Sets new standard for alternatives industry and improves investor access
PHILADELPHIA, PA, January 27, 2016 – Franklin Square Capital Partners, the largest manager of business development companies (BDCs), has unveiled an innovative structure for non-traded alternative investments that reduces fees and seeks to align the interests of investors, advisors, regulators and sponsors. The firm recently announced that FS Investment Corporation IV(FSIC IV), an income-focused non-traded business development company (BDC), commenced operations with an industry-leading commission structure that responds to FINRA Regulatory Notice 15-02 (15-02).
The amendments to NASD Rule 2340 presented in 15-02, which take effect on April 11, were designed to, among other things, enhance the disclosure of sales charges on investor account statements. For over 18 months, Franklin Square worked in collaboration with financial advisors and the independent broker-dealer community to design an improved solution for the marketplace.
The result is a distinctive T-share class that lowers the fees investors are charged both upfront and in total over the life of the investment, while addressing the needs of financial advisors as they help their clients access alternative investments. A key distinction is the financing by Franklin Square of a portion of the upfront commission, which serves to reduce the financial impact to investors at the time of sale.
“Providing investors access to transparent, high-quality investments has been a core principle at Franklin Square since our inception,” said Michael C. Forman, Chairman and Chief Executive Officer of Franklin Square. “We took it upon ourselves to dedicate significant effort to arriving at a 15-02-ready solution and we believe our new commission structure will become the industry standard.”
“We explored many options before determining that this solution improves the offering for investors and balances the collective feedback from advisors, clients and regulators,” added Zachary Klehr, Executive Vice President of Franklin Square, who led the firm’s efforts to address 15-02. “We believe the right alternatives can play an important role in diversifying portfolios, and the fundamentals behind those investments will not be affected by the statement changes required by FINRA Regulatory Notice 15-02.”
About Franklin Square
Franklin Square is a leading manager of alternative investment funds designed to enhance investors’ portfolios by providing access to asset classes, strategies and asset managers that typically have been available to only the largest institutional investors. The firm’s funds offer “endowment-style” investment strategies that help construct diversified portfolios and manage risk. Franklin Square strives not only to maximize investment returns but also to set the industry standard for best practices by focusing on transparency, investor protection and education for investment professionals and their clients.
Founded in Philadelphia in 2007, Franklin Square quickly established itself as a leader in the world of alternative investments by introducing innovative credit-based income funds, including the industry’s first non-traded BDC. As of September 30, 2015, the firm managed approximately $17.0 billion in total assets, including $15.7 billion in BDC assets, making it the largest manager of BDCs. For more information, please visit www.franklinsquare.com.
For information about FSIC IV, visit www.franklinsquare.com.
Forward-Looking Statements and Important Disclosures
This press release may contain certain forward-looking statements, including statements with regard to the future performance or operations of FSIC IV. Words such as “believes,” “expects,” “projects” and “future” or similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results to differ materially from those projected in these forward-looking statements, and some of these factors are enumerated in the filings FSIC IV makes with the U.S. Securities and Exchange Commission. FSIC IV undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Individual investors and endowments may have different investment horizons, liquidity needs and risk tolerances. In addition, fees that may be incurred by an investor in funds sponsored by Franklin Square may be different than fees incurred by an endowment investing in similar assets as those in which the funds invest.