The Destra Multi-Alternative Fund (“DMA” or the “Fund”) started as a closed-end (non-listed) interval fund over 10 years ago to provide non-correlated income and a diversified exposure to alternatives for investors.  After years of transformation, the Fund’s multi-strategy alternative approach (“MASS”) has created one of the most unique portfolios in the listed closed-end fund world – a portfolio poised to deliver meaningful income and substantial potential upside.  In addition, the meaningful discount to net asset value (“NAV”) created by a lack of understanding, and general market laziness, produces an additional opportunity for return as liquidity improves through the normal course. 

In the accompanying interview with Chuck Jaffe on his NAVigator podcast last September, Mark Scalzo, the Fund’s portfolio manager, provides information which may address questions on the minds of current and prospective investors about: 

Direct Listing.  As the IPO window quickly closed in 2022, DMA was one of the few new listings of any kind.  Even more unusual, it was a “direct listing” on the NYSE – meaning that existing shareholders continued to hold their shares, just in a different format.  For comparative purposes, the more traditional way of going public (in an Initial Public Offering) involves selling shares to new public shareholders and raising additional capital. 

Differentiated Multi-Strategy Approach.  Since its inception, the Fund has pursued a multi-strategy approach to alternative investing, akin to the endowment model that David Swenson pioneered for the Yale Endowment.  Often, the Fund represents an investor’s entire allocation to alternatives – this generally involves a broad exposure to asset classes and strategies that are not correlated with traditional asset classes (equity and fixed income) – but not just real estate or credit.  For instance, the Fund invests in both public and private markets, liquid and illiquid positions across real estate, direct private equity, and alternative credits.  It can also invest in commodities, currencies, infrastructure, structured products, and direct investments in operating companies.  Finally, hedging strategies can be employed to manage exposure along the way.   

Discount to NAV. Like some other closed-end funds, once listed, the Fund almost immediately traded at a substantial discount to its underlying NAV. We think there are several reasons for this.  First, the Fund was caught up in the negativity surrounding new issues that transpired in 2022.  Secondly, the direct listing format meant that the marketing period used to create interest from new shareholders during an IPO was forgone.  Finally, the uniqueness of strategy (mentioned above) among listed closed-end funds is both a blessing and a curse.  The Fund has no comparable peer group, and no easy quick benchmark to utilize to get a sense of the real opportunity.  Most closed-end funds are single asset classes and/or single strategies.  This makes them easier to understand and easier to benchmark utilizing more simplistic metrics.  For DMA, utilizing simple and traditional metrics for the Fund misses the mark. 

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