Alternative investment strategies, including private equity, private credit, hedge funds, real estate, infrastructure, natural resources and digital assets (generally referred to in the industry as “alts”), have traditionally been offered to ultra-high-net-worth individuals and institutional investors due to high investment minimums and investor suitability requirements. Today, many traditional and alternative asset managers are seeking to make alts investment strategies more accessible to high-net-worth and mass affluent retail investors who are increasingly requesting exposure to these offerings. In order to reach this retail audience, alts investment strategies are being offered through pooled investment vehicles that are registered under the Investment Company Act of 1940, as amended (the 1940 Act). We have observed an industry trend of alts and traditional asset managers launching these 1940 Act funds in both the private credit and private equity space. Alternative asset managers, however, may be unfamiliar with the different tax requirements of these products relative to their private funds.

Learn more in the attached EY publication.