An interval fund is a type of closed-end fund that offers liquidity at stated intervals – typically quarterly, semiannually or annually – by offering to buy back a portion of its shares from shareholders at a price based on the fund’s net asset value. Interval funds are registered under the Investment Company Act of 1940 and, therefore, offer many of the same regulatory protections as mutual funds. In addition, like mutual funds, interval funds can have low investment minimums.

A premium for limited liquidity
As compared to mutual funds, interval funds may invest a larger portion of their portfolios in less liquid and illiquid assets, such as the securities of private companies. In exchange for accepting a lower degree of investment liquidity, investors potentially may earn higher returns or higher yields than those found in the public markets – this is often referred to as the “illiquidity premium.” Therefore, interval funds may work well for investment strategies that require a long-term approach while still allowing investors to sell their shares at defined intervals.

1099 15% NAV Daily Yes Daily MUTUAL FUND 1099 No limit2 NAV Daily Yes (typically quarterly) Periodically INTERVAL FUND 1099 No limit Market Daily Not generally Exchange traded CLOSED-END FUND1 Taxed Max. illiquid investments Pricing Valuation Direct redemption Liquidity 1 Category references closed-end funds that are listed on an exchange2 Must have liquid assets to cover repurchase offers, otherwise no limit

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