Total net assets in the interval fund market equaled $31.5 billion as of the most recent public filings, up 7.3% year over year, but down 3.2% quarter over quarter. The Covid-19 pandemic drove mark to market writedowns and outflow across the sector in April and May. However most interval funds have been rebounding quickly along with global markets. In recent months there has also been an increase in new fund sponsors registering unlisted closed end funds, or converting existing funds to unlisted closed end funds.

This mid year update focuses on the interval fund market. If you’re interested in tender offer funds, visit our new affiliate site.

Interval Fund Registrations

Nine new interval funds filed registration statements so far in 2020, covering a wide variety of sectors

Fund Name	Registration Date	Strategy
Flat Rock Capital Credit Fund	7/23/2020	Credit
First Eagle Credit Opportunities Fund	7/22/2020	Credit
Primark Private Equity Fund	6/30/2020	Equity
Calamos-Avenue Opportunities Fund	5/19/2020	Credit
Entoro Gray Swan Fund	5/18/2020	Digital Assets
Versus Capital Real Asset Debt Fund	5/15/2020	Credit
Bow River Capital Evergreen Private Equity Fund	4/30/2020	Equity
Lord Abbett Enhanced Floating Rate Fund	2/20/2020	Credit
Yleana Bitcoin Strategy Fund	2/7/2020	Digital Assets

Five of the newly registered funds in the interval fund market are pursuing credit strategies. This reflects the growth in credit opportunities amidst the disruption caused by the Covid-19 Pandemic. Both Calamos and First Eagle are launching opportunistic funds to help investors take advantage of the recent turmoil. Lord Abbett is also launching an income focused credit fund that will focus on floating rate debt.

Versus Capital, which has over $4.5 billion in net assets in two existing interval funds registered a third interval fund focused on real estate debt. Versus Capital already accounts for 14% of total interval fund net assets.

Flat Rock Global is converting its non-traded BDC into a newly formed interval fund- the Flat Rock Capital Credit Fund. This transaction will be similar to the path followed by Griffin Capital’s Institutional Access Credit Fund, which grew assets from $20 million to $360 million in less than three years after converting from a BDC to an interval fund.

Two new fund registrations are private equity funds. These funds will help meet the growing demand for private equity among high net worth retail investors.

Finally, two new interval fund registrations include digital assets as an important part of their investment strategy.

The multi year trend of unlisted closed end funds taking market share from BDCs and non-traded REITs has continued, as this chart shows.

Premium members can access the underlying data behind this chart, including details on each individual fund registered.

New Fund Launches

As of the date of this report, 5 new interval funds have launched in 2020. Three of these new funds were completely new funds, bringing over $3 billion in securities for sale into the interval fund market, while two of them were formed as part of proposed mergers, one of which was canceled.

Fund Name	Effective Date	Investment Strategy	Maximum Offering Proceeds
ARCA U.S. Treasury Fund	7/6/2020	Credit	$100,000,000
CIM Real Assets & Credit Fund	4/30/2020	Real Estate	$1,000,000,000
Goldman Sachs Credit Income Fund	3/6/2020	Credit	Launched as part of later canceled merger plan
Goldman Sachs Real Estate Diversified Income Fund	3/6/2020	Real Estate	Launched for acquisition of Resource Real Estate Real Estate Income Fund
KKR Credit Opportunities Portfolio	2/28/2020	Credit	$2,000,000,000

The KKR Credit Opportunities Portfolio(KCOPX) launched on February 28. This fund will apply two primary credit strategies: opportunistic credit and private credit. This will likely prove to be fortunate etimeing, as there was a plethora of discounted credit assets available in late March due to the Covid-19 disruption. KKR is a well known alternative asset manager with over $200 billion under management. They also registered a tender offer fund recently.

Goldman Sachs is using interval funds as part of its push into retail alternative investments. The Goldman Sachs Real Estate Diversified Income Fund received an effective notice from the SEC on March 6, and completed its acquisition of the Resource Real Estate Diversified income fund on May 15. The Goldman Sachs REal Estate Diversified Income fund will continue to invest capital and raise new capital. Resource already had a solid distribution channel built out, and Goldman Sachs will be able to expand this further, likely raising a lot more capital.

In contrast, Resource and Goldman Sachs mutually agreed to terminate the plan to merge Resource Credit Income Fund. Instead Sierra Crest will take over the Resource Credit Income Fund. Sierra Crest already manages a public BDC. The SEC did declare effective the Goldman Sachs Credit Income Fund, but Goldman subsequently withdrew registration. These transactions did not have any impact on the number of active funds in the marketplace.

The CIM Real Assets and Credit Fund launched on April 30, 2020. This fund will pursue a two pronged strategy. The real assets part of the strategy will focus on real estate and infrastructure. The fund will hold some of the real estate directly through a REIT subsidiary , but will also buy REITs, CMBS and other securities. The credit portion of the strategy will include both real estate debt and corporate credit. CIM Group has a total of $29.9 billion in AUM across a variety of strategies, and this is their first interval fund. One unique feature of this fund is the heavy management investment.

The ARCA US Treasury Fund seems like a relatively boring treasury fund, based on the name. However, its July 6 launch is part of a quiet revolution building in the interval fund sector.

The Quiet Revolution in the Interval Fund Market

The ARCA US Treasury fund is the first ever 40 act fund to offer digital securities. Investors will be able to trade these digital securities, known as “ARCoins” using the Ethereum blockchain. The fund sponsor aims to combine the regulatory safeguards of the 40 act with the efficiencies of blockchain. If this concept succeeds it has a wide range of implications for payments, lending, clearing settlement, and corporate treasury functions.

An increasing number of funds are using blockchain technology as part of their investment strategy or fund operations, several others are investing in digital assets. We’ll be taking a deep dive into this important emerging trend in a series of forthcoming reports.

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