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Unlocking Private Markets: Why ’34 Act Registered Private Funds Are Key
The rise in private credit and other alternative asset classes has been a major trend in recent years, driven by increasing investor demand for yield and diversification.
Innovative product structures, particularly semi-liquid evergreen structures like interval funds, tender offer funds, and non-traded business development companies (BDCs), have gained popularity as vehicles that are increasing accessibility to alternative investments for retail investors. As the alternative investment product landscape continues to evolve, specialty structures such as the Securities Exchange Act of 1934 (’34 Act) registered private funds, also referred to as ‘34 Act registered 3(c)7 funds, are gaining traction in the semi-liquid evergreen product market. These funds are specifically designed for private wealth investors and are limited to qualified purchasers. Fund managers benefit from the ability to implement less liquid strategies, predominantly in private equity or infrastructure today, within a semi-liquid wrapper. Importantly, these funds remain exempt from registration under the Investment Company Act of 1940 (’40 Act), enabling them to avoid certain regulatory and reporting requirements imposed on ’40 Act registered funds.