Irregular Roundup, 21st April 2026

We begin today’s Irregular Roundup with hedge funds for dentists.

Hedge fund for dentists

Matt Levine wrote about the asset management industry’s latest attempt to return to the era of high fees.

Once upon a time, there were mutual fund managers who took money from retail investors, invested it in stocks and bonds and charged 1% fees.  Now they have been replaced by index fund managers who buy all the stocks and bonds but charge 0.01% fees.

Instead of stocks and bonds, they need to sell something more complicated and difficult – private equity and private credit, and in the latest iteration, hedge funds.

There was a cheery equilibrium in which everyone owned mutual funds, but if everyone abandons their mutual funds for index funds, the asset management industry is going to start selling them hedge funds instead.

Blackstone is launching the Blackstone Multi-Strategy Hedge Fund (BXHF) to “accredited” investors – you need $5M in investments.

Free Float

Matt also wrote about the issues that the imminent float of SpaceX and some AI firms is causing to the Nasdaq index.

• These firms are too new to qualify for the index, and they also have too small a free float.

But Nasdaq wants them in the index, so they are changing their rules to allow it.

• They haven’t quite switched to weighting the index by free float, but they will scale back firms with less than 33% free float.
• The old rule was that firms with less than 10% free float were excluded from the index.
• For reference, SpaceX will have only 4.3% free float.

Since Nasdaq is not heavily indexed (relative to the S&P 500), index firms should be able to get the shares they need.

• Active managers may have more of a problem – they need to participate in order not to be embarrassed if the float goes well.

And if all of Elon’s fan-boys know that the active managers must buy, they have an incentive to bid up the price.

• But as Matt points out, the job of active managers is to buy the stocks that go up.

Private Markets SIPP

VCT and EIS broker Wealth Club (WC) has launched the UK’s first Private Markets SIPP, offering a range of 12 funds from 10 “world-leading” managers with a minimum investment of £10K.

• WC are also accepting transfers in from existing pensions.

An IPO – an initial public offering or stock market floatation – is no longer the ultimate milestone of success. Today’s high-growth companies are staying private for much longer, delaying or entirely avoiding an IPO. 

In fact, just 19,000 of the world’s 159,000 companies with over $100 million in revenue are listed. The rest are private, often with no immediate plans to list.

In the long term, Private Equity has outperformed global equities by 6.2% a year net of fees on average in the 25 years since December 1999.

On paper, this is a nice idea – access to private markets with income tax relief on the way in and CGT protection on the way out –  but it rings two alarm bells with me:

• My immediate concern (as with EIS) is how do I get my money back out when I want it?
• Secondly, if the private market funds are now keen to get their hands on my pension money, is this a good time to get in?

Unfortunately, there are restrictions on the promotion of private market funds, so you can’t find out everything about the product unless you fill in a form to confirm your eligibility.

To invest, you will need to become an Elective Professional Client of Wealth Club and answer a few more questions about your investment experience. Elective Professional Clients give up certain investor protections.

I would imagine this is largely the right to compensation if things go wrong.

The promotional blurb makes a point of stressing that the finds in the SIPP are “semi-liquid”, but that term meant little to me, so I did a bit more digging:

Historically, the majority of Private Equity funds have followed a ‘drawdown’ model. These closed-ended funds (often structured as a limited partnership) are managed by a private equity or venture capital firm, known as a ‘General Partner’ or ‘GP’.

These funds raise money up front, then close, drawing down the capital committed by the investors over three to four years.

• The funds last for around 10 years, with distributions as investments are realised.

Semi-liquid funds are evergreen and accept new capital and allow redemptions on a rolling basis – normally once a month or quarter. Investors can buy (and sell) at a prevailing Net Asset Value (NAV). The price for that liquidity is usually higher charges compared to a drawdown fund.

Funds may place a limit on total redemptions in any one period. Accordingly, it is not guaranteed that an individual investor will be able to liquidate their holding within a given redemption ‘window’.

The documentation mentions penalties for redemptions in the first 18 months, and a 5% cap on redemptions each quarter (which translates to five years to get 100% out).

• I couldn’t find any mention of running costs.

It’s a step in the right direction, but I’d much rather have an ETF that did all the work for me.

SpaceX again

One of the private market opportunities that WC flagged up to me was the ARK Private Innovation fund, which provides access to SpaceX.

[The fund] is designed to provide access to private, high-growth companies that are typically out of reach for most investors. Founded by Cathie Wood, ARK has a long-standing approach of identifying transformative companies early, often before they become widely known.

