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Memos from Howard Marks: The Indispensability of RiskTender 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 allow shareholders to buy shares at regular intervals and make periodic offers to repurchase shares at their 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.