| N-2 | Mar. 18, 2024 USD ($) | |
| Cover [Abstract] | ||
| Entity Central Index Key | 0001709406 | |
| Amendment Flag | false | |
| Document Type | 424B3 | |
| Entity Registrant Name | AIP Alternative Lending Fund P | |
| Fee Table [Abstract] | ||
| Shareholder Transaction Expenses [Table Text Block] | Transaction Fees Maximum Sales Load ( Percentage of Purchase Amount ) 1 3.00% Dividend Reinvestment Plan Fees None Maximum Redemption Fee None | [1] |
| Sales Load [Percent] | 3% | [1] |
| Dividend Reinvestment and Cash Purchase Fees | $ 0 | |
| Other Transaction Expenses [Abstract] | ||
| Other Transaction Expenses [Percent] | 0% | |
| Annual Expenses [Table Text Block] | Annual Fund Expenses (as a percentage of the Fund’s net assets attributable to common shares) Management Fee 2 1.01% Interest Payments on Borrowed Funds 3 2.35% Other Expenses 4 Platform Loan Fees 5 1.55% All Other Expenses 6 1.33% Acquired Fund Fees and Expenses 7 0.01% Total Annual Fund Expenses 6.25% Less Fee Waivers and/or Expense Reimbursement 8 0.00% Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement 6.25% | [2],[3],[4],[5],[6],[7],[8] |
| Management Fees [Percent] | 1.01% | [2] |
| Interest Expenses on Borrowings [Percent] | 2.35% | [3] |
| Acquired Fund Fees and Expenses [Percent] | 0.01% | [7] |
| Other Annual Expenses [Abstract] | ||
| Other Annual Expense 1 [Percent] | 1.55% | [5] |
| Other Annual Expense 2 [Percent] | 1.33% | [6] |
| Total Annual Expenses [Percent] | 6.25% | |
| Waivers and Reimbursements of Fees [Percent] | 0% | [8] |
| Net Expense over Assets [Percent] | 6.25% | |
| Expense Example [Table Text Block] | Example You would pay the following fees and expenses (including the sales load) on a $1,000 investment, assuming a 5% annual return and that the Fund’s operating expenses remain the same (except that the example incorporates the fee waiver and/or expense reimbursement arrangement for only the first year): 1 Year 3 Years 5 Years 10 Years $94 $219 $341 $632 Actual expenses may be greater or lesser than those shown. Moreover, the rate of return of the Fund may be greater or less than the hypothetical 5% return used in the Example. On an investment of $50,000 the Example would be as follows: 1 Year 3 Years 5 Years 10 Years $4,703 $10,975 $17,071 $31,578 | |
| Purpose of Fee Table , Note [Text Block] | The following table illustrates the aggregate fees and expenses that the Fund expects to incur and that Shareholders can expect to bear directly or indirectly. The following table should not be considered a representation of the Fund’s future expenses. The Fund’s actual expenses may vary significantly from the estimated expenses shown in the table. | |
| Basis of Transaction Fees, Note [Text Block] | Percentage of Purchase Amount | |
| Other Expenses, Note [Text Block] | Other Expenses include professional fees and other expenses that the Fund will bear directly and indirectly through the Master Fund, including, without limitation, the Fund’s Distribution and Shareholder Servicing Fee. See “Fund and Master Fund Expenses” and “Distribution and Shareholder Servicing Fee.” The Fund, and therefore the Shareholders, will indirectly bear Platform loan fees, such as loan servicing fees and loan trailing fees that are paid to the servicer of the applicable Platform and, in certain cases, to applicable originator of the alternative lending securities in which the Master Fund invests. Included within “All Other Expenses” in the table above are 0.15% of expenses related to the credit facilities, including amounts such as drawdown fees, legal fees and other service provider fees. | |
| Acquired Fund Fees and Expenses, Note [Text Block] | The Master Fund may invest a portion of its assets in other investment companies (the “Acquired Funds”). The Master Fund’s Shareholders indirectly bear a pro rata portion of the expenses of the Acquired Funds in which the Master Fund invests. “Acquired Fund Fees and Expenses” in the table is an estimate of those expenses. The estimate is based upon the average allocation of the Master Fund’s investments in the Acquired Funds and upon the actual total operating expenses of the Acquired Funds (including any current waivers and expense limitations) for the fiscal year ending September 30, 2023. Actual Acquired Fund Fees and Expenses incurred by the Master Fund may vary with changes in the allocation of Master Fund assets among the Acquired Funds and with other events that directly affect the fees and expenses of the Acquired Funds. Since “Acquired Fund Fees and Expenses” are not directly borne by the Master Fund, they are not reflected in the Master Fund’s financial statements, with the result that the information presented in the table will differ from that presented in the Financial Highlights. | |
| Acquired Fund Fees Estimated, Note [Text Block] | The estimate is based upon the average allocation of the Master Fund’s investments in the Acquired Funds and upon the actual total operating expenses of the Acquired Funds (including any current waivers and expense limitations) for the fiscal year ending September 30, 2023. | |
| General Description of Registrant [Abstract] | ||
| Investment Objectives and Practices [Text Block] | Investment Objective Through its investment in the Master Fund, the Fund seeks to provide total return with an emphasis on current income. There can be no assurance that the Fund will achieve its investment objective. Investment Philosophy Morgan Stanley AIP GP LP emphasizes investments that take a long-term view and that prioritize sources of expected return over security selection or market timing. The Investment Adviser will select investments for the Master Fund with a focus on long-term returns derived primarily from the “credit risk premium” in certain loans and other investments described below. The “credit risk premium” is the difference in return between obligations viewed as low risk, such as high-quality, short-term government debt securities, and securities issued by private entities or other entities which are subject to credit risk. The credit risk premium is positive when the interest payments or other income streams received in connection with a pool of alternative lending securities, minus the principal losses experienced by the pool, exceed the rate of return for risk-free obligations. There can be no assurance that the credit risk premium will be positive for the Master Fund’s investments for any specific time period, on average or over time. If the interest payments and repayments of principal received in connection with such borrowings exceed the losses incurred from defaults on the borrowings, on average and over time, the excess positive return from the interest payments represents the credit risk premium. The Master Fund is accepting the risk of default by some borrowers in exchange for the expected returns from interest payments and principal repayments of the borrowers that repay their loans. The Master Fund seeks to benefit over the long-term from the difference between the amount of interest and principal received from these loans and other investments and the losses experienced. Investment Strategies The Master Fund seeks to achieve its investment objective by investing in alternative lending securities that generate interest or other income streams that the Investment Adviser believes offer access to credit risk premium (as defined herein). Alternative lending securities are loans originated through non-traditional, or alternative, lending Platforms, or securities that provide the Master Fund with exposure to such instruments. The “credit risk premium” is the difference in return between obligations viewed as low risk, such as high-quality, short-term government debt securities, and securities issued by private entities or other entities which are subject to credit risk. The credit risk premium is positive when interest payments or other income streams received in connection with a pool of alternative lending securities, minus the principal losses experienced by the pool, exceed the rate of return for risk-free obligations. By investing in alternative lending securities, the Master Fund is accepting the risk that some borrowers will not repay their loans in exchange for the expected returns associated with the receipt of interest payments and repayment of principal by those that do. There is no assurance that the credit risk premium will be positive for the Master Fund’s investments at any time or on average and over time. However, the Master Fund seeks to benefit over the long-term from the difference between the amount of interest and principal received and losses experienced. The alternative lending securities in which the Master Fund may invest are sourced through various alternative lending Platforms as determined by the Investment Adviser. The Master Fund may invest in a broad range of alternative lending securities, including, but not limited to, (1) consumer loans, inclusive of specialty offerings such as education loans and elective medical loans; (2) small business loans, receivables and/or merchant cash advances, inclusive of specialty offerings such as purchasing and financing of future payment streams or asset-based financing; (3) specialty finance loans, including, but not limited to, automobile purchases, equipment finance, transportation leasing or real estate financing; (4) tranches of alternative lending securitizations, including, but not limited to, residual interests and/or majority-owned affiliates (MOAs); and (5) to a lesser extent, fractional interests in alternative lending securities and other types of equity, debt or derivative instruments that the Investment Adviser believes are appropriate, except that the Master Fund will not invest in consumer loans that are of sub-prime quality as determined at the time of investment, and the Master Fund will not invest 45% or more of its Managed Assets in the securities of, or loans originated by, any single Platform or group of related Platforms. The Investment Adviser makes the determination that loans purchased by the Master Fund are not of subprime quality based on the Investment Adviser’s due diligence of the credit underwriting policies of the originating platform, which look to a number of borrower-specific factors to determine a borrower’s ability to repay a particular loan, which may include employment status, income, assets, education and/or credit bureau data where available. The Master Fund may also purchase bonds and other debt securities backed by a pool of alternative lending securities. The Master Fund invests primarily in whole loans. The Master Fund may invest across various Platforms, loan types, geographies and credit risk bands. The Master Fund’s loan investments are currently sourced from Platforms based in the United States. The Master Fund’s loan investments may be sourced from Platforms domiciled outside the United States, including the United Kingdom and Europe. To the extent the Master Fund’s investments are sourced from Platforms domiciled outside the United States, the investment limitations and requirements applicable to investments sourced from U.S. Platforms will be applicable to such Platforms. The Master Fund may also invest in other investment companies that invest in alternative lending securities. To the extent the Master Fund invests in real estate loans, such investments are limited to real estate loans where, at the time of investment, the loan-to-value ratio of the property is less than or equal to 95%. The Master Fund invests primarily in unrated securities. Although the Master Fund’s fundamental policies described above do not permit the Master Fund to invest in consumer loans of sub-prime quality, unrated securities purchased by the Master Fund may be of credit quality comparable to securities rated below investment grade by a nationally recognized statistical rating organization (“NRSRO”). The Master Fund may invest, without limitation, in unrated securities that may be of a credit quality comparable to securities rated below investment grade. To the extent the Master Fund invests directly in fractional or whole interests in alternative lending securities, such investments will not include consumer loans that are of sub-prime quality. Otherwise, the fractional or whole interests in alternative lending securities or tranches of alternative lending securitizations in which the Master Fund may invest may be of a credit quality comparable to securities rated below investment grade. Below investment grade securities, which are often referred to as “junk,” have predominantly speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal. They may also be difficult to value and illiquid. The Master Fund may also invest in both rated senior classes of asset-backed securities as well as residual interests in pools of alternative lending loans or securitizations. To the extent the Master Fund invests in residual interests in pools of alternative lending loans or securitizations, a small percentage of loans in the pools may include consumer loans of sub-prime quality. The Master Fund has adopted the below fundamental policies, which may only be changed by the affirmative vote of a majority of the outstanding Shares of the Master Fund. For more information on the Master Fund’s stated fundamental policies, please see “Investment Policies and Practices—Fundamental Policies” in the Master Fund’s Statement of Additional Information. The Master Fund may not invest in consumer loans that are deemed to be of sub-prime quality at the time of investment pursuant to guidelines developed by the Investment Adviser and implemented by the Platforms. The Master Fund may not purchase alternative lending securities from Platforms whose primary business consists of originating sub-prime quality consumer loans. The Master Fund may not purchase alternative lending securities deemed to be originated in emerging markets, pursuant to guidelines developed by the Investment Adviser and implemented by the Platforms. The Master Fund may not purchase alternative lending securities from Platforms whose financial statements are not audited by a nationally recognized accounting firm and/or its international affiliates. As described in further detail under “Alternative Lending,” an alternative lending Platform is a lending marketplace or lender other than a traditional lender such as a bank. In considering investments for the Master Fund, the Investment Adviser performs diligence on the Platforms from which the Master Fund purchases alternative lending securities. The Investment Adviser evaluates the process by which each Platform extends loans and loan-related services to borrowers, as well as the characteristics of the loans made available through each Platform. The Master Fund seeks to purchase loans from a Platform that meet certain criteria (such as maturities and durations, borrower and loan types, borrower credit quality and geographic locations of borrowers) and that provide broad exposure to that particular Platform’s loan originations. The Master Fund only invests in or through alternative lending Platforms that will provide the Master Fund with a written commitment to deliver, on an ongoing basis, individual loan-level data that is updated as often as NAV is calculated to reflect updated information regarding the borrower or the loan itself. The Master Fund only invests in loans for which the Investment Adviser can evaluate to its satisfaction the individual loan-level data related to the existence and valuation of the loans and used by the Master Fund for accounting purposes. The Master Fund pursues its investment objective by investing primarily in alternative lending securities, either directly or through one or more wholly-owned and controlled subsidiaries (each, a “Subsidiary”) formed by the Master Fund. These securities typically provide the Master Fund with exposure to loans originated by alternative lending Platforms. The Master Fund invests primarily in whole loans, but also may invest, to a lesser extent, in other types of alternative lending securities, which include: shares, certificates, notes or other securities representing the right to receive principal and interest payments due on whole loans and pools of whole loans (“participation notes”), or fractions of whole loans or pools of whole loans (including “member- dependent payment notes” issued by some public Platforms domiciled in the United States, referred to as “fractional loans” herein); securities issued by special purpose entities that hold either of the foregoing types of alternative lending securities (“asset-backed securities”), including pass-through certificates and securities issued by special purpose entities that hold mortgages (“mortgage- backed securities”); notes evidencing a right to payment; equity or debt securities (publicly or privately offered), including warrants, of alternative lending Platforms or companies that own or operate alternative lending Platforms; and derivative instruments (which may include options, swaps or other derivatives) that provide exposure to any of the investments the Master Fund may make directly or that hedge components of such investments. A large portion of the Master Fund’s investments in loans may be unsecured and have speculative characteristics and therefore may be high risk, including the heightened risk of nonpayment of interest or repayment of principal. Such loans are not secured by any collateral, not guaranteed or insured by any third-party and not backed by any governmental authority in any way. The Master Fund may gain exposure directly or indirectly to loans that are unsecured, secured by a perfected security interest in an enterprise or specific assets of an enterprise or individual borrower, and/or supported by a personal guarantee by individuals related to the borrower. The loans to which the Master Fund gains may pay fixed or variable rates of interest, may have a variety of amortization schedules, may include borrowings that do not require amortization payments (i.e., are interest-only), and may have a term ranging from less than one year to thirty years or longer. This universe of investments is subject to change under varying market conditions and as alternative lending instruments and markets evolve over time. Under normal circumstances, the Master Fund will invest at least 80% of its net assets, plus the amount of any borrowings for investment purposes, directly or indirectly in alternative lending securities. This policy may be changed without shareholder approval; however, you would be notified upon 60 days’ notice in writing of any changes. The Master Fund’s investment objective and strategy are non-fundamental and may be changed without shareholder approval. The Master Fund may, but it is not required to, use derivatives and other similar instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. The Master Fund’s use of derivatives may involve the purchase and sale of derivative instruments such as futures, forwards, swaps, options, contracts for difference (“CFDs”), structured investments and other similar instruments and techniques. The Master Fund may utilize foreign currency forward exchange contracts, which are also derivatives, in connection with its investments in foreign securities. Such derivative transactions may subject the Master Fund to increased risk of principal loss due to unexpected movements in securities prices, interest rates, foreign exchange rates, credit spreads and imperfect correlations between the value of such instruments and the underlying instruments upon which derivatives transactions are based. Further, there can be no guarantee the Master Fund’s hedging activities will effectively offset any adverse impact of foreign exchange, interest rates or credit spread moves. Investment Selection The Investment Adviser seeks to identify attractive alternative lending securities for consideration in connection with investments by the Master Fund. In implementing the Master Fund’s investment program, the Investment Adviser has broad discretion to invest in alternative lending securities of different types and relating to a variety of borrower types and geographic regions (including regions inside and outside the United States), subject to the Master Fund’s stated fundamental policies. The Master Fund’s loan investments are currently sourced from Platforms based in the United States. In the future, the Master Fund’s investments may be sourced, without limitation, from Platforms domiciled outside or underwriting loans outside the United States, including in the United Kingdom and/or Europe (except emerging markets, as determined by the Platforms pursuant to guidelines developed by the Investment Adviser). The guidelines provide that generally, emerging market countries are countries that major international financial institutions (such as the World Bank) generally consider to be less economically mature than developed nations, such as the United States or most nations in Western Europe. Emerging market or developing countries can include every nation in the world except the United States, Canada, Japan, Australia, New Zealand and most countries located in Western Europe. Within each geographic region and borrower type, the Investment Adviser has broad discretion to invest in securities that provide the Master Fund with a variety of exposures, including to risk and return characteristics, loan types, geographies and credit risk bands. Subject to any restrictions under applicable law (including diversification requirements under U.S. federal income tax law applicable to regulated investment companies), the Master Fund is not limited in terms of its exposure to any particular borrower profile or loan terms or characteristics, except as provided in the Master Fund’s stated fundamental policies. There is no stated limit on the percentage of assets the Master Fund may invest in a particular investment or the percentage of assets the Master Fund will allocate to any one loan type, borrower type, loan purpose, geographic region, borrower creditworthiness, term or form of security or guarantee permitted by the Master Fund’s fundamental policies. The Master Fund may, at times, focus its investments on instruments meeting one or more of these criteria. There is currently no active secondary trading market available for many of the loans in which the Master Fund invests and, as a result, the Master Fund may often hold investments to maturity. However, the Master Fund may sell certain of its investments into a securitization and/or to unrelated third parties before maturity in circumstances that the Investment Adviser determines will provide the Master Fund with more attractive pricing, or liquidity at a more rapid pace than is expected from the amortization of the Master Fund’s underlying collateral or from recovery efforts on delinquent or defaulted loans. The Master Fund may make investments in alternative lending securities directly or indirectly through one or more Subsidiaries. Each Subsidiary may invest, for example, in whole loans or in shares, certificates, notes or other securities representing the right to receive principal and interest payments due on whole loans and pools of whole loans (“participation notes”), or fractions of whole loans or pools of whole loans, or any other security that the Master Fund may hold directly. References herein to the Master Fund include references to a Subsidiary in respect of the Master Fund’s exposure to alternative lending securities. Portfolio Construction The alternative lending securities in which the Master Fund invests are loans originated through non-traditional lending Platforms, or securities that provide the Master Fund with exposure to such instruments. Such investments may include the following: Whole Loans. The Master Fund invests primarily in whole loans. When the Master Fund invests directly or indirectly in whole loans, it typically purchases all rights, title and interest in the loans pursuant to a whole loan purchase agreement directly from the Platform or its affiliate. The Platform or a third-party servicer typically continues to service the loans that it originates, collecting payments and distributing them to investors, less any servicing fees assessed against the Master Fund. The servicing entity typically will make all decisions regarding acceleration or enforcement of the loans following any default by a borrower. The Master Fund expects to engage a backup servicer in case any Platform or affiliate of the Platform ceases to exist or fails to perform its servicing functions. The Master Fund, as an investor in a whole loan, would be entitled to receive payment only from the borrower and/or any guarantor, and would not be entitled to recover any deficiency of principal or interest from the Platform if the underlying borrower defaults on its payments due with respect to a loan, except under very narrow circumstances, which may include fraud by the borrower in some cases. As described above, the whole loans in which the Master Fund may invest may be secured or unsecured. Shares, Certificates, Notes or Other Securities. The Master Fund may also invest directly or indirectly in shares, certificates, notes or other securities representing the right to receive principal and interest payments due on whole loans and pools of whole loans (“participation notes”), or fractions of whole loans (“fractional loans”) or pools of whole loans. The Platform (or any separate special purpose entity organized by or on behalf of the Platform) may hold the whole loans underlying such securities on its books and issue to the Master Fund, as an investor, a share, certificate, note or other security, the payments on which track and depend upon the borrower payments on the underlying loans. As with whole loans, the Platforms or third-party servicers typically continue to service the underlying loans on which the performance of such securities is based. Such securities may be linked to any of the types of whole loans in which the Master Fund may invest directly. Such securities may also be participation notes or fractional loans. These securities may be sold through registered public offerings or through unregistered private offerings. Equity Securities. The Master Fund may invest directly or indirectly in public or private equity securities issued by alternative lending Platforms or companies that own or operate alternative lending Platforms (or their affiliates), including common stock, preferred stock, convertible stock and/or warrants. For example, the Master Fund may invest in securities issued by a Platform, which may provide the Platform with the financing needed to support its lending business. An equity interest in a Platform or related entity represents ownership in such company, which may provide voting rights and entitle the Master Fund, as a shareholder, to a share of the company’s success through dividends and/or capital appreciation. The Master Fund may also invest directly or indirectly in equity securities of both foreign and U.S. small and mid-cap companies. The equity investments in which the Master Fund may invest include common stock, preferred stock, rights and warrants and convertible securities. Debt Securities . The Master Fund may invest directly or indirectly in debt securities (including loans) issued by alternative lending Platforms or companies that own or operate alternative lending platforms. The Master Fund may have exposure to the debt securities of U.S. or foreign issuers. These debt securities may have fixed or floating interest rates; may or may not be collateralized; and may be below investment grade or unrated but judged by the Investment Adviser to be of comparable quality (debt securities that are below investment grade are commonly called “junk bonds”). Debt securities are fixed or variable/floating-rate debt obligations, including bills, notes, debentures, money market instruments and similar instruments and securities. Debt is generally used by corporations, individuals, governments and other issuers to borrow money from investors. The issuer pays the investor a fixed or variable rate of interest and normally must repay the amount borrowed on or before maturity. Some debt securities are “perpetual” in that they have no maturity date. The Master Fund has no limits as to the maturity of debt securities in which it invests directly or indirectly. Such investments may be within any maturity range (short, medium or long) depending on the Investment Adviser’s evaluation of investment opportunities available within the debt securities market. Similarly, the Master Fund has no limits as to the market capitalization range of the issuers. A debt investment made by the Master Fund could take the form of a loan, convertible note, credit line or other extension of credit made by the Master Fund to a Platform operator. The Master Fund would be entitled to receive interest payments on its investment and repayment of the principal at a set maturity date or otherwise in accordance with the governing documents. Asset-Backed Securities . The Master Fund may invest in asset-backed securities, which are bonds and other debt securities backed by, or residual equity interests in, pools of alternative lending securities. These investments include bonds or other debt securities issued by special purpose vehicles (“SPVs”) established solely for the purpose of holding alternative lending debt securities and issuing securities (“asset-backed securities”) secured only by such underlying assets (which practice is known as securitization). The Master Fund may invest, for example, in an SPV that holds a pool of loans originated by a particular Platform. The SPV may enter into a service agreement with the operator or a related entity to ensure continued collection of payments, pursuit of delinquent borrowers and general interaction with borrowers in much the same manner as if the securitization had not occurred. The Master Fund may invest in both rated senior classes of asset-backed securities as well as residual classes of pools of alternative lending securities. The subordinated classes of alternative lending securities in which