Perpetual fund
- November 25, 2022
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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Perpetual fund
Subject :Economy
The IVCA expert committee asked the government to allow perpetual capital vehicles in order to unlock capital flows from long-term investors.
Concept:
Perpetual fund
- It is also referred to as an endowment fund
- It consists of a sum of money gifted to a charity by a donor who wishes to provide it with a never-ending source of revenue.
- The fund is usually named in memory of loved ones or after the donors themselves.
- By using only the interest income and never reducing the capital portion of the fund, a charity is assured that a certain amount of support will come its way year after year.
A perpetual capital vehicle
- It is a type of investment where capital available or permanent capital is managed for an unlimited period of time.
- Under it the funds do not come with the drawdowns, capital calls, exit deadlines and other traditional features of the PE-VC funds that have a fixed fund cycle or life.
- Permanent Capital Structures Examples
- Real estate investment trusts
- Master limited partnerships
- Companies that operate, own or finance income-producing real estate and are modeled after mutual funds
- Limited partnerships traded publicly on an exchange
- Yield cos (companies structured in a way that their operating assets product long term contracts produce steady cash flow)
- Public assets management companies
- Interval fund ( a type of closed-end fund not trading on the secondary market)
- Variable funds such as life insurance and annuities.
- Closed-end funds (a mutual fund type)