An interval fund is a form of a 1940 Act-registered, closed-end fund that has made the election to be treated as an interval fund.

Interval funds offer investors the ability to invest daily and redeem their investment on an interval basis, typically quarterly, through the fund’s tender offer program.

What are the benefits of investing in interval funds?

Unlike open-end mutual funds that give investors the ability to invest or redeem daily, creating additional operational concern to managing the underlying investments, the interval fund structure gives the fund manager opportunities to invest capital without the need to potentially raise cash on a daily basis. This feature allows the fund manager to invest in assets or investment strategies that may be more suited to longer holding periods, such as illiquid investments.

Who should consider investing in Interval Funds?

Interval funds, due to their limited liquidity structure, should be considered for long-term investors who do not need access to their principal for a period of time. Always check the prospectus before investing, as interval funds may invest in a wide range of investment objectives and risk tolerance may vary.

Investors seeking income from their investments are candidates for interval funds, as these funds tend to invest in income-producing products and strategies and offer investors periodic distributions from the fund. Distributions from interval funds may be a combination of income, capital gains, and return of capital.

Most interval funds are not limited to high-net-worth investors, do not require investor accreditation, and do not charge any performance-based fees.

What type of investments can be included in interval funds?

Interval funds may include a wide range of investments and investment strategies, including listed, non-listed, public, and private investments. Some investments include equity real estate, commercial real estate loans, small- and middle-market loans, institutional funds, and private funds. The point is that through interval funds, individual investors who may not be able to directly access the underlying investments can invest in a portfolio of products typically reserved for institutions, endowments, and high-net-worth investors.

Investors need to understand that information about the underlying holdings may not be publicly available and will need to rely significantly on the experience of the adviser. As with all investments, investors should thoroughly read and understand the risk disclosures in the related prospectus.