the Master Fund may invest are typically considered to be an illiquid and highly speculative investment, as losses on the underlying assets are first absorbed by the subordinated classes. The SPV may issue multiple classes of asset-backed securities with different levels of seniority. The more senior classes will be entitled to receive payment before the subordinate classes if the cash flow generated by the underlying assets is not sufficient to allow the SPV to make payments on all of the classes of the asset-backed securities. Accordingly, the senior classes of asset-backed securities receive higher credit ratings (if rated) whereas the subordinated classes have higher interest rates. Payments of principal and interest on such bonds and debt securities are dependent upon the cash flows generated by the underlying loans, and therefore these investments are subject to the same types of risks as direct investments in alternative lending securities. Other Asset-Backed Securities. The Master Fund may invest in, and may sell certain of its alternative lending-related investments to, securitization vehicles formed by alternative lending platforms or third parties for the purpose of acquiring alternative lending-related investments and issuing securities the payments on which are funded by payments received on such entities’ underlying investments. Such asset-backed securities, including mortgage-backed securities, may be issued in different tranches of debt and residual equity interests with different rights and preferences. The Master Fund may hold any tranche of such asset-backed securities. The volume and frequency of the Master Fund’s sales of pools of loans to securitization vehicles may increase as more active and reliable secondary market develops over time. Real Estate-Related Assets. The Master Fund may invest in real estate-related assets, including but not limited to equity, debt, and other securities secured by a present or future interest in real property. The Master Fund may hold these investments through many vehicles, including Real Estate Investment Trusts (“REITs”) and Real Estate Mortgage Investment Conduits (“REMICs”) and real estate-linked derivative instruments, including options, swaps, futures, forwards or other derivative instruments. See “Additional Risks–Derivatives.” Tax consequences for Shareholders and the Master Fund depend on the vehicle in which the investments are held. Various factors will influence the vehicle selection, including tax, administrative, and operational considerations. The Investment Adviser, as part of its portfolio construction process, performs diligence on the Platforms from which the Master Fund purchases alternative lending securities in order to evaluate both the process by which each Platform extends loans to borrowers and provides related services and the characteristics of the overall portfolio of loans made available through that Platform. As part of its diligence process, the Investment Adviser monitors on an ongoing basis the underwriting quality of each Platform through which it invests in alternative lending securities, including an analysis of the historical and ongoing “loan tapes” that often include loan underwriting data and actual payment experience for all individual loans originated by the Platform that are comparable to the loans purchased, or to be purchased, by the Master Fund. In addition, the Investment Adviser conducts periodic meetings with the Platforms for purposes of assessing and evaluating the underwriting quality at each Platform for each loan type. Although the Master Fund conducts diligence on the Platforms, the Master Fund generally does not have the ability to independently verify the information provided by the Platforms respecting individual loans and other alternative lending securities, other than certain payment information regarding such instruments owned by the Master Fund, which the Master Fund evaluates as payments are received. The Master Fund monitors the characteristics of the alternative lending securities it purchases on an ongoing basis. Once the Master Fund acquires a loan from a Platform, the Platform provides the Master Fund with certain information to enable the Investment Adviser to monitor the performance of the Master Fund’s overall portfolio and to determine whether such loans comply with the Master Fund’s investment criteria. The Master Fund also periodically reviews certain aspects of the Platforms’ credit models and monitor the Platforms with a view toward ensuring that sound underwriting standards are maintained over time. The Master Fund will not invest in alternative lending securities deemed to be of sub-prime quality at the time of investment pursuant to guidelines developed by the Investment Adviser. “Sub-prime” does not have a specific legal or market definition, but is understood in the credit marketplace to signify that a loan has a material likelihood that it will not be repaid. These guidelines look to a number of borrower-specific factors to determine a borrower’s ability to repay a loan, such as employment status, income, assets, education and credit bureau data where available. The Master Fund may also invest in subordinated classes of loans or other assets, including rated or unrated equity tranches, which may include in the pool consumer loans of sub-prime quality. These investments are typically considered to be illiquid and highly speculative, as they are more sensitive to defaults and realized losses in relation to underlying assets than other tranches and are required to absorb losses before the more senior classes are required to do so. Furthermore, these investments possess credit quality similar to below investment grade securities, which are often referred to as “junk,” and have predominantly speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal. The Master Fund is not required to sell or otherwise dispose of any loan or security that loses its credit rating or has its credit rating reduced after the Master Fund has purchased it. The Master Fund will not invest in payday loans. “Payday loans” are deemed by the Investment Adviser to be a category of sub-prime unsecured consumer loans. Payday loans are typically small-dollar, short term loans that consumer borrowers promise to repay out of their next paycheck or regular income payment. Payday loans are usually priced at a fixed dollar fee, which represents the finance charge to the consumer borrower. Because these loans have relatively short terms to maturity, the cost of borrowing, when annualized, typically produces a very high annual percentage rate. Consumer borrowers who obtain payday loans frequently have limited financial capacity or blemished or insufficient credit histories that limit their access to lower cost borrowing alternatives. Determinations as to the eligibility of loans for purchase by the Master Fund are made pursuant to guidelines developed by the Investment Adviser and implemented by the Platforms. The Master Fund may also pursue its investment objective by investing in equity or debt securities issued by real estate investment trusts (“REITs”), pooled investment vehicles that invest in REITs, or through real estate mortgage investment conduits (“REMICs”). REITs and REMICs are pooled real estate investment vehicles that own, an | |
| Risk Factors [Table Text Block] | Risk Considerations Risk is inherent in all investing. Investors should carefully consider the Fund’s risks and investment objective, as an investment in the Fund may not be appropriate for all investors and is not designed to be a complete investment program. The risks below include risks associated with investments in the Master Fund specifically, as well as risks generally associated with investment in a fund with investment objectives, investment policies, capital structure or trading markets similar to the Master Fund’s. An investment in the Fund involves a high degree of risk. It is possible that investing in the Fund may result in a loss of some or all of the amount invested. Therefore, before investing, you should consider carefully the following risks that you assume when you invest in the Fund’s Shares. The Fund, through its investment in the Master Fund, is subject to the principal risks noted below, whether through the Master Fund’s direct investments, investments through a Subsidiary or derivatives positions. As with any investment company, there is no guarantee that the Master Fund, and thus the Fund, will achieve its investment objective. You could lose all or part of your investment in the Fund, and the Fund could underperform other investments. Alternative Lending Risk Considerations Loans may carry risk and be speculative . Loans are risky and speculative investments. The loans are obligations of the borrower and depend entirely for payment on receipt of payments by a borrower. If a borrower fails to make any payments, the amount of interest payments received by the Master Fund will be reduced. Many of the loans in which the Master Fund invests are unsecured personal loans. However, the Master Fund may invest in business and specialty finance, including secured loans. If borrowers do not make timely payments of the interest due on their loans, the yield on the Master Fund’s Shares will decrease. If borrowers do not make timely payment of the principal due on their loans, or if the value of such loans decreases, the Master Fund’s NAV will decrease. Uncertainty and negative trends in general economic conditions in the United States and abroad, including significant volatility in credit markets, historically have created a difficult environment for companies in the lending industry. Many factors may have a detrimental impact on the Platforms’ operating performance and the ability of borrowers to pay principal and interest on loans. These factors include general economic conditions, unemployment levels, energy costs and interest rates, as well as events such as natural disasters, acts of war, terrorism and catastrophes. Risks related to alternative lending securities include: Prepayment Risk . Borrowers may have the option to prepay all or a portion of the remaining principal amount due under a borrower loan at any time without penalty. In the event of a prepayment of the entire remaining unpaid principal amount of a borrower loan in which the Master Fund invests, the Master Fund will receive such prepayment but further interest will not accrue on such loan after the date of the prepayment. If the borrower prepays a portion of the remaining unpaid principal balance, interest will cease to accrue on the prepaid portion, and the Master Fund will not receive all of the interest payments that it expected to receive. When interest rates fall, certain obligations will be paid off by the obligor more quickly than originally anticipated, and the Master Fund may have to invest the proceeds in loans or other securities with lower yields. In periods of falling interest rates, the rate of prepayments tends to increase (as does price fluctuation), as borrowers are motivated to pay off debt and refinance at new lower rates. During such periods, reinvestment of the prepayment proceeds by the Master Fund will generally be at lower rates of return than the return on the assets that were prepaid, which may result in a decline in the Master Fund’s income and distributions to Shareholders. Prepayment reduces the yield to maturity and the average life of a loan or other security. Interest Rate Risk . Interest rate risk is the risk that investments will decline in value because of changes in market interest rates. When interest rates rise the market value of a loan or other debt securities generally will fall, and when interest rates fall the market value of such securities generally rise. The Master Fund’s investment in such securities means that the NAV and market price of the Shares may decline if market interest rates rise. The Master Fund may face a heightened level of interest rate risk in times of monetary policy change and/or uncertainty, such as when the Federal Reserve Board adjusts a quantitative easing program and/or changes rates. A changing interest rate environment increases certain risks, including the potential for periods of volatility, increased redemptions, shortened durations (i.e., prepayment risk) and extended durations (i.e., extension risk). Investments in loans or other debt securities with long-term maturities may experience significant price declines if long-term interest rates increase. This is known as maturity risk. The value of the Master Fund’s investments in common shares or other equity securities may also be influenced by changes in interest rates. Investments in variable rate loans or other debt instruments, although generally less sensitive to interest rate changes than longer duration fixed rate instruments, may nevertheless decline in value in response to rising interest rates if, for example, the rates at which they pay interest do not rise as much, or as quickly, as market interest rates in general. Conversely, variable rate instruments will not generally increase in value if interest rates decline. Synthetic variable rate debt instruments include the additional risk that the derivatives transactions used to convert a fixed interest rate into a variable interest rate may not work as effectively as intended, such that the Master Fund is worse off than if it had invested directly in variable rate debt instruments. Inverse variable rate debt securities may also exhibit greater price volatility than a fixed-rate debt obligation with similar credit quality. To the extent the Master Fund holds variable rate instruments, a decrease (or, in the case of inverse variable rate securities, an increase) in market interest rates will adversely affect the income received from such securities and the NAV of the Shares. Default Risk . Loans have substantial vulnerability to default in payment of interest and/or repayment of principal. In addition, at times the repayment of principal or interest may be delayed. Certain of the loans in which the Master Fund may invest have large uncertainties or major risk exposures to adverse conditions, and should be considered to be predominantly speculative. Loan default rates may be significantly affected by economic downturns or general economic conditions beyond the Master Fund’s control. In particular, default rates on loans may increase due to factors such as prevailing interest rates, the rate of unemployment, the level of consumer confidence, residential real estate values, currency values, energy prices, changes in consumer spending, the number of personal bankruptcies, disruptions in the credit markets and other factors. The significant downturn in the global economy that occurred several years ago caused default rates on consumer loans to increase. The default history for loans may differ from that of the Master Fund’s investments. Loan losses (which may include both defaults and charge-offs) differ across Platforms and by loan type. Platforms in which the Master Fund invests may experience significant cumulative loan losses, particularly for lower-rated, higher risk loans. The default history for loans sourced via Platforms is limited, actual defaults may be greater than indicated by historical data and the timing of defaults may vary significantly from historical observations. Generally, in a rising interest rate environment, default rates may increase compared to their historical averages. The Platforms make payments ratably on an investor’s investment only if they receive the borrower’s payments on the corresponding loan. If the Platforms do not receive payments on the corresponding loan related to an investment, the investor will not be entitled to any payments under the terms of the investment. Further, investors may have to pay a Platform an additional servicing fee for any amount recovered on a delinquent loan and/or by the Platform’s third-party collection agencies assigned to collect on the loan. The Master Fund may be limited in its ability to recover any outstanding principal and interest under the loans because substantially all of the loans may be unsecured or undercollateralized, the loans will not be guaranteed or insured by any third-party or backed by any governmental authority, legal enforcement of the loans may be impracticable due to the relatively small size of the loans and the Master Fund will not have the ability to directly enforce creditors’ rights under the loans. If borrowers do not make timely payment of the principal due on their loans, or if the value of such loans decreases, the Fund’s NAV will decrease. Uncertainty and negative trends in general economic conditions in the United States and abroad, including significant volatility in credit markets, historically have created a difficult environment for companies in the lending industry. Many factors may have a detrimental impact on the Platforms’ operating performance and the ability of borrowers to pay principal and interest on loans. These factors include general economic conditions, unemployment levels, energy costs and interest rates, as well as events such as natural disasters, acts of war, terrorism and catastrophes. The interest rate, timing of payments or the overall amount to be repaid, of a loan the Fund holds may be altered in the discretion of the loan servicer or by operation of law or regulation. This risk may be particularly acute during periods of market dislocation, including but not limited to the dislocations caused by the impact of COVID-19 and/or the regulations and restricted imposed to limit its spread. Any such modification could adversely affect Fund performance by, among other things, delaying the receipt of payments, reducing the overall amount to be repaid by the borrower, or otherwise lowering the value of the credit. The Fund will typically have no ability to modify loans itself or to limit the authority of the servicing entity to do so. Credit Risk . Credit risk is the risk that a borrower or an issuer of a debt security or preferred stock, or the counterparty to a derivatives contract, will be unable to make interest, principal, dividend, or other payments when due. In general, lower rated securities carry a greater degree of credit risk. If rating agencies lower their ratings of securities in the Master Fund’s portfolio or if the credit standing of borrowers of loans in the Master Fund’s portfolio decline, the value of those obligations could decline. In addition, the underlying revenue source for a debt security, a preferred stock or a derivatives contract may be insufficient to pay interest, principal, dividends or other required payments in a timely manner. Because a significant primary source of cash available for income distributions by the Master Fund is the interest, principal and other payments on loans in which it invests, any default by a borrower could have a negative effect on the Master Fund’s ability to pay dividends on Shares and/or cause a decline in the value of Master Fund assets. Even if the borrower or issuer does not actually default, adverse changes in the borrower’s or issuer’s financial condition may negatively affect the borrower’s or issuer’s credit ratings or presumed creditworthiness. These developments would adversely affect the market value of the borrower’s or issuer’s obligations or the value of credit derivatives if the Master Fund has sold credit derivatives. Risk of Unsecured Loans . Many of the Master Fund’s investments are associated with loans that are unsecured obligations of borrowers. This means that they are not secured by any collateral, not insured by any third party, not backed by any governmental authority in any way and typically not guaranteed by any third party. When a borrower defaults on an unsecured loan, the holder’s only recourse is generally to sell the holder’s rights to principal or interest recovered at a discount to face value, or to accelerate the loan and enter into litigation to recover the outstanding principal and interest. There is no assurance that such litigation would result in full repayment of the loan and the costs of such measures may frequently exceed the outstanding unpaid amount of the borrowing. The Master Fund generally needs to rely on the efforts of the Platforms, servicers or their designated collection agencies to collect on defaulted loans and there is no guarantee that such parties will be successful in their efforts to collect on loans. In addition, the Master Fund’s investments in shares, certificates, notes or other securities representing an interest in a special purpose entity organized by an alternative lending Platform and the right to receive principal and interest payments due on whole loans, participation notes or fractional loans owned by such entity are typically unsecured obligations of the issuer. As a result, the Master Fund generally may not look to the underlying loans to satisfy delinquent payments on such interests, even though payments on such interests depend entirely on payments by underlying borrowers on their loans. Competition and Risks of Locating Suitable Investments; Ramp-Up Period . The success of the Master Fund depends on the Investment Adviser’s ability to identify and make suitable investments. The business in which the Master Fund operates, however, is highly competitive, rapidly changing and involves a high degree of risk. The Master Fund competes with a number of other sources of capital having an investment objective similar to those of the Master Fund. Some of the Master Fund’s competitors may have higher risk tolerance or different risk assessments. These characteristics could allow the Master Fund’s competitors to consider a wider variety of investments, establish more relationships and pay more competitive prices for investments than the Master Fund is able to. The Master Fund may lose investment opportunities if it does not match its competitors’ pricing and terms. If the Master Fund is forced to match its competitors’ pricing, it may not be able to achieve acceptable returns on its investments or may bear substantial risk of capital loss. A significant increase in the number and/or the size of the Master Fund’s competitors could force it to accept less attractive investment terms. Furthermore, many of the Master Fund’s competitors are not subject to the regulatory restrictions that the 1940 Act and other regulations impose on it as a closed-end fund. Furthermore, there is a risk that the Master Fund will not be able to deploy its capital or reinvested capital in a timely or efficient manner given the increased demand for suitable loans. The rate of reinvestment of such capital would be contingent on the availability of suitable inventory at that time. The Master Fund may be unable to find a sufficient number of attractive loans to meet its investment objective. The Master Fund depends on the Platforms’ ability to attract and identify sufficient borrower members to meet investor demand. If there are not sufficient qualified loan requests, the Master Fund may be unable to deploy or reinvest its capital in a timely or efficient manner. In such event, the Master Fund may be forced to invest in cash, cash equivalents, or other assets that fall within its investment policy, all of which generally offer lower returns than the Master Fund’s target returns from investments in loans. The Master Fund invests cash held in cash deposits, cash equivalents and fixed income instruments for cash management purposes. Interim cash management is likely to yield lower returns than the expected returns from investments. While the Master Fund expects it will be able to invest at least 80% of its net assets, plus the amount of any borrowings for investment purposes, directly or indirectly in alternative lending securities and other securities that meet the Master Fund’s investment objective and policies within three months after the receipt of proceeds from the offering, there are no assurances that there will be sufficient suitable loans in which to invest the Master Fund’s proceeds within this time frame. Moreover, there can be no assurance as to how long it will take for the Master Fund to invest any or all of the net proceeds of the offering, if at all, and the longer the period the greater the likelihood that the Master Fund’s performance will be materially adversely affected. Platform Risk . The Master Fund is highly dependent on the Platforms for loan data, origination, sourcing and servicing. Alternative lending is a relatively new lending method. The interest rates on loans are generally fixed by the Platforms on the basis of an analysis of the borrower’s credit. The analysis is done through credit decisions and scoring models that may prove to be inaccurate, be based on false, misleading or inaccurate information, be subject to programming or other errors and/or be ineffective entirely. Further, the Master Fund’s Investment Adviser may not be able to perform any independent follow-up verification on borrowers. As a general matter, borrowers assessed as having a higher risk of default are assigned higher rates. The Master Fund’s investment in any loan is not protected by any government guarantee. The Platforms are for-profit businesses; they typically generate revenue by collecting a one-time fee on funded loans from borrowers or investors, by selling loans at a premium and/or by assessing a loan servicing fee to investors such as the Master Fund (typically a fixed amount annually, a percentage of the loan amount or a percentage of cash flows). Bankruptcy of the Platform that facilitated a loan may also put the Master Fund’s investment at risk. An investor may become dissatisfied with the Platform’s marketplace if a loan underlying its investment is not repaid and it does not receive full payment. As a result, such Platform’s reputation may suffer and the Platform may lose investor confidence, which could adversely affect investor participation on the Platform’s marketplace. When transacting on certain Platforms, the Master Fund may be required to advance cash to be held in a clearing account for a short time before the loan is transferred to the Master Fund in return for an irrevocable right to receive a loan from a Platform. In the event of the bankruptcy or insolvency of the Platform, the Master Fund may sustain losses and/or experience significant delays in obtaining any recovery in a bankruptcy or other reorganization proceeding. The Master Fund will engage a backup servicer in the event that any Platform or servicing affiliate of the Platform ceases to exist or fails to perform its servicing functions. The Platforms have encountered and will continue to encounter risks, uncertainties, expenses and difficulties, including: navigating complex and evolving regulatory and competitive environments; increasing the number of borrowers and investors utilizing their marketplace; increasing the volume of loans facilitated through their marketplace and transaction fees received for matching borrowers and investors through their marketplace; entering into new markets and introducing new loan products; continuing to revise the marketplace’s proprietary credit decisions and scoring models; continuing to develop, maintain and scale their Platforms; effectively using limited personnel and technology resources; effectively maintaining and scaling their financial and risk management controls and procedures; maintaining the security of the Platform and the confidentiality of the information provided and utilized across the Platform; and attracting, integrating and retaining an appropriate number of qualified employees. If Platforms are not able to effectively address these requirements in a timely manner, the Platforms’ businesses and the results of their operations may be harmed, which may reduce the possible available investments for the Master Fund. Multiple banks may originate loans for the Platforms. If such a bank were to suspend, limit or cease its operations, or a Platform’s relationship with a bank were to otherwise terminate, such Platform would need to implement a substantially similar arrangement with another funding bank, obtain additional state licenses or curtail its operations. Transitioning loan originations to a new funding bank is untested and may result in delays in the issuance of loans or may result in a Platform’s inability to facilitate loans. If a Platform is unable to enter in an alternative arrangement with a different funding bank, the Platform would need to obtain a state license in each state in which it operates in order to enable it to originate loans, as well as comply with other state and federal laws, which would be costly and time-consuming. If a Platform is unsuccessful in maintaining its relationships with the funding banks, its ability to provide loan products could be materially impaired and its operating results would suffer. The Master Fund is dependent on the continued success of the Platforms that originate the Master Fund’s loans. If such Platforms were unable or impaired in their ability to operate their lending business, the Investment Adviser may be required to seek alternative sources of investments (e.g., loans originated by other Platforms), which could adversely affect the Master Fund’s performance and/or prevent the Master Fund from pursuing its investment objective and strategies. As discussed above, the Platforms make payments ratably on an investor’s investment only if they receive the borrower’s payments on the corresponding loan. There may be a delay between the time the Platform receives a borrower’s principal and interest payments and distributes the proceeds to investors, including the Master Fund. This time delay may, among other things, adversely affect the valuation of the Master Fund’s portfolio or prevent the Master Fund from taking advantage of certain investment opportunities. The Platforms depend on debt facilities and other forms of debt in order to finance most of the loans they make to their customers. However, these financing sources may not continue to be available beyond the current maturity date of each debt facility, on reasonable terms or at all. As the