Interval Fund
An Interval Fund is a registered closed-end investment company that does not trade on a secondary exchange but instead offers periodic repurchase windows — typically quarterly — during which shareholders can tender a limited percentage of their shares at net asset value, providing a middle ground between daily-liquid mutual funds and fully illiquid private funds.
Interval funds have grown significantly in popularity since the 2010s as a vehicle for giving a broader investor audience access to alternative asset classes — private credit, private real estate, infrastructure, and hedge fund strategies — that would otherwise be unavailable outside private fund structures requiring accredited investor status or long lockups.
The defining structural feature of an interval fund is its periodic repurchase program under SEC Rule 23c-3. The fund commits to repurchasing a stated percentage of its outstanding shares at NAV at defined intervals — most commonly quarterly, though monthly intervals exist. The typical repurchase offer covers 5% of outstanding shares per quarter, meaning in any given quarter only 5% of the fund's investors can exit at NAV. If more than 5% of shareholders tender their shares, redemptions are prorated. This structure enables the fund to hold substantial illiquid assets without facing the liquidity mismatch risk that caused the gating of daily-redemption products holding illiquid assets during market crises.
Because interval funds are registered investment companies under the Investment Company Act, they are subject to SEC oversight, regular NAV reporting, and certain diversification and leverage constraints that purely private funds do not face. Retail investors can access them through brokerage accounts — no accredited investor status is required, though many platforms impose suitability requirements. This democratization of access to alternative asset categories is a primary marketing appeal of the interval fund structure.
The tradeoff for the investor is the constrained liquidity. Unlike an open-end mutual fund where daily redemption at NAV is guaranteed, an interval fund investor who needs to exit cannot be certain that their full redemption request will be honored in any given window. This requires careful liquidity planning — interval fund investments are suited to capital that will not be needed for at least one full repurchase cycle and ideally longer.
Expense ratios for interval funds are typically higher than traditional mutual funds or ETFs, reflecting the higher cost of managing illiquid underlying assets and the more complex operational structure. Investors should carefully evaluate the total expense load, the quality of the underlying asset managers, the liquidity terms, and the stated distribution policy before allocating to an interval fund.