Capped Fund

A capped fund is an investment fund that has a finite pool of capital, called a cap. Once the capital has been invested, the fund can no longer accept new investors.

Key Features:

• Limited capital: Has a finite pool of capital that is capped at a predetermined amount.
• Closed to new investors: Once the capital is invested, the fund is closed to new investors.
• High liquidity: Generally have high liquidity, as investors can easily exit their positions.
• Illiquid assets: May invest in illiquid assets, such as private equity or venture capital.
• High fees: May have high fees, as investors are charged for the privilege of accessing the fund.

Benefits:

• Access to high-performing assets: Can provide access to high-performing assets that would be difficult for individual investors to access.
• Diversification: Can provide diversification across a range of investments.
• Potential for higher returns: May have the potential for higher returns than other investment vehicles.

Drawbacks:

• Limited availability: May not be available to all investors.
• High costs: May have high costs, which can eat into returns.
• Investors locked in: Investors are locked into the fund until it is closed.
• Potential for loss: May have the potential for loss, like any investment vehicle.

Examples:

• Private equity funds
• Venture capital funds
• Hedge funds

Overall:

Capped funds offer a unique blend of high liquidity and the potential for high returns. However, investors should be aware of the limited availability and high costs associated with these funds.