Jan 3 Carlyle Group LP is preparing to
launch its first two publicly listed mutual funds, according to
a regulatory filing by the latest alternative asset manager
seeking to offer its investment platform to retail investors in
Carlyle Enhanced Commodity Real Return Fund will mainly
invest in commodity sectors including energy and metals, while
Carlyle Global Core Allocation Fund will invest across equities,
debt, real estate, commodities and currencies using primarily
exchange-traded funds, according to the filing published this
week by the U.S. Securities and Exchange Commission.
A Carlyle spokesman declined to comment beyond the filing.
Developing mutual funds has historically been challenging
for private equity firms because the average buyout fund is
illiquid, with a typical life span of 10 years. But as these
firms diversified into relatively more liquid alternative assets
such as credit and hedge funds, they have sought to widen their
investor base beyond institutional investors.
"I do think that the retail investors are just a lot bigger
pile of money than all the other piles of money we can get from
investors," Carlyle co-founder and co-CEO William Conway told a
Goldman Sachs financial services conference last month.
Rival Blackstone Group LP launched its first
alternative investment-focused mutual fund last summer. Dubbed
Blackstone Alternative Multi-Manager Fund, it offers
exposure to the bread-and-butter of hedge fund investing such as
troubled debt, commodities speculation and shorting stocks.
KKR & Co LP launched its first publicly listed
mutual fund, KKR Alternative High Yield in 2012,
investing in risky debt such as junk bonds. Last July, it
launched its first listed closed-end fund, KKR Income
Opportunities Fund, which is also investing in debt.
Both Carlyle's mutual funds will be open-end funds. The
number of shares in an open-end fund can be indefinite and
shares are sold by the fund company. In closed-end funds, there
is a finite number of shares.
Alternative asset managers have developed other ways to
raise money from non-institutional investors. These include
business development companies (BDCs), which pay at least 90
percent of annual earnings as dividends to avoid corporate
taxation under provisions passed by Congress in 1980.
They are also turning increasingly to so-called feeder
funds, special purpose vehicles that gather money from
individual high net-worth investors or family offices before
investing in alternative assets such as private equity funds.
Carlyle launched its first BDC called Carlyle GMS Finance
Inc last year to lend to midsize U.S. companies. Using
investment firm Central Park Group LLC, Carlyle has also
launched a captive feeder fund to allow individuals with net
worth in excess of $1 million to commit as little as $50,000 to
its private equity fund portfolio.
Carlyle Enhanced Commodity Real Return Fund will use
Vermillion Asset Management LLC, the commodities-trading hedge
fund manager that Carlyle took over in 2012, as advisor,
according to the filing.
Washington, D.C.-based Carlyle, founded in 1987 by Conway,
David Rubenstein and Daniel D'Aniello, had $185 billion in
assets under management as of the end of September.
InvestmentNews, a newspaper for financial advisers published
by Crain Communications Inc, first reported on the regulatory
filing on Carlyle's mutual funds earlier on Friday on its