volume of loans that a Platform makes to customers increases, it may require the expansion of its borrowing capacity on its existing debt facilities and other debt arrangements or the addition of new sources of capital. The availability of these financing sources depends on many factors, some of which are outside of the Platform’s control. The Platforms may also experience the occurrence of events of default or breaches of financial or performance covenants under their debt agreements, which could reduce or terminate their access to institutional funding. Security breaches of customers’ confidential information that the Platforms store may harm a Platform’s or the Master Fund’s reputation and expose them to liability. The collection, processing, storage, use and disclosure of personal data could give rise to liabilities as a result of governmental regulation, conflicting legal requirements or differing views of personal privacy rights. A Platform’s ability to collect payment on loans and maintain accurate accounts may be adversely affected by computer viruses, physical or electronic break-ins, technical errors and similar disruptions. A Platform and its internal systems rely on software that is highly technical, and if it contains undetected errors, the Platform’s business could be adversely affected. A Platform may rely on data centers to deliver its services. Any disruption of service at these data centers could interrupt or delay a Platform’s ability to deliver its service to its customers. The Platforms’ businesses are subject to the risks of earthquakes, fire, power outages, floods and other catastrophic events, and to interruption by man-made problems such as strikes and terrorism. Demand for the Platforms’ loans may decline if they do not continue to innovate or respond to evolving technological changes. A Platform may evaluate, and potentially consummate, acquisitions, which could require significant management attention, disrupt the Platform’s business, and adversely affect its financial results. Because some investors may come to a Platform’s website via hyperlinks from websites of referral partners, it is possible that an unsatisfied investor could make a claim against such Platform based on the content of these third-party websites that could result in claims that are costly to defend and distracting to management. A Platform may be sued by third parties for alleged infringement of their proprietary rights, which could harm such Platform’s business. It may be difficult and costly to protect the Platforms’ intellectual property rights, and a Platform may not be able to ensure its protection. Some aspects of a Platform may include open source software, and any failure to comply with the terms of one or more of these open source licenses could negatively affect a Platform’s business. Online lending is a new industry operating in an unsettled legal environment. Participants may be subject in certain cases to higher risk of litigation alleging violations of federal and state laws and regulations and consumer law torts, including fraud. There is a risk that should regulatory or legal action be concluded in the favor of borrowers, the Master Fund may be required to modify the terms of its loans and potentially realize a loss or a lower return on its investments. In the event that the number of Platforms through which the Master Fund invests were to be limited in number, whether due to termination of existing agreements or failure to secure agreements or other terms with other Platforms, the Master Fund may be subject to certain risks associated with investing through a small number of Platforms. Investing in a limited number of Platforms and/or in loans that were originated using a particular Platform’s borrower credit criteria exposes the Master Fund’s investments to a greater risk of default and risk of loss. The fewer Platforms through which the Master Fund invests in or acquires loans, the greater the risks associated with those Platforms changing their arrangements will become. For instance, the Platforms may change their underwriting and credit models, borrower acquisition channels and quality of debt collection procedures in ways which may make such loans unsuitable for investment by the Master Fund. From time to time the Master Fund may enter into arrangements with one or more Platforms that, depending on market circumstances, may make sourcing from any particular Platform more or less attractive relative to its peers. In addition, a Platform may become involved in a lawsuit, which may adversely impact that Platform’s performance and reputation and, in turn, the Master Fund’s portfolio performance. Servicer Risk . The Master Fund expects that all of its direct and indirect investments in loans originated by alternative lending Platforms will be serviced by a Platform or a third-party servicer. In the event that the servicer is unable to service the loan, there can be no guarantee that a backup servicer will be able to assume responsibility for servicing the loans in a timely or cost-effective manner; any resulting disruption or delay could jeopardize payments due to the Master Fund in respect of its investments or increase the costs associated with the Master Fund’s investments. If the servicer becomes subject to a bankruptcy or similar proceeding, there is some risk that the Master Fund’s investments could be re-characterized as a secured loan from the Master Fund to the Platform, as described more fully (with respect to the potential bankruptcy of a Platform) under “Risks Relating to Compliance and Regulation of Online Lending Participants in the United States,” which could result in uncertainty, costs and delays from having the Master Fund’s investment deemed part of the bankruptcy estate of the Platform, rather than an asset owned outright by the Master Fund. Potential Inaccuracy of Information Supplied by Prospective Borrowers . The Master Fund is dependent on the Platforms to collect and verify certain information about each loan and prospective borrower. Prospective borrowers supply a variety of information regarding the purpose of the loan, income, occupation and employment status that is included in the Platforms’ underwriting. As a general matter, the Platforms may not verify the majority of this information, which may be incomplete, inaccurate, false or misleading. Prospective borrowers may misrepresent any of the information they provide to the Platforms, including their intentions for the use of loan proceeds. As a general matter, the Platforms may not verify any statements by prospective borrowers as to how loan proceeds are to be used nor confirm after loan funding how loan proceeds were used. To the extent false, misleading or incomplete information was supplied, it could adversely affect the Master Fund’s income and distributions to Shareholders. Risks Associated with the Platforms’ Credit Scoring Models . A prospective borrower is assessed by a Platform based on a number of factors, such as the borrower’s credit score and credit history. Credit scores are produced by third-party credit reporting agencies based on a borrower’s credit profile, including credit balances, available credit, timeliness of payments, average payments, delinquencies and account duration. This data is furnished to the credit reporting agencies by the creditors. A credit score or loan grade assigned to a borrower member by a Platform may not reflect that borrower’s actual creditworthiness because the credit score may be based on outdated, incomplete or inaccurate reporting data. The Platforms’ credit decisions and scoring models are based on algorithms that could potentially contain programming or other errors, prove to be ineffective, or the data provided by borrowers or third parties may be incorrect or stale. If any of this occurs, loan pricing and approval processes could be negatively affected, resulting in mispriced or misclassified loans, which could ultimately have a negative impact on the Master Fund’s income and distributions to Shareholders. Additionally, it is possible that following the date of any credit information received, a borrower member may have become delinquent in the payment of an outstanding obligation, defaulted on a pre-existing debt obligation, taken on additional debt, applied simultaneously for a loan through multiple Platforms, or sustained other adverse financial or life events resulting in a reduction in the borrower’s creditworthiness. Also, if this information becomes unavailable or becomes more expensive to access, it could increase the Platforms’ costs as they seek alternative sources of information. In performing its credit analysis, each Platform will be reliant on the borrower’s credit information, which may be out of date, incomplete or inaccurate. In addition, for consumer loans, the Platforms will likely not have access to consolidated financial statements or other financial information about the borrowers, and the information supplied by borrowers may be inaccurate or intentionally false. Unlike traditional lending, the Platforms will not be able to perform any independent follow-up verification with respect to a borrower member, as the borrower member’s name, address and other contact details remain confidential. Because of these factors, the Investment Adviser may make investment decisions based on outdated, inaccurate or incomplete information. Risk of Increase in Consumer Credit Default Rates. The Master Fund’s investment strategy and valuation of portfolio investments is dependent on projected consumer default rates. Because alternative lending Platforms are relatively new, defa | |
| Effects of Leverage [Text Block] | Effects of Leverage The following table is furnished in response to requirements of the SEC. It is designed to illustrate the effect of leverage on Shares total return, assuming investment portfolio total returns (comprised of income and changes in the value of securities held in the Master Fund’s portfolio) of -10%, -5%, 0%, 5% and 10%. Specifically, the table is intended to illustrate the amplified effect leverage may have on Shares total returns based on the performance of the Master Fund’s underlying assets, i.e., gains or losses will be greater than they otherwise would be without the use of leverage. These assumed investment portfolio returns are hypothetical figures and are not necessarily indicative of the investment portfolio returns experienced or expected to be experienced by the Master Fund. See “Risk Considerations.” The table further reflects the issuance of leverage through credit facilities representing 25.66% of the Managed Assets at an annual interest rate expense to the Master Fund of 6.79% . The Shares must experience an annual return of 2.34% in order to cover the annual interest expense. Assumed Return on Portfolio (Net of Expenses) -10% -5% 0% 5% 10% Corresponding Return to Shareholder -15.80% -9.07% -2.34% 4.38% 11.11% Total return is composed of two elements: the Master Fund’s net investment income after paying the carrying cost of leverage and gains or losses on the value of the securities the Master Fund owns. As required by SEC rules, the table above assumes that the Master Fund is more likely to suffer capital losses than to enjoy capital appreciation. For example, to assume a total return of 0% the Master Fund must assume that the interest it receives on its debt security investments is entirely offset by losses in the value of those investments. If the Master Fund uses leverage, the amount of fees paid to the Investment Adviser for management services will be higher than if the Master Fund does not use leverage because the Management Fee paid is calculated based on the Managed Assets, which include assets purchased with leverage. Therefore, the Investment Adviser has a financial incentive to use leverage, which creates a conflict of interest between the Investment Adviser and the Shareholders, as only the Shareholders would bear the fees and expenses incurred through the Master Fund’s use of leverage. | |
| Annual Interest Rate [Percent] | 6.79% | |
| Annual Coverage Return Rate [Percent] | 2.34% | |
| Effects of Leverage [Table Text Block] | Assumed Return on Portfolio (Net of Expenses) -10% -5% 0% 5% 10% Corresponding Return to Shareholder -15.80% -9.07% -2.34% 4.38% 11.11% | |
| Return at Minus Ten [Percent] | (15.80%) | |
| Return at Minus Five [Percent] | (9.07%) | |
| Return at Zero [Percent] | (2.34%) | |
| Return at Plus Five [Percent] | 4.38% | |
| Return at Plus Ten [Percent] | 11.11% | |
| Effects of Leverage, Purpose [Text Block] | The following table is furnished in response to requirements of the SEC. It is designed to illustrate the effect of leverage on Shares total return, assuming investment portfolio total returns (comprised of income and changes in the value of securities held in the Master Fund’s portfolio) of -10%, -5%, 0%, 5% and 10%. Specifically, the table is intended to illustrate the amplified effect leverage may have on Shares total returns based on the performance of the Master Fund’s underlying assets, i.e., gains or losses will be greater than they otherwise would be without the use of leverage. These assumed investment portfolio returns are hypothetical figures and are not necessarily indicative of the investment portfolio returns experienced or expected to be experienced by the Master Fund. See “Risk Considerations.” The table further reflects the issuance of leverage through credit facilities representing 25.66% of the Managed Assets at an annual interest rate expense to the Master Fund of 6.79% . The Shares must experience an annual return of 2.34% in order to cover the annual interest expense. | |
| Capital Stock, Long-Term Debt, and Other Securities [Abstract] | ||
| Security Voting Rights [Text Block] | Each Shareholder has the right to cast a number of votes equal to the number of Shares held by such Shareholder at a meeting of Shareholders called by the Fund’s Board of Trustees. Shareholders will be entitled to vote on any matter on which shareholders of a registered investment company organized as a corporation would be entitled to vote, including certain elections of a Trustee and approval of the Investment Advisory Agreement, in each case to the extent that voting by Shareholders is required by the 1940 Act. Notwithstanding their ability to exercise their voting privileges, Shareholders in their capacity as such are not entitled to participate in the management or control of the Fund’s business, and may not act for or bind the Fund. Whenever the Fund as a shareholder in the Master Fund is requested to vote on matters pertaining to the Master Fund (other than the termination of the Master Fund’s business, which may be determined by the Board of Trustees of the Master Fund without shareholder approval) the Fund will hold a meeting of the Shareholders and vote its interest in the Master Fund for or against such matters proportionately to the instructions to vote for or against such matters received from the Shareholders. The Fund shall vote Shares for which it receives no voting instructions in the same proportion as the Shares for which it receives voting instructions. | |
| Legal and Regulatory Risk - General [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Legal and Regulatory Risk – General . Legal, tax and regulatory changes could occur and may adversely affect the Master Fund, and thus the Fund, and its ability to pursue its investment strategies and/or increase the costs of implementing such strategies. The regulation of U.S. and non-U.S. securities and investment funds, such as the Master Fund, has undergone substantial changes in recent years, and such change may continue. New (or revised) laws or regulations may be imposed by U.S. Congress, the Commodity Futures Trading Commission (“CFTC”), the Securities and Exchange Commission (“SEC”), the U.S. Federal Reserve or other banking regulators, the U.S. Department of Labor, other regulatory authorities or self-regulatory organizations that supervise the financial markets that could adversely affect the Master Fund. The Master Fund also may be adversely affected by changes in the enforcement or interpretation of existing statutes and rules by these regulatory authorities or self-regulatory organizations. In addition, the securities and futures markets are subject to comprehensive statutes and regulations. The CFTC, the SEC, the Federal Deposit Insurance Corporation, other regulators and self-regulatory organizations and exchanges are authorized under these statutes, regulations and otherwise to take extraordinary actions in the event of market emergencies. The Fund, the Master Fund and the Investment Adviser are eligible for exemptions from certain regulations. However, there is no assurance that the Fund, the Master Fund and the Investment Adviser will continue to be eligible for such exemptions. For example, the Investment Adviser has claimed an exclusion from the definition of the term “commodity pool operator” (“CPO”) with regard to the operation of the Fund and the Master Fund pursuant to Regulation 4.5 promulgated by the CFTC under the Commodity Exchange Act of 1936, as amended (“CEA”). To continue to qualify for the exclusion under CFTC Regulation 4.5, the aggregate initial margin and premiums required to establish positions in CEA-regulated derivative instruments (other than positions entered into for “bona fide hedging purposes”) may not exceed five percent of each of the Fund’s and the Master Fund’s liquidation value or, alternatively, the net notional value of each of the Fund’s and the Master Fund’s aggregate investments in CEA-regulated derivative instruments (other than positions entered into for “bona fide hedging purposes”) may not exceed 100% of each of the Fund’s and the Master Fund’s liquidation value. In the event the Investment Adviser fails to qualify for the exclusion and the Investment Adviser is required to operate the Fund and the Master Fund in its capacity as a registered CPO, it will become subject to additional disclosure, recordkeeping and reporting requirements with respect to the Fund and the Master Fund, which may increase both the Fund’s and the Master Fund’s expenses. The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) establishes rigorous oversight standards for the U.S. economy, market participants and businesses. As the implementation of the Dodd-Frank Act continues, its full impact on the Master Fund and the ability of the Master Fund to meet its investment objective is unknown. The effect of the Dodd-Frank Act or other regulatory changes on the Master Fund could be substantial and may adversely affect the Master Fund’s performance. The implementation of the Dodd-Frank Act could also adversely affect the Investment Adviser and the Master Fund by increasing transaction and/or regulatory compliance costs. In addition, greater regulatory scrutiny and the implementation of enhanced and new regulatory requirements may increase the Investment Adviser’s and the Master Fund’s exposure to potential liabilities, and in particular liabilities arising from violating any such enhanced and/or new regulatory requirements. Increased regulatory oversight could also impose administrative burdens on the Investment Adviser and the Master Fund, including, without limitation, responding to investigations and implementing new policies and procedures. The Dodd-Frank Act and related regulations have had a significant impact on the trading and use of many derivative instruments, and derivative dealers and their counterparties have become subject to new business conduct standards and disclosure requirements, reporting and recordkeeping requirements, transparency requirements, position limits, margin requirements and other regulatory burdens. These new regulatory and margin requirements may increase the overall costs for derivatives dealers and their counterparties and may also render certain strategies in which the Master Fund might otherwise engage impossible or so costly that they will no longer be economical to implement. Derivatives dealers can be expected to try to pass those increased costs along, at least partially, to market participants such as the Master Fund in the form of higher fees or less advantageous dealer marks. The ultimate impact of the Dodd-Frank Act, and any resulting regulation, is not yet certain and the Investment Adviser and the Master Fund may be affected by the new legislation and regulation in ways that are currently unforeseeable. The federal interagency credit risk retention rules (the “U.S. Risk Retention Rules”) require the “sponsor” of a “securitization transaction” to retain (either directly or through its “majority-owned affiliates”) not less than 5% of the “credit risk” of the assets collateralizing the related asset-backed securities. The U.S. Risk Retention Rules became effective on December 24, 2016 with respect to asset-backed securities collateralized by assets other than residential mortgages. As a result, the failure of a “sponsor” to comply with the U.S. Risk Retention Rules may have a material and adverse effect on the market value and/or liquidity of any securities held by the Fund in regards to related securitizations of such sponsoring entity. As internet commerce continues to evolve, increasing regulation by U.S. federal and state governments becomes more likely. Platforms may be negatively affected by the application of existing laws and regulations or the enactment of new laws applicable to online lending. In addition, federal and state governmental or regulatory agencies may decide to impose taxes on services provided over the Internet. These taxes could discourage the use of the Internet as a means of consumer lending, which would adversely affect the viability of the Platforms. As a result, the Master Fund’s performance would be negatively impacted by the non-viability of any or all of the Platforms in whose loans it has invested. In recent years, there appears to be a renewed popular, political and judicial focus on finance-related consumer protection. Financial institution practices are also subject to greater scrutiny and criticism generally. In the case of transactions between financial institutions and the general public, there may be a greater tendency toward strict interpretation of terms and legal rights in favor of the consuming public, particularly where there is a real or perceived disparity in risk allocation and/or where consumers are perceived as not having had an opportunity to exercise informed consent to the transaction. In the event of conflicting interests between individual loan borrowers and an originating platform or the Master Fund, a court may similarly seek to strictly interpret terms and legal rights in favor of individual borrowers, which could negatively impact the Master Fund to the extent the Master Fund invested in such loans. | |
| General Risks of Securities Activities [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | General Risks of Securities Activities. All securities investing and trading activities risk the loss of capital. Although the Investment Adviser will attempt to moderate these risks, no assurance can be given that the Master Fund’s investment activities will be successful or that Shareholders will not suffer losses. Following below are some of the more significant specific risks that the Investment Adviser believes are associated an investment in the Master Fund: | |
| Currencies [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Currencies. The Master Fund may invest a portion of its assets in non-U.S. currencies, or in instruments denominated in non-U.S. currencies, the prices of which are determined with reference to currencies other than the U.S. dollar. To the extent unhedged, the value of the Master Fund’s assets will fluctuate with U.S. dollar exchange rates, as well as the price changes of its investments in the various local markets and currencies. Thus, an increase in the value of the U.S. dollar compared to the other currencies in which the Master Fund makes its investments will reduce the effect of increases, and magnify the effect of decreases, in the prices of securities denominated in currencies other than the U.S. dollar and held by the Master Fund in such securities’ respective local markets. Conversely, a decrease in the value of the U.S. dollar will have the opposite effect on the non-U.S. dollar securities of the Master Fund. In addition, some governments from time to time impose restrictions intended to prevent capital flight, which may for example involve punitive taxation (including high withholding taxes) on certain securities transfers or the imposition of exchange controls making it difficult or impossible to exchange or repatriate the local currency. Currency exchange rates may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates and overall economic health of the issuer. Devaluation of a currency by a country’s government or banking authority will also have a significant impact on the value of any investments denominated in that currency. The Master Fund may also incur costs in connection with conversion between various currencies. In addition, the Master Fund may be denominated in non-U.S. currencies. Subscription amounts contributed in non-U.S. currencies will be converted from U.S. dollars into the applicable foreign currency at the then applicable exchange rate determined by and available to the Investment Adviser. In certain cases, depending on the applicable circumstances, the exchange rate obtained by the Investment Adviser may be less advantageous to the Master Fund than other rates available to the Master Fund directly. The Master Fund may enter into foreign currency forward exchange contracts for hedging and non-hedging purposes in pursuing its investment objective. Foreign currency forward exchange contracts are transactions involving the Master Fund’s obligation to purchase or sell a specific currency at a future date at a specified price. Foreign currency forward exchange contracts may be used by the Master Fund for hedging purposes to protect against uncertainty in the level of future non-U.S. currency exchange rates, such as when the Master Fund anticipates purchasing or selling a non-U.S. security. This technique would allow the Master Fund to “lock in” the U.S. dollar price of the security. Foreign currency forward exchange contracts may also be used to attempt to protect the value of the Master Fund’s existing holdings of non-U.S. securities. Imperfect correlation may exist, however, between the Master Fund’s non-U.S. securities holdings and the foreign currency forward exchange contracts entered into with respect to those holdings. The precise matching of foreign currency forward exchange contract amounts and the value of the securities involved will not generally be possible because the future value of such securities in foreign currencies will change as a consequence of market movements in the value of those securities between the date on which the contract is entered into and the date it matures. There is additional risk that such transactions may reduce or preclude the opportunity for gain if the value of the currency should move in the direction opposite to the position taken and that foreign currency forward exchange contracts create exposure to currencies in which the Master Fund’s securities are not denominated. Foreign currency forward exchange contracts may be used for non-hedging purposes in seeking to meet the Master Fund’s investment objective, such as when the Investment Adviser anticipates that particular non-U.S. currencies will appreciate or depreciate in value, even though securities denominated in those currencies are not then held in the Master Fund’s investment portfolio. The use of foreign currency forward exchange contracts involves the risk of loss from the insolvency or bankruptcy of the counterparty to the contract or the failure of the counterparty to make payments or otherwise comply with the terms of the contract. Generally, the Master Fund is subject to no requirement that they hedge all or any portion of their exposure to non-U.S. currency risks, and there can be no assurance that hedging techniques will be successful if used. | |
| Leverage Risk [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Leverage Risk . The Master Fund may obtain financing to make investments in alternative lending securities and may obtain leverage through derivative instruments or asset-backed securities that afford the Master Fund economic leverage. Leverage magnifies the Master Fund’s exposure to declines in the value of one or more underlying reference assets or creates investment risk with respect to a larger pool of assets than the Master Fund would otherwise have and may be considered a speculative technique. The value of an investment in the Master Fund will be more volatile, and other risks tend to be compounded if and to the extent the Master Fund borrows or uses derivatives or other investments that have embedded leverage. | |
