Interval Fund Transfer Agents

Interval Fund Service Providers

Interval funds rely on a variety of third party fund service providers in order to operate.  An administrator oversees the operational performance ensuring it complies with regulatory requirements. An independent accounting firm performs annual audits and certifies the fund’s financial statements. The interval fund transfer agent keeps ownership records, and handles transaction processing. A CSV file with information on service providers for all active interval funds is available at the bottom of this post.

Interval Fund Transfer Agent Market Share

Several users of this site have asked about interval fund transfer agents. DST Systems leads the market, and currently serves as transfer agent for 26% of active interval funds.  See this whitepaper that DST Systems recently produced on exploring new product structures. UMB Services serves as transfer agent for 21% of interval funds. UMB Services recently wrote about its turnkey interval fund solutions in HedgeWeek.

The following chart summarizes interval fund transfer agent market share, as of August 2017:

 

Interval Fund Transfer Agents

Pathway Energy Infrastructure's Portfolio

Pathway Energy Infrastructure Converts to Interval Fund

On July 26, 2017, Pathway Energy Infrastructure’s board of directors approved the Company’s plan to convert to an interval fund. The change of this fundamental policy will be submitted to shareholders for a vote in a forthcoming proxy. The Company is also making adjustements to its investment strategy to focus on broader infrastructure opportunities. The new Company name will be “Pathway Capital Opportunity Fund.” Shareholders will need to vote on the change in an investment strategy as well. Details on the new structure and strategy are included in a draft registration statement

PIMCO Interval Fund

Where PIMCO Sees Attractive Opportunities

PIMCO recently launched the Flexible Credit Income Fund(PFLEX). The fund has a a flexible mandate to capitalize on a variety of credit market opportunities. On the fund’s website, PIMCO describes the opportunities it is expecting to find:

Q: Where do you see attractive opportunities for the Flexible Credit Income Fund today and in the future?
A: While we believe valuations on many traditional credit sectors (investment grade, high yield and bank loans) are relatively fair at current levels, we are seeing several robust opportunities today.
First, despite strong performance in U.S. real estate markets since the financial crisis, we continue to find value in both public and private mortgage debt, especially on the residential side. These opportunities include traditional legacy non-agency mortgage-backed securities (MBS), legacy loans that Fannie Mae and Freddie Mac continue to dispose, and opportunities to purchase newer origination non-agency mortgage loans directly. (We see many loans being made at significantly high interest rates given the regulatory burden associated with making non-traditional loans.)

Comparing Interval Funds to Open-End Mutual Funds

Interval Funds have several key similarities with open-end mutual funds, but they are not identical.   Mutual funds and interval funds both offer shares on a continuous basis at NAV.  Mutual funds and interval funds are both “40 Act Funds” that provide investor protections from the Investment Company Act of 1940.   Mutual funds by definition allow daily redemptions, but interval Funds provide limited liquidity at set intervals.  This diagram, from the recently launched Sierra Total Return Fund, compares and contrasts Open-End Mutual Funds, Closed-End Funds, and Interval Funds:

Investors May Soon Be Hearing More About Interval Funds

Recent links:
What are Interval Funds? – Wall Street Journal

Some researchers think there will be both a need and a demand for exposure to such assets in the near future. Low returns from traditional investments by historical standards will lead to a “steady stream of assets moving into alternative investments,” says a 2016 report from consulting firm McKinsey & Co. “These flows will be redirected heavily toward illiquid private markets.”

Interval funds may also provide a boost for financial advisers in a world where passive investing in funds that track market indexes is the rage.

“What retail investors now hold is largely a portfolio of passive exchange-traded funds, so the alternative-assets domain is how the adviser will add value to the client,” says Kimberly Flynn, managing director of XA Investments LLC in Chicago.

Alts offer a new course- – Financial Advisor Magazine

Pioneer ILS Interval fund hits $305m, some loss impact in half-year -Artemis

Also, registration is still open for the Adisa Due Diligence Forum. This event is designed for industry professionals who are employed with a Broker-Dealer, RIA, Family Office, Due Diligence Firm, or select others, that offer alternative investments in their business.

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