The MASECO Alternative Income Fund (MAIF) is the amended name of the MASECO Alternative Credit Fund (ACF) which was established in 2015 and started trading in January 2016. The ACF (Delaware) changed its name in early 2022 to MAIF and the CEMP MASECO Alternative Credit Fund SPC (Cayman) has been liquidated with the active investments and investors moving to the newly established MASECO Alternative Income Fund Ltd (Cayman) on December 31, 2022.
Separately, the MAIF/ACF General Partner/Investment Manager was originally MASECO Asset Management Limited (BVI) and changed to MASECO Asset Management Limited (Cayman Islands) on January 1, 2020. The former directors of MASECO Asset Management Limited (BVI) were managing the ACF and acquired the ‘illiquid’ investments held below. The current Directors of MASECO Asset Management Limited (Cayman Islands) took over the management of ACF in early 2020 and have repositioned the portfolio in recent years.
This page is to notify new subscribers to MAIF of the history of the ACF and some of the pandemic and other issues related to historical investments that have led to investment returns below the original stated target return of the ACF (but still positive returns) and created illiquid situations for investors who subscribed prior to April 1, 2020.
Prior to the pandemic, the ACF started making significant changes to the ACF portfolio. Specifically, only one of the original investments made by the ACF LP in 2016 are part of he MAIF’s current portfolio. In 2016 the ACF focused primarily on open ended investment funds some of which experienced difficulty, performed below expectations, experienced fraud, suffered from lock ups and/or ultimately proved to be illiquid.
Although the ACF performed in line with expectations in 2016 and 2017, in late 2018 some employees at one of the aforementioned funds recognised fraudulent activity by the fund manager which led to fraud charges being charged against the manager and the fund being taken over by receivers. Thankfully, ACF had sold a significant portion of its investment in the aforementioned fund but the relatively small remaining holding in late 2018 was placed into a side pocket. This negatively impacted ACF performance in 2018, 2019 and 2022 as the vast majority of the portfolio has been written down. The value of the remaining portion of this investment remains illiquid and its value unknown.
Two other ACF investments struggled due to CoVID 2019 and on March 31, 2020 were moved to a side pocket account in ACF and have since fallen in value. The two funds were making investments in Brazil and South Africa which were two of the hardest hit economies by CoVID 2019.
The South African fund is now in run off and has either taken over collateral or restructured almost all of the loans in its portfolio and has paid MAIF back more than 30% of the value of it’s March 31, 2020 value (as of December 31, 2022). There is a well scheduled payment plan outlined and at the time of this writing, investors are expected to see a return of most of their investment in this fund over the next three to four years. This is of course subject to change.
The situation with the Brazilian focused fund is different as it is structured out of Luxembourg. The investment manager has submitted a proposal to the Luxembourg regulator to split the fund into two. If approved in its current form, approximately half of the assets would stay in the fund and focused on collecting on the defaulted loans and returning capital to investors. The other half of the assets are performing and would move into a new fund that would continue to be managed by the existing team, expected to grow and liquidated over time. This is of course subject to change.
Despite the issues ACF/MAIF suffered with the aforementioned funds, it weathered 2018-2022 relative well and produced positive returns in all calendar years since inception even after using estimated lower valuations of the side pocket investments (see below). All of the aforementioned funds in side pockets no longer provide audited accounts and have been moved to a low cost realisation fund called ACF Realization LP (ACFR) on December 31, 2021 and 2022. The ACFR does not incur any management fees, is not open to new investors and has been paying out distributions to investors and will continue to do so until the aforementioned investments are liquidated. The final realisation value of these aforementioned investments and the timing of realisation remains uncertain.
As mentioned above, over the past few years the MAIF and its predecessor funds have repositioned the investments in the portfolio which has been fortuitous for MAIF investors. Since April 1, 2020 the active investments in the fund net of all fees have performed above its stated targeted return of 6-8% per annum. Due to its larger size, the MAIF is able to invest in more established managers with higher minimum investment commitments and is also invested in more closed end funds with a longer illiquidity profile than in ACF’s earlier days. The MAIF factsheets illustrate the above target performance record of the active investments since April 1, 2020.
New and additional subscribers into ACF or MAIF since April 1, 2020 are unaffected by the above three investments and do not have exposure to the aforementioned investments.
Below is the estimated value performance of the funds since inception including the side pockets:
||Jan 2016 series + ACFR
||Aug 2016 series + ACFR
||Feb 2016 series + ACFR
||May 2016 series + ACFR
||January 1, 2016
||August 1, 2016
||February 1, 2016
||May 1, 2016
|Estimated Annualised Return since Inception
The returns above are calculated including the estimated value of the side-pocketed investments.
As the sidepockets are not audited, the performance figures shown are unaudited, net of all charges and based on estimates. As such, the figures are subject to revision. Past performance should not be seen as an indication of future performance. The value of an investment may fluctuate and investors may not get back the full amount invested. Currency fluctuations may increase or decrease the returns of an investment.
This is published in the Cayman Islands by MASECO Asset Management Ltd (the Company). It is provided for the purpose of information only, and if you are unsure of the suitability of this investment you should take independent advice. Net Asset Value (NAV) performance is not linked to share price performance and shareholders may realise returns that are lower or higher in performance. Past performance should not be seen as an indication of future performance. The value of investment and any income may fluctuate and investors may not get back the full amount invested. Although the Company have used reasonable efforts to ensure the accuracy of the information, the Company makes any warranties or presentations with respect to the completeness or accuracy of the information set forth herein. Examples of investment process, risk management, due diligence, position sizes, diversification, leverage, assessment of risk and similar information (together, the “Investment Programme”) are presented as a general guide for illustration purposes only and are subject to change without notice to investors at any time and at the sole discretion of the Company. In addition, the composition and size, and risks associated with, current or future investments of the Company may differ substantially from examples set forth in this Factsheet. Accordingly, actual implementation of the Investment Programme may vary from the examples presented herein. ACF is primarily a fund of hedge funds and is not regulated by the UK’s Financial Conduct Authority. Consequently, investors will not have the benefit of the protections afforded by the UK regulatory regime. The recommended holding period of ACF is 5 years. The alternative credit asset class is generally less liquid than traditional investments and, in certain circumstances, the underlying funds or investments may become illiquid or be unable to provide an updated valuation which may result in the creation of side-pockets. These side-pockets will typically be closed-ended, meaning that ownership in the side pocket cannot be redeemed until the side-pocket distributes which could take 5 years or more to realise. In this event, it may take longer than the normal redemption period for that portion of an investor’s holding to be realised. 95 days’ prior notice is required for redemptions. All data in this Factsheet is at or to the final day of the calendar month identified in the heading of the Factsheet’s front page unless otherwise stated. This Factsheet may not be distributed nor transmitted in any jurisdiction outside of the United Kingdom or United States of America where such distribution might lead to a breach of law or regulatory requirements. The distribution of this document in certain jurisdictions may be restricted by law and therefore persons into whose possession this document comes should inform themselves about and observe any such restrictions. Any such distribution could result in a violation of the law of such jurisdiction.
 this refers to both the MASECO Alternative Income Fund LP (Delaware) and MASECO Alternative Income Fund Ltd (Cayman) funds which are two separate entities but have the same investment strategy, same portfolio manager and similar holdings.
 this refers to both the MASECO Alternative Credit Fund LP (Delaware) and CEMP MASECO Alternative Credit Fund SPC (Cayman) funds which are two separate entities but have the same investment strategy, same portfolio manager and similar holdings.
 February 1, 2016 for the Cayman fund
 early for the Cayman fund