Oaktree to Start First Mutual Funds to Woo IndividualsMiles Weiss
Oaktree Capital Group LLC, the world’s biggest distressed-debt firm, is starting its first in-house mutual funds as it joins the largest private-fund managers in raising money from individual investors.
The Los Angeles-based firm filed today with the U.S. Securities and Exchange Commission to sell shares in the Oaktree High Yield Bond Fund and the Oaktree Emerging Markets Equity Fund. The minimum initial investment in each would be $25,000, according to the filing.
Oaktree, which oversaw about $91 billion at the end of June and is seeking $10 billion for a new private fund in anticipation of an economic slowdown, has been planning to court retail or individual investors for several years. The money Oaktree managed on behalf of wealthy individuals and family offices comprised about 6 percent of assets at the end of last year, while sub-contracts to help run mutual funds on behalf of other investment advisers, including Vanguard Group Inc., equaled 7 percent.
John Frank, a principal at Oaktree, said in May that increasing the 13 percent of assets managed on behalf of individual investors is a “big focus” at Oaktree. Other asset managers that are branching into the mutual-fund business include private-equity firms KKR & Co. and Carlyle Group LP.
The high-yield fund will invest at least 80 percent of its assets in bonds that are rated below investment grade and will be managed by Sheldon Stone and Shannon Ward, according to the SEC filing. Frank Carroll and Tim Jensen will run the emerging markets fund, which will invest at least 80 percent of its assets in companies included in the Morgan Stanley Capital International Emerging Markets Index.
Oaktree has been running a high-yield bond strategy since 1986, according to regulatory filings. The firm began managing emerging-market assets just last year and is seeking to build up the business.
For its new $10 billion distressed-debt private fund, Oaktree plans to sit on most of the capital until rising markets reverse course, three people with knowledge of the plans said this month. Oaktree plans to raise $3 billion that it can start investing immediately and $7 billion for a reserve pool to deploy when more distressed opportunities arise, said the people.