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Registered Investment Advisors (RIAs) are increasingly turning to alternative asset classes, such as private credit, real estate, and private equity to offer differentiated solutions to their clients.

Interval and tender offer funds offer retail and alternative asset managers an opportunity to differentiate their product lineup and create new distribution opportunities. These funds are considered alternative strategies because they encompass a wide array of investments including: real estate, infrastructure, private credit, private equity and venture capital. These asset classes were previously offered in private vehicles for a limited number of investors with higher expense structures.

To assist advisers considering the unlisted closed end fund wrapper for new products, our whitepaper examines predominant fee structure options and trends across various strategies in the interval fund marketplace targeted to retail and high-net-worth investors.

Launching an interval or tender offer fund is like playing a multi-level chess game. There is a great deal of complexity in taking advanced investment strategies and designing, maintaining, and selling these 40 Act investment vehicles. Intensive strategy and deliberate planning are needed to grapple with their specific idiosyncrasies. It is important to note that there is nothing magical about these fund structures that inspires a Field of Dreams “if you build it, they will come” response and, oftentimes, it becomes a challenging period between fund registration and reaching $100 million in assets under management, otherwise known by some as the “Valley of Death”.

Interval and Tender Offer funds provide investors an opportunity to gain exposure to alternative investment strategies that have been traditionally offered through private fund vehicles. Many of these strategies involve investing in assets that are considered illiquid. If you are a fund sponsor who is considering launching an Interval or Tender Offer fund, understanding how to establish a valuation policy for illiquid assets will be a key area of focus for you.

In our recent whitepaper collaboration with XA Investments, “Launching an Interval Fund – Clear-eyed Approach to Successful Launch,” we explored various launch strategies for fund managers to efficiently bring products to market. It is becoming more and more critical that new funds reach scale quickly so that they can meet distribution platform requirements and cover elevated expenses in the interval or tender offer fund wrapper (in comparison to traditional alts or mutual funds).