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Interval Funds

Image by Kevin Ku

An Interval Fund is closely related to a Tender Offer Fund but operates with structured, predictable redemption windows.

The key difference:

  • Interval Funds must offer redemptions on a set schedule (usually every quarter).

  • Tender Offer Funds may offer liquidity only when the manager chooses.

Interval Funds are regulated under the Investment Company Act of 1940, which adds transparency and structure.

 

How Interval Funds Work

  1. Investors buy shares at the fund’s net asset value (NAV).

  2. The fund invests in alternative assets—private credit, real estate, loans, infrastructure, etc.

  3. Every quarter, the fund must offer to repurchase a minimum percentage of its shares (often 5%).

  4. If investors request more than the minimum, redemptions may still be reduced proportionally.

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They are designed to:

  • give investors access to illiquid assets

  • provide regular quarterly liquidity

  • offer a familiar mutual-fund-style experience but in a private-market context

Interval Funds are especially popular in the private credit and real estate space.

 

Benefits of Interval Funds

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1. Predictable Quarterly Liquidity

While capped, these redemption periods occur regularly, which helps with planning.

2. Access to Private Markets

Like Tender Offer Funds, Interval Funds can hold alternative assets that daily-liquid funds cannot.

3. Lower Minimums and Broader Access

Many open to accredited and non-accredited investors depending on the fund structure.

4. NAV-Based Pricing

Shares are priced based on the fund’s calculation of the value of its holdings, not market speculation.

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Considerations and Risks

 

1. Redemption Limits

Even though liquidity is scheduled, redemptions may still be limited in tough markets.

 

2. Valuation Uncertainty

Private assets are harder to price than public securities, so NAV reflects estimates.

 

3. Income and Return Variability

Different strategies produce different income levels and risks.
Understanding the fund’s focus is key.

 

Interval Funds Are Designed For Investors who want:

  • exposure to private credit or real estate

  • regular (but limited) liquidity

  • lower minimums

  • professional management

  • diversification across many private assets

Interval Funds are increasingly common in retirement portfolios, income strategies, and alternatives allocations.

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