| Risks Relating to Compliance and Regulation of Online Lending Participants in the United States [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Risks Relating to Compliance and Regulation of Online Lending Participants in the United States. Highly Regulated U.S. Loan Industry The loan industry in the United States is highly regulated. The loans made through the Platforms domiciled in the United States (referred to herein as “U.S. Platforms”) are subject to extensive and complex rules and regulations issued by various federal, state and local government authorities. These authorities also may impose obligations and restrictions on the Platforms’ activities. In particular, these rules require extensive disclosure to, and consents from, prospective borrowers and borrowers, prohibit discrimination and may impose multiple qualification and licensing obligations on Platform activities. In addition, one or more U.S. regulatory authorities may assert that the Master Fund, as a whole or fractional loan investor of the U.S. Platforms, is required to comply with certain laws or regulations which govern the consumer or commercial (as applicable) loan industry. If the Master Fund were required to comply with additional laws or regulations, this would likely result in increased costs for the Master Fund and may have an adverse effect on its results or operations or its ability to invest in loans through the U.S. Platforms. The Platforms’ failure to comply with the requirements of applicable U.S. rules and regulations may result in, among other things, the Platforms (or their whole or fractional loan investors) being required to register with governmental authorities and/or requisite licenses being revoked, or loan contracts being voided, indemnification liability to contract counterparties, class action lawsuits, administrative enforcement actions and/or civil and criminal liability. Determining the applicability of and effecting compliance with such requirements is at times complicated by the Platforms’ novel business model. Moreover, these requirements are subject to periodic changes. Any such change necessitating new significant compliance obligations could have an adverse effect on the Platforms’ compliance costs and ability to operate. The Platforms would likely seek to pass through any increase in the Platforms’ costs to the investors such as the Master Fund. CFPB Jurisdiction The Consumer Financial Protection Bureau (“CFPB”) has broad authority over the businesses in which the Platforms engage. This includes authority to write regulations under federal consumer financial protection laws, such as the Truth in Lending Act and the Equal Credit Opportunity Act, and to enforce those laws against and examine large financial institutions, such as certain of the Platforms’ funding banks, for compliance. The CFPB is authorized to prevent “unfair, deceptive or abusive acts or practices” through its regulatory, supervisory and enforcement authority. To assist in its enforcement, the CFPB maintains an online complaint system that allows consumers to log complaints with respect to various consumer finance products, including marketplace loans. This system could inform future CFPB decisions with respect to its regulatory, enforcement or examination focus. The Platforms are subject to the CFPB’s jurisdiction, including its enforcement authority, as servicers and acquirers of consumer credit. The CFPB may request reports concerning the Platforms’ organization, business conduct, markets and activities. The CFPB may also conduct on-site examinations of the Platforms’ businesses on a periodic basis if the CFPB were to determine, through its complaint system, that the Platforms were engaging in activities that pose risks to consumers. There continues to be uncertainty as to how the CFPB’s strategies and priorities, including in both its examination and enforcement processes, will impact the Platforms’ businesses and their results of operations going forward. Actions by the CFPB could result in requirements to alter or cease offering affected loan products and services, making them less attractive and restricting the Platforms’ ability to offer them. For example, the CFPB has successfully asserted the power to investigate and bring enforcement actions directly against securitization vehicles. In December 2021, in an action brought by the CFPB, the U.S. District Court for the District of Delaware denied a motion to dismiss filed by a securitization trust by holding that the trust is a “covered person” under the Dodd-Frank Act because it engages in the servicing of loans, even if through servicers and subservicers. While the court did not decide whether the trust could be held liable for the conduct of the servicer at this stage of the case, the CFPB’s pleadings reflect that the agency intends to make that argument. In February 2022, the district court granted the defendant trusts’ motion to certify its ruling in favor of the CFPB for immediate appeal and stayed the case pending resolution of any appeal. In April 2022, the U.S. Court of Appeals for the Third Circuit granted defendants’ petition for permission to appeal. In November 2022, the attorneys general of 22 states and the District of Columbia filed an amicus brief supporting the CFPB’s position. In May 2023, the U.S. Third Circuit Court of Appeals heard oral arguments in connection with the appeal but has not yet issued a ruling. Depending on the outcome of the appeal, the CFPB, and state attorneys general, who have the independent authority to enforce the Dodd-Frank Act, may rely on this decision as precedent in investigating and bringing enforcement actions against other trusts and securitization vehicles in the future. Many provisions of the Dodd-Frank Act are required to be implemented through rulemaking by the applicable federal regulatory agencies, and some of this rulemaking has yet to occur. In addition, Section 1022(d) of the Dodd-Frank Act requires the CFPB to conduct an assessment of each rule within five years of its adoption. The results of any such assessments could result in changes to existing rules and further rulemaking. Therefore, the full impact of financial regulatory reform on the financial markets and its participants and on the asset-backed securities market in particular, as well as the interplay with existing laws, will not be known for some time. For example, in June 2021, six fintech companies and the National Community Reinvestment Coalition sought guidance from the CFPB on how to use artificial intelligence, machine learning algorithms and alternative data in their lending decisions without running afoul of fair-lending laws. The CFPB issued guidance in May 2022 clarifying that creditors who use complex algorithms, including artificial intelligence or machine learning, in any aspect of their credit decisions must still provide a notice to an applicant against whom adverse action is taken disclosing the specific principal reasons for taking such adverse action. No assurance can be given that the Dodd-Frank Act and its implementing regulations and the guidance of the CFPB it created, or the imposition of additional regulations, will not have a significant adverse impact on the value of the notes, on the servicing of the loans or on the Master Fund. Actions by the CFPB or other regulators against the Platforms, their funding banks, their funding sources, such as loan purchasers or securitization trust, or their competitors that discourage the use of the alternative lending model or suggest to consumers the desirability of other loan products or services could result in reputational harm and a loss of borrowers or investors. The Platforms’ compliance costs and litigation exposure could increase materially if the CFPB or other regulators enact new regulations, change regulations that were previously adopted, modify, through supervision or enforcement, past regulatory guidance, or interpret existing regulations in a manner different or stricter than have been previously interpreted. Usury and Related Issues Different Platforms adhere to different business models, resulting in uncertainty as to the regulatory environment applicable to the Master Fund. For example, one Platform may underwrite loans from a particular state to make loans to consumers or companies across the United States. The Platform must comply with that state’s licensing requirements and possible usury limitations. However, other states could seek to regulate the Platform (or the Master Fund as a whole loan investor) on the basis that loans were made to consumers or companies located in such other states. In that case, loans made in those other states could be subject to the maximum interest rate limits (usury laws), if any, of such jurisdiction, which in turn could limit revenues for the Master Fund. Moreover, it could further subject the Platform (or the Master Fund) to such states’ licensing requirements. Another Platform may follow a different model in which all loans sourced by the Platform are made through a bank which originates a loan as the named lender based on parameters developed jointly with the Platform. U.S. federal law allows FDIC-insured banks to charge interest to borrowers on a nationwide basis based on the rates allowed by the state where the bank is located, as federal law preempts inconsistent state law limitations. The interest rates that such Platforms charge to borrowers are based upon the ability under federal law of the funding banks that originate the loans to export the interest rates of its jurisdiction of formation or incorporation to provide uniform rates to all borrowers in all states that have not opted out. For example, certain primary funding banks for some of the Platforms export the interest rates of Utah, the state in which they are incorporated, which allows parties to generally agree by contract to any interest rate. The current annual percentage rates offered by these banks through the Platforms for personal loans generally range from approximately 6% to 36%. Certain states, including Utah, have no statutory interest rate limitations on personal loans, while other jurisdictions have a maximum rate that is less than the current maximum rate offered by these banks through the Platforms. However, there has been both private litigation and governmental enforcement actions which have sought to re-characterize lending transactions, claiming that a loan platform, and not the bank, it the “true lender” with respect to a loan. Courts have applied differing interpretations when determining which party is the true lender. Plaintiffs may successfully challenge the funding bank or other lending models. The “true lender” argument has been litigated in a number of courts, most commonly (but not always) in cases involving short-term “payday loans” offered at triple-digit annual percentage rates, where the non-bank partner of the bank nominally making the loan provides turnkey marketing, billing, collection and accounting services in connection with the loans and also acquires the predominant if not entire economic interest in the loans. Such litigation has sought to re-characterize the non-bank loan marketer as the lender for purposes of state consumer protection and usury laws. While the Platforms’ programs do not involve payday loans and may be factually distinguishable from the activities of payday loan marketers, there nevertheless remains a risk that a court in one or more jurisdictions could conclude that the loans are unlawful because the Platform is deemed to be the “true lender” and, therefore, subject to additional state consumer protection laws. The resulting uncertainty may increase the possibility of claims brought against the Platforms by borrowers seeking to void their loans or subject the Platforms to increased regulatory scrutiny and enforcement actions. To the extent that either the Platform (or the Master Fund) is deemed to be the true lender in any jurisdiction instead of the funding bank (whether determined by a regulatory agency at the state or federal level or by court decision), loans made to borrowers in that jurisdiction would be subject to the maximum interest rate limits (usury laws) of such jurisdiction and existing loans may be unenforceable, and the Platform (and/or the Master Fund) could be subject to additional regulatory requirements in addition to any penalties and fines. Moreover, it may be determined that this business model is not sustainable in its current form, which could ultimately cause such Platforms to terminate their business. In such circumstances, there is likely to be a material adverse effect on the Investment Adviser’s ability to continue to invest in certain or all alternative lending securities and the Master Fund’s ability to pursue its investment objective and generate anticipated returns. Other litigation has challenged the ability of loan assignees to rely on the preemption that applied to the initial lender of the loan. In addition to a challenge to a bank’s status as “true lender” of a loan, it could be argued that, even if the funding bank is the “true lender,” state usury laws would apply once the funding bank sells the loan to a non-bank assignee. If a borrower were to successfully bring claims against one of the Platforms for state usury law violations or other similar violations, and the rate on that borrower’s personal loan was greater than that allowed under applicable state law, the Platforms and the Master Fund could be subject to, among other things, fines and penalties, which would negatively affect the Master Fund. If the Platforms’ ability to export the interest rates, and related terms and conditions, permitted under a particular state’s law to borrowers in other states is determined to violate applicable lending laws, a Platform could be subject to the interest rate restrictions, and related terms and conditions, of the lending laws of each of the states in which it operates. The result would be a complex patchwork of regulatory restrictions that could significantly and adversely impact the Platforms’ operations and ability to operate, and they may be forced to end or significantly change their business and activities, resulting in a reduction in the volume of loans available for investment for whole loan investors such as the Master Fund. Certain case law has cast doubt on the viability of the model in which many Platforms operate and in particular their ability to charge the same rate as a funding bank after a loan has been sold to the Platform. The U.S. Court of Appeals for the Second Circuit (“Second Circuit”) issued a significant decision in May 2015 that interpreted the scope of federal preemption under the National Bank Act (the “NBA”) and held that a non-bank assignee of loans sourced by a national bank was not entitled to the benefits of NBA preemption as to state law claims of usury (the “Second Circuit Decision”). Although the decision is binding only in Connecticut, New York and Vermont, it may significantly affect non-bank assignees of loans, including the loan origination practices of certain online lenders. As a result of the decision, non-bank assignees/purchasers of bank loans may face uncertainty regarding their ability to rely upon federal preemption of state usury laws. A number of online lending Platforms purchase loans from state-chartered banks promptly after origination and rely upon federal preemption to exempt the loans from state usury caps. The Second Circuit Decision, although directly ruling on purchasers of national bank loans, could be applied to those purchases by courts considering the scope of federal preemption under the Depository Institutions Deregulation and Monetary Control Act of 1980 (which generally preempts state usury laws in favor of federally insured state-chartered banks). In June 2016, the Supreme Court elected not to review the Second Circuit Decision. Despite recommending that the Supreme Court decline to review the case, the Solicitor General argued that the Second Circuit Decision was incorrect and contrary to longstanding precedent that if the interest rate in a bank’s original loan agreement was non-usurious and “valid-when-made,” the loan does not become usurious upon assignment to a non-bank third party. Nevertheless, if the Second Circuit Decision is adopted by other federal circuit courts, the lending models of some Platforms may be severely impacted. A number of Platforms have restructured the relationship with their funding bank in response to the Second Circuit Decision so that the funding bank maintains a continuing economic interest in the loans that are originated for the Platform. In addition, the risk from this court decision in the three states comprising the Second Circuit may be mitigated by purchasing or investing in loans that are not above the state usury limitations in those states. During the past several years, various bills have been introduced in Congress that would have overridden the Second Circuit Decision by adding new language to the NBA and other federal statutes stating that a loan that is valid when made as to its maximum rate of interest remains valid regardless of any subsequent sale, assignment or transfer of the loan. However, none of these bills has been adopted, and it is uncertain whether similar legislation would be passed in the future. Wyoming amended its Consumer Credit Code in July 2021. Wyo. Stat. 40-14-302. Under the new provisions, Wyoming broadened its licensing requirements to provide that “Unless a person is a supervised financial organization or has first obtained a license from the administrator, no person shall engage in the business of making consumer loans or taking assignments of non-servicing rights relating to consumer loans that are not in default.” The statute applies to all consumer loans that do not exceed $75,000. Thus, all non-bank persons that take assignments of non-defaulted consumer loans must be licensed. OCC True Lender Rule The OCC promulgated a final rule issued on October 27, 2020 concerning when a bank is the true lender in the context of a partnership between a bank and a non-bank entity, such as a marketplace platform. The rule specified that a bank makes a loan and is the true lender if, as of the date of origination, it (1) is named as the lender in the loan agreement or (2) funds the loan. The rule also specified that if, as of the date of origination, one bank is named as the lender in the loan agreement for a loan and another bank funds that loan, the bank that is named as the lender in the loan agreement makes the loan. Furthermore, under the rule, the bank, as the true lender of a loan, would retain the compliance obligations associated with the origination of that loan. The OCC rule went into effect on December 29, 2020. On January 5, 2021, seven state Attorneys General filed a lawsuit against the OCC challenging the rule on procedural and substantive grounds. However, on June 24, 2021, Congress passed a resolution seeking to invalidate the OCC’s true lender rule pursuant to the Congressional Review Act and to prohibit the OCC from issuing a rule in substantially the same form in the future. On June 30, 2021, President Biden signed the resolution, and the OCC’s true lender rule was voided retroactively. The state Attorneys General subsequently dismissed their action as moot. The FDIC has not proposed a similar rule, and state-chartered banks would not have been covered by the OCC rule. Risk of the Platform or Master Fund Being Deemed the True Lender Courts have recently applied differing interpretations when determining which party in a funding bank arrangement is the true lender. The resulting uncertainty may increase the possibility of claims brought against the Platforms by borrowers seeking to void their loans or subject the Platforms to increased regulatory scrutiny and enforcement actions. To the extent that either the Platform (or the Master Fund) is deemed to be the true lender in any jurisdiction (whether determined by a regulatory agency or by court decision), loans made to borrowers in that jurisdiction would be subject to the maximum interest rate limits of such jurisdiction and existing loans may be unenforceable, and the Platform (and/or the Master Fund) could be subject to additional regulatory requirements in addition to any restitution and/or penalties and fines as to existing loans (and any new loans originated at rates that are not permitted under the laws of the states in question), subject to applicable statutes of limitation. Moreover, it may be determined that this business model is not sustainable in its current form, which could ultimately cause such Platforms to terminate their business. In such circumstances, there is likely to be an adverse effect on the Investment Adviser’s ability to continue to invest in certain or all alternative lending securities and the ability of the Master Fund, and thus the Fund, to pursue its investment objective and generate anticipated returns. The risk that either the Platforms or the Master Fund (as a whole or fractional loan investor) is deemed the true lender in any jurisdiction exists with respect to loans made to both consumers and businesses. Several courts have concluded that non-bank consumer lenders that utilize a bank funding model should be viewed as the true lenders in the arrangement. U.S. courts have rarely analyzed questions regarding true lenders in the context of business loans. Although it is expected that U.S. courts’ true lender analysis would be the same for both consumer and business loans, additional uncertainty exists as to how U.S. courts would analyze questions regarding true lenders in a business loan context. In October 2017, a small business owner brought suit against a small business marketplace lender in federal district court in Massachusetts under a true lender theory. The suit alleged that the marketplace lender, which utilized a bank funding model, was the true lender and, among other things, originated loans in violation of state usury laws. However, the court recently stayed the case pending the outcome of arbitration. Any action undertaken by state regulators to assert that Platforms that partner with funding banks are the actual providers of loans to borrower members could have a material adverse effect on the lending model utilized by the alternative lending industry and, consequently, the ability of the Master Fund, and thus the Fund, to pursue a significant part of its investment strategy. In November 2017, a bill was introduced in the U.S. House of Representatives to address the true lender issue. The bill would have clarified that an insured bank is the lender of any loan for which the bank is the initial creditor, notwithstanding any later assignment of the loan, or the existence of a service or economic relationship with a non-bank entity (such as the Platforms). Ultimately, the bill was not signed into law and it is uncertain whether Congress will adopt legislation to address the true lender issue. At any time there may be litigation pending against Platforms and/or banks that issue loans for the Platforms. Any such litigation may significantly and adversely impact the Platforms’ ability to make loans or subject them or their whole or fractional loan investors, like the Master Fund, to fines and penalties, which could consequently have a material adverse effect on the Master Fund. Additionally, plaintiffs may assert claims against subsequent holders of the loans, including the Master Fund, and recipients of amounts collected on the Loans, including the investors. Some of the laws with which the loans must comply with respect to the marketing, origination, servicing, and collection, such as the federal Truth in Lending Act, may make an assignee of such loans (such as the Master Fund) liable for violations. Even when laws do not include express provisions creating assignee liability, plaintiffs (including private plaintiffs and government regulators and agencies) may bring claims against assignees based on general common law principles of liability or other theories. In addition, some laws, such as the Colorado Uniform Consumer Credit Code (the “Colorado UCCC”) (as has been alleged by the Colorado Administrator), may make subsequent holders liable for claims relating to the collection of amounts provided for under the terms of the Loans. As discussed above, the Colorado Administrator brought claims against certain subsequent holders of loans originated through certain online platforms, alleging that the subsequent holders are liable with respect to finance charges, late charges, and other amounts that the servicer collected on their behalf in excess of the amounts permitted by the Colorado UCCC, as well as civil penalties in accordance with Colorado law. And, claims were brought against subsequent holders of credit card receivables in class action complaints filed (1) in the United States District Court for the Eastern District of New York against three special purpose vehicles involved in the securitization of credit card receivables, as well as the trustees of two of the special purpose vehicles and (2) in the United States District Court for the Western District of New York against two special purpose vehicles involved in the securitization of credit card receivables, as well as a trustee of one of the special purpose vehicles. There can be no assurance that plaintiffs or regulators will not bring claims relating to the loans or notes against assignees of the loans, such as the Master Fund, or against recipients of the proceeds collected on the Master Fund, including the investors. The Platforms could also be forced to comply with the lending laws of all U.S. states, which may not be feasible and could result in Platforms ceasing to operate. As discussed above, certain states have enacted new legislation relating to true lender theories and other states may enact similar legislation. Any increase in cost or regulatory burden on a Platform could have a material adverse effect on the Master Fund. Specifically, adverse rulings by courts in pending and potential future matters could undermine the basis of the Platforms’ business models and could result ultimately in a Platform or its whole or fractional loan investors being characterized as a lender, which as a consequence would mean that additional U.S. consumer protection laws would be applicable to the borrower member loans sourced on such Platforms, rendering such borrower member loans voidable or unenforceable. In addition, a Platform or its whole or fractional loan investors, like the Master Fund, could be subject to claims by borrower members, as well as enforcement actions by regulators that could lead to fines, civil or criminal penalties or other sanctions. Even if a Platform were not required to cease operation with residents of certain states, the Platform or its whole or fractional loan investors, like the Master Fund, could be required to register or obtain, and maintain, licenses or regulatory approvals in all 50 U.S. states at substantial cost. If a Platform or the Fund or its Subsidiary were subject to fines, civil or criminal penalties or sanctions, or other regulatory action, or forced to cease operations in some or all states, this could have a material adverse effect on the Master Fund and its Shareholders, and the investments in the Platforms. State Licensing Considerations In addition to laws governing the activities of lenders and servicers, certain states may require, or may in the future require, purchasers or holders of certain loans, primarily consumer loans, to be licensed or registered in order to purchase or hold such loans or to collect interest above a specified rate. To the extent required or determined to be necessary or advisable, the Master Fund intends to obtain licenses or take other appropriate steps to address any applicable state licensing requirements in order to pursue its investment strategy. To the extent the Master Fund or any of its Subsidiaries obtains licenses or is required to comply with related regulatory requirements, the Master Fund could be subject to increased costs and regulatory oversight by governmental authorities, which may have an adverse effect on its results or operations. The Master Fund intends to invest in alternative lending securities through one or more wholly-owned Subsidiaries. These Subsidiaries will include one or more common law or statutory trusts with a federally chartered bank serving as trustee. The Master Fund or one or more of its other wholly-owned Subsidiaries will hold the beneficial interests in each such trust, and the federally chartered bank acting as trustee will hold legal title to the alternative lending securities for the benefit of the trust and/or the trust’s beneficial owners. State licensing laws typically exempt federally chartered banks from their licensing requirements, and federally chartered banks may also benefit from federal preemption of state laws, including any licensing or registration requirements. The use of common law or statutory trusts with a federally chartered bank serving as trustee is intended to address any state licensing requirements that may be applicable to purchasers or holders of alternative lending securities. However, the ability of a trust with a federally chartered bank as trustee to override state laws on the basis of federal preemption has recently been challenged and may be further challenged in the future. It is expected that each trustee of a common law or statutory trust through which the Fund invests would be indemnified by the applicable trust and, potentially in certain circumstances, by the Master Fund or one or more of its Subsidiaries. Although the Master Fund intends to invest in alternative lending securities through one or more common law or statutory trusts, the Master Fund is not required to use this approach and may instead hold such investments directly or indirectly through one or more other Subsidiaries. If the Master Fund or any of its Subsidiaries is required to be licensed in any particular jurisdiction in order to invest in certain alternative lending securities, obtaining the required license may not be viable (because, for example, it is not possible or practical) and the Master Fund may be unable to restructure its investments to address the licensing requirement. In that case, the Master Fund or its Subsidiaries may be forced to cease investing in the affected alternative lending securities, or may be forced to sell such alternative lending securities. If a state regulator or court were to determine that the Master Fund or its Subsidiaries acquired or held an alternative lending security without a required state license, the Master Fund or its Subsidiaries could be subject to penalties or other sanctions, prohibited or restricted in its ability to enforce its alternative lending security, or subject to litigation risk or other losses or damages. Fair Debt Collection Practices Act The U.S. federal Fair Debt Collection Practices Act (“FDCPA”) provides guidelines and limitations on the conduct of third-party debt servicers in connection with the collection of consumer debts. In order to ensure compliance with the FDCPA, the Platforms often contract with professional third-party debt collection agencies to engage in debt collection activities. The CFPB, the U.S. federal agency now responsible for administering the FDCPA, is engaged in a comprehensive rulemaking regarding the operation of the FDCPA which likely will affect the obligations of sellers of debt to third parties, as well as change other regulatory requirements. Any such changes could have an adverse effect on any U.S. Platforms following a certain model and therefore on the Master Fund as a whole or fractional loan investor. The U.S. Fair Credit Reporting Act (“FCRA”) regulates consumer credit reporting. Under the FCRA, liability may be imposed on furnishers of data to credit reporting agencies to the extent that adverse credit information reported is false or inaccurate. On October 30, 2020, the CFPB issued new regulations implementing the federal FDCPA, which regulate the collection activities of third-party debt collectors. These new regulations went into effect November 30, 2021. These regulations could potentially impact third parties servicing loans owned by the Fund and the collections received on the loans by the Fund. Payday Lending Rule On October 5, 2017, the CFPB adopted a final rule governing payday, vehicle title, and certain high-cost installment loans (the “2017 Rule”). The 2017 Rule mandates that lenders take reasonable steps to ensure tha | |
