MSC Income Fund aims to generate income and capital appreciation by investing in small and mid-sized companies. However, a reported drop in the Net Asset Value (NAV) and the suspension of distributions have raised questions about the fund's financial stability, potentially exposing investors to substantial losses. Below, Soreide Law Group goes over some concerns for investors and how a securities attorney can help if you’ve suffered damages due to your investment in MSC Income Fund.
Overview Of The Fund
MSC Income Fund Inc., formerly known as HMS Income Fund, is a Business Development Company (BDC) managed by a subsidiary of Main Street Capital Corporation since 2020. BDCs like MSC Income Fund usually provide financing solutions to small and mid-sized companies, which typically have limited access to traditional forms of capital. The fund's primary objective is to generate both capital appreciation and current income for its investors.
MSC Income Fund invests in a diversified portfolio that supports various financial transactions, including recapitalizations, refinancing, management buyouts, growth financings, and acquisitions.
For example, MSC Income Fund might invest in a mid-sized manufacturing company undergoing a management buyout. In this scenario, the fund provides the necessary capital to facilitate the buyout, and in return, it receives equity or debt instruments that generate returns for the fund's shareholders.
Investor Concerns About MSC Income Fund
Investors in MSC Income Fund should be cautious due to recent developments concerning the fund. Notably, the fund experienced a significant decrease in its Net Asset Value (NAV) and a decline in the price at which its shares are sold in secondary markets. Moreover, the suspension of distributions from 2020 to early 2024 raised concerns about the fund's financial health and liquidity. These factors suggest that some investors may face losses, particularly those who purchased shares at the original offering price.
Risks For Investors
Investing in products like MSC Income Fund involves substantial risks. BDCs are similar to non-traded Real Estate Investment Trusts (REITs) in that they are typically high-risk, illiquid investments with high commission fees. The lack of liquidity means that investors may find it challenging to sell their shares quickly, especially in a declining market. Furthermore, the value of BDC shares can fluctuate a lot, driven by the performance of the underlying portfolio companies and broader economic conditions.
Securities brokers and financial advisors who recommend or sell these investments have a fiduciary duty to ensure that they are suitable for the investor's financial situation, goals, and risk tolerance. However, there have been instances where advisors have made sales practice violations, such as recommending high-risk BDCs like MSC Income Fund to investors without fully disclosing the associated risks. These violations can include unsuitable recommendations, misrepresentations or omissions of critical information, and breaches of fiduciary duty. Aggrieved investors may have grounds to pursue disputes against the brokerage firms through FINRA arbitrations, potentially recovering their losses.
Did You Sustain Losses?
Did you experience losses because of investing in MSC Income Fund? If so, contact Soreide Law Group online or at (888) 760-6552 and speak to a securities attorney about a potential recovery of your investment losses. Soreide Law Group investment loss attorneys assist individuals throughout the United States, work on a contingency fee basis, and advance all costs.