Interval & Tender Offer Funds
INTERVAL & TENDER-OFFER FUNDS
A Growing Corner of the Registered Fund Universe
Interval and tender-offer funds combine characteristics of traditional mutual funds and private funds. Organized under the Investment Company Act of 1940, they accept daily subscriptions but redeem shares on a preset schedule—providing portfolio managers with “permanent” capital while still offering periodic liquidity to investors.
What Is an Interval Fund?
An interval fund is a continuously offered, closed-end investment company that makes repurchase offers—typically 5 %–25 % of outstanding shares—at stated intervals (most often quarterly). Shareholders submit shares for repurchase at net asset value (NAV); the fund is not exchange-traded.
Key points
- Regulated structure - subject to 1940-Act governance, audited financials, and Form N-PORT transparency
- Broader mandate - may hold less-liquid assets such as private credit, real estate debt, CLOs, or specialty equities
- Distribution flexibility - dividends are paid from net investment income, realized gains, or return of capital, similar to other registered funds
What Is a Tender-Offer Fund?
A tender-offer fund (sometimes called a non-listed closed-end fund) resembles an interval fund but the board, rather than a preset schedule, determines when to conduct repurchase offers—usually two to four times per year. The repurchase size and timing are announced through SEC filings, giving managers added flexibility to balance portfolio liquidity with shareholder needs.
Why Consider These Structures?
Advantage
- Access to private or less-liquid markets
- Reduced redemption pressure
- NAV-based liquidity
- Regulatory oversight & reporting
Investor Benefit
- Professionally managed exposure to assets that may be unavailable in open-end funds—middle-market loans, private real estate debt, litigation finance, etc.
- Because capital is not subject to daily outflows, managers can take a longer-term view when sourcing and holding investments.
- Shares are repurchased at NAV (less any repurchase fee disclosed in the prospectus), eliminating bid/ask spread concerns that exchange-traded vehicles may face.
- Detailed quarterly and annual filings, independent board oversight, and audited statements help investors evaluate risk and performance.
Considerations & Risks
- Limited Liquidity – Repurchases are capped; requests exceeding the offer amount are subject to pro-rata acceptance.
- Valuation Uncertainty – Hard-to-value assets rely on third-party pricing and manager inputs; NAV may be adjusted after each repurchase window.
- Leverage & Strategy Risk – Many funds use credit lines or preferred equity to enhance returns, which can magnify losses.
- Fees & Expenses – Expense ratios are typically higher than those of open-end funds because of specialized asset classes and operational complexity.
*Investors should review the prospectus, Statement of Additional Information (SAI), and most recent shareholder reports, and consult a qualified adviser, before committing capital.
How CEF Advisors | CEFData® Can Help
For Investors & Advisors
- Objective side-by-side comparisons of interval, tender-offer, CEF, and BDC vehicles
- Liquidity-stress testing and income-stability analysis for portfolio construction
- Education sessions on tax treatment, 1099 reporting, and managed-distribution plans
For Institutions & Consultants
- Custom screens of the full universe by asset class, leverage profile, fee structure, and historical repurchase cadence
- Factor and scenario studies using CEFData®’s multi-year history of filings and corporate actions
For Fund Sponsors & Service Providers
- Market-gap assessments and peer analytics for new-product development
- Data feeds, dashboard modules, and white-label factsheets to enhance investor-relations transparency