New Mutual Fund Aims to Democratize Access to Venture Capital

Leland Funds Venture Capital

Following the Crash of ’29 and subsequent onset of the Great Depression, securities regulators moved to restrict the general public’s access to “esoteric” investments. The problem: These laws have arguably helped the rich get richer while barring less-affluent investors from investing in assets that could have made them more affluent. Not only that, but many of the investments prohibited or discouraged by Depression-era securities laws also have low correlation to the broad stock and bond markets. During the Crash of ’08 and subsequent Great Recession, the importance of low correlation was made very clear – hence the popularity of liquid alternatives.

Liquid Venture Capital

But while liquid alternatives have democratized retail-investor access to a variety of hedge fund strategies, some asset classes remain out of reach: Infrastructure, private equity, and especially venture capital – that is, until now. While infrastructure and “PE” investments for non-accredited investors are still hard to come by (but, are becoming more available – see articles on funds from Altegris, Pomona Capital and AMG), Leland Funds and Thomson Reuters have launched an innovative new mutual fund providing retail access to “VC” investments: The Leland Thomson Reuters Venture Capital Index Fund (LDVAX).

“Historically, sophisticated institutional investors have been the only market participants able to gain meaningful access to venture capital investments, which are expensive, illiquid and require high minimum investments,” said Leland Funds CIO and fund Portfolio Manager Neil Peplinski, in a recent announcement. “The Leland Thomson Reuters Venture Capital Index Fund addresses these issues and provides investors with less expensive, more liquid exposure to the potentially strong returns typically associated with the traditionally hard-to-access venture capital asset class.”

Thomson Reuters VC Index

The fund tracks the Thomson Reuters Venture Capital Index, which was launched in October 2012. The index is designed to track the performance of individual U.S. venture capital-backed private companies by using “economic factors and market indicators to calculate optimal asset weights across a number of sectors.” The portfolio, which consists of exclusively liquid, publicly traded assets, is modified over time to reflect changes in the U.S. VC universe.

“We are excited to draw on the strength of Thomson Reuters’ comprehensive research on diversified venture-backed companies to bring this distinct fund offering to the market,” said Paul Ingersoll, CEO of Good Harbor Financial, the advisor to the fund and owner of the Leland Funds. “Through this partnership, we are helping democratize access to this important asset class and we look forward to a long-term collaboration.”

Fund Details

The investment advisor to the fund is Good Harbor Financial. Shares of the Leland Thomson Reuters Venture Capital Index Fund are available in three share classes: A (LDVAX), C (LDVCX), and I (LDVIX). The minimum investments for A and C shares, which both have a management fee of 1.25% and respective net-expense ratios of 1.70% and 2.45%, is $2,500. The minimum initial investment for the I shares, which have a 1.25% management fee and a 1.45% net-expense ratio, is $5 million.

For more information, visit the fund’s website.