Interval Fund Market Keeps Setting New Records
The interval fund sector set more growth records in 2022. At the end of 2022, interval fund net assets totaled $63.5 billion, up 29.8% compared to the end of 2021. There were 79 active funds with assets(1), compared to 68 at the end of 2021. Credit and Real Estate were the fastest growing interval fund strategies in 2022. The fundraising success of existing funds is attracting new entrants. More new interval funds filed initial registration statements with the SEC in 2022 than any year in history.
In this writeup, we highlight the fastest growing strategies and funds in the interval fund sector. Then we will examine the pipeline of funds that are preparing to launch in 2023. Finally, we will look at three developing themes that will impact the market in 2023 and the coming years.
Fastest Growing Interval Fund Strategies in 2022
Throughout 2022, Credit and Real Estate continued to be the dominant categories in the interval fund sector.
Credit and Real Estate have grown steadily in recent years, with many new managers launching funds. In contrast, asset growth for Derivatives/Insurance Linked Securities and Equity was leading funds in those categories experienced outflows.
Credit is the fastest growing category in terms of total assets, increasing by 63.7% from $18.3 billion in 2021 to $29.9 billion in 2022. Real Estate also grew rapidly, increasing net assets by 61.3%, from $14.0 billion to $22.6 billion. PE/Venture Capital has had absurd growth in percentage terms, albeit from an extremely low base. At the end of 2022, there were $1.4 billion in PE/Venture Capital interval fund net assets, up from $828 million at the end of 2021. The Private Shares fund accounted for most of the growth in the PE/Venture capital space. However, Bow River Capital Evergreen Fund and Primark Private Equity Investments Fund have started to raise significant assets. Additionally, the ARK Venture fund launched in late 2022, and will may benefit from its Sponsor’s notoriety when raising assets in 2023.
Looking at the level of individual funds, the top ten in terms of net assets added in 2022, include 5 Credit funds and 5 Real Estate Funds.
10 Fastest Growing Interval Funds in 2022
|Fund||Strategy||2021 Net Assets ($millions)||2022 Net Assets ($millions)||2022 Increase ($millions)||2022 % Change|
|Cliffwater Corporate Lending Fund||Credit||$3,305||$9,348||$6,043||183%|
|Bluerock Total Income (plus) RE Fund||Real Estate||$3,160||$7,176||$4,016||127%|
|Apollo Diversified Real Estate Fund||Real Estate||$4,405||$5,985||$1,580||36%|
|Variant Alternative Income Fund||Credit||$1,239||$2,216||$976||79%|
|Fundrise Real Estate Interval Fund, LLC||Real Estate||$485||$1,342||$857||177%|
|Cion Ares Diversified Credit Fund||Credit||$1,638||$2,426||$788||48%|
|Cliffwater Enhanced Lending Fund||Credit||$164||$951||$787||480%|
|Versus Capital Real Assets Fund, LLC||Real Estate||$2,185||$2,850||$665||30%|
|Carlyle Tactical Private Credit Fund||Credit||$684||$1,328||$643||94%|
|Fundrise Income Real Estate Fund, LLC||Real Estate||0||$499||$499||NA|
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(1)This excludes eight interval funds that had been declared effective by the SEC but had not yet reported assets as of year end.