HFR Tender Offer Funds Indices

Index Constituents & Eligibility

Tender Offer Funds are a type of closed-end investment company that periodically offers to repurchase its shares from shareholders (See Formulaic Methodology document for more details). Unlike traditional closed-end funds, Tender Offer funds are generally not listed on a secondary market. Instead, they provide liquidity through discretionary repurchase offers made under Rule 13e-4 of the Securities Exchange Act of 1934, typically at net asset value (NAV).

Tender Offer funds provide investors with access to less liquid asset classes and alternative investment strategies, including private equity, private credit, secondaries, real estate, hedge fund strategies, and other illiquid investments that are typically unavailable through traditional open-end mutual funds.

Unlike open-end funds, shareholders cannot redeem shares on a daily basis, and unlike interval funds there is no guaranteed periodic repurchase. The discretionary Tender structure allows the fund manager to invest in less liquid securities without the constraints of daily redemption or a mandated repurchase calendar, potentially enhancing returns.

While the structure and regulatory framework of tender offer funds encompasses many different dynamics of consideration, the eligibility criteria for funds included in the HFR Tender Offer Funds Indices are as follows:

• Fund is registered as a Tender Offer fund under the Investment Company Act of 1940 (Rule 23c-3)
• Performance denominated in U.S. Dollars
• Fund reports NAV at least monthly
• Assets under management of at least $50 million

Computation of the Index NAV uses actual performance of constituent funds as reported by the managers. Performance reflects constituent fund management fees, incentive fees, dividends and other distributions. In cases where a manager lists multiple funds with the same or similar investment profiles, HFR chooses only the most representative fund for inclusion. HFR also screens for funds that exhibit abnormal volatility compared to their peers and may consider them for exclusion from the indices.

Constituents of all indices are selected from an eligible pool of more than 200 Tender Offer funds which are screened for various reporting characteristics to ensure unique fund strategy inclusion.

The HFR Tender Offer Funds Indices are rebalanced on a quarterly basis.