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Memo
20 May 2020

Alternative Credit - Fund Structuring

Alternative Credit strategies often hold illiquid assets. To align investor interests with the underlying portfolio and avoid liquidity mismatches in the fund, more restrictive fund liquidity terms are often required. This memo details some of the key considerations for closed-ended and open-ended credit fund structures

The SBAI Alternative Investment Standards require disclosure of key fund structure terms and the handling of situations where normal redemption mechanics might not apply.

This memo reaffirms the standards and guidance included in the Standards which relate to the fund’s structure and commercial terms. It also outlines the advantages, disadvantages and other considerations for closed-ended and open-ended funds when used inr Alternative Credit Strategies.

  • Closed Ended - Investors may give up liquidity but this can negate liquidity mismatches. We also discuss fee structures and the use of subscription lines.
  • Open Ended – Investors have more flexible liquidity but there is increased risk of liquidity mismatches. We also discuss gates, side pockets and fee structures.
Alt Credit - Fund Structuring
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Emerging Managers Governance Fund Structuring Credit
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