Terry Gallagher, UMB Fund Services

Unlisted CEF market sees steady growth between 2014 and 2018, says new UMB report


The size of the unlisted closed ended fund (CEF market) has grown steadily since 2014, ending 2018 at nearly USD53 billion in assets under management, according to a new report by UMB Fund services and FUSE Research Network (FUSE).

The third edition of the annual report, which covers both interval and tender offer funds, reveals that the former, in terms of number and assets continue to outpace the latter. Since 2014, interval funds have grown at an annual rate of 42.9 per cent to end 2018 with USD27.2 billion in assets. During the same period, tender-offer funds dropped to USD25.6 billion with a compound annual growth rate of negative 2.1 per cent.
 
Although assets in the two structures are nearly even, asset growth for interval funds during the past five years has been significant. In 2014, assets in interval funds were only USD6.5 billion, while tender-offer funds were nearly USD28 billion – showing the dramatic growth with interval fund assets and the retraction from tender-offer funds we see today.
 
At year-end 2018, interval funds represented 51.5 per cent of the unlisted CEF marketplace, which is a significant increase from the 19 per cent seen in 2014.  
 
FUSE anticipates the growth of unlisted closed-end funds to continue in 2019, but at a slower pace than 2018, with interval funds as the key driver of that growth.

“After servicing these products for more than 20 years, it is exciting to see interval funds not only growing in number of funds, but also in asset size as we see more acceptance and stronger interest from financial advisors,” says Terry Gallagher, executive vice president, director of fund accounting and administration at UMB Fund Services. “Our research partnership with FUSE continues to be beneficial in informing investment managers and financial advisors, serving as the most comprehensive annual report on CEFs.”

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