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Fidelity files for Credit Interval Fund

thereflection
in Fund Discussions
https://www.sec.gov/Archives/edgar/data/1949594/000119312522260617/d351784dn2.htm

Principal Investment Strategies. Under normal circumstances, the Fund will invest at least 80% of its assets in Credit Instruments (as defined below). The Fund will opportunistically allocate its investments in Credit Instruments among (i) foundational credit, which includes private credit (direct lending and real estate debt), and liquid and less liquid credit (leveraged loans, high yield bonds and collateralized loan obligations (“CLOs”)) and (ii) opportunistic credit, which include stressed and distressed investments (distressed debt, special situations, rescue financing and hung deals) and opportunistic investments (convertible bonds, preferred stock, commercial mortgage-backed securities and privately originated reverse inquiry credit solutions) (together, “Credit Instruments”). The Fund may invest in additional types of Credit Instruments and strategies in the future.

Comments

  • yogibearbullyogibearbull
    Interval-funds are newer types of funds with some features of CEFs, OEFs, ETFs. Note para 3 of the filing for limitations of interval-funds:

    "Interval Fund. The Fund is designed primarily for long-term investors and not as a trading vehicle. The Fund does not currently intend to list its Shares for trading on any securities exchange and does not expect any secondary market to develop for its Shares. The Fund is an “interval fund” (as defined below) pursuant to which it, subject to applicable law, will conduct quarterly repurchase offers for between 5% and 25% of the Fund’s outstanding Shares at net asset value (“NAV”). In connection with any given repurchase offer, it is likely that the Fund may offer to repurchase only the minimum amount of 5% of its outstanding Shares. It is also possible that a repurchase offer may be oversubscribed, with the result that shareholders may only be able to have a portion of their Shares repurchased. The Fund does not currently intend to list its Shares for trading on any national securities exchange. The Shares are, therefore, not readily marketable. Even though the Fund will make quarterly repurchase offers to repurchase a portion of the Shares to try to provide liquidity to shareholders, you should consider the Shares to have limited liquidity."
  • CrashCrash
    So, is fancier always better? NOT!
  • yogibearbullyogibearbull
    Interval-funds are relatively new. Many major firms have them (BlackRock, Blackstone, BNY Mellon, Calamos, GS, Invesco, KKR, Lord Abbett, Pimco, Principal). And this is Fido's first - can you imagine Fido being left behind in something (it almost got left behind in ETFs where it had an early ONEQ and then nothing for years, and finally catching up fast).
    https://stockmarketmba.com/listofintervalfunds.php
  • LewisBraham
    edited October 2022
    I believe the interval fund is a good structure with poor execution so far. If someone could offer a low fee product in an interval structure to invest in illiquid assets without applying any leverage, it could be quite attractive. But almost every product I've seen has high fees and applies leverage. There is no reason for it to be this way, other than the fact that new products tend to charge premium prices. But interval funds structurally solve many of the liquidity problems involved with public mutual funds and ETFs as well as providing the access to your capital at NAV traditional closed-end funds lack.
  • carew388carew388
    +1
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