SpaceX illustrates a key and growing trend – many of the most exciting and potentially valuable companies are staying private longer. The [fund’s] strategy is focused on innovation themes such as artificial intelligence, robotics, energy storage, blockchain and genomics.

Possibly a little late, if SpaceX is about to IPO.

Revolut banking licence

After almost five years, Revolut has been approved for a UK banking licence.

• Those of us with an e-money account and debit card should be automatically converted to a real current account.

The good news is that means we qualify for the £120K FCA protection on balances.

No doubt we’ll be pushed credit cards and loans in due course.

• We’ll have to wait and see if there’s anything of interest to savers and investors.

Pensions mandation

The House of Lords has voted to remove the government’s powers to mandate that pension schemes invest a set proportion of assets in private markets from the new pension schemes bill. 

Baroness Bowles said: 

Why should the government override trustees? The track record of intervention is not good. If the industry does not deliver, it will not be out of obstinacy; it will be because the opportunities are not there at the right price or at the right risk.

Baroness Sherlock, minister of state for the Department of Work and Pensions, said:

There is strong evidence that savers’ interests lie in greater investment diversification than we see today in the DC market. A small allocation to private markets as part of a diversified portfolio offers the potential for better risk adjusted returns over the long term. 

But despite that recognition, many providers are not yet acting on it.

This is a tough one – I think pension schemes should be more diversified investors, but I don’t like the idea of the government defining what diversification means.

• As it happens, the government has already rejected the Lords’ amendment.

Benefits bailout

Rachel Reeves has ruled out universal support on energy bills when the price cap goes up in July.

• Instead, the government will use a means-test based on household income.
• This has led some commentators to suggest she will target only those on benefits.
• She also pointed out that energy bills are low in the summer, suggesting that support will not arrive until the October price cap.

The data on household income is not collected, and Reeves is not prepared to cut through the red tape preventing its collation. 

• One (terrible) option is to hand the money to councils, who would then dole it out through a “hardship” fund.
• But it would be easier to give it to those on benefits )around six million people) as per the current “warm homes discount”.

This is yet another disincentive to get back to work, and one that will be difficult to remove once established.

Price gouging

Like rent controls, consumer goods price-fixing is one of those dumb lefty ideas that refuse to die.

• Both Starmer and Reeves have accused fuel providers of “profiteering” because they have raised prices of a global commodity whose price has risen.
• Worse than that, they raised the prospect of price caps on petrol ( to match the ones we have for gas and electricity).

On CapX, the nominatively determined James Price pointed out the benefits of high prices:

First, they force energy conservation. Second, they incentivise new supply (drilling, fracking and small modular reactors all become commercially viable at higher prices [though the first two are banned by this government]). And third, they direct willing capital towards other alternatives.

As always, price is the signal, but this government is drowning it with noise.

Ed Miliband continues to insist that energy prices are ‘set on the international market’ and that increasing supply from hydrocarbons on British territory would not lower prices. At the time of writing, UK gas is six times higher than in the US. Why? It doesn’t take an energy secretary to guess that it might have something to do with the shale gas revolution in America.

Even if the Government’s 2030 clean power target were met, electricity would still account for only around a fifth of total UK energy consumption. The vast majority would still be met by oil and gas.

No free lunch

Diversification had a bad March, with crypto the only asset class to rise after the start of the war with Iran (according to Goldman Sachs). FT’s Alphaville said: 

Oil has kicked the chair out from under all the stuff the average investor has been favoured over the past year, like old-economy European stocks and dollar diversifiers. 

Equities and bonds have fallen together as markets seek to price in an inflationary shock of unguessable size and scope. Rising real yields eroded the defensiveness of defensives. Going by what the average punter can trade, that only really leaves cash and (not investment advice!) crypto.

David Thorpe in the FT looked at research from AJ Bell, which said that only money market funds and non-life insurance companies fared well.

• Capital preservation trusts lost money, but only one-fifth as much as the FTSE-100.
• Defensive sectors like tobacco and food producers did worse than the market.

The basic story is familiar – when bond yields were falling and inflation was low, the classic 60/40 portfolio looked great, and diversification was simple.

• Post-Covid, pure stocks have worked better.

Other diversifiers (commodities, gold, real estate, etc.) are better than bonds when inflation sticks above 2.5% pa, but in a crisis, everything falls together. 

On the other hand, most crises don’t last for long, and if your SWR is low enough, you shouldn’t see too much long-term damage.

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That’s it for today.

• Until next time.