noted. “The fourth quarter of 2024 has already far surpassed the nine new fund filings from the same period last year, marking an impressive 66% increase. We are anticipating a vibrant burst of new alternative funds entering the market in early 2025,” she added confidently.
Market Statistics and Assets
XAI’s December market update highlighted that, as of November 30, 2024, there are 247 interval and tender offer funds, collectively managing net assets of $171 billion and total assets of $204 billion, including leverage. Notably, the 122 interval funds constitute 60% of the total managed assets at $121.8 billion, while the 125 tender offer funds account for the remaining 40%, amounting to $81.9 billion. This year has already seen a robust addition of 35 funds, coupled with a $31 billion increase in net assets across the market.
Diversification of Fund Sponsors
The interval and tender offer fund sector is becoming increasingly diverse, with 142 distinct sponsors now participating. The marketplace welcomed new entrants in late 2024, including prominent players such as Rockefeller Asset Management, Booster Asset Management, and Gladstone Management Corporation. Currently, there are 54 funds undergoing the SEC registration process, further indicating the sustained growth potential in this category. Recently filed funds include notable names such as Columbia Threadneedle and Coatue Management, signifying a strong interest from high-profile alternative investment managers.
Featured Fund: Corient Registered Alternatives
Among the noteworthy N-2 filings is the Corient Registered Alternatives Fund, which was submitted to the SEC on November 19, 2024. This is the inaugural interval and tender offer fund from Segall Bryant & Hamill, an investment adviser managing over $185 billion in assets. XAI anticipates a growing trend of registered investment advisers developing proprietary alternative products, a pattern likely to continue into 2025. The Corient fund will focus on various alternative investments, including private equity, co-investments, business development companies (BDCs), real estate investment trusts (REITs), and private funds, further diversifying its offerings.
Forecast for 2025
The research team at XA Investments predicts that by the end of 2025, the combined assets of interval and tender offer funds could soar to $220 billion, with over 275 funds in operation. The growth rate for interval funds is projected at 23% CAGR, significantly outpacing the 16% CAGR of the slower-growing tender offer funds. The market is expected to see accelerated growth in the tender offer segment, particularly with the introduction of long-duration alternatives such as private equity and infrastructure. In 2025, private credit is anticipated to lead in capital raising and fund formations, with many private credit funds operating as daily NAV interval funds, making them more accessible for advisors to integrate into client portfolios. Private equity and hedge fund categories are also expected to witness notable growth and adoption.
About XA Investments
Founded in 2016 by XMS Capital Partners, XA Investments LLC is a Chicago-based investment advisory firm. XAI manages two listed closed-end funds—the XAI Octagon Floating Rate & Alternative Income Trust (NYSE: XFLT) and the Madison Covered Call & Equity Strategy Fund (NYSE: MCN)—along with a newly launched interval closed-end fund, the Octagon XAI CLO Income Fund (OCTIX). Besides advisory services, XAI provides fund structuring and consulting services tailored to registered closed-end funds, meeting the needs of institutional clients. XAI is dedicated to enhancing access to a diverse range of alternative investment strategies and managers, bridging the gap for individual investors seeking institutional-quality alternative managers.
Contact Information
For further inquiries, please reach out to:
Kimberly Flynn, President
XA Investments LLC
Phone: 888-903-3358
Email: KFlynn@xainvestments.com
Sources: XA Investments; CEFData.com; SEC Filings.
Note: All information is accurate as of November 30, 2024, unless stated otherwise. Total managed assets include leverage. The non-listed CEF market experiences delays in reporting, and data may be reported up to 90 days post quarter-end.