| Platform Risk [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Platform Risk . The Master Fund is highly dependent on the Platforms for loan data, origination, sourcing and servicing. Alternative lending is a relatively new lending method. The interest rates on loans are generally fixed by the Platforms on the basis of an analysis of the borrower’s credit. The analysis is done through credit decisions and scoring models that may prove to be inaccurate, be based on false, misleading or inaccurate information, be subject to programming or other errors and/or be ineffective entirely. Further, the Master Fund’s Investment Adviser may not be able to perform any independent follow-up verification on borrowers. As a general matter, borrowers assessed as having a higher risk of default are assigned higher rates. The Master Fund’s investment in any loan is not protected by any government guarantee. The Platforms are for-profit businesses; they typically generate revenue by collecting a one-time fee on funded loans from borrowers or investors, by selling loans at a premium and/or by assessing a loan servicing fee to investors such as the Master Fund (typically a fixed amount annually, a percentage of the loan amount or a percentage of cash flows). Bankruptcy of the Platform that facilitated a loan may also put the Master Fund’s investment at risk. An investor may become dissatisfied with the Platform’s marketplace if a loan underlying its investment is not repaid and it does not receive full payment. As a result, such Platform’s reputation may suffer and the Platform may lose investor confidence, which could adversely affect investor participation on the Platform’s marketplace. When transacting on certain Platforms, the Master Fund may be required to advance cash to be held in a clearing account for a short time before the loan is transferred to the Master Fund in return for an irrevocable right to receive a loan from a Platform. In the event of the bankruptcy or insolvency of the Platform, the Master Fund may sustain losses and/or experience significant delays in obtaining any recovery in a bankruptcy or other reorganization proceeding. The Master Fund will engage a backup servicer in the event that any Platform or servicing affiliate of the Platform ceases to exist or fails to perform its servicing functions. The Platforms have encountered and will continue to encounter risks, uncertainties, expenses and difficulties, including: navigating complex and evolving regulatory and competitive environments; increasing the number of borrowers and investors utilizing their marketplace; increasing the volume of loans facilitated through their marketplace and transaction fees received for matching borrowers and investors through their marketplace; entering into new markets and introducing new loan products; continuing to revise the marketplace’s proprietary credit decisions and scoring models; continuing to develop, maintain and scale their Platforms; effectively using limited personnel and technology resources; effectively maintaining and scaling their financial and risk management controls and procedures; maintaining the security of the Platform and the confidentiality of the information provided and utilized across the Platform; and attracting, integrating and retaining an appropriate number of qualified employees. If Platforms are not able to effectively address these requirements in a timely manner, the Platforms’ businesses and the results of their operations may be harmed, which may reduce the possible available investments for the Master Fund. Multiple banks may originate loans for the Platforms. If such a bank were to suspend, limit or cease its operations, or a Platform’s relationship with a bank were to otherwise terminate, such Platform would need to implement a substantially similar arrangement with another funding bank, obtain additional state licenses or curtail its operations. Transitioning loan originations to a new funding bank is untested and may result in delays in the issuance of loans or may result in a Platform’s inability to facilitate loans. If a Platform is unable to enter in an alternative arrangement with a different funding bank, the Platform would need to obtain a state license in each state in which it operates in order to enable it to originate loans, as well as comply with other state and federal laws, which would be costly and time-consuming. If a Platform is unsuccessful in maintaining its relationships with the funding banks, its ability to provide loan products could be materially impaired and its operating results would suffer. The Master Fund is dependent on the continued success of the Platforms that originate the Master Fund’s loans. If such Platforms were unable or impaired in their ability to operate their lending business, the Investment Adviser may be required to seek alternative sources of investments (e.g., loans originated by other Platforms), which could adversely affect the Master Fund’s performance and/or prevent the Master Fund from pursuing its investment objective and strategies. As discussed above, the Platforms make payments ratably on an investor’s investment only if they receive the borrower’s payments on the corresponding loan. There may be a delay between the time the Platform receives a borrower’s principal and interest payments and distributes the proceeds to investors, including the Master Fund. This time delay may, among other things, adversely affect the valuation of the Master Fund’s portfolio or prevent the Master Fund from taking advantage of certain investment opportunities. The Platforms depend on debt facilities and other forms of debt in order to finance most of the loans they make to their customers. However, these financing sources may not continue to be available beyond the current maturity date of each debt facility, on reasonable terms or at all. As the volume of loans that a Platform makes to customers increases, it may require the expansion of its borrowing capacity on its existing debt facilities and other debt arrangements or the addition of new sources of capital. The availability of these financing sources depends on many factors, some of which are outside of the Platform’s control. The Platforms may also experience the occurrence of events of default or breaches of financial or performance covenants under their debt agreements, which could reduce or terminate their access to institutional funding. Security breaches of customers’ confidential information that the Platforms store may harm a Platform’s or the Master Fund’s reputation and expose them to liability. The collection, processing, storage, use and disclosure of personal data could give rise to liabilities as a result of governmental regulation, conflicting legal requirements or differing views of personal privacy rights. A Platform’s ability to collect payment on loans and maintain accurate accounts may be adversely affected by computer viruses, physical or electronic break-ins, technical errors and similar disruptions. A Platform and its internal systems rely on software that is highly technical, and if it contains undetected errors, the Platform’s business could be adversely affected. A Platform may rely on data centers to deliver its services. Any disruption of service at these data centers could interrupt or delay a Platform’s ability to deliver its service to its customers. The Platforms’ businesses are subject to the risks of earthquakes, fire, power outages, floods and other catastrophic events, and to interruption by man-made problems such as strikes and terrorism. Demand for the Platforms’ loans may decline if they do not continue to innovate or respond to evolving technological changes. A Platform may evaluate, and potentially consummate, acquisitions, which could require significant management attention, disrupt the Platform’s business, and adversely affect its financial results. Because some investors may come to a Platform’s website via hyperlinks from websites of referral partners, it is possible that an unsatisfied investor could make a claim against such Platform based on the content of these third-party websites that could result in claims that are costly to defend and distracting to management. A Platform may be sued by third parties for alleged infringement of their proprietary rights, which could harm such Platform’s business. It may be difficult and costly to protect the Platforms’ intellectual property rights, and a Platform may not be able to ensure its protection. Some aspects of a Platform may include open source software, and any failure to comply with the terms of one or more of these open source licenses could negatively affect a Platform’s business. Online lending is a new industry operating in an unsettled legal environment. Participants may be subject in certain cases to higher risk of litigation alleging violations of federal and state laws and regulations and consumer law torts, including fraud. There is a risk that should regulatory or legal action be concluded in the favor of borrowers, the Master Fund may be required to modify the terms of its loans and potentially realize a loss or a lower return on its investments. In the event that the number of Platforms through which the Master Fund invests were to be limited in number, whether due to termination of existing agreements or failure to secure agreements or other terms with other Platforms, the Master Fund may be subject to certain risks associated with investing through a small number of Platforms. Investing in a limited number of Platforms and/or in loans that were originated using a particular Platform’s borrower credit criteria exposes the Master Fund’s investments to a greater risk of default and risk of loss. The fewer Platforms through which the Master Fund invests in or acquires loans, the greater the risks associated with those Platforms changing their arrangements will become. For instance, the Platforms may change their underwriting and credit models, borrower acquisition channels and quality of debt collection procedures in ways which may make such loans unsuitable for investment by the Master Fund. From time to time the Master Fund may enter into arrangements with one or more Platforms that, depending on market circumstances, may make sourcing from any particular Platform more or less attractive relative to its peers. In addition, a Platform may become involved in a lawsuit, which may adversely impact that Platform’s performance and reputation and, in turn, the Master Fund’s portfolio performance. | |
| Small Business Risk [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Small Business Risk. The Master Fund may invest in loans, receivables or merchant cash advances (MCAs) with exposure to small and medium size enterprises (SMEs). SMEs may not have steady earnings growth, may be operated by less experienced individuals, may have limited resources and may be more vulnerable to adverse general market or economic developments. Platforms that originate loans to or purchase receivables from SMEs do not always conduct on-site due diligence visits to verify that the businesses exist and are in good standing, which may lead to higher instances of fraud. Receivables and MCAs are advances based upon the future revenues or credit card sales of a business. Repayment of an MCA is typically made by the MCA provider taking an agreed upon percentage of the business’s future cash flow (often through a percentage of the business’s credit card transactions) until the MCA amount is repaid in full plus an agreed upon percentage of the MCA amount, referred to as a “factor.” The factor amount is usually higher than interest rates on commercial loans or other comparable loan products. Because MCAs are repaid using the future receipts of the business and are not unconditional obligations by the merchant to repay the advance, MCAs are generally not considered to be loans that are subject to state licensing and usury laws. If the business does not generate sufficient receipts due to adverse business conditions, it may not be able to pay off the MCA, thereby adversely affecting the Master Fund’s investment. Fraud, delays or write-offs associated with SME loans, receivables and MCAs could directly impact the profitability of the Master Fund’s potential investments in such instruments. Some SME assets have recourse to a personal guarantor, which may become obligated to pay any remaining amounts owed to the owner of the loan or receivable, although others have no recourse and the Master Fund would have no such “back-up” if the business fails to pay back the principal and interest or advance amount and additional factor. In addition, a number of lawsuits in recent years have sought to re-characterize MCAs as loans subject to state usury laws. If that were to occur with respect to any Master Fund investments, the Master Fund may not be able to collect on those MCAs deemed by a court to be disguised loans in violation of state usury laws. MCAs may also be subject to increasing scrutiny by federal and state regulatory agencies, which could lead to additional regulation and oversight of such investments. | |
| Repurchase Risks [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Repurchase Risks . The Fund has no obligation to repurchase Shares at any time; any such repurchases will only be made at such times, in such amounts and on such terms as may be determined by the Board of Trustees, in its sole discretion. Subject to Board approval, the Fund intends to conduct a share repurchase program pursuant to which it intends to conduct quarterly tender offers on approximately 5% to 25% of the Fund’s net assets. With respect to any future repurchase offer, Shareholders tendering any Shares for repurchase must do so by a date specified in the notice describing the terms of the repurchase offer (the “Notice Date”). The Notice Date generally will be 60 days prior to the date as of which the Shares to be repurchased are valued by the Fund (the “Valuation Date”). Tenders will be revocable upon written notice to the Fund up to 40 days prior to the Valuation Date. Shareholders that elect to tender any Shares for repurchase will not know the price at which such Shares will be repurchased until the Fund’s NAV as of the Valuation Date is able to be determined, which determination is expected to be able to be made only late in the month following that of the Valuation Date. It is possible that during the time period between the Expiration Date and the Valuation Date, general economic and market conditions could cause a decline in the value of Shares in the Fund. Moreover, because the Notice Date will be substantially in advance of the Valuation Date, Shareholders who tender Shares of the Fund for repurchase will receive their repurchase proceeds well after the Notice Date. Shareholders who require minimum annual distributions from a retirement account through which they hold Shares should consider the Fund’s schedule for repurchase offers and submit repurchase requests accordingly . See “Repurchases and Transfers of Shares.” | |
| Bonds and Other Fixed Income Securities [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Bonds and Other Fixed Income Securities. Fixed income securities include, among other securities: bonds, notes and debentures issued by U.S. and non-U.S. corporations; debt securities issued or guaranteed by the U.S. Government or one of its agencies or instrumentalities (“U.S. government securities”) or by a non-U.S. government; municipal securities; and mortgage-backed and asset- backed securities. These securities may pay fixed, variable or floating rates of interest, and may include zero coupon obligations. Fixed income securities are subject to the risk of the issuer’s inability to meet principal and interest payments on its obligations (i.e., credit risk) and are subject to price volatility resulting from, among other things, interest rate sensitivity, market perception of the creditworthiness of the issuer and general market liquidity (i.e., market risk). The Master Fund’s investments may face a heightened level of interest rate risk in times of monetary policy change and uncertainty, such as when the Federal Reserve Board adjusts a quantitative easing program and/or changes rates. The duration of a fixed income security is an attempt to quantify and estimate how much the security’s price can be expected to change in response to changing interest rates. For example, when the level of interest rates increases by 1%, a fixed income security having a positive duration of four years generally will decrease in value by 4%; when the level of interest rates decreases by 1%, the value of that same security generally will increase by 4%. Accordingly, securities with longer durations are likely to be more sensitive to changes in interest rates, generally making them more volatile than securities with shorter durations. Except as described herein, the Master Fund may have exposure, without limitation, to investments that are rated below investment grade or that are unrated but are judged by the Investment Adviser to be of comparable quality. The alternative lending securities in which the Master Fund invests (or, in the case of asset-backed securities, the loans that back them) typically are not rated by an NRSRO. Although the Master Fund’s Fundamental Investment Restrictions do not permit the Master Fund to invest in consumer loans of sub-prime quality, unrated securities purchased by the Master Fund may be of credit quality comparable to securities rated below investment grade by an NRSRO. The Master Fund may invest, without limitation, in unrated securities that may be of a credit quality comparable to securities rated below investment grade. To the extent the Master Fund invests directly in fractional or whole interests in alternative lending securities, such investments will not include exposure to consumer loans that are of sub-prime quality. Otherwise, the fractional or whole interests in alternative lending securities or tranches of alternative lending securitizations in which the Master Fund may invest may be of a credit quality comparable to securities rated below investment grade. Below investment grade securities, which are commonly called “junk bonds,” are rated below BBB- by S&P or Baa3 by Moody’s, or have comparable ratings by another rating organization. Accordingly, certain of the Master Fund’s unrated investments could constitute a highly risky and speculative investment, similar to an investment in “junk bonds.” The Master Fund may also invest in both rated senior classes of asset-backed securities as well as residual interests in pools of alternative lending loans or securitizations. To the extent the Master Fund invests in residual interests in pools of alternative lending loans or securitizations, a small percentage of loans in the pools may include consumer loans of sub-prime quality. Below investment grade investments may be subject to greater risks than other investments, including greater levels of risk related to changes in interest rates, credit risk (including a greater risk of default) and liquidity risk. There is a greater risk of loss associated with alternative lending securities investments and the ability of a borrower to make principal and/or interest payments is predominantly speculative for below investment grade investments or unrated investments judged by the Investment Adviser to have a similar quality. Below investment grade investments or unrated investments judged by the Investment Adviser to be of comparable quality may be more susceptible to real or perceived adverse economic and competitive industry or business conditions than higher-grade investments. Yields on below investment grade investments will fluctuate. Fixed income securities may experience reduced liquidity due to the lack of an active market and the reduced number and capacity of traditional market participants to make a market in fixed income securities, which may occur to the extent traditional dealer counterparties that engage in fixed income trading do not maintain inventories of corporate bonds (which provide an important indication of their ability to “make markets”) that keep pace with the growth of the bond markets over time. Liquidity risk also may be magnified in times of monetary policy change and/or uncertainty, such as when the Federal Reserve Board adjusts a quantitative easing program and/or changes rates, or other circumstances where investor redemptions from fixed income mutual funds, exchange- traded funds or hedge funds may be higher than normal, causing increased supply in the market due to selling activity. | |
| Borrowers May Seek Protection of Debtor Relief under Federal Bankruptcy or State Insolvency Laws, Which May Result in the Nonpayment of the Funds Loans [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Borrowers May Seek Protection of Debtor Relief under Federal Bankruptcy or State Insolvency Laws, Which May Result in the Nonpayment of the Master Fund’s Loans . Borrowers may seek protection under federal bankruptcy law or similar laws. If a borrower files for bankruptcy (or becomes the subject of an involuntary petition), a stay will go into effect that will automatically put any pending collection actions on the loan on hold and prevent further collection action absent bankruptcy court approval. Whether any payment will ultimately be made or received on a loan after a bankruptcy status is declared depends on the borrower’s particular financial situation. In most cases, however, unsecured creditors, such as the Master Fund, receive nothing or only a fraction of their outstanding debt. | |
| General Economic and Market Conditions [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | General Economic and Market Conditions. The value of your investment in the Fund is based on the market values of the alternative lending securities the Fund holds. These values change regularly due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. These price movements, sometimes called volatility, may be greater or less depending on the types of alternative lending securities the Fund owns and the markets in which the alternative lending securities trade. Volatility and disruption in financial markets and economies may be sudden and unexpected, expose the Fund to greater risk, including risks associated with reduced market liquidity and fair valuation, and adversely affect the Fund’s operations. For example, the Investment Adviser potentially will be prevented from executing investment decisions at an advantageous time or price as a result of any domestic or global market disruptions and reduced market liquidity may impact the Fund’s ability to sell alternative lending securities to conduct repurchases of it shares. The increasing interconnectivity between global economies and financial markets increases the likelihood that events or conditions in one region or financial market may adversely impact issuers in a different country, region or financial market. Alternative lending securities in the Fund’s portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters, health emergencies (such as epidemics and pandemics), terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, health emergencies, social and political discord or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. Inflation rates may change frequently and significantly because of various factors, including unexpected shifts in the domestic or global economy and changes in monetary or economic policies (or expectations that these policies may change). Changes in expected inflation rates may adversely affect market and economic conditions, the Fund’s investments and an investment in the Fund. Other financial, economic and other global market and social developments or disruptions may result in similar adverse circumstances, and it is difficult to predict when similar events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects (which may last for extended periods). In general, the alternative lending securities or other instruments that the Investment Adviser believes represent an attractive investment opportunity or in which the Fund seeks to invest may be unavailable entirely or in the specific quantities sought by the Fund. As a result, the Fund may need to obtain the desired exposure through a less advantageous investment, forgo the investment at the time or seek to replicate the desired exposure through a derivative transaction or investment in another investment. Any such event(s) could have a significant adverse impact on the value and risk profile of the Fund’s portfolio. There is a risk that you may lose money by investing in the Fund. Social, political, economic and other conditions and events, such as war, natural disasters, health emergencies (e.g., the novel Covid-19 outbreak, epidemics and other pandemics), terrorism, conflicts, social unrest, recessions, inflation, rapid interest rate changes and supply chain disruptions, could reduce consumer demand or economic output, result in market closures, travel restrictions or quarantines, and generally have a significant impact on the economies and financial markets and the Investment Adviser’s investment advisory activities and services of other service providers, which in turn could adversely affect a Fund’s investments and other operations. | |
| Non-U.S. Government Securities [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Non-U.S. Government Securities. The Master Fund’s non-U.S. investments may include debt securities issued or guaranteed by non- U.S. governments, their agencies or instrumentalities and supranational entities. The Master Fund may invest in debt securities issued by certain “supranational” entities, which include entities designated or supported by governments to promote economic reconstruction or development, international banking organizations and related government agencies. An example of a supranational entity is the International Bank for Reconstruction and Development (commonly referred to as the “World Bank”). Investment in sovereign debt of non-U.S. governments can involve a high degree of risk, including additional risks not present in debt obligations of corporate issues and the U.S. Government. The issuer of the debt or the government authority that controls the repayment of sovereign debt may be unable or unwilling to repay the principal and/or interest when due in accordance with the terms of the debt, and the Master Fund may have limited recourse to compel payment in the event of a default. A sovereign debtor’s or governmental entity’s willingness or ability to repay principal and/or interest due in a timely manner may be affected by, among other factors, its cash flow situation, the extent of its foreign currency reserves, the availability of sufficient foreign exchange on the date a payment is due, the relative size of the debt service burden to the economy as a whole, the sovereign debtor’s or governmental entity’s policy toward international lenders, such as the International Monetary Fund, the World Bank and other multilateral agencies, the political constraints to which a governmental entity may be subject, and changes in governments and political systems. A country whose exports are concentrated in a few commodities or whose economy depends on certain strategic imports could be vulnerable to fluctuations in international prices of these commodities or imports. If a foreign sovereign obligor cannot generate sufficient earnings from foreign trade to service its external debt, it may need to depend on continuing loans and aid from foreign governments, commercial banks and multilateral organizations, and inflows of foreign investment. The commitment on the part of these foreign governments, multilateral organizations and others to make such disbursements may be conditioned on the government’s implementation of economic reforms and/or economic performance and the timely service of its obligations. Failure to implement such reforms, achieve such levels of economic performance or repay principal or interest when due may result in the cancellation of such third parties’ commitments to lend funds, which may further impair the foreign sovereign obligor’s ability or willingness to timely service its debts. At certain times, certain countries have declared moratoria on the payment of principal and interest on external debt. Governmental entities may also depend on expected disbursements from non-U.S. governments, multilateral agencies and others to reduce principal and interest arrearages on their debt. The commitment on the part of these governments, agencies and others to make such disbursements may be conditioned on a governmental entity’s implementation of economic reforms and/or economic performance and the timely service of such debtor’s obligations. Failure to implement such reforms, achieve such levels of economic performance or repay principal or interest when due may result in the cancellation of such third parties’ commitments to lend funds to the governmental entity, which may further impair such debtor’s ability or willingness to service its debts in a timely manner. Consequently, governmental entities may default on their sovereign debt. Holders of sovereign debt (including the Master Fund) may be requested to participate in the rescheduling of such debt and to extend further loans to governmental entities. There is no legal process for collecting on a sovereign debt that a government does not pay or bankruptcy proceeding by which all or a part of the sovereign debt that a governmental entity has not repaid may be collected. Periods of economic uncertainty may result in the volatility of market prices of sovereign debt to a greater extent than the volatility inherent in debt obligations of other types of issues. | |
