By definition, all interval funds must offer intermittent liquidity by making repurchase offers at fixed intervals(usually quarterly).

Under Rule 23c-3, also known as the interval fund rule, interval funds make periodic repurchase offers at NAV a fundamental policy, requiring shareholder approval to modify. Repurchase amounts between between 5% and 25% of outstanding shares, with board approval required to determine the specific amount. They must also maintain regular NAV calculations and sufficient liquid assets to cover repurchases.
Interval funds must file Form N-23c-3 within 3 days of mailing shareholder notifications.

Repurchase offers must follow this sequence:

• Repurchase request deadline (21-42 days after notification)
• Repurchase pricing date (≤14 days after request deadline)
• Payment deadline (7 days after pricing date)

How Interval Funds Handle Oversubscribed Repurchase Offers

What if more than 5% of investors want to exit an interval fund? When interval fund repurchase offers are oversubscribed, the rule requires that they use a pro rata allocation. They may allow priority allocations for small shareholders, retirement plans RMDs, and all or none tender elections. Interval Funds are allowed to increase offers by up to 2% to partially absorb excess demand without pro rata allocation.
When a fund prorates its tender offers, an investor can only exit part of their position with each repurchase. Interval fund investors need to understand that partial liquidity is not a panacea.

In most cases, if an investor has no immediate need for liquidity, will be best off exiting slowly over several quarters. However, if an investor has an immediate need for liquidity, they still have options. Alternative Liquidity Capital will purchase shares in a variety of alternative investment funds. Investors that need to quickly liquidate their shares in any hard to exit funds should contact info@alternativeliquidity.net for details on how they can sell their shares.

Data on Interval Fund Repurchase Offers

We examined recent data on repurchases for the 19 interval funds that have at least $1 billion in net assets. Together this group of funds accounts for approximately 81% of net assets in the interval fund market.

Interval funds always report the number of shares they repurchase. However, this reporting is lagged, and not standardized. Some funds report just a dollar value of redemptions without specifying the amount of redemption requests.

Out of interval funds with over $1 billion in net assets, 58% reported meeting 100% of all repurchase requests over the past year, 26% reported some proration, while the rest did not provide the specific details(usually indicating proration).

Fortunately, there is another metric we can use to supplement data on repurchases: the Ratio of Redemptions to New Capital Raised. If this ratio is over 1, then a fund has had net outflows and most likely needed to prorate repurchase requests. In contrast, interval unds that have net inflows, typically meet 100% of redemption requests.

Out of interval funds with over $1 billion in net assets, 58% reported net inflows in the most recent year.

Cliffwater Corporate Lending Fund, currently the largest interval fund, had more raised new capital that was over 5x the repurchase requests it received. Cliffwater has had significant funrasing success in the most recent year Cliffwater Enhanced Lending Fund had proportionalyl even more net inflows. Carlyle Tactical Private Credit Fund also raised new capital that was approximately 5x the amount of repurchase requests it received.

Additional Tools and Resources

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• Complete list of all active interval funds 
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