The Complexities and Opportunities of Launching an Interval Fund

Feb 07, 2023

| Interval Funds / Alternative Funds | Registered Funds

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”.

Despite these challenges, the interest and number of fund launches have been increasing with Interval Fund Tracker now reporting on a total of 84 Interval Funds with over $61 billion in assets. This is a group of funds that essentially did not exist a decade ago that have attracted assets at a 32% compounded annual growth rate since 2017. So, there is something bigger going on here.

To learn more about this specialized area of the asset management industry, the Institute for Innovation Development reached out to Ultimus’ Nick Darsch and Todd Werner, asking them questions to better understand this vehicle that is providing more access to alternative investments and being hailed for leading the democratization of institutional investment strategies.

In the interview, Nick and Todd share their insights on the following topics:

  • Fundamentals of interval and tender offer funds
  • Benefits of an interval fund structure
  • Launching an interval fund – some of the typical challenges
  • How technology plays a role in these funds
  • Determining if an interval fund is right for you

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