| Default Risk [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Default Risk . Loans have substantial vulnerability to default in payment of interest and/or repayment of principal. In addition, at times the repayment of principal or interest may be delayed. Certain of the loans in which the Master Fund may invest have large uncertainties or major risk exposures to adverse conditions, and should be considered to be predominantly speculative. Loan default rates may be significantly affected by economic downturns or general economic conditions beyond the Master Fund’s control. In particular, default rates on loans may increase due to factors such as prevailing interest rates, the rate of unemployment, the level of consumer confidence, residential real estate values, currency values, energy prices, changes in consumer spending, the number of personal bankruptcies, disruptions in the credit markets and other factors. The significant downturn in the global economy that occurred several years ago caused default rates on consumer loans to increase. The default history for loans may differ from that of the Master Fund’s investments. Loan losses (which may include both defaults and charge-offs) differ across Platforms and by loan type. Platforms in which the Master Fund invests may experience significant cumulative loan losses, particularly for lower-rated, higher risk loans. The default history for loans sourced via Platforms is limited, actual defaults may be greater than indicated by historical data and the timing of defaults may vary significantly from historical observations. Generally, in a rising interest rate environment, default rates may increase compared to their historical averages. The Platforms make payments ratably on an investor’s investment only if they receive the borrower’s payments on the corresponding loan. If the Platforms do not receive payments on the corresponding loan related to an investment, the investor will not be entitled to any payments under the terms of the investment. Further, investors may have to pay a Platform an additional servicing fee for any amount recovered on a delinquent loan and/or by the Platform’s third-party collection agencies assigned to collect on the loan. The Master Fund may be limited in its ability to recover any outstanding principal and interest under the loans because substantially all of the loans may be unsecured or undercollateralized, the loans will not be guaranteed or insured by any third-party or backed by any governmental authority, legal enforcement of the loans may be impracticable due to the relatively small size of the loans and the Master Fund will not have the ability to directly enforce creditors’ rights under the loans. If borrowers do not make timely payment of the principal due on their loans, or if the value of such loans decreases, the Fund’s NAV will decrease. Uncertainty and negative trends in general economic conditions in the United States and abroad, including significant volatility in credit markets, historically have created a difficult environment for companies in the lending industry. Many factors may have a detrimental impact on the Platforms’ operating performance and the ability of borrowers to pay principal and interest on loans. These factors include general economic conditions, unemployment levels, energy costs and interest rates, as well as events such as natural disasters, acts of war, terrorism and catastrophes. The interest rate, timing of payments or the overall amount to be repaid, of a loan the Fund holds may be altered in the discretion of the loan servicer or by operation of law or regulation. This risk may be particularly acute during periods of market dislocation, including but not limited to the dislocations caused by the impact of COVID-19 and/or the regulations and restricted imposed to limit its spread. Any such modification could adversely affect Fund performance by, among other things, delaying the receipt of payments, reducing the overall amount to be repaid by the borrower, or otherwise lowering the value of the credit. The Fund will typically have no ability to modify loans itself or to limit the authority of the servicing entity to do so. | |
| Loans are Generally not Secured by any Collateral or Guaranteed or Insured by any Third Party [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Loans are Generally not Secured by any Collateral or Guaranteed or Insured by any Third Party . The ability of the Master Fund to earn revenue is completely dependent upon payments being made by the borrower of the loan acquired by the Master Fund through a Platform. The Master Fund (as a “whole or fractional loan investor”) will receive payments under any loans it acquires through a Platform only if the corresponding borrower through that Platform (as a “borrower member”) makes payments on the loan. As a general matter, most loans are unsecured obligations of the borrowers. Thus, as a general matter, they are not secured by any collateral, not guaranteed or insured by any third party and not backed by any governmental authority in any way. The Platforms and their designated third-party collection agencies may be limited in their ability to collect on loans. The Master Fund must typically rely on the collection efforts of the Platforms and their designated collection agencies and does not generally expect to have any direct recourse against borrower members, will not be able to obtain the identity of the borrower members in order to contact a borrower about a loan and will otherwise have no ability to pursue borrower members to collect payment under loans. In addition, after the final maturity date of certain fractional loans and pass-through notes, a Platform may have no obligation to make any late payments to its whole or fractional loan investors even if a borrower has submitted such a payment to the Platform. In such case, the Platform is entitled to such payments submitted by a borrower member, and the whole or fractional loan investors will have no right to such payments. The reason for this limitation is that the distribution of such late payments after the final maturity date could have adverse tax consequences to the Platform. The Platform will retain from the funds received from the relevant borrower and otherwise available for payment to the Master Fund any insufficient payment fees and the amounts of any attorney’s fees or collection fees it, a third-party service provider or collection agency imposes in connection with such collection efforts. To the extent a loan is secured, there can be no assurance as to the amount of any funds that may be realized from recovering and liquidating any collateral or the timing of such recovery and liquidation, and hence there is no assurance that sufficient funds (or, possibly, any funds) will be available to offset any payment defaults that occur under the loan. As such, even loans that are secured by collateral may have the effect of being unsecured. The investment return on the loans depends on borrowers fulfilling their payment obligations in a timely and complete manner. Borrowers may not view lending obligations sourced on the Platform as having the same significance as other credit obligations arising under more traditional circumstances, such as loans from banks or other commercial financial institutions. If a borrower neglects his or her payment obligations on a loan or chooses not to repay his or her loan entirely, the Master Fund may not be able to recover any portion of its investment in such loan. As a result, the Master Fund’s NAV will decrease. All loans are credit obligations of individual borrowers, and the terms of the borrower members’ loans may not restrict the borrowers from incurring additional debt. If a borrower member incurs additional debt after obtaining a loan through a Platform, that additional debt may adversely affect the borrower’s creditworthiness generally, and could result in the financial distress, insolvency or bankruptcy of the borrower. This circumstance could ultimately impair the ability of that borrower to make payments on its loan and the Master Fund’s ability to receive the principal and interest payments that it expects to receive on those loans. To the extent borrower members incur other indebtedness that is secured, such as a mortgage, the ability of the secured creditors to exercise remedies against the assets of that borrower may impair the borrower’s ability to repay its loan, or it may impair the Platform’s ability to collect on the loan if it goes unpaid. Since consumer loans are unsecured, borrower members may choose to repay obligations under other indebtedness before repaying loans facilitated through a Platform because the borrowers have no collateral at risk. The Master Fund will not be made aware of any additional debt incurred by a borrower or whether such debt is secured. Where a borrower member is an individual, if such a borrower with outstanding obligations under a loan dies while the loan is outstanding, the borrower’s estate may not contain sufficient assets to repay the loan or the executor of the borrower’s estate may prioritize repayment of other creditors. Numerous other events could impact a borrower’s ability or willingness to repay a loan in which the Master Fund has invested, including divorce or sudden significant expenses, such as uninsured health care costs. Identity fraud may occur and adversely affect the Master Fund’s ability to receive the principal and interest payments that it expects to receive on loans. A Platform may have the exclusive right and ability to investigate claims of identity theft, and this creates a conflict of interest between the Master Fund and such Platform. If a Platform determines that verifiable identity theft has occurred, that Platform may be required to repurchase the loan or indemnify the Master Fund and, in the alternative, if the Platform denies a claim under any identify theft guarantee, the Platform would be saved from its repurchase or indemnification obligations. The Master Fund may not be protected from any losses it may incur from its investments in any loans resulting from borrower default by any insurance-type product operated by any of the Platforms through which it may invest. | |
| High-Yield Instruments and Unrated Debt Securities Risk [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | High-Yield Instruments and Unrated Debt Securities Risk. The loans purchased by the Master Fund are not rated by an NRSRO. In evaluating the creditworthiness of borrowers, the Investment Adviser relies on the ratings ascribed to such borrowers by the relevant Platform or otherwise determined by the Investment Adviser. The analysis of the creditworthiness of borrowers of loans may be a lot less reliable than for loans originated through more conventional means. In addition, the Master Fund may invest in debt securities and instruments that are classified as “higher yielding” (and, therefore, higher risk) investments. In most cases, such investments will be rated below investment grade by NRSROs or will be unrated. These investments are commonly referred to as “junk” investments. Investments in such securities are subject to greater risk of loss of principal and interest than higher rated instruments and may be considered to be predominantly speculative with respect to the obligor’s capacity to pay interest and repay principal. Such investments may also be considered to be subject to greater risk than those with higher ratings in the case of deterioration of general economic conditions. Because investors generally perceive that there are greater risks associated with high-yield instruments, the yields and prices of such instruments may fluctuate more than those that are higher rated. The market for high-yield instruments may be smaller and less active than those that are higher rated, which may adversely affect the prices at which the Master Fund’s investments can be sold and result in losses to the Master Fund, which, in turn, could have a material adverse effect on the performance of the Master Fund. Such securities and instruments are generally not exchange traded and, as a result, trade in the OTC marketplace, which is less transparent than the exchange-traded marketplace. | |
| Competition and Risks of Locating Suitable Investments; Ramp-Up Period [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Competition and Risks of Locating Suitable Investments; Ramp-Up Period . The success of the Master Fund depends on the Investment Adviser’s ability to identify and make suitable investments. The business in which the Master Fund operates, however, is highly competitive, rapidly changing and involves a high degree of risk. The Master Fund competes with a number of other sources of capital having an investment objective similar to those of the Master Fund. Some of the Master Fund’s competitors may have higher risk tolerance or different risk assessments. These characteristics could allow the Master Fund’s competitors to consider a wider variety of investments, establish more relationships and pay more competitive prices for investments than the Master Fund is able to. The Master Fund may lose investment opportunities if it does not match its competitors’ pricing and terms. If the Master Fund is forced to match its competitors’ pricing, it may not be able to achieve acceptable returns on its investments or may bear substantial risk of capital loss. A significant increase in the number and/or the size of the Master Fund’s competitors could force it to accept less attractive investment terms. Furthermore, many of the Master Fund’s competitors are not subject to the regulatory restrictions that the 1940 Act and other regulations impose on it as a closed-end fund. Furthermore, there is a risk that the Master Fund will not be able to deploy its capital or reinvested capital in a timely or efficient manner given the increased demand for suitable loans. The rate of reinvestment of such capital would be contingent on the availability of suitable inventory at that time. The Master Fund may be unable to find a sufficient number of attractive loans to meet its investment objective. The Master Fund depends on the Platforms’ ability to attract and identify sufficient borrower members to meet investor demand. If there are not sufficient qualified loan requests, the Master Fund may be unable to deploy or reinvest its capital in a timely or efficient manner. In such event, the Master Fund may be forced to invest in cash, cash equivalents, or other assets that fall within its investment policy, all of which generally offer lower returns than the Master Fund’s target returns from investments in loans. The Master Fund invests cash held in cash deposits, cash equivalents and fixed income instruments for cash management purposes. Interim cash management is likely to yield lower returns than the expected returns from investments. While the Master Fund expects it will be able to invest at least 80% of its net assets, plus the amount of any borrowings for investment purposes, directly or indirectly in alternative lending securities and other securities that meet the Master Fund’s investment objective and policies within three months after the receipt of proceeds from the offering, there are no assurances that there will be sufficient suitable loans in which to invest the Master Fund’s proceeds within this time frame. Moreover, there can be no assurance as to how long it will take for the Master Fund to invest any or all of the net proceeds of the offering, if at all, and the longer the period the greater the likelihood that the Master Fund’s performance will be materially adversely affected. | |
| Student Loans Risk [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Student Loans Risk. In general, the repayment ability of borrowers of student loans, as well as the rate of prepayments on student loans, may be influenced by a variety of economic, social, competitive and other factors, including changes in interest rates, the availability of alternative financings, regulatory changes affecting the student loan market and the general economy. For instance, certain student loans may be made to individuals who generally have higher debt burdens than other individual borrowers (such as students of post-secondary programs). The effect of the foregoing factors is impossible to predict. | |
| Reverse Repurchase Agreements [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Reverse Repurchase Agreements. Reverse repurchase agreements involve a sale of a security by the Master Fund to a bank or securities dealer and the Master Fund’s simultaneous agreement to repurchase the security for a fixed price (reflecting a market rate of interest) on a specific date. These transactions involve a risk that the other party to a reverse repurchase agreement will be unable or unwilling to complete the transaction as scheduled, which may result in losses to the Master Fund. Reverse repurchase transactions are a form of leverage that may also increase the volatility of the Master Fund’s investment portfolio. | |
| Treatment of Fund Investments under Federal Securities Laws [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Treatment of Fund Investments under Federal Securities Laws. The Fund and the Master Fund have been advised that it is the current view of the SEC and its staff that the purchase of whole loans through alternative lending Platforms involves the purchase of “securities” issued by the originating Platforms under the Securities Act. If the alternative lending securities purchased by the Master Fund, such as whole loans, are deemed to be “securities” under federal securities law, then the issuers of such instruments are subject to a wide range of obligations and sanctions. At the federal level, the issuer, the underwriter and other individuals in a public offering signing a registration statement are strictly liable for any inaccurate statements in the document. Even though an exemption from registration with the SEC is typically utilized by the issuers of the alternative lending securities that are considered “securities” pursuant to the federal securities laws, the anti-fraud provisions of the federal securities laws still apply. Avoidance of fraud requires full and fair disclosure of all material facts and the usual method of discharging this disclosure obligation is for the issuer to prepare and distribute a prospectus that has been registered with the SEC or, in a private transaction, an “offering memorandum” that incorporates the same type of information as would be contained in a registration statement. Noncompliance with federal securities laws can involve potentially severe consequences for the issuer and the Master Fund may recover civil damages from the applicable issuer of a security if the requisite intent can be shown against its directors, managers and/or other responsible persons. Securities regulators can also institute administrative proceedings, suits for injunction and, in the appropriate circumstances, even criminal actions. In addition, there are separate obligations and sanctions under securities laws which exist in each and every state. There is no bright line test to determine whether notes evidencing loans should be deemed “securities” within the purview of the SEC. In general, a determination of whether a note evidencing a loan is a security under the Securities Act is subject to an analysis of the facts and circumstances of the transaction involving the issuance of the notes. To the extent certain alternative lending securities, such as whole loans, are not, in the future, deemed to be “securities” under the Securities Act, the Master Fund would not be able to seek the remedies described above with respect to such instruments. | |
| Real Estate Loans and Real Estate-Related Assets Loans Risk [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Real Estate Loans and Real Estate-Related Assets Risk. The Master Fund may gain exposure to loans, securities or derivatives secured by, or relating to, real property, or it may invest in equity or debt issued by Platforms originating such loans, securities or derivatives. The value of an investment in securities or of the real property underlying a loan will be subject to the risks generally incident to the ownership of real estate. These risks include the cyclical nature of real estate values, risks related to general and local economic conditions, overbuilding and increased competition, increases in property taxes and operating expenses, demographic trends and variations in rental income, changes in zoning laws, casualty or condemnation losses, environmental risks, regulatory limitations on rents, changes in neighborhood values, changes in the appeal of properties to tenants, increases in interest rates and other real estate capital market influences. Generally, increases in interest rates will increase the costs of obtaining financing, which could directly and indirectly decrease the value of the Master Fund’s investments. To the extent the Master Fund invests in real estate loans, such investments are limited to real estate loans where, at the time of investment, the loan-to-value ratio of the property is less than or equal to 95%. If the Master Fund acquires options or certain other types of derivative securities on real estate, such as home equity agreements, and is unable to exercise them or otherwise participate in the intended upside economics, the Master Fund could lose the entire value of its investment in such derivatives. | |
| Non-U.S. Securities [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Non-U.S. Securities. The Master Fund may invest in securities of non-U.S. issuers and in depositary receipts or shares (of both a sponsored and non-sponsored nature), such as American Depositary Receipts, American Depositary Shares, Global Depositary Receipts or Global Depositary Shares (referred to collectively as “ADRs”), which represent indirect interests in securities of non-U.S. issuers. Sponsored depositary receipts are typically created jointly by a foreign private issuer and a depositary. Non-sponsored depositary receipts are created without the active participation of the foreign private issuer of the deposited securities. As a result non- sponsored depositary receipts may be viewed as riskier than depositary receipts of a sponsored nature. Non-U.S. securities in which the Master Fund may invest may be listed on non-U.S. securities exchanges or traded in non-U.S. over-the-counter markets (“OTC”). Investments in non-U.S. securities are subject to risks generally viewed as not present in the United States. These risks include: varying custody, brokerage and settlement practices; difficulty in pricing of securities; less public information about issuers of non-U.S. securities; less governmental regulation and supervision over the issuance and trading of securities than in the United States; the lack of availability of financial information regarding a non-U.S. issuer or the difficulty of interpreting financial information prepared under non-U.S. accounting standards; less liquidity and more volatility in non-U.S. securities markets; the possibility of expropriation or nationalization; the imposition of withholding and other taxes; adverse political, social or diplomatic developments; limitations on the movement of funds or other assets between different countries; difficulties in invoking legal process abroad and enforcing contractual obligations; and the difficulty of assessing economic trends in non-U.S. countries. In addition, investments in certain foreign markets, which have historically been considered stable, may become more volatile and subject to increased risk due to ongoing developments and changing conditions in such markets. Moreover, the growing interconnectivity of global economies and financial markets has increased the probability that adverse developments and conditions in one country or region will affect the stability of economies and financial markets in other countries or regions. Governmental issuers of non-U.S. securities may also be unable or unwilling to repay principal and interest due, and may require that the conditions for payment be renegotiated. Investment in non-U.S. countries typically also involves higher brokerage and custodial expenses than does investment in U.S. securities. Certain foreign markets may rely heavily on particular industries or foreign capital and are more vulnerable to diplomatic developments, the imposition of economic sanctions against a particular country or countries, organizations, companies, entities and/ or individuals, changes in international trading patterns, trade barriers, and other protectionist or retaliatory measures. Economic sanctions could, among other things, effectively restrict or eliminate the Master Fund’s ability to purchase or sell securities or groups of securities for a substantial period of time, and may make the Master Fund’s investments in such securities harder to value. International trade barriers or economic sanctions against foreign countries, organizations, companies, entities and/or individuals, may adversely affect the Master Fund’s foreign holdings or exposures. Investments in foreign markets may also be adversely affected by governmental actions such as the imposition of capital controls, nationalization of companies or industries, expropriation of assets, or the imposition of punitive taxes. Governmental actions can have a significant effect on the economic conditions in foreign countries, which also may adversely affect the value and liquidity of the Master Fund’s investments. For example, the governments of certain countries may prohibit or impose substantial restrictions on foreign investing in their capital markets or in certain sectors or industries. In addition, a foreign government may limit or cause delay in the convertibility or repatriation of its currency which would adversely affect the U.S. dollar value and/or liquidity of investments denominated in that currency. Any of these actions could severely affect security prices, impair the Master Fund’s ability to purchase or sell foreign securities or transfer the Master Fund’s assets back into the United States, or otherwise adversely affect the Master Fund’s operations. Certain foreign investments may become less liquid in response to market developments or adverse investor perceptions, or become illiquid after purchase by the Master Fund, particularly during periods of market turmoil. Certain foreign investments may become illiquid when, for instance, there are few, if any, interested buyers and sellers or when dealers are unwilling to make a market for certain securities. When the Master Fund holds illiquid investments, its portfolio may be harder to value or sell. | |
| Tax Treatment of Loans Risk [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Tax Treatment of Loans Risk. No statutory, judicial or administrative authority directly discusses how the notes, certificates and other alternative lending securities in which the Master Fund invests should be treated for tax purposes. As a result, the tax treatment of the Master Fund’s investment in the alternative lending securities is uncertain. The tax treatment of the Master Fund’s investment in the alternative lending securities could be affected by changes in tax laws or regulations, or interpretations thereof, or by court cases that could adversely affect the Master Fund and the Fund and their ability to qualify as a RIC under Subchapter M of the Code. As described above, the Master Fund invests primarily in whole loans sourced from lending Platforms based in the United States. For purposes of the Diversification Tests, it may be uncertain whether the issuer of such whole loans made by the Master Fund is the Platform, or the underlying borrowers with respect to such investments. In the opinion of Dechert LLP, tax counsel to the Master Fund and the Fund, whole loans acquired by the Master Fund under the circumstances described below in “Tax Aspects” should be treated as issued by the underlying borrower for the purposes of the Diversification Tests. Based on such opinion, the Master Fund intends to treat the underlying borrowers as the issuers of whole loans (and not the Platforms) for purposes of the Diversification Tests. However, such opinion is not binding on the IRS or a court and there can be no assurance that the IRS will not take contrary positions or that a court would agree with such opinion if litigated. While the Master Fund intends to invest in loans sourced by various Platforms, there may be times where a substantial portion of its alternative lending investments will be sourced from one Platform. Thus, a determination or future guidance by the IRS that the issuer of such whole loans is the Platform may adversely affect the Master Fund’s and, in turn, the Fund’s, ability to meet the Diversification Tests and qualify as a RIC. Failure of the Master Fund to qualify and be eligible to be treated as a RIC would result in Master Fund level and Fund-level taxation and, consequently, a reduced return on your investment. Each of the Master Fund and Fund could in some cases cure such failure, including by paying a Fund-level tax or interest, making additional distributions, or disposing of certain assets. See “Tax Aspects.” | |
