Regan Capital Registers Its First Interval Fund With SEC

Regan Capital LLC has announced the registration of the Regan Capital Alternative Income Fund with the U.S. Securities and Exchange Commission. If declared effective, the fund would be Regan Capital’s first interval, or tender offer fund.

Offering shares of beneficial interest on a continuous basis, the interval fund’s primary investment objective is to seek a high level of risk-adjusted current income and capital appreciation. Its strategy centers on debt obligations, with a mandate to invest at least 80% of its net assets in this area.

Its primary focus within this segment will be mortgage-backed securities, or MBS, specifically those that are non-agency residential MBS – securities issued by non-governmental entities like commercial banks and backed by residential mortgages. The weighted average life of its MBS investments is expected to range between zero and 10 years.

In addition to its main debt focus, the fund may allocate up to 30% of its net assets to private alternative credit opportunities. This allocation includes transactions collateralized by real estate assets (such as bridge or construction lending), hard assets, and various receivables (including those related to consumer loans, litigation, or medical claims). The fund may also invest in other structured credit products like commercial MBS, asset-backed securities, and collateralized loan obligations.

The company noted that the fund may invest without limit in fixed income products that are rated below investment grade (often referred to as “high yield” or “junk” ratings). Due to this potential exposure, the fund’s investments are explicitly stated to be speculative.

The fund’s portfolio duration is typically expected to be less than five years, a measure indicating its sensitivity to interest rate changes. As investment manager, Regan Capital plans to utilize a bottom-up security selection analysis overlaid with a top-down macro qualitative analysis (focused on factors like the economic outlook and interest rates) to identify deep value investments.

The fund will offer two common share classes: institutional class shares will have a minimum initial investment of $50,000; and investor class shares will have a lower minimum initial investment of $2,500 but are currently not available for sale.

The investor class shares are contingent upon the fund receiving multi-share class exemptive relief from the SEC, which would permit it to issue the separate classes and impose related fees. It remains uncertain when, or if, the SEC will grant this relief.

The company said it will make quarterly repurchase offers between 5% and 25% of its outstanding common shares at net asset value.

Regarding fees, the maximum sales charge  or load as a percentage of the subscription amount is 3% for the investor class and 0% for the institutional class. Management fees will be 1.5% for both share classes. Distribution and shareholder servicing fees will be 1% for the investor class and 0% for the institutional class offering. Other specifics and expenses, as well as total annual operating expenses are yet to be disclosed.

Quasar Distributors LLC serves as the fund’s principal underwriter and distributor. U.S. Bank National Association serves as the primary custodian of the fund’s assets. U.S. Bank Global Fund Services provides fund accounting, administrative, and certain compliance services. The latter also serves as the fund’s transfer agent and dividend disbursement agent.

Regan Capital is an SEC-registered investment adviser specializing in structured credit strategies with approximately $2.9 billion in assets under management.

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