Interval Fund Market: 2018 Review

January 21, 2019

Interval fund net assets increased 41% in 2018, reaching $27.5 billion.
A record number of new funds launched in 2018.
Interval fund performance has been generally positive for funds with track records.
The government shutdown is temporarily delaying SEC review of pending interval fund registration statements.

Asset Growth and Fund Launches

Total net assets in interval funds increased 41% in 2018, reaching approximately $27.5 billion based on filings available at the end of the year. The SEC declared effective 16 interval fund registrations statements in 2018, including three in Q4. Additionally, two privately offered interval funds launched in 2018. Overall 2018 was another year of historic growth for interval funds.

Although there are 60 active funds, the five largest alone account for 65% of total net assets. Many funds recently launched and are yet to gain fundraising momentum. Click here for AUM data on active interval funds.

Note All data in this post is based on SEC filings available as of January 1, 2019 unless otherwise indicated. To access data and code behind this article, see Interval Fund Tracker’s Bitbucket repository.

Fastest Growing Interval Funds

Thirty-five active interval funds reported net asset growth in the most recent quarter, and fifteen reported a decrease. In general, large asset managers continue to dominate fundraising. The following list shows the five fastest growing interval funds, based on net asset growth in the most recent reported quarter

Fund	Date of Reporting Period	Net Assets Increase MRQ
Versus Capital Multi Manager Fund	September 30	$331,506,776
ACAP Strategic Fund	September 30	$295,041,103
Griffin Institutional Access RE Fund	September 30	$235,001,852
Versus Capital Real Assets Fund LLC	September 30	$162,396,650
Total Income (plus) RE Fund	September 30	$136,083,896

Fee structures are becoming more standardized, and several service providers have become critical to the interval fund ecosystem. For detailed information on fund structure trends in the interval fund space click here.

Interval Fund Performance

Interval funds report total return semi-annually. Only a small subset of funds have performance histories of more than a year. As the niche grows, the total return dataset becomes will become more robust. Performance has been generally positive for funds that have reported total return data. The following chart shows ranges of three year cumulative total returns (assuming reinvested dividends) for interval funds active the entire period.

Note that this data is lagged. Late 2018 market volatility likely impacted many interval funds.

Evaluating individual fund performance requires putting it in the proper context. This includes comparing a fund to its benchmark and peers with similar strategies. Additionally, investors should consider performance in relation to fees. More detailed, fund level information on performance and fees is available in the premium section of the site.

Registration Pipeline

Four interval funds filed initial registration statements with the SEC in 2018Q4, one of which has already been declared effective. There are currently 24 interval funds in registration, pending the release of final prospectuses and SEC approval. Based on number of funds, credit strategies, broadly defined, continue to be the most popular among fund managers getting ready to launch an interval fund.

Impact of the government shutdown

The government shutdown will delay the SEC approval of pending interval fund launches. According to GableGotwals:

On December 22, 2018, a partial shutdown of the federal government began. On December 27, 2018, the operational status of the Securities and Exchange Commission (SEC) was changed to “closed,” and the SEC began operating according to its Operations Plan under a Lapse in Appropriations and Government Shutdown. This means that the SEC “will have only an extremely limited number of staff members available to respond to emergency situations involving market integrity and investor protection, including law enforcement.”

The SEC will not be able to declare pending registration statements effective until the government shutdown is resolved.