| Systems and Operational and Cybersecurity Risks [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Systems and Operational and Cybersecurity Risks . The Master Fund depends on the development and implementation of appropriate systems for the Master Fund’s activities. The Master Fund relies heavily on a daily basis on financial, accounting and other data processing systems to execute, clear and settle transactions across numerous and diverse markets and to evaluate certain loans, to monitor its portfolio and capital, and to generate risk management and other reports that are critical to oversight of the Master Fund’s activities. The Investment Adviser may not be in a position to verify the risks or reliability of such third-party systems. In addition, the Master Fund relies on information systems to store sensitive information about the Master Fund, the Investment Adviser, their affiliates and the Shareholders. Any failure of the information technology (“IT”) systems developed and maintained by the Investment Adviser could have a material adverse effect on the ability of the Master Fund to acquire and realize investments and therefore negatively impact the Master Fund’s performance. The Investment Adviser is reliant upon attaining data feeds directly from the Platforms via an API and/or SFTP connection, which is a system of protocols and tools used for creating software applications. Any delays or failures could impact operational controls and the valuation of the Master Fund’s portfolio. While the Investment Adviser has in place systems to continually monitor the performance of these IT systems, there can be no guarantee that issues will not arise that may require attention from a specific Platform. Any such issues may result in processing delays. To seek to mitigate this risk the Investment Adviser will seek to put in place, with each Platform through which the Master Fund intends to invest, a defined process and communication standard to support the exchange of data. Technology complications associated with lost or broken data fields as a result of Platform-level changes to API and/or SFTP protocols may impact the Master Fund’s ability to receive and process the data received from the Platforms. To effectuate the Master Fund’s investment objective, the Investment Adviser’s activities are dependent upon systems operated by third parties, including without limitation the Platforms, banks, market counterparties and other service providers, and the Investment Adviser may not be in a position to verify the risks or reliability of such third-party systems. Failures in the systems employed by the Investment Adviser, Platforms, banks, counterparties, exchanges and similar clearance and settlement facilities and other parties could result in mistakes made in the confirmation or settlement of transactions, or in transactions not being properly booked, evaluated or accounted for. In addition, despite the security measures established by the Investment Adviser and other third parties to safeguard the information in these systems, such systems may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions. Any such breach could compromise these systems and result in the theft, loss or public dissemination of the information stored therein. Disruptions in a Platform’s, the Investment Adviser’s and/or the Master Fund’s operations or breach of such Platform’s, the Investment Adviser’s and/or the Master Fund’s information systems may cause the Master Fund to suffer, among other things, financial loss, the disruption of its business, liability to third parties, regulatory intervention or reputational damage. The highly automated nature of a Platform may make it an attractive target for, and potentially vulnerable to, cyberattacks, computer viruses, physical or electronic break-ins and similar disruptions. If a hacker were able to infiltrate a Platform, the Master Fund may experience losses on, or delays in the recoupment of amounts owed on, a fraudulently induced purchase of a loan. If a Platform is unable to prevent such activity, the value of the loans and such Platform’s ability to fulfill its servicing obligations and to maintain the Platform would be adversely affected. Because techniques used to sabotage or obtain unauthorized access to systems change frequently and generally are not recognized until they are launched against a target, the Platforms may be unable to anticipate these techniques or to implement adequate preventative measures. In addition, federal regulators and many federal and state laws and regulations require companies to notify individuals of data security breaches involving their personal data. If security measures are breached because of third-party action, employee error, malfeasance or otherwise, or if design flaws in software are exposed and exploited, relationships with borrowers and investors could be severely damaged. All of these potential risks may cause a decrease in the amount of loans acquired by the Platforms, which may directly affect the Master Fund and its ability to achieve its investment objective. The potential for security breaches may also adversely affect the Master Fund due to its reputational impact on the Platforms and wider effect on the online lending industry as a whole. Any of the foregoing failures or disruptions could have a material adverse effect on the Master Fund and the Shareholders’ investments therein. | |
| Risk of Fraud [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Risk of Fraud. The Master Fund may be subject to the risk of fraudulent activity associated with the various parties involved in alternative lending, including the Platforms, banks, borrowers and third parties handling borrower and investor information. Prospective borrowers may materially misrepresent any of the information they provide to the Platforms, including their credit history, the existence or value of purported collateral, the purpose of the loan, their occupation or their employment status. Platforms may not verify all of the information provided by prospective borrowers. Except where a Platform is required to repurchase loans or indemnify investors, fraud may adversely affect the Master Fund’s ability to receive the principal and interest payments that it expects to receive on its investments and, therefore, may negatively impact the Master Fund’s performance. A Platform may have the exclusive right and ability to investigate claims of borrower identity theft, which creates a conflict of interest, as Platforms may be obligated to repurchase loans and/or indemnify investors in the loans in the case of fraud and may, therefore, have an incentive to deny or fail to investigate properly a claim of fraud. Furthermore, there can be no guarantee that the resources, technologies or fraud prevention measures implemented by a Platform will be sufficient to accurately detect and prevent fraud. The Master Fund is also subject to the risk of fraudulent activity by a Platform or a backup servicer. In the event that a Platform or backup servicer engages in fraudulent activity, the pools of alternative lending securities originated by the Platform or any loans serviced by the Platform or backup servicer may be impaired or may not be of the quality that the Master Fund anticipated, thereby increasing the risk of default in respect of such loans. | |
| Servicer Risk [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Servicer Risk . The Master Fund expects that all of its direct and indirect investments in loans originated by alternative lending Platforms will be serviced by a Platform or a third-party servicer. In the event that the servicer is unable to service the loan, there can be no guarantee that a backup servicer will be able to assume responsibility for servicing the loans in a timely or cost-effective manner; any resulting disruption or delay could jeopardize payments due to the Master Fund in respect of its investments or increase the costs associated with the Master Fund’s investments. If the servicer becomes subject to a bankruptcy or similar proceeding, there is some risk that the Master Fund’s investments could be re-characterized as a secured loan from the Master Fund to the Platform, as described more fully (with respect to the potential bankruptcy of a Platform) under “Risks Relating to Compliance and Regulation of Online Lending Participants in the United States,” which could result in uncertainty, costs and delays from having the Master Fund’s investment deemed part of the bankruptcy estate of the Platform, rather than an asset owned outright by the Master Fund. | |
| Income Risk [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Income Risk. The income Shareholders receive from the Fund is based primarily on the interest it earns from its investments, which can vary widely over the short and long term. If prevailing market interest rates drop, distribution rates of the Fund’s debt holdings and Shareholder’s income distributions from the Fund could drop as well. The Fund’s income also would likely be affected adversely when prevailing short-term interest rates increase and the Fund is utilizing leverage. | |
| Limited Secondary Market and Liquidity of Alternative Lending Securities [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Limited Secondary Market and Liquidity of Alternative Lending Securities. Alternative lending securities generally have a maturity of up to seven years. Investors acquiring alternative lending securities directly through Platforms and hoping to recoup their entire principal must generally hold their loans through maturity. There is also currently no active secondary trading market for many of the loans in which the Master Fund invests, and there can be no assurance that such a market will develop in the future. The Master Fund is dependent on the Platforms to sell the Master Fund loans that meet the Master Fund’s investment criteria. There is currently very limited liquidity in the secondary trading of these investments. Alternative lending securities are not at present listed on any national or international securities exchange. Until an active secondary market develops, the Master Fund may often hold investments to maturity and may not necessarily be able to access significant liquidity. In the future, the Master Fund may purchase alternative lending securities from, or sell alternative lending securities through, a secondary market to the extent such a market exists, including privately negotiated secondary purchases. In the event of adverse economic conditions in which it would be preferable for the Master Fund to sell certain of its loans, the Master Fund may not be able to sell a sufficient proportion of its portfolio as a result of liquidity constraints. In such circumstances, the overall returns to the Master Fund from its investments may be adversely affected. In addition, the limited liquidity may cause a Platform’s other investors and potential investors to consider these investments to be less appealing, and demand for these investments may decrease, which may adversely affect the Platforms’ business. Moreover, certain alternative lending securities are subject to certain additional significant restrictions on transferability. The lack of an active secondary trading market, coupled with significant increases in default rates, could impact the Master Fund’s ability to provide quarterly repurchase offers to its Shareholders. | |
| Alternative Lending Risk Considerations - Loans may carry risk and be speculative [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Alternative Lending Risk Considerations Loans may carry risk and be speculative . Loans are risky and speculative investments. The loans are obligations of the borrower and depend entirely for payment on receipt of payments by a borrower. If a borrower fails to make any payments, the amount of interest payments received by the Master Fund will be reduced. Many of the loans in which the Master Fund invests are unsecured personal loans. However, the Master Fund may invest in business and specialty finance, including secured loans. If borrowers do not make timely payments of the interest due on their loans, the yield on the Master Fund’s Shares will decrease. If borrowers do not make timely payment of the principal due on their loans, or if the value of such loans decreases, the Master Fund’s NAV will decrease. Uncertainty and negative trends in general economic conditions in the United States and abroad, including significant volatility in credit markets, historically have created a difficult environment for companies in the lending industry. Many factors may have a detrimental impact on the Platforms’ operating performance and the ability of borrowers to pay principal and interest on loans. These factors include general economic conditions, unemployment levels, energy costs and interest rates, as well as events such as natural disasters, acts of war, terrorism and catastrophes. | |
| Credit Risk [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Credit Risk . Credit risk is the risk that a borrower or an issuer of a debt security or preferred stock, or the counterparty to a derivatives contract, will be unable to make interest, principal, dividend, or other payments when due. In general, lower rated securities carry a greater degree of credit risk. If rating agencies lower their ratings of securities in the Master Fund’s portfolio or if the credit standing of borrowers of loans in the Master Fund’s portfolio decline, the value of those obligations could decline. In addition, the underlying revenue source for a debt security, a preferred stock or a derivatives contract may be insufficient to pay interest, principal, dividends or other required payments in a timely manner. Because a significant primary source of cash available for income distributions by the Master Fund is the interest, principal and other payments on loans in which it invests, any default by a borrower could have a negative effect on the Master Fund’s ability to pay dividends on Shares and/or cause a decline in the value of Master Fund assets. Even if the borrower or issuer does not actually default, adverse changes in the borrower’s or issuer’s financial condition may negatively affect the borrower’s or issuer’s credit ratings or presumed creditworthiness. These developments would adversely affect the market value of the borrower’s or issuer’s obligations or the value of credit derivatives if the Master Fund has sold credit derivatives. | |
| Interest Rate Risk [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Interest Rate Risk . Interest rate risk is the risk that investments will decline in value because of changes in market interest rates. When interest rates rise the market value of a loan or other debt securities generally will fall, and when interest rates fall the market value of such securities generally rise. The Master Fund’s investment in such securities means that the NAV and market price of the Shares may decline if market interest rates rise. The Master Fund may face a heightened level of interest rate risk in times of monetary policy change and/or uncertainty, such as when the Federal Reserve Board adjusts a quantitative easing program and/or changes rates. A changing interest rate environment increases certain risks, including the potential for periods of volatility, increased redemptions, shortened durations (i.e., prepayment risk) and extended durations (i.e., extension risk). Investments in loans or other debt securities with long-term maturities may experience significant price declines if long-term interest rates increase. This is known as maturity risk. The value of the Master Fund’s investments in common shares or other equity securities may also be influenced by changes in interest rates. Investments in variable rate loans or other debt instruments, although generally less sensitive to interest rate changes than longer duration fixed rate instruments, may nevertheless decline in value in response to rising interest rates if, for example, the rates at which they pay interest do not rise as much, or as quickly, as market interest rates in general. Conversely, variable rate instruments will not generally increase in value if interest rates decline. Synthetic variable rate debt instruments include the additional risk that the derivatives transactions used to convert a fixed interest rate into a variable interest rate may not work as effectively as intended, such that the Master Fund is worse off than if it had invested directly in variable rate debt instruments. Inverse variable rate debt securities may also exhibit greater price volatility than a fixed-rate debt obligation with similar credit quality. To the extent the Master Fund holds variable rate instruments, a decrease (or, in the case of inverse variable rate securities, an increase) in market interest rates will adversely affect the income received from such securities and the NAV of the Shares. | |
| Prepayment Risk [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Prepayment Risk . Borrowers may have the option to prepay all or a portion of the remaining principal amount due under a borrower loan at any time without penalty. In the event of a prepayment of the entire remaining unpaid principal amount of a borrower loan in which the Master Fund invests, the Master Fund will receive such prepayment but further interest will not accrue on such loan after the date of the prepayment. If the borrower prepays a portion of the remaining unpaid principal balance, interest will cease to accrue on the prepaid portion, and the Master Fund will not receive all of the interest payments that it expected to receive. When interest rates fall, certain obligations will be paid off by the obligor more quickly than originally anticipated, and the Master Fund may have to invest the proceeds in loans or other securities with lower yields. In periods of falling interest rates, the rate of prepayments tends to increase (as does price fluctuation), as borrowers are motivated to pay off debt and refinance at new lower rates. During such periods, reinvestment of the prepayment proceeds by the Master Fund will generally be at lower rates of return than the return on the assets that were prepaid, which may result in a decline in the Master Fund’s income and distributions to Shareholders. Prepayment reduces the yield to maturity and the average life of a loan or other security. | |
| Risk of Treatment as a Non-Publicly Offered RIC [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Risk of Treatment as a Non-Publicly Offered RIC. The Fund will be treated as a “publicly offered regulated investment company” (within the meaning of Section 67 of the Code) if either (i) Shares of the Fund’s stock collectively are held by at least 500 persons at all times during a taxable year, (ii) Shares of the Fund’s stock are treated as regularly traded on an established securities market or (iii) Shares of the Fund’s stock are continuously offered pursuant to a public offering (within the meaning of section 4 of the Securities Act of 1933, as amended (the “Securities Act”). The Fund cannot provide assurance that it will be treated as a publicly offered regulated investment company for all taxable years. If the Fund is not treated as a publicly offered regulated investment company for any calendar year, each U.S. Shareholder that is an individual, trust or estate will be treated as having received a dividend from the Fund in the amount of such U.S. Shareholder’s allocable share of the Fund’s management fees and certain of other expenses for the calendar year, and these fees and expenses will be treated as miscellaneous itemized deductions of such U.S. Shareholder. For taxable years beginning before 2026, miscellaneous itemized deductions generally are not deductible by a U.S. Shareholder that is an individual, trust or estate. For taxable years beginning in 2026 or later, miscellaneous itemized deductions generally are deductible by a U.S. Shareholder that is an individual, trust or estate only to the extent that the aggregate of such U.S. Shareholder’s miscellaneous itemized deductions exceeds 2% of such U.S. Shareholder’s adjusted gross income for U.S. federal income tax purposes, are not deductible for purposes of the alternative minimum tax and are subject to the overall limitation on itemized deductions under the Code. See “Tax Aspects.” | |
| Risk of Bonds and Other Debt Securities Backed by Pools of Alternative Lending Securities [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Risk of Bonds and Other Debt Securities Backed by Pools of Alternative Lending Securities. The Master Fund may invest in bonds and other debt securities backed by a pool of alternative lending securities. These investments include bonds or other debt securities issued by SPVs established solely for the purpose of holding alternative lending securities secured only by such assets (which practice is known as securitization). Payment of principal and interest on such bonds and debt securities is dependent upon the cash flows generated by the underlying loans, and therefore these investments are subject to the same types of risks as direct investments in alternative lending securities. | |
| Subsidiary Risk [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Subsidiary Risk. By investing through its Subsidiaries, the Master Fund is exposed to the risks associated with the Subsidiaries’ investments. Subsidiaries are not registered as investment companies under the 1940 Act and will not be subject to all of the investor protections of the 1940 Act, although each Subsidiary is managed pursuant to the compliance policies and procedures of the Master Fund applicable to it. Changes in the laws of the United States and/or the jurisdiction in which a Subsidiary is organized could result in the inability of the Master Fund and/or the Subsidiary to operate as described in this Prospectus and could adversely affect the Master Fund. | |
| Risks Associated with the Platforms Credit Scoring Models [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Risks Associated with the Platforms’ Credit Scoring Models . A prospective borrower is assessed by a Platform based on a number of factors, such as the borrower’s credit score and credit history. Credit scores are produced by third-party credit reporting agencies based on a borrower’s credit profile, including credit balances, available credit, timeliness of payments, average payments, delinquencies and account duration. This data is furnished to the credit reporting agencies by the creditors. A credit score or loan grade assigned to a borrower member by a Platform may not reflect that borrower’s actual creditworthiness because the credit score may be based on outdated, incomplete or inaccurate reporting data. The Platforms’ credit decisions and scoring models are based on algorithms that could potentially contain programming or other errors, prove to be ineffective, or the data provided by borrowers or third parties may be incorrect or stale. If any of this occurs, loan pricing and approval processes could be negatively affected, resulting in mispriced or misclassified loans, which could ultimately have a negative impact on the Master Fund’s income and distributions to Shareholders. Additionally, it is possible that following the date of any credit information received, a borrower member may have become delinquent in the payment of an outstanding obligation, defaulted on a pre-existing debt obligation, taken on additional debt, applied simultaneously for a loan through multiple Platforms, or sustained other adverse financial or life events resulting in a reduction in the borrower’s creditworthiness. Also, if this information becomes unavailable or becomes more expensive to access, it could increase the Platforms’ costs as they seek alternative sources of information. In performing its credit analysis, each Platform will be reliant on the borrower’s credit information, which may be out of date, incomplete or inaccurate. In addition, for consumer loans, the Platforms will likely not have access to consolidated financial statements or other financial information about the borrowers, and the information supplied by borrowers may be inaccurate or intentionally false. Unlike traditional lending, the Platforms will not be able to perform any independent follow-up verification with respect to a borrower member, as the borrower member’s name, address and other contact details remain confidential. Because of these factors, the Investment Adviser may make investment decisions based on outdated, inaccurate or incomplete information. | |
| Valuation Risk [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Valuation Risk. The Master Fund is subject to valuation risk, which is the risk that one or more of the securities in which the Master Fund invests are priced incorrectly, due to factors such as incomplete data, market instability or human error. The alternative lending securities in which the Master Fund invests are investments for which market quotations are not readily available. Accordingly, the Master Fund values its investments at fair value as determined in good faith pursuant to policies and procedures developed and implemented by the Investment Adviser and approved by the Board of Trustees. Fair value pricing will require subjective determinations about the value of an investment or other asset. The Master Fund will utilize the services of one or more independent valuation firms to aid in determining the fair value of these investments. There is no assurance that the Master Fund could sell a portfolio security for the value established for it at any time, and it is possible that the Master Fund would incur a loss because a portfolio security is sold at a discount to its established value. If securities are mispriced, Shareholders could lose money upon redemption or could pay too much for Shares purchased. | |
| Risk of Increase in Consumer Credit Default Rates [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Risk of Increase in Consumer Credit Default Rates. The Master Fund’s investment strategy and valuation of portfolio investments is dependent on projected consumer default rates. Because alternative lending Platforms are relatively new, default history for loans sourced via Platforms is limited. Actual defaults may be greater than indicated by historical data, and the timing of defaults may vary significantly from historical observations. Importantly, historical observations do not cover any period of severe economic downturn. For example, loan forbearance and other loan modifications increased following economic shutdowns in view of COVID-19. Any future downturns in the economy may result in high or increased loan default rates, including with respect to consumer credit card debt. Furthermore, in a rising interest rate environment, default rates are likely to increase compared to their historical averages. Significant increases in default rates could impact the Master Fund’s ability to provide quarterly liquidity to its Shareholders. See “Limited Secondary Market and Liquidity of Alternative Lending Securities.” | |
| Risks Relating to Funds RIC Status [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Risks Relating to Fund’s RIC Status. Each of the Fund and the Master Fund has elected to be treated, and intends to qualify and be treated each taxable year, as a RIC under Subchapter M of the Code. In order for the Fund to qualify as a RIC in any taxable year, each of the Fund and the Master Fund must meet certain asset diversification tests (the “Diversification Tests”) and at least 90% of its gross income for such year must consist of certain types of qualifying income. The Diversification Tests will be satisfied if, at the end of each quarter of the Fund and the Master Fund’s taxable year, (i) at least 50% of the value of their total assets consists of cash and cash items (including receivables), U.S. government securities, securities of other RICs, and other securities limited, with respect to any one issuer, to no more than 5% of the value of the total assets of each of the Fund and the Master Fund and 10% of the outstanding voting securities of such issuer, and (ii) not more than 25% of the value of the total assets of the Fund and/or the Master Fund is invested in the securities (other than those of the U.S. government or other RICs) of any one issuer or of two or more issuers which the Fund and/or the Master Fund controls and which are engaged in the same, similar or related trades or businesses, or in the securities of one or more qualified publicly traded partnerships. So long as the Fund and/or the Master Fund qualify as a RIC, they generally will not be subject to U.S. federal income tax on its income, including net capital gain, distributed to Shareholders, provided that, for each taxable year, the Fund and/or the Master Fund distribute to their Shareholders an amount equal to or exceeding 90% of the sum of their “investment company taxable income” as that term is defined in the Code (which includes, among other things, dividends, taxable interest and the excess of any net short-term capital gains over net long-term capital losses, as reduced by certain deductible expenses) and its net tax-exempt income, if any. Each of the Fund and the Master Fund intends to distribute all or substantially all of its investment company taxable income and net capital gain each year. If Congress, the Treasury Department or the Internal Revenue Service (“IRS”) were to take any action that altered the Master Fund and the Fund’s current understanding of these requirements, certain types of income representing a significant portion of the gross income of the Master Fund or the Fund may not constitute qualifying income or the Master Fund or the Fund may not be adequately diversified. In that case, the Master Fund or the Fund could be forced to change the manner in which it pursues its investment strategy or, if the Master Fund or the Fund were ineligible to or otherwise did not “cure” its failure to meet such requirements, the Master Fund or the Fund could cease to qualify for the special U.S. federal income tax treatment accorded RICs. If for any taxable year the Master Fund or the Fund did not qualify as a RIC, they would be treated as a corporation subject to U.S. federal income tax, thereby subjecting any income earned by the Master Fund or the Fund to tax at the corporate level (currently at a 21% U.S. federal tax rate) and, when such income is distributed, to a further tax at the Shareholder level to the extent of the current or accumulated earnings and profits of the Master Fund or the Fund. See “Tax Aspects.” | |
