Fidelity Investments, the Boston-based global financial services company with $11.1 trillion of assets under administration, is launching a new credit fund, a closed-end interval fund that will be available to financial advisers 25 May. This continues the financial giant’s move into alternatives in general and into the private debt space in particular.
With regard to liquidity, the Fidelity Multi-Strategy Credit Fund will not provide for daily redemptions but will conduct quarterly repurchase offers between 5 percent and 25 percent of the fund’s shares outstanding at net asset value.
Adam Kramer and Brian Chang will lead the new fund, drawing on the whole credit spectrum based on current and projected macro factors. It will allocate to direct lending, leveraged loans and high-yield bonds. And it will invest opportunistically in stressed and distressed investments, convertible bonds, preferred stock, real estate debt, commercial mortgage-based securities, collateralized obligations and emerging-markets debt.
Kramer and Chang will be looking to high-income-oriented asset classes, including both liquid and illiquid securities, offering current income and capital appreciation.
The SEC filing, on 19 May, said that the fund “will leverage the resources of the Fidelity high-income and alternatives group as well as the resources of the broader Fidelity research ecosystem in selecting investments”. The product lineup of the alts group now includes 35 funds and $9.8 billion in assets under management as of 31 March.
A line of Fidelity alternative moves
In October 2013, Fidelity created an alternatives investment platform. It now includes more than $50 billion in assets under administration, and provides research, education and third-party due diligence as well as access to a wide variety of alternative products: real estate trusts, private equity funds, liquid alternatives and credit funds all among them.
Fidelity created a private credit team early in 2021.
In the statement announcing the Multi-Strategy Credit Fund, the company said that since the creation of the platform, it has worked to deepen its integration with two fintech-supported alternative investment marketplaces.
Fidelity launched its first Distressed Opportunities Fund in April 2020, right into the teeth of the pandemic, with a North American focus. According to people with knowledge of the matter, it had its final close in February 2021 after raising more than $340 million. Though closed to new investors, it is still in its investment period.
A person familiar with the matter says that in October 2020, Fidelity launched the Fidelity Real Estate Debt Opportunities Fund. In July 2022, this fund closed at around $165 million in commitments. Its strategy is subordinated debt, North American real estate.
The Fidelity Private Credit Fund, a non-traded, perpetually offered business development company, launched in January of this year. That fund broke escrow and began operations in March. Its portfolio manager, David Gaito, said when escrow broke that through this BDC, the direct lending team “aims to leverage the resources of our globally integrated investment organisation to access highly attractive credit investment opportunities”.