Market
Memos from Howard Marks: Ruminating on Asset AllocationTender Offer Funds
Seeking to balance long-term investments with periodic liquidity
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Fundamentals
In return for limited liquidity, tender offer funds can offer the potential for a greater return.
These closed-end funds do not trade on exchanges but provide liquidity to its investors by offering periodic opportunities (often quarterly or annually) for them to sell shares back to the fund. These funds periodically “tender” to repurchase a portion of investors' shares at net asset value (NAV) at the discretion of the fund's Board.
This semi-liquid structure is designed to encourage long-term investing by allowing investment managers to allocate to less liquid assets.
Features
Tender offer funds have the following features and potential benefits:
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Periodic liquidity1
Investors may sell shares back to the fund at NAV through discretionary repurchases
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Investment Transparency
Regular regulatory filings provide details on portfolio holdings
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Simplified tax reporting2
Shareholder distributions reported annually on Form 1099
1Periodic liquidity is not guaranteed.
2This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Please consult your attorney for legal advice, or your accountant for tax advice.