A Chicago-based mutual fund boutique is launching a hedge fund that will arbitrage price inefficiencies in closed-end investment funds.
RiverNorth Capital Management, formerly known as Pinnacle Asset Management, runs roughly $150 million in mutual funds and separately managed accounts. Its new venture, RiverNorth Capital Partners, will begin trading within the next two months.
A wealthy investor has already committed $5 million to the strategy. Closed-end funds often trade at a premium or discount to net asset value, and RiverNorth intends to exploit those discrepancies and hedge its long positions by shorting exchange-traded funds. But only 680 closed-end funds