A perpetual fund offering limited periodic liquidity through quarterly or semi-annual redemption windows capped at 5-25% of NAV—providing more liquidity than closed-end funds but less than daily-traded open-end vehicles.

A liquidity trade-off signal—interval funds offer allocators partial private market liquidity without full lock-up but require tolerance for redemption limits and NAV-based pricing rather than instant access.

Expanded Definition

Interval funds are registered investment companies (regulated like mutual funds) that invest in less-liquid assets while offering periodic redemption opportunities. They bridge traditional closed-end private funds and daily-liquid mutual funds.

Interval fund features: Redemption windows (quarterly or semi-annual liquidity events), repurchase caps (fund repurchases 5-25% of NAV per window—protects remaining LPs from fire sales), queue system (if redemption requests exceed cap, pro-rata allocation across requesting LPs), registration (SEC-registered under 1940 Act with retail investor access), and NAV pricing (redemptions at independently valued NAV, not market pricing). Interval funds democratize access to private credit, real estate, and infrastructure for wealth management channels.

Signals & Evidence

Interval fund quality indicators:

Redemption fulfillment: High percentage of requests honored (low queue backlogs)
NAV stability: Conservative valuations avoid step-downs surprising LPs
Fee competitiveness: Management fees comparable to institutional private funds (not inflated for retail)
AUM growth: Net inflows signal LP satisfaction with liquidity/performance balance
Portfolio liquidity: Sufficient liquid holdings to meet redemption caps without distressed sales

Decision Framework

Liquidity needs: Does quarterly/semi-annual liquidity with 5-25% caps match LP's cash flow requirements?
Queue tolerance: Can LP accept potential delays if redemption requests exceed repurchase cap?
Fee value: Do interval fund fees justify semi-liquid access vs fully locked private funds?

Common Misconceptions

"Interval funds = liquid alts" → More liquid than closed-end but not instantly tradable; queues and caps apply. "All redemptions honored" → Requests exceeding repurchase cap get pro-rated; full liquidity not guaranteed. "Retail-only products" → Institutional allocators use interval funds for semi-liquid private market exposure.

Key Takeaways

Interval funds offer periodic redemptions (quarterly/semi-annual) capped at 5-25% of NAV, bridging locked private funds and liquid mutual funds
Structure provides allocators with partial liquidity while protecting fund from destabilizing outflows
LPs evaluate interval funds based on redemption fulfillment rates, NAV discipline, fee competitiveness, and liquidity need fit

Interval Fund