A clear example of "alternative investment" and finance is the aviation funds market, as seen by the final closing of a new fund recently.

A fund that invests in commercial aircraft and engines has finally closed to new money, taking in total committed capital of around $438 million, following in the flight path of other funds holding assets in this space.

Cross Ocean Partners this week announced that it had held the final closing of Cross Ocean Aviation Fund I on August 20, 2018. Family offices, endowments and charitable foundations were among those putting money into the fund.

As of September 30, 2018, the Aviation Fund has drawn about 22 per cent of its committed capital, and it has funded a series of acquisitions of commercial aircraft and engines, the managers said. Cross Ocean Partners, which has offices in Greenwich, Connecticut, London, UK, and Dublin, Ireland, advises on assets of about $3.2 billion globally.

Aviation funds come in different forms, with some providing lease financing. Earlier in the decade, hedge funds operating in this space included Trafalgar Asset Management, for example. In May 2011, the JAR Aviation fund launched and pitched to high net worth investors. It focused on buying second-hand aircraft at a discount as the major airlines shifted to more modern aircraft. (That fund was re-launched in 2015.) The fund, which targets an internal rate of return of 12-15 per cent, leases out single-aisle teenaged commercial jets to airlines in developing countries.

Late last week Investec Aviation Finance unveiled the launch of its fourth aircraft leasing fund to acquire some of the latest generation Airbus and Boeing aircraft. Investec launched its first such fund in 2008.

A few weeks ago Citi Private Bank explained the challenges to family offices and high net worth individuals of overseeing aviation assets. (See here.) The topic of aviation and wealthy families will be discussed at the forthcoming Family Wealth Report conference in New York on Nov 1.