UniFi by CAIA Crossing the Threshold - 15

New Types of Wealth Alt Products Emerge, But
Advisor Understanding Needs to Improve
Several products' structures are being explored
to support broader sales of alternative
exposures to the wealth channel. These include:
* Feeder Funds. The most common approach
in recent years has been to work with a
technology intermediary to help create feeder funds able to aggregate an advisor's
set of clients to reach the investment threshold needed to subscribe to a private fund's
minimum investment size.
* Interval Funds. Illiquid, closed-end alternative funds that are offered to investors
directly and are not listed on an exchange. They are priced daily at net asset value.
Investors are given a periodic opportunity to sell shares directly back to the fund at
NAV at specified intervals (e.g., monthly, quarterly).
* Business Development Companies (BDCs). These closed-end structures are vehicles
used to raise capital to be deployed as loans to public or private U.S. firms with market
values of less than $250 million. Typically, these are small emerging firms or distressed
companies emerging from financial difficulties. BDCs must distribute 90% of their
income to shareholders to avoid corporate income taxes. There are both listed and
unlisted versions of BDCs.
* European Long-Term Investment Funds (ELTIFs). Expressly designed to enable
anyone to invest in unlisted European companies and long-term assets such as
infrastructure. The original ELTIF regulation came into force back in 2015, but ELTIFs
were seen as too restrictive, a situation ELTIF 2.0 regulation activated in January 2024
may address.
* Tokenized LP Shares. Tokenization is a new approach being used to explore making
alternative exposures more readily available to investors. Hamilton Lane, KKR, and
Apollo have issued tokenized LP shares to potential investors via the private firm
Securitize's blockchain-based marketplace. Outside the U.S., Singaporean exchange
ADDX has done more than 60 tokenized private fund deals by March 2023.
New Classes of More " Individual " Alternatives Also Emerging
In addition to the democratization of traditional alternatives, a new set of digital frontier
alternatives has also emerged. This includes peer-to-peer lending platforms, equity, debt,
real estate crowd-investing, fractional investments into collectibles, and cultural assets such
as wine, art, and cryptocurrencies.
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UniFi by CAIA Crossing the Threshold

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