Interval funds

Alban

Does anyone here have any experience with interval funds? I have seen a few recent articles in the business press talking about them, but I have no idea how many of them are out there and how they perform.

Thanks,
Alban

Ted

@Alban & MFO Members An interval fund is a type of investment company that periodically offers to repurchase its shares from shareholders. That is, the fund periodically offers to buy back a stated portion of its shares from shareholders. Shareholders are not required to accept these offers and sell their shares back to the fund.
Regards,
Ted
http://www.investmentnews.com/article/20140506/BLOG09/140509948/the-rise-of-interval-funds-mutual-funds-for-alternative-investing

TD1

Very familiar with interval funds. They are becoming more popular as they have the look and feel of traditional 40 Act mutual funds (5 letter tickers, on traditional custodians (Schwab, Fidelity, TD, etc), 1099's. Performance like all funds and asset classes can vary, though some that are focusing on very niche areas have performed very well. In theory, you should get compensated for the semi- illiquidity (a premium). Gates of 5-10% of the total fund AUM typically exist on the way out. For the right asset class these can be a good solution.

Alban

Thanks. Does Morningstar cover them? I am assuming that they do not trade in exchanges like typical closed end funds do. Is that correct? Also, how do you go about identifying them. I would like to track the returns of some of them if possible.

Thanks,
Alban

TD1

Morningstar should track most, though I think Bloomberg.com would have all of them. They are not traded intraday, think of them like a mutual fund with daily NAV once a day at the close. Identifying can be tricky. I have not seen a publicly available screen for them. If you have a Bloomberg terminal you can get creative with some searches to find them. Plus, some are really marketed to RIA's and not retail investors so minimums can be quite high and permission has to be given to get into some. Below are 15 to come off a quick screen from the Bloomberg terminal:

Ticker Name
XCAPX - ACAP STRATEGIC FUND-A
WESFX - WILDERMUTH ENDOWMENT STRAT
VSLAX - INVESCO SENIOR LOAN-A
VCMRX - VERSUS CAP MM REAL ESTATE-F
VCAPX - VERTICAL CAPITAL INCOME FUND
SRRIX - STONE RIDGE REINSUR RISK PRE
RCIAX - RESOURCE CREDIT INCOME-A
PSOIX - PALMER SQ OPPORTUNISTIC INC
PRIVX - SHARESPOST 100 FUND
NRSZX - NEXPOINT REAL ESTATE STRAT-Z
MSFDX - MULTI-STRATEGY GROW & INC-A
LENDX - STONE RIDGE ALT LENDING RISK
AVRPX - STONE RIDGE ALL ASSET VAR RK

OckhamResearch

See "Tools and Data" at the Interval Fund Tracker site for a list of active funds. About 30 new funds have launched over the past year. A lot of credit asset manager are entering the space.

http://www.intervalfundtracker.com/

VintageFreak

Stupid Question. Why would fund company offer to buy back shares? Because they think they are a better value at current price? If these are mutual funds then thinking they don't work like CEFs which has fixed number of shares. So it's not making sense why they would offer to buy someone's shares - which basically is the same thing as saying "hey bob, care to redeem your shares today at $x which is $y more/less than yesterdays NAV"?

Or is it just like a hedge fund masquerading as mutual fund without possibly its heavy performance based fees?