Kayne Anderson Capital Advisors, LP (KACALP) is a financial advisor firm that principally manages pooled investment vehicles, like hedge funds and private equity funds. It also has a few institutional and high-net-worth individual clients. The firm employs a large team of financial advisors.
Kayne Anderson Capital Advisors Background
Kayne Anderson Capital Advisors first opened its doors in 1984. It was founded by Richard Kayne, who holds the position of co-chairman to this day. The firm's current CEO is Al Rabil.
The firm has a massive group of investment advisors on staff. Among these advisors, you'll find chartered financial analysts (CFAs), certified public accountants (CPAs) and chartered alternative investment analysts (CAIAs).
Kayne Anderson Capital Advisors Client Types and Minimum Account Sizes
Currently, Kayne Anderson Capital Advisors works mainly with pooled investment vehicles, which are investment funds in which money from many different investors are aggregated for the purposes of investing. These include hedge funds, private equity funds and real estate funds.
On a more limited basis, the firm also counts high-net-worth individuals, investment companies, pension and profit-sharing plans, charitable organizations, government entities, other investment advisors, insurance companies and corporations as clients.
To take part in any of the investment funds that Kayne Anderson Capital Advisors manages, prospective clients will need anywhere from $250,000 to $10 million in investable assets. To open a separate account with the firm, there's no explicitly stated minimum requirement. However, the firm doesn’t currently work with any non-high-net-worth individuals.
Services Offered by Kayne Anderson Capital Advisors
Kayne Anderson specializes in alternative investing, primarily through private investment funds and less frequently for separate accounts and sub-advisory relationships. The firm seeks to generate returns for all of its clients via several different strategies, including:
- Energy infrastructure master limited partnerships (MLPs) and other energy infrastructure companies
- Private equity, high-growth, middle market midstream and upstream oil and gas companies
- Private energy income investing in mature, long-life oil and gas assets
- Private middle market credit
- Liquid credit investing in high-yield bonds and bank loans, including collateralized loan obligations (CLOs)
- Specialized real estate assets with a primary focus on medical office, senior living facilities, student housing and commercial debt collateralized by such assets
- Structured, non-control investments in high-growth, lower middle market companies
Kayne Anderson Capital Advisors Investment Philosophy
The investment philosophy at Kayne Anderson Capital Advisors depends heavily on the specific fund in question. Firm-sponsored funds come in two broad categories: redeemable funds and lock-up funds. Redeemable funds allow investment and withdrawal at regular intervals (monthly, quarterly, etc.), while lock-up funds require up-front commitments and generally don’t allow for withdrawal before a stated term that usually last a few years.
For redeemable funds, the firm generally seeks to generate returns by investing in equity and debt instruments, such as high-yield bonds and bank loans. The firm may also use hedging strategies such as exchange-traded fund (ETF) shorts, options, MLP shorts, U.S. Treasury shorts, index ETFs and credit default swaps.
Lock-up funds at Kayne Anderson are mostly funds with a single strategy, focusing on investing in a specific type of company, like:
- North American private oil and gas companies
- Medical offices, senior living facilities, student housing units, self-storage buildings and more
- Private middle market companies with more than $10 million in earnings before interest, taxes, depreciation and amortization (EBITDA)
- Lower middle market, growth companies that offer technology solutions to specific industries
Fees Under Kayne Anderson Capital Advisors
As it's primarily a fund manager, Kayne Anderson Capital Advisors earns the majority of its compensation from charges it takes from the funds. The firm has separate fee schedules for its redeemable funds and lock-up funds. For separate account clients, the firm uses a similar fee arrangement to that of redeemable funds.
- Redeemable funds: 0.50% - 1.00% annually
- Lock-up funds: 1.00% - 2.00% annually
What to Watch Out For
For its redeemable funds, Kayne Anderson Capital Advisors usually adopts a performance-based fee structure. For this, the firm is compensated in accordance with the fund’s performance relative to a predetermined benchmark.
According the the firm's Form ADV, “Our redeemable fund fee arrangements may create an incentive to favor higher potential fee-paying accounts over other accounts in the allocation of investment opportunities. Similarly, KACALP or its affiliates or employees may have a significant proprietary investment in a fund or account, and KACALP may have an incentive to favor such fund or account to the detriment of other funds or accounts."
Despite this dynamic, keep in mind that Kayne Anderson is still a fiduciary, meaning it is legally obligated to always make decisions in the best interests of its clients, no matter what incentives may otherwise exist.
Opening an Account With Kayne Anderson Capital Advisors
If you’re interested in working with Kayne Anderson Capital Advisors, you can reach out by calling the firm’s office at (310) 284-5591 or you can send an email. You can also visit an office in person.
All information is accurate as of the writing of this article.
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