| Equity Securities [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Equity Securities . In general, prices of equity securities are more volatile than those of fixed income securities. The prices of equity securities fluctuate, and sometimes widely fluctuate, in response to activities specific to the issuer of the security as well as factors unrelated to the fundamental condition of the issuer, including general market, economic, political and public health conditions. | |
| Non-U.S. Exchanges [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Non-U.S. Exchanges. The Master Fund may trade, directly or indirectly, futures and securities on exchanges located outside of the United States. Some non-U.S. exchanges, in contrast to U.S. exchanges, are “principal’s markets” in which performance is solely the individual member’s responsibility with whom the Master Fund has entered into a commodity contract and not that of an exchange or clearinghouse, if any. In the case of trading on non-U.S. exchanges, the Master Fund is subject to the risk of the inability of, or refusal by, the counterparty to perform with respect to contracts. Moreover, since there is generally less government supervision and regulation of non-U.S. exchanges, clearinghouses and clearing firms than in the United States, the Master Fund is also subject to the risk of the failure of the exchanges on which its positions trade or of their clearinghouses or clearing firms, and there may be a high risk of financial irregularities and/or lack of appropriate risk monitoring and controls. | |
| Geographic Focus Risk [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Geographic Focus Risk. A geographic focus in a particular region may expose the Master Fund to an increased risk of loss due to risks associated with that region. Certain regions from time to time will experience weaker economic conditions than others and, consequently, will likely experience higher rates of delinquency and loss than on similar investments across the geographic regions to which the Master Fund is exposed. In the event that a significant portion of the alternative lending securities of the Master Fund relate to loans owed by borrowers resident or operating in certain specific geographic regions, any localized economic conditions, weather events, natural or man-made disasters or other factors affecting those regions in particular could increase delinquency and defaults on the assets to which the Master Fund is exposed and could negatively impact Master Fund performance. Further, any focus of the Master Fund’s alternative lending investments in one or more regions would have a disproportionate effect on the Master Fund if governmental authorities in any such region took action against any of the participants in the alternative lending industry doing business in that region. | |
| Regulatory Regime in the United Kingdom [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Regulatory Regime in the United Kingdom. In the future, the Master Fund may invest in online lending-related securities through Platforms domiciled in the United Kingdom. Such Platforms must be authorized and regulated by the Financial Conduct Authority (“FCA”) in order to engage in the regulated activity of “operating an electronic system in relation to lending,” following changes to consumer credit regulation in April 2014. The FCA is currently allowing application periods, giving Platforms with interim permission a three-month window in which they must apply to the FCA for full authorization. If any Platform through which the Master Fund invests were to fail to obtain full authorization, the Platform might be forced to cease its operations, which would disrupt the servicing and administration of loans to which the Master Fund has exposure through that Platform. Any such disruption may impact the quality of debt collection procedures in relation to those loans and may result in reduced returns to the Master Fund from those investments. The FCA has recently also introduced new regulatory controls for Platform operators, including the application of conduct of business rules (in particular, relating to disclosure and promotions), minimum capital requirements, client money protection rules, dispute resolution rules and a requirement for firms to take reasonable steps to ensure existing loans continue to the administered if the firm goes out of business. The introduction of these regulations and any further new laws and regulations could have a material adverse effect on U.K. Platforms’ businesses and may result in interruption of operations by such Platforms or the passing on of the costs of increased regulatory compliance to investors, such as the Master Fund, in the form of higher origination or servicing fees. The Master Fund may invest in loans that constitute regulated credit agreements (consumer credit loans) under the Financial Services and Markets Act 2000 (“FSMA”). Article 60B of the amended Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (“RAO”) provides that the activity of entering into a regulated credit agreement as lender or exercising or having the right to exercise the lender’s rights and duties under such credit agreement requires FCA authorization. However, article 60I of the RAO and paragraph 55 of the schedule to the Financial Services and Markets Act 2000 (Exemption) Order 2001 provide exemptions from authorization to persons who acquire rights under a regulated credit agreements (but who do not make any such loans or extend any new credit), provided that the servicer of such loans is appropriately authorized by the FCA. The Master Fund is not authorized by the FCA in respect of consumer credit activities. To the extent that it acquires any loans which are regulated credit agreements under FSMA, the Master Fund will be required to ensure that a person with the appropriate FCA authorization is engaged to service such regulated credit agreements in accordance with the exemptions from authorization under article 60B and paragraph 55 outlined above. If the FCA were to successfully challenge the Master Fund’s reliance on this exemption, this could adversely affect the Master Fund’s ability to invest in consumer loans in the United Kingdom or other online lending- related securities relating to such consumer loans, and could subject to the Master Fund to costs that could adversely affect the results of the Master Fund. | |
| European Economic Risk [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | European Economic Risk. European financial markets have experienced volatility in recent years and have been adversely affected by concerns about rising government debt levels, credit rating downgrades, and possible default on or restructuring of government debt. These events have affected the value and exchange rate of the euro. The Fund’s potential investments in euro-denominated (or other European currency-denominated) securities also entail the risk of being exposed to a currency that may not fully reflect the strengths and weaknesses of the disparate European economies. The governments of several member countries of the European Union (“EU”) have experienced large public budget deficits, which have adversely affected the sovereign debt issued by those countries and may ultimately lead to declines in the value of the euro. In addition, if one or more countries leave the EU or the EU dissolves, the world’s securities markets likely will be significantly disrupted. In an advisory referendum held in June 2016, the United Kingdom (“UK”) electorate voted to leave the EU, an event widely referred to as “Brexit.” On January 31, 2020, the UK officially withdrew from the EU and the UK entered a transition period which ended on December 31, 2020. On December 30, 2020, the EU and UK signed the EU-UK Trade and Cooperation Agreement (“TCA”), an agreement on the terms governing certain aspects of the EU’s and the UK’s relationship following the end of the transition period. Notwithstanding the TCA, following the transition period, there is likely to be considerable uncertainty as to the UK’s post-transition framework. The impact on the United Kingdom and the EU and the broader global economy is still unknown but could be significant and could result in increased volatility and illiquidity and potentially lower economic growth. Brexit may have a negative impact on the economy and currency of the United Kingdom and the EU as a result of anticipated, perceived or actual changes to the United Kingdom’s economic and political relations with the EU. The impact of Brexit, and its ultimate implementation, on the economic, political and regulatory environment of the United Kingdom and the EU could have global ramifications. Any of the foregoing or similar risks could have a material adverse effect on the operations, financial condition or investment returns of a Fund and/or the Investment Adviser in general. These events, subsequent developments and future consequences of Brexit lie outside of the control of the Fund and the Investment Adviser and their impact cannot be reliably predicted. It is possible that EU member countries that have already adopted the euro could abandon the euro and return to a national currency and/or that the euro will cease to exist as a single currency in its current form. The effects of such an abandonment or a country’s forced expulsion from the euro on that country, the rest of the EU, and global markets are impossible to predict, but are likely to be negative. The exit of any country out of the euro would likely have an extremely destabilizing effect on all Eurozone countries and their economies and negatively affect the global economy as a whole, which may have substantial and adverse effects on the Fund. In addition, under these circumstances, it may be difficult for the Fund to value investments denominated in euros or in a replacement currency. | |
| Highly Volatile Markets [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Highly Volatile Markets. Financial markets may be highly volatile from time to time. The prices of commodities contracts and all derivative instruments, including futures and options, can be highly volatile. Price movements of forwards, futures and other derivative contracts are influenced by, among other things: interest rates; changing supply and demand relationships; trade, fiscal, monetary and exchange control programs and policies of governments; and national and international political and economic events and policies. In addition, governments from time to time intervene, directly and by regulation, in certain markets, particularly those in currencies, financial instruments, futures and options. Intervention often is intended directly to influence prices and may, together with other factors, cause all such markets to move rapidly in the same direction because of, among other things, interest rate fluctuations. In times of general market turmoil, even large, well-established financial institutions may fail rapidly with little warning. Events in the financial sector during late 2008 and during the crisis relating to COVID-19 resulted in an unusually high degree of volatility in the financial markets, both domestic and foreign, and similar market disruption could occur again in the future. More recently, concerns about political instability, questions about the strength and sustainability of the U.S. economic recovery, concerns about the growing federal debt and slowing growth in China, are factors which continue to concern the financial markets and create volatility. Issuers that have exposure to the real estate, mortgage and credit markets may be particularly affected by subsequent adverse events affecting these sectors and general market turmoil. Moreover, legal or regulatory changes applicable to financial services companies may adversely affect such companies’ ability to generate returns and/or continue certain lines of business. See “Risk Considerations—Alternative Lending Risk Considerations.” | |
| Investment Company Securities [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Investment Company Securities. Subject to the limitations set forth in the 1940 Act, or as otherwise permitted by the SEC, the Master Fund may acquire shares in other investment companies, including foreign investment companies and ETFs, which may be managed by the Investment Adviser or its affiliates. The market value of the shares of other investment companies may differ from the NAV of the Master Fund. The shares of closed-end investment companies frequently trade at a discount to their NAV. As a shareholder in an investment company, the Master Fund would bear its ratable share of that entity’s expenses, including its investment advisory and administration fees. At the same time, the Master Fund would continue to pay its own advisory and administration fees and other expenses. As a result, the Master Fund and its shareholders, in effect, will be absorbing duplicate levels of fees with respect to investments in other investment companies. The SEC has adopted changes to the regulatory framework governing investments by investment companies in other investment companies, which may adversely affect the Fund’s ability to invest in one or more investment companies in excess of applicable statutory limits. | |
| Investments in Other Pooled Investment Vehicles [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Investments in Other Pooled Investment Vehicles. Direct or indirect investing in another pooled investment vehicle, such as securitization vehicles that issue asset-backed securities, exposes the Master Fund to all of the risks of that vehicle’s investments. The Master Fund bears its pro rata share of the expenses of any such vehicle, in addition to its own expenses. The values of other pooled investment vehicles are subject to change as the values of their respective component assets fluctuate. To the extent the Master Fund invests in managed pooled investment vehicles, the performance of the Master Fund’s investments in such vehicles will be dependent upon the investment and research abilities of persons other than the Investment Adviser. The securities offered by such vehicles typically are not registered under the securities laws because they are offered in transactions that are exempt from registration. The SEC has adopted changes to the regulatory framework governing investments by investment companies in other investment companies, which may adversely affect the Master Fund’s ability to invest in one or more investment companies in excess of applicable statutory limits. | |
| Regulatory Regime in Other Jurisdictions [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Regulatory Regime in Other Jurisdictions. In the future, the Master Fund’s loan investments may be sourced from Platforms domiciled outside the United States and United Kingdom, except that the Master Fund will not invest in Platforms domiciled in emerging markets countries, as determined by the Platforms pursuant to guidelines developed by the Investment Adviser. The Platforms and their investors may face regulation in the other jurisdictions in which the Master Fund invests. Many other jurisdictions have regulatory regimes in place to authorize or regulate Platforms. If any entity operating a Platform through which the Master Fund invests, or any entity that is the lender under a loan agreement facilitated by that Platform, were to lose its license or have its license suspended or revoked, the Platform might be forced to cease its operations, which could impair the ability of the Master Fund, and thus the Fund, to pursue its investment strategy by investing in loans originated by that Platform, and could disrupt the servicing and administration of loans to which the Master Fund has exposure through that Platform. Any such disruption may impact the quality of debt collection procedures in relation to those loans and may result in reduced returns to the Master Fund from those investments. In addition, some jurisdictions may regulate the terms of loans issued through a Platform or impose additional requirements on investments in such loans, which could impact the value of online lending-related securities purchased from a Platform operating in such a jurisdiction or the ability of the Master Fund, and thus the Fund, to pursue its investment strategy by investing in loans originated by such a Platform. New or amended laws or regulations could disrupt the business operations of Platforms operating in jurisdictions in which the Master Fund invests and could result in the Platforms passing on of increased regulatory compliance costs to investors, such as the Master Fund, in the form of higher origination or servicing fees. | |
| Potential Inaccuracy of Information Supplied by Prospective Borrowers [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Potential Inaccuracy of Information Supplied by Prospective Borrowers . The Master Fund is dependent on the Platforms to collect and verify certain information about each loan and prospective borrower. Prospective borrowers supply a variety of information regarding the purpose of the loan, income, occupation and employment status that is included in the Platforms’ underwriting. As a general matter, the Platforms may not verify the majority of this information, which may be incomplete, inaccurate, false or misleading. Prospective borrowers may misrepresent any of the information they provide to the Platforms, including their intentions for the use of loan proceeds. As a general matter, the Platforms may not verify any statements by prospective borrowers as to how loan proceeds are to be used nor confirm after loan funding how loan proceeds were used. To the extent false, misleading or incomplete information was supplied, it could adversely affect the Master Fund’s income and distributions to Shareholders. | |
| Risk of Unsecured Loans [Member] | ||
| General Description of Registrant [Abstract] | ||
| Risk [Text Block] | Risk of Unsecured Loans . Many of the Master Fund’s investments are associated with loans that are unsecured obligations of borrowers. This means that they are not secured by any collateral, not insured by any third party, not backed by any governmental authority in any way and typically not guaranteed by any third party. When a borrower defaults on an unsecured loan, the holder’s only recourse is generally to sell the holder’s rights to principal or interest recovered at a discount to face value, or to accelerate the loan and enter into litigation to recover the outstanding principal and interest. There is no assurance that such litigation would result in full repayment of the loan and the costs of such measures may frequently exceed the outstanding unpaid amount of the borrowing. The Master Fund generally needs to rely on the efforts of the Platforms, servicers or their designated collection agencies to collect on defaulted loans and there is no guarantee that such parties will be successful in their efforts to collect on loans. In addition, the Master Fund’s investments in shares, certificates, notes or other securities representing an interest in a special purpose entity organized by an alternative lending Platform and the right to receive principal and interest payments due on whole loans, participation notes or fractional loans owned by such entity are typically unsecured obligations of the issuer. As a result, the Master Fund generally may not look to the underlying loans to satisfy delinquent payments on such interests, even though payments on such interests depend entirely on payments by underlying borrowers on their loans. | |
| Fees and expenses Paid on a 1,000 investment, assuming a 5% annual return [Member] | ||
| Other Annual Expenses [Abstract] | ||
| Expense Example, Year 01 | $ 94 | |
| Expense Example, Years 1 to 3 | 219 | |
| Expense Example, Years 1 to 5 | 341 | |
| Expense Example, Years 1 to 10 | 632 | |
| Fees and expenses Paid on a 50,000 investment, assuming a 5% annual return [Member] | ||
| Other Annual Expenses [Abstract] | ||
| Expense Example, Year 01 | 4,703 | |
| Expense Example, Years 1 to 3 | 10,975 | |
| Expense Example, Years 1 to 5 | 17,071 | |
| Expense Example, Years 1 to 10 | $ 31,578 | |
| Preferred Shares [Member] | ||
| Capital Stock, Long-Term Debt, and Other Securities [Abstract] | ||
| Capital Stock [Table Text Block] | Preferred Shares Although the Fund does not intend to issue preferred shares at this time, the Declaration of Trust authorizes the issuance of an unlimited number of shares of beneficial interest with preference rights, including preferred shares (“preferred shares”), having no par value per share or such other amount as the Board may establish, in one or more series, with rights as determined by the Board, by action of the Board without the approval of the Shareholders. Under the requirements of the 1940 Act, the Fund must, immediately after the issuance of any preferred shares, have an “asset coverage” of at least 200%. Asset coverage means the ratio which the value of the total assets of the Fund, less all liabilities and indebtedness not represented by senior securities (as defined in the 1940 Act), bears to the aggregate amount of senior securities representing indebtedness of the Fund, if any, plus the aggregate liquidation preference of the preferred shares. If the Fund seeks a rating of the preferred shares, asset coverage requirements, in addition to those set forth in the 1940 Act, may be imposed. The liquidation value of the preferred shares is expected to equal their aggregate original purchase price plus redemption premium, if any, together with any accrued and unpaid dividends thereon (on a cumulative basis), whether or not earned or declared. The terms of the preferred shares, including their dividend rate, voting rights, liquidation preference and redemption provisions, will be determined by the Board (subject to applicable law and the Declaration of Trust) if and when it authorizes the preferred shares. The Fund may issue preferred shares that provide for the periodic redetermination of the dividend rate at relatively short intervals through an auction or remarketing procedure, although the terms of the preferred shares may also enable the Fund to lengthen such intervals. At times, the dividend rate as redetermined on the Fund’s preferred shares may approach or exceed the Fund’s return after expenses on the investment of proceeds from the preferred shares and the Fund’s leveraged capital structure would result in a lower rate of return to Shareholders than if the Fund were not so structured. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Fund, the terms of any preferred shares may entitle the holders of preferred shares to receive a preferential liquidating distribution (expected to equal the original purchase price per share plus redemption premium, if any, together with accrued and unpaid dividends, whether or not earned or declared and on a cumulative basis) before any distribution of assets is made to Shareholders. After payment of the full amount of the liquidating distribution to which they are entitled, the preferred shareholders would not be entitled to any further participation in any distribution of assets by the Fund. Under the 1940 Act, preferred shareholders, voting as a class, will be entitled to elect two members of the Board and, if at any time dividends on the preferred shares are unpaid in an amount equal to two full years’ dividends thereon, the holders of all outstanding preferred shares, voting as a class, will be allowed to elect a majority of the Board until all dividends in default have been paid or declared and set apart for payment. In addition, if required by the NRSRO that is rating the preferred shares or if the Board determines it to be in the best interests of the Shareholders, issuance of the preferred shares may result in more restrictive provisions than required by the 1940 Act being imposed. In this regard, holders of the preferred shares may be entitled to elect a majority of the Board in other circumstances, for example, if one payment on the preferred shares is in arrears. If the Fund were to issue preferred shares, it is expected that the Fund would seek a credit rating for the preferred shares from an NRSRO. In that case, as long as preferred shares are outstanding, the composition of its portfolio would reflect guidelines established by such NRSRO. Although, as of the date hereof, no such NRSRO has established guidelines relating to any such preferred shares, based on previous guidelines established by such rating agencies for the securities of other issuers, the Fund anticipates that the guidelines with respect to the preferred shares would establish a set of tests for portfolio composition and asset coverage that supplement (and in some cases are more restrictive than) the applicable requirements under the 1940 Act. Although, at this time, no assurance can be given as to the nature or extent of the guidelines which may be imposed in connection with obtaining a rating of the preferred shares, the Fund currently anticipates that such guidelines will include asset coverage requirements, which are more restrictive than those under the 1940 Act, restrictions on certain portfolio investments and investment practices and certain mandatory redemption requirements relating to the preferred shares. No assurance can be given that the guidelines actually imposed with respect to the preferred shares by such NRSRO will be more or less restrictive than as described in this prospectus. | |
| Security Title [Text Block] | Preferred Shares | |
| [1] 1 Generally, the minimum initial investment by an investor in the Fund is $25,000, which minimum may be reduced for certain investors. Investors purchasing Shares may be charged a sales load of up to 3% of the Investor’s subscription. The table assumes the maximum sales load is charged. The Distributor and/or a Service Agent may, in its discretion, waive the sales load for certain investors. See “Plan of Distribution.” 2 This fee is paid to the Investment Adviser at the Master Fund level. 3 These expenses are paid at the Master Fund level. See “Investment Program - Leverage.” 4 Other Expenses include professional fees and other expenses that the Fund will bear directly and indirectly through the Master Fund, including, without limitation, the Fund’s Distribution and Shareholder Servicing Fee. See “Fund and Master Fund Expenses” and “Distribution and Shareholder Servicing Fee.” 5 The Fund, and therefore the Shareholders, will indirectly bear Platform loan fees, such as loan servicing fees and loan trailing fees that are paid to the servicer of the applicable Platform and, in certain cases, to applicable originator of the alternative lending securities in which the Master Fund invests. 6 Included within “All Other Expenses” in the table above are 0.15% of expenses related to the credit facilities, including amounts such as drawdown fees, legal fees and other service provider fees. 7 The Master Fund may invest a portion of its assets in other investment companies (the “Acquired Funds”). The Master Fund’s Shareholders indirectly bear a pro rata portion of the expenses of the Acquired Funds in which the Master Fund invests. “Acquired Fund Fees and Expenses” in the table is an estimate of those expenses. The estimate is based upon the average allocation of the Master Fund’s investments in the Acquired Funds and upon the actual total operating expenses of the Acquired Funds (including any current waivers and expense limitations) for the fiscal year ending September 30, 2023. Actual Acquired Fund Fees and Expenses incurred by the Master Fund may vary with changes in the allocation of Master Fund assets among the Acquired Funds and with other events that directly affect the fees and expenses of the Acquired Funds. Since “Acquired Fund Fees and Expenses” are not directly borne by the Master Fund, they are not reflected in the Master Fund’s financial statements, with the result that the information presented in the table will differ from that presented in the Financial Highlights. 8 The Investment Adviser has agreed, until at least February 1, 2025, to waive and/or reimburse the Fund’s expenses (other than (i) the Fund’s proportionate share of the management fees paid to the Investment Adviser by the Master Fund, (ii) the Fund’s proportionate share of the other expenses of the Master Fund and (iii) the Fund’s Extraordinary Expenses) to the extent necessary in order to cap total annual fund expenses at 1.00% of the Fund’s average annual net assets. The fee waiver and/or expense reimbursement will continue for at least one year or until such time as the Master Fund’s Board of Directors acts to discontinue all or a portion of such waiver and/or reimbursement when it deems such action is appropriate. “Extraordinary Expenses” are expenses incurred by the Fund outside of the ordinary course of its business, including, without limitation, costs incurred in connection with any claim, litigation, arbitration, mediation, government investigation or similar proceedings, indemnification expenses and expenses in connection with holding and/or soliciting proxies for a meeting of Shareholders. Pursuant to an Expense Reimbursement Agreement, to the extent that the Fund’s expenses for the fiscal year fall below the Operating Expense Limit and the Investment Adviser has previously waived management fees for any calendar month of that fiscal year, the Fund shall reimburse the Investment Adviser in the amount necessary to bring the Fund’s expenses up to the Operating Expense Limit. | ||
