Halting Redemptions...Permanently?

A couple of weeks ago I got an email promoting the Denali Structured Return Strategy Fund (DNLIX). It's more fixed income-ish, not an equity strategy.

It's a newer fund. We took a look at a few months ago. MERIX is a client and personal holding and I used CBYYX as a proxy for catastrophe bonds because testfol.io didn't have the right data for SHRIX or client/personal holding EMPIX. The general interest here for me is finding more strategies that have the above type of volatility and return profiles but with risk factors that differentiate from other funds I use. 

Related pivot, on Wednesday I sat in on a webinar put on by Nuveen about farmland investing. Similar to timberland, farmland is a fantastic diversifier. Equities/REITs in either category don't capture the effect very well. My belief in farmland (and timberland too) is great enough that I will listen to any presentation that comes my way. Nuveen has a non-traded farmland REIT which is probably surprising, at least to me anyway, and sure enough it does well.

Now this from the FT (everyone else covered it too), Blue Owl has "permanently" halted redemptions from some of its credit funds. Basically, Blue Owl is going to sell down holdings as it can and then return the money in drips and drabs. The implication is it will take a long time.

DNLIX is an interval fund. I already said the farmland fund is non-trade so no daily liquidity there either. 

I have been very consistent in saying I'm not going to go down this road for clients, and that is still the case but as we talk about frequently, all of these things will evolve and maybe farmland or timberland will make it into some sort of wrapper with daily liquidity that captures the effect. Or not, but there is no reason not to follow along for the things that interest you as much as timberland and farmland interest me. 

In the meantime, taking on the complexity, fees and illiquidity of the current wrapper makes no sense to me. Chances are you can find proxies that get 90% of the effect without the complexity, fees and illiquidity. 

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