b'A company electing to be classified as a BDC mustCollective Investment Trustsregister a class of securities under Section 12 of theCollective investment trusts (CITs), or collective trust Exchange Act. Consequently, BDCs are subject to thefunds, are not registered funds; however, CITs often same periodic reporting requirements as other reportingserve a similar purpose. A CIT is a pooled investment companies and must file with the SEC annual reports onvehicle, the funds of which are managed pursuant to a Form 10-K, quarterly reports on Form 10-Q, and currentspecific investment strategy. A CIT may be maintained reports on Form 8-K, as well as proxy statements underby a bank or trust company and regulated by a banking Section 14(a) of the Exchange Act. BDCs also are subjectagency, which might be the Office of the Comptroller to corporate governance requirements under both theof the Currency or a state bank regulator. The bank acts Exchange Act and the 1940 Act. as a fiduciary and holds legal title to the trust assets. Public BDCs raise capital by selling their securities toCITs are not regulated by the SEC and are not subject the public in offerings registered under the Securitiesto disclosure or reporting requirements. While the Act of 1933 (the Securities Act), and list a class of theirCIT vehicle is not new, dedicating a sleeve of a CIT to equity securities on a national securities exchange (e.g.,alternative assets is a relatively recent development. the New York Stock Exchange). Other BDCs are privately held, having sold their securities to accredited investorsPermanent Capital Vehicle Growthin offerings exempt from registration under the SecuritiesIn recent years, permanent capital vehicles have grown Act. Private BDCs are typically sponsored or formed byin line with the growth of the private markets, particularly private equity firms or financial institutions that have thethe private credit market. The U.S. private credit market requisite preexisting relationships with their investors.was estimated to approach $1.4 trillion by the end of Additional materials about BDCs are available here. 2025. Permanent capital vehicles are becoming popular as a means of providing exposure to illiquid assets, including private equity and private credit assets. By way Open-end Funds of example, interval fund assets have grown from $6.5 Open-end funds continuously issue and redeem sharesbillion in 2014 to $107.7 billion as of the first quarter of at NAV. Investors buy or sell shares directly from the2025. Tender offer funds have grown from $27.9 billion to fund at any time, and the funds size fluctuates with$80.4 billion during this same period. Private equity and investor activity. Open-end funds are subject to liquidityventure-focused strategies accounted for the majority of requirements, limiting their exposure to illiquid assetstotal assets, and fund of funds strategies accounted for (historically capped at 15% of assets), which ensuresthe second largest percentage of total assets of tender daily liquidity for investors, but restricts access tooffer funds. Private credit-focused funds represent the certain alternative investments. Open-end funds carrymajority of interval funds, with real estate-focused funds the risk that high demand for redemptions will compelaccounting for the second most prevalent interval fund a fund to sell assets to cover that demand, hinderinginvestment strategy. Assets under management at BDCs fund performance. These are drawbacks that controlledalso have grown significantlyfrom $120 billion in 2020 liquidity funds, such as tender offer funds, do notto about $500 billion in 2025. Most of this recent BDC encounter.growth is attributable to evergreen, or non-traded, BDCs. Target Date Funds Several notable trends, all interrelated and reinforcing each other, that are likely to continue to accelerate A target date fund is a type of open-end fund thatpermanent capital vehicle growth include the following:automatically adjusts its asset allocation over time, typically shifting from higher-risk assets (like equities) toThe growing significance of private markets and historically more conservative investments (like bonds)private securities: The private markets have become as the target date (often retirement) approaches. Theseincreasingly important in recent years. This relates to all funds offer a set-it-and-forget-it approach for investorsaspects of the private marketsfrom the market for the with specific time horizons. This is in large measure whatsecurities of privately held companies, to private equity, makes them appealing for those planning for retirement. to private credit. A recent Prequin report forecasted Mayer Brown|Introduction 5'