UMB: Seven questions to help build distribution strategies for interval and tender-offer funds
July 19, 2022 | James Curry | UMB
“We wish we’d talked to you six months ago” is a comment I hear often from private fund managers as they work out distribution strategies for their first registered product. Too often, managers have to backtrack when their sales, operations and investment teams aren’t on the same page. Here are seven questions drawn from practical experience to align your team—and avoid wasted time and effort.
The first six questions help define and refine a distribution strategy. The seventh is a critical one about product economics.
1. Who are your initial investors and target market?
There’s a big difference between retail investors (and their advisors) and large institutional RIAs and family offices.
Say you’ve been encouraged by retail-market RIAs to make your strategy available to their clients. It’s important to understand what they are expecting—because it may well mean your presence on mutual-fund platforms that present interval and tender-offer funds together with standard open-ended funds.
Institutional RIAs and family offices, by contrast, are unlikely to require that platform presence.
2. What platform does the RIA prefer?
There are two defined and separate distribution paths for interval and tender offer funds depending on your funds structure. Do the advisors interested in your product work primarily—or only—with funds available on a specific platform? Your fund’s valuation structure and other factors will determine which distribution path you choose and ultimately how your funds are approved and made available to the various RIAs, broker-dealers and wire houses.
