Northstar : Interval Funds Gaining Momentum

Dan Gilbert of North Star Asset Management (NYSE: NSAM) discussed the importance of interval funds in the new regulatory environment, on the NSAM Q2 2016 conference call:

“Our current products are implementing share classes well-suited for RIAs and wirehouses. We have already made progress on a number of significant relationships in these areas. We are also quickly developing additional products that will have structures that are well-suited to this channel, and we’ll leverage our internal capabilities, like the potential interval fund with Townsend.

Tracking The Universe of Interval Funds

A common complaint is the lack of data on interval funds.  Consequently broker-dealers and RIAs never take the first step to invest.  Interval Fund Tracker is building tools to bridge this knowledge gap. The Active Funds page contains a sortable and searchable directory of currently active publicly registered closed-end interval funds. More tools for interval fund managers and investors are in beta mode. Here is a preview of the ten largest active interval funds based on net assets:

What types of investments can be included in interval funds?

Interval fund is a fund structure that can be used to gain exposure to a wide variety of asset types. Multi Strategy Growth and Income Fund(MSFDX) summarizes it quite well on its website:

“Interval funds may include a wide range of investments and investment strategies, including listed, non-listed, public, and private investments. Some investments include equity real estate, commercial real estate loans, small- and middle-market loans, institutional funds, and private funds. The point is that through interval funds, individual investors who may not be able to directly access the underlying investments can invest in a portfolio of products typically reserved for institutions, endowments, and high-net-worth investors.”

Using a Little-Known Type of Fund for Private-Company Exposure

The Wall Street Journal had an article a while back discussing a type of situation where a financial adviser found interval funds to be a great fit for a client. The interval fund used here is SharesPost 100 Fund (PRIVX), but a similar process would likely apply for many different funds.

According to the adviser in the article:
“What’s interesting to me about closed-end interval funds is that clients get access to these [private] companies, but they have the transparency and regulatory benefits of the mutual-fund structure,”

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