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Oaktree To Start Mutual Funds To Woo Individual

TedTed
in Fund Discussions
FYI: Oaktree Capital Group LLC (OAK), the world’s biggest distressed-debt firm, is starting its first in-house mutual funds as it joins the largest private-fund managers in raising money from individual investors.
The Los Angeles-based firm filed today with the U.S. Securities and Exchange Commission to sell shares in the Oaktree High Yield Bond Fund and the Oaktree Emerging Markets Equity Fund. The minimum initial investment in each would be $25,000, according to the filing.
Regards,
Ted
http://www.bloomberg.com/news/print/2014-09-15/oaktree-to-start-first-mutual-funds-to-woo-individuals.html

Comments

  • BWG
    Oaktree subadvises a high yield bond fund (RNOTX) and an emerging markets fund (HAEMX). Will be interesting to see a comparison of the expense ratios once the details for the in-house funds are available. RNOTX may not yield an apples to apples comparison, as Oaktree only manages a part of it. Interesting that there is no in-house convertibles fund being considered, given that Oaktree has subadvised VCVSX for a long time.

    BWG
  • expatsp
    I wonder if this is a bullish sign (they see tons of opportunities so want to raise more money) or a bearish one (they don't see great investment opportunities so they want to make their money off management fees) or if I'm just overthinking this.
  • scott
    edited September 2014
    Oaktree has been raising money for distressed investing.

    http://www.bloomberg.com/news/2014-09-02/oaktree-said-to-seek-10-billion-for-distressed-fund.html

    "The world’s biggest distressed-debt investor is seeking $10 billion for a new fund with plans to sit on most of the capital until rising markets reverse course, three people with knowledge of the plans said. Oaktree plans to raise $3 billion that it can start investing immediately and $7 billion for a reserve pool to deploy when more distressed opportunities arise, said the people, who requested anonymity because the plans aren’t public."

    Also:

    “Aggressive extensions of credit of the sort we’re seeing today have always been a precursor to a substantial distressed-debt opportunity.”
  • VintageFreakVintageFreak
    I am not so sure about this one. Seems to me they are seeing how much returns they are generating for OTHER investment shops and want a piece of pie for themselves. If they truly want to do this, open your own fund an terminate agreement with subadvised fund.
  • BWG
    Could also be a response to trends reflected in the Calpers decision to move away from hedge funds.
  • [Deleted User]
    The user and all related content has been deleted.
  • scott
    edited September 2014
    Maurice said:

    Oaktree is one of several subadvisors to another Vanguard fund. VMMSX. Personally I don't recommend this emerging markets fund. There are others that I think are better. I would prefer to go with smaller caps in this space, than the giant securities they own.

    @Ted @scott and others. Any opinion on this financial services company OAK? Maybe buying the company is better than buying the fund. They trade on the OTC, but daily volumes seem reasonable. Seems to be a turnaround story that has already broken. PE seems below average. A nice yield too.

    Oaktree is lead by Howard Marks, one of the more legendary investors around. It is the world's largest distressed investor and a rare instance of something that actually does well when times are difficult. The yield is not going to be consistent - it is an example of a variable yield MLP (see also BX as another example.) So, distressed debt, private equity and one of the most highly regarded investors today as leader.

    Long-term long OAK.

  • [Deleted User]
    edited September 2014
    The user and all related content has been deleted.
  • BWG
    You will need the extra tax forms.

    Here is an analysis of the OAK ipo a couple of years ago.
    http://brooklyninvestor.blogspot.ca/search?q=oaktree

    Long OAK.

    BWG
  • scott
    Thanks for adding the correct link not sure why the other link didn't copy/paste correctly.

    OAK is an MLP and does result in the delightful (not) form known as a k-1.
  • MJG
    Hi Guys,

    Scott is spot on-target. Howard Marks is a legendary investor who has specialized on distressed products. He has been hugely successful as acknowledged by the likes of Warren Buffett.

    He writes with great clarity. I consider his “The Most Important Thing: Uncommon Sense for the Thoughtful Investor” book a classic. I highly recommend it. At times he seems more like Warren Buffett than Buffett himself. He concludes there are about 20 or so “Most Important Thing(s)”.

    With regard to this discussion, I direct your attention to Chapter 18, The Most Important Thing Is…… Avoiding Pitfalls. He starts the chapter by quoting Buffett: “An investor needs to do very few things right as long as he avoids big mistakes”.

    Marks ends his first paragraph in Chapter 18 with : ”A portfolio that contains too little risk can make you underperform in a bull market, but no one ever went bust from that; there are far worse fates.” Marks constantly stresses risk control and is well aware that there is a price for it.

    Please get a copy of the book. It is entertaining and serves-up priceless investment wisdom. The book is an investment gem and a keeper.

    Best Regards.
  • scott
    edited September 2014
    MJG, Thanks.

    I've been meaning to get a copy of the book and will likely do so within the next few weeks. Oaktree is a unique investment and I don't expect it to be heavily correlated to the market, but I do like it very much long-term, given the quality exposure to distressed assets and strong, very highly regarded management. Additionally, as noted above, the yield will not be consistent.

    Plus, Oaktree owns a % of Gundlach's Doubleline.



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