Key Takeaways
- • Cox Capital Partners launched the Interval Fund Transparency Project, a repository aiming to centralize repurchase histories and redemption demand data for interval funds, which the firm says is believed to be a first of its kind.
- • Interval funds are not subject to the same redemption-demand disclosure requirements as BDCs; repurchase totals are reported but disclosure of total requests is voluntary, so the degree of oversubscription is not widely known.
- • The project builds "fill rates" (the percentage of submitted shares a fund accepts in a repurchase window) from public filings, sponsor confirmations, and shareholder-provided repurchase confirmations.
- • John Cox, founder and CIO of Cox Capital Partners, argued that without this data advisers and fiduciaries cannot make fully informed recommendations for clients, and that transparency must keep pace with retail access to private markets.
Summary
Cox Capital Partners has launched the Interval Fund Transparency Project, which aims to improve transparency around repurchase programs at interval funds by building a repository of data tracking redemption demand and share repurchase activity. According to the article, the project brings repurchase histories together in a central resource and is believed to be the first of its kind.
The firm noted a structural disclosure gap. Business development companies are required to periodically report shareholder redemption demand and repurchases, while interval funds are not subject to the same requirements. Interval funds disclose the shares they repurchased in shareholder reports and monthly filings, but reporting total repurchase requests is voluntary, leaving the extent of oversubscription largely unknown to investors and advisers.
Cox Capital has already compiled repurchase data from public information and is asking certain fund sponsors to review and confirm or supplement their figures. Shareholders and financial advisers are invited to fill remaining gaps by submitting repurchase confirmations showing the shares requested. Submissions will be used to calculate repurchase request "fill rates," defined as the percentage of shares submitted for repurchase that a fund accepted during a given window. Cox Capital illustrated the metric with an example: a 25 per cent fill rate means the fund repurchased one-quarter of the shares shareholders requested to sell. Contributors will receive the compiled repurchase history for their fund by email, and the most active contributors will receive the full data set.
John Cox, founder and chief investment officer of Cox Capital Partners, said interval funds are among the most popular vehicles for expanding retail access to private markets, and that without this information advisers, particularly fiduciaries, may be unable to make recommendations on a fully informed basis that serve clients' best interests. He said advisers need a clear basis for assessing private market funds comparable to the disclosures they expect for public-market investments, including the liquidity risks of funds they recommend.
Cox Capital provides liquidity solutions for retail holders of illiquid alternative investments, including non-traded BDCs. In August, the firm expanded its platform to include interval funds, and the transparency project extends that work.
The firm noted a structural disclosure gap. Business development companies are required to periodically report shareholder redemption demand and repurchases, while interval funds are not subject to the same requirements. Interval funds disclose the shares they repurchased in shareholder reports and monthly filings, but reporting total repurchase requests is voluntary, leaving the extent of oversubscription largely unknown to investors and advisers.
Cox Capital has already compiled repurchase data from public information and is asking certain fund sponsors to review and confirm or supplement their figures. Shareholders and financial advisers are invited to fill remaining gaps by submitting repurchase confirmations showing the shares requested. Submissions will be used to calculate repurchase request "fill rates," defined as the percentage of shares submitted for repurchase that a fund accepted during a given window. Cox Capital illustrated the metric with an example: a 25 per cent fill rate means the fund repurchased one-quarter of the shares shareholders requested to sell. Contributors will receive the compiled repurchase history for their fund by email, and the most active contributors will receive the full data set.
John Cox, founder and chief investment officer of Cox Capital Partners, said interval funds are among the most popular vehicles for expanding retail access to private markets, and that without this information advisers, particularly fiduciaries, may be unable to make recommendations on a fully informed basis that serve clients' best interests. He said advisers need a clear basis for assessing private market funds comparable to the disclosures they expect for public-market investments, including the liquidity risks of funds they recommend.
Cox Capital provides liquidity solutions for retail holders of illiquid alternative investments, including non-traded BDCs. In August, the firm expanded its platform to include interval funds, and the transparency project extends that work.
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