The move by yet another private equity firm to close a retail fund is highlighting the challenge for advisors looking to instill client confidence in those sexy investments.
U.S. player Carlyle Group announced
Sunday that it was closing two mutual funds that it had established in 2014 to court retail investors. The decision makes Carlyle the latest high-profile private equity firm in the States using liquid alternative investments to make such a move.
The closures also represent the latest setback for US advisors struggling to convince high-net-worth clients that those types of funds have longevity behind them. Advisors here will likely have to grapple with the same challenges.
Carlyle’s move isn’t the first case of a large private equity firm stumbling badly. Last year, KKR & Co. closed two funds that invested in high-yield debt and distressed companies after gathering just $33 million from investors over a twelve-month period.
Funds such as Carlyle’s Global Core Allocation Fund closing with just $50 million in total net assets may challenge some investor considering liquid alternatives. The worry is that with Canadian market not nearly as mature or advanced, the Carlyle experience could mean these types of investments never take off here.