MCN XAI Madison Equity Premium Income Fund

XA Investments LLC (“XAI”), an alternative investment management and consulting firm, has released its Non-Listed Closed-End Funds Fourth Quarter 2024 Market Update, which is a comprehensive research report detailing current market trends and industry highlights. The non-listed closed-end funds (CEF) market includes all interval and tender offer funds. The report covers recent M&A activity for private asset managers, 2024 success stories, and expanded coverage on the infrastructure fund category.

“The non-listed CEF market had a record year in 2024 with 50 funds launching and many more entering the SEC registration process,” stated Kimberly Flynn, the President of XAI. “Such robust growth is great for the interval / tender offer fund market, and while challenges remain, particularly in investor education and navigating regulatory complexities, we believe the market's trajectory will remain positive, with significant opportunities for expansion in 2025,” she added.

“XAI predicts market trends for 2025 include a strong demand for evergreen products, the market coalescing around market leaders, and technology changes for ease of use,” Flynn said. Additionally, “XAI anticipates alternative investments will be more widely available to investors in all accounts, allowing the market to continue at an accelerated pace of growth in 2025.”

The non-listed CEF market reached a new peak with 257 interval and tender offer funds with a total of $172 billion in net assets and $208 billion in total managed assets, inclusive of leverage as of December 31, 2024. The market includes 124 interval funds which comprise 60% of the total managed assets at $124.3 billion and 133 tender offer funds which comprise the other 40% with $83.3 billion in total managed assets. In 2024, 50 new funds entered the market, representing an increase of 22 funds compared to the 28 funds launched in 2023. Market wide net assets increased $37 billion in 2024.

Flynn noted, “In total, there are 146 unique fund sponsors in the interval and tender offer fund space, which is an increase of 24 new fund sponsors from 122 unique sponsors at the end of 2023. The market has continued to diversify with 49% of the funds launched in 2024 sponsored by new entrants. Some of these new fund sponsors in the non-listed CEF market include MA Asset Management, Rockefeller Asset Management, and Wellington Management.”

There are 44 fund sponsors that have two or more interval and/or tender offer funds currently in the market. Additionally, there are 26 funds in the Securities and Exchange Commission (SEC) registration process from fund sponsors looking to launch another fund. While the top 20 funds held their 65% market share from Q3 2024, there were 11 new fund sponsors that entered the market in Q4 2024, with 24 new fund sponsors in total entering the market this year.

Many interval and tender offer funds had a strong 2024 with positive net flows and large increases in fund assets. Some of these include the Brookfield Infrastructure Fund, which had over $1bn in net flows in the first three quarters of 2024, and the Hamilton Lane Private Assets Fund which raised over $1bn in their first interval / tender offer fund, with three additional funds in registration. Other recently launched funds that had notable success in 2024 include the AMG Pantheon Credit Solutions Fund, the Cascade Private Capital Fund, and the StepStone Private Credit Income Fund.

“The non-listed CEF market continues to grow with a total of 53 funds in the SEC registration process at the end of 2024,” according to Flynn. “Due to a record number of 22 funds launched in Q4, the SEC backlog stayed the same compared to the third quarter, when there were also 53 funds in registration. In 2024, there was a record 80 new SEC filings, compared to 45 SEC filings in 2023, representing a 73% increase in registrations. Newly launched non-listed CEFs spent around six months in the SEC registration process, with the fund’s asset class continuing to be the main driver of time spent in the SEC review process. Real Estate / Real Asset funds were the quickest to launch, at 139 days on average spent in registration,” she added.

The majority of interval and tender offer funds (47%) do not have any suitability restrictions for investors imposed at the fund level - 32% of funds are available to accredited investors and 21% are only available to qualified clients. Alternative funds without suitability restrictions also prove to be more accessible and have gathered more assets at $108.8bn in managed assets or 52% of market wide assets.

For more information on the interval fund market and to read our full quarterly report on non-listed CEFs, please visit the CEF Market research page linked here and click ‘Subscribe’ for access to XA Investments’ online research portal and pricing information. In addition, please contact info@xainvestments.com or 888-903-3358 with questions.

About XA InvestmentsXA Investments LLC (“XAI”) is a Chicago-based firm founded by XMS Capital Partners in 2016. XAI serves as the investment adviser for two listed closed-end funds and an interval closed-end fund, respectively the XAI Octagon Floating Rate & Alternative Income Trust (NYSE: XFLT), the XAI Madison Equity Premium Income Fund (NYSE: MCN), and the Octagon XAI CLO Income Fund (OCTIX). In addition to investment advisory services, the firm also provides investment fund structuring and consulting services focused on registered closed-end funds to meet institutional client needs. XAI offers custom product build and consulting services, including product development and market research, marketing and fund management. XAI believes that the investing public can benefit from new vehicles to access a broad range of alternative investment strategies and managers. For more information, please visit www.xainvestments.com.

Sources: XA Investments; CEFData.com; SEC Filings.

Notes: All information as of 12/31/2024 unless otherwise noted. Total managed assets is inclusive of leverage. The non-listed CEF market is subject to lags in reporting and limited data availability. Data such as asset levels, net flows, and performance are delayed up to 90 days after quarter-end and are not available for all funds. All data in the report is the most current available. Please contact our team if you have any questions about the non-listed CEF marketplace.