Semi-liquid alternatives, in plain English.

How the structures work, what they really cost, and how getting your money out actually happens.

Start with the structure.

What is a BDC?: A business development company (BDC) is a type of closed-end investment company, created by the US Congress in 1980, that invests primarily in the debt and equity of small and mid-sized private American companies. Most BDCs pay out at least 90 percent of their taxable income to shareholders, which is why they are best known as income vehicles.
What is an interval fund?: An interval fund is a closed-end fund, registered under the Investment Company Act of 1940, that continuously offers its shares at net asset value and commits in advance to repurchase a set percentage of shares, most commonly 5 percent, at fixed intervals, most commonly quarterly. The structure lets a fund hold illiquid assets while still giving investors a scheduled way out.
What is a tender-offer fund?: A tender-offer fund is a closed-end fund, registered under the Investment Company Act of 1940, that provides liquidity through periodic tender offers made at its board’s discretion. Unlike an interval fund, it is not bound to a fixed repurchase schedule: each buyback is a decision, not an obligation.
What is a REIT?: A real estate investment trust (REIT) is a company that owns, operates, or finances income-producing real estate and distributes at least 90 percent of its taxable income to shareholders as dividends. Created by Congress in 1960, the structure lets any investor hold a share of large-scale commercial property the way they would hold a stock.
What is return of capital?: Return of capital (ROC) is the portion of a fund distribution that is a repayment of the investor’s own invested capital rather than a payout of income or gains. It is generally not taxed when received; instead it reduces the investor’s cost basis, and once basis reaches zero any further return of capital is taxed as a capital gain.

The terms that matter.

NAV: Net asset value per share, the price repurchases are made at.
Proration: When requests exceed the offer, everyone gets a share of what they asked for.
Repurchase offer: The fund’s offer to buy back a stated percentage of shares.
Ex-financing cost: Total fund cost excluding interest and borrowing expense.
Distribution coverage: Whether income actually earned covers what the fund pays out.
Share class: Same fund, different fees and minimums, depending on how you access it.

See it on a real fund.

Open the Terminal. Educational content, not investment advice. See also: the public fund directory.