From: Mike Silverman
March 28, 2016
Securities and Exchange Commission
My name is Mike Silverman. I am the Chief Investment Officer of Crow Holdings Capital-Investment Partners. Our firm is a registered investment advisor based in Dallas, Texas. We are an advisor of both investment funds with individual and institutional investors and an advisor to individuals on their investment portfolios. The Investment Partners group, of which I am a part, deals primarily with individuals and family groups.
I am concerned about proposed new rules dealing with the Use of Derivatives by Investment Companies and BDCs. Our firm uses liquid alternatives as a way to complement other investment strategies. Specifically, we use them to efficiently access various global markets as a diversification tool to traditional stock, bond and private investments. We have found liquid alternatives a more cost effective and an easier way to access markets than other options most notably hedge funds which may have limited liquidity and lack of transparency to the underlying assets and correspondingly to the risks being taken. A reduction in availability of these marketable investment vehicles would be detrimental to our client portfolios-costs would increase and flexibility would decrease. I believe it is quite important to have rules to protect investors. These instruments, in fact, support our firms ability to be a good steward of capital. I should point out that we use liquid alternatives which we have evaluated carefully and don’t use derivatives to increase the risk of the investment-that is they don’t use financial leverage to enhance returns. We hope to make more use of these funds in the future not less and accordingly believe that having reasonable rules which don’t impair market participants from offering options is important. I suspect that the current proposal was written broadly and has pulled in a number of market participants which are not creating new investor risk. While I am sure that some exchange trade funds-particularly those that expressly offer a high degree of leverage to increase return-have peril for the uninformed investor, my assessment would be that a degree of differentiation of the rules should exist between the various types of funds.
I am happy to discuss this further with a member of your team if that would be helpful.
CROW HOLDINGS CAPITAL