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T. Rowe and Oak Hill Start Private Credit Fund for Mass-Affluent Market
T. Rowe Price Group Inc. and Oak Hill Advisors are launching a new private credit fund open to individual investors in the US to take advantage of the rapidly-growing $1.5 trillion market. The T. Rowe OHA Select Private Credit Fund, or OCREDIT, already has $1.5 billion of investible capital, according to a statement seen by Bloomberg News. That includes more than $600 million raised in equity commitment from T. Rowe and a group of global institutional investors, with the offering now opening to individuals, it said.
“Mass Affluent “. Is that someone who lives paycheck to paycheck and leases a C class? And is making payments on a Rolex?
I tried to find the minimum investment for you @LarryB - but a web search turned up nothing. I’m guessing it’s probably $100 K. And, I was wondering if Giroux will be named to run it?
-“We have no prior operating history and there is no assurance that we will achieve our investment objective.
“This is a “blind pool” offering and thus you will not have the opportunity to evaluate our investments before we make them.
“You should not expect to be able to sell your shares regardless of how we perform.
“You should consider that you may not have access to the money you invest for an extended period of time.
-“We do not intend to list our shares on any securities exchange, and we do not expect a secondary market in our shares to develop prior to any listing.
“Because you may be unable to sell your shares, you may be unable to reduce your exposure in any market downturn.“
TRP must have dropped that old slogan, ”Invest With Confidence.”
One could make the argument that TROW is trend chasing but the private credit business is doing quite well at this time as traditional banks are in a defensive mode. See CCLFX, CELFX and CEDIX recent performance.
For the most part, this looks even worse than described. The S (retail) shares will have management fees of 1.25% plus shareholder servicing fees of 0.85% plus implicit borrowing fees. The expense table suggests this adds another 6.08% to the annual cost, based on a borrowing rate of 6.08% and an amount borrowed equal to the amount invested.
But there is good news, pidgeons investors. One does not need to be an accredited investor. The fund has set initial suitability guidelines at a mere $70K gross annual income and $70K net worth, or $250K net worth (excluding home and car).
So step right up and place your bets. Keep in mind: You should purchase these securities only if you can afford a complete loss of your investment.
And if you're a resident of one of a select 19 states or Puerto Rico, your state government expects more of you before investing. For example, North Dakota residents may not invest more than 10% of their net worth. Some other states limit investors to 10% of their liquid net worth. Nebraska has its own 10% limit but waives it for actual accredited investors.
Not that I'd be interested, but given current market conditions and trends, I would be hesitant to buy into any 'newfangled' retail-oriented vehicle. Usually when such things are rolled out, the markets generally roll over hard and early-investors buying into it while still riding their trading high will get sucker-punched soon after purchase...which kind of echoes what staycalm said about trend-chasing, perhaps.
MSF: I agree that 1.25+./85 fee + 6% expenses is high, but still looks better than the 2-and-20 model most hedge funds charge their deep-pocketed pigeons. That said, there's still a front-end load of up to 3.5% on Class S (retail) shares which is an added expense if purchased through "certain financial intermediaries."
The 3.5% is just the cap on what an intermediary may charge. I'm confident that if one were to invest via Fidelity, Schwab, E*Trade (Morgan Stanley), Merrill (BofA), Vanguard, etc. there would not be a load.
Fees are stiff when compared to offerings from an experienced player like Cliffwater. Unfortunately this is a feature and not a bug for these types of "mass affluent" products.
We long-term investors all know that what we really need is for a fund company to lock up our money, throw way the key, issue no quarterly or annual reports, and tell us after 10 years or so how we made out. We just don’t recognize when someone has our best interests at heart.
Comments
https://www.sec.gov/Archives/edgar/data/1901164/000162828023033245/oakhilladvisors-424b3.htm
“This is a “blind pool” offering and thus you will not have the opportunity to evaluate our investments before we make them.
“You should not expect to be able to sell your shares regardless of how we perform.
“You should consider that you may not have access to the money you invest for an extended period of time.
-“We do not intend to list our shares on any securities exchange, and we do not expect a secondary market in our shares to develop prior to any listing.
“Because you may be unable to sell your shares, you may be unable to reduce your exposure in any market downturn.“
TRP must have dropped that old slogan, ”Invest With Confidence.”
But there is good news,
pidgeonsinvestors. One does not need to be an accredited investor. The fund has set initial suitability guidelines at a mere $70K gross annual income and $70K net worth, or $250K net worth (excluding home and car).So step right up and place your bets. Keep in mind:
You should purchase these securities only if you can afford a complete loss of your investment.
And if you're a resident of one of a select 19 states or Puerto Rico, your state government expects more of you before investing. For example, North Dakota residents may not invest more than 10% of their net worth. Some other states limit investors to 10% of their liquid net worth. Nebraska has its own 10% limit but waives it for actual accredited investors.
MSF: I agree that 1.25+./85 fee + 6% expenses is high, but still looks better than the 2-and-20 model most hedge funds charge their deep-pocketed pigeons. That said, there's still a front-end load of up to 3.5% on Class S (retail) shares which is an added expense if purchased through "certain financial intermediaries."
*munches popcorn and watches*
”T. Rowe and Oak Hill Start Private Credit Fund for
MassLess-Affluent Market”