Publications

- January 1, 2022: Vol. 9, Number 1

Interval funds by the numbers

by Mike Consol

Though interval funds are still a mystery to most retail investors — and to many advisers — the list of sponsors behind many of the funds reads like a who’s who of Wall Street: Bain Capital, Morgan Stanley and BlackRock to name just a few.

Little wonder that the Institute for Portfolio Alternatives (IPA) produced an interval funds conference during the fall of 2021 in New York City to focus more squarely on this class of funds, or that Robert A. Stanger & Co. is doggedly tracking interval fund formation, fundraising and performance.

Kevin Gannon, managing director at Stanger, was a presenter at the conference, narrating his way through a series of slides with his characteristic brio. The charts and graphs, re-created on these pages, tell the tale of a fund structure that has won advocates and capital inflow.

By definition, an interval fund is a type of closed-end fund with shares that do not trade on the secondary market, according to Investopedia. Instead, the fund periodically offers to buy back a percentage of outstanding shares at net asset value. The rules for interval funds, along with the types of assets held, make them largely illiquid compared with other funds. High yields are the main reason investors are attracted to interval funds.

Bringing the interval fund industry to the table represents another milestone in what had already been a banner year for interval funds, writes IntervalFund.org, an information site and proponent of the investment model. It also paraphrases IPA president and CEO Tony Chereso as saying the impetus for the conference was a member consensus that the rapidly evolving and growing interval fund space lacked industrywide focus.

“We didn’t know Tony or the IPA when we first started building IntervalFunds.org,” the site reads, “but our project was driven by the exact same observation, at around the same time — it was absurd that such a valuable category of investment products was so cumbersome and expensive to research.”

Perhaps less so after the IPA conference and Gannon’s rendering of the numbers.

 

To see the tables and charts that appeared with this article, go to the January 2021 print or click here and click on the January ebook edition on that page, then turn to pages 54-55.

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