The increasing popularity of high yield bond funds brings the issue of liquidity mismatches to the forefront. There are plenty of opportunities in credit, but investors need to find the right vehicle for the right strategy. When the average high yield bond only trades nine times per week, a daily liquidity structure such as a […]
Interval fund performance during the global financial crisis (GFC) of 2008-2009 provides a useful case study for understanding how Covid-19 might impact the sector. Although the global pandemic and economic shutdown we are currently experiencing is unique, every financial crisis has certain characteristics in common. How a Financial Crisis Impacts Interval Funds First the bad […]
Goldman Sachs is in the midst of a strategic realignment to focus more on alternative investment strategies and retail investors. The new Goldman Sachs interval funds are a prime example of this new approach, and a precursor to a massive structural change in the retail alternative investments industry. Goldman started reporting Consumer and Wealth Management […]
Tender offer and interval funds have become the structure of choice for alternative asset managers. Nonetheless, a small group of REITs and BDCS continues to raise capital and play an important role in investor’s portfolios.
(Note: this chart includes only new funds registering shares for the first time, and excludes follow-on offerings. Additionally, funds that offer multiple share classes via a master feeder structure are treated as a single fund)
Fundraising in NT REITs and BDCs has mainly consisted of a small group of legacy funds, rather than newly launched funds. Non-Traded REIT fundraising has been dominated by Blackstone, which as over 50% market share. Many legacy non-traded REITs and BDCs have also continued to raise capital through follow on offerings. Yet new fund’s have been few and far between. In contrast, more and more asset managers are launching tender offer and interval funds. As more financial advisers and asset allocators get comfortable with these structures, the trend is likely to continue.
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Under the interval fund rule, closed end interval funds are required to offer to repurchase between 5% and 25% of shares at NAV at predetermined intervals(quarterly, semi-annually, or annually). Frequency of repurchase offers varies depending on the liquidity of the underlying assets, and target investor base. The SEC requires funds to provide notice to shareholders between 21 and 42 days in advance of repurchase offer . Interval Funds also file N-23c-3 with the SEC within 3 days of sending shareholder notification of a tender offer. (see Rule N-23c-3 under the 1940 act)
In practice, most interval funds conduct a repurchase offer quarterly. Here is what the data says:
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