Net Asset Value Wrapper

Matrix’s Net Asset Value Wrapper (‘NAV Wrapper’) solution provides an insurance-based wrapper that protects against the loss of value of the initial invested Net Asset Value (“NAV”). This enables asset managers, REITs, family offices, and other segments (see breakdown of markets served at the bottom of this page) to offer a rare and customized principal-protected fund to leading institutional allocators. By mitigating downside risk, Matrix’s innovative solution helps firms across the alternative investment landscape attract new capital and grow their Assets Under Management (“AUM”).

The NAV Wrapper insurance program offers a combination of value contributions by and for all parties involved:

• The insurers lend their credit ratings and major global balance sheets to back-stop the value of well managed alternative investment vehicles, in return for receiving a premium payment
• The asset manager benefits from recognition by the insurer for providing outstanding risk management– worthy of the insurer’s willingness to defease price risk from the investors–and offering high-prestige, risk-adverse allocators– such as banks, pension funds and sovereign wealth funds–a unique solution providing exceptional risk-adjusted returns
• Investors receive the benefit of accessing attractive emerging managers in interesting, uncorrelated assets classes, while still satisfying risk mandates of Investment Committees, and in the case of rated and regulated balance sheets, potentially capital relief/release as well
• Matrix, with its team of experienced alternative investment managers, underwriters, capital raisers and insurance intermediaries, serves as the exclusive manager of this insurance program, selecting attractive managers and strategies for consideration; providing due diligence and underwriting; and coordinating placement and closing of this unique insurance wrapper.

NAV Wrapper Insurance policies are customized for each manager and fund, to meet the specific requirements of the underlying investments. However, we see a few common themes to successful structures:

• Insurance limits of $50-100 million per insured fund, per tranche; may be repeated with additional tranches for a manager upon successful experience
• 3–5-year terms of coverage
• Principal protection insurance may cover up to 100% of the NAV of a given fund in certain circumstances, but more commonly the manager or investor would retain a certain minority percentage of the risk, with the insurer covering the large majority
• Fund entity would be the named insured, and all LPs in a given fund or share class would be insured
• LPs would have the ability to redeem investment prior to the end of coverage term but would forfeit rights to claim and all premiums paid would be earned
• Each manager will agree to a bespoke, specific investment policy statement for insured assets dictating diversification, concentration limit, risk management factors etc. Only portfolios meeting these criteria will be eligible
• All insurers writing coverage for this program are rated A or better, with multi-billion balance sheets and excellent reputations; they are highly creditworthy risk-bearing partners
• Certain types of strategies are much better suited for the program than others. Core considerations of eligible managers include a 2-3+ year audited track record, a minimum of $50mm in AUM; $100mm+ preferred, high quality team and processes with a focus on compliance and systems.

Strategy eligibility criteria:

• Low volatility
• Uncorrelated to other asset classes
• Invested in quality assets that can be valued and liquidated under subrogation in event of a claim, and provide consistent cash flow and positive returns
• No equity, commodity, macro, timing or trading/MTM risk
• Little to no leverage used in portfolio
• Focus is on private credit and other asset-backed illiquid assets.

Matrix is currently actively reviewing asset managers and strategies that may be a good fit for this new and innovative NAV wrap insurance program. If you manage an alternative investment vehicle and are interested in discussing this solution in more detail, please contact us and we will be pleased to discuss.

The Matrix NAV Wrapper can add value beyond private credit and alternative asset managers, especially in sectors where capital efficiency, risk mitigation, and portfolio stability are critical. Here are some key sectors where it can make a significant impact:

Family Offices & Sovereign Wealth Funds

Why NAV Wrapper works: Managing diversified, often illiquid portfolios where NAV volatility affects strategic planning.

Value: Enables attracting outside capital for proprietary strategies; risk management tool to preserve wealth across asset classes.

Private Equity Secondaries Funds

Why NAV Wrapper works: NAV fluctuations impact valuations and secondary market pricing.

Value: Stabilizes NAV, supporting more predictable pricing and liquidity events; often enables debt financing secured by PE portfolios.

Real Estate Investment Trusts (REITs) & Real Estate Funds

Why NAV Wrapper works: REITs face higher debt financing costs due to market fluctuations and asset revaluations.

Value: Stabilizes a portion of the NAV and/or credit enhances debt offerings, to support better debt terms and investor confidence.

Infrastructure Funds

Why NAV Wrapper works: Long-term projects with illiquid assets can benefit from NAV protection.

Value: Enhances credit profiles over long maturity windows, making financing more efficient.

Collateralized Loan Obligations (CLOs) & Structured Credit Vehicles

Why NAV Wrapper works: Complex capital structures sensitive to credit events and NAV shifts.

Value: Provides credit enhancement for specific tranches or exposures, supporting tighter spreads and investor confidence.

Hedge Funds

Why NAV Wrapper works: Especially for funds non-volatile and uncorrelated returns.

Value: Mitigates NAV drawdown risk, improves financing terms with counterparties.

Banks & Institutional Lenders

Why NAV Wrapper works: When lending against fund NAV or portfolio assets.

Value: Acts as a credit enhancement, reducing risk exposure for lenders and/or creates capital release/relief advantages.