Interval Funds are an increasingly popular way for investors to access alternative investments. Manager like the interval structure as a route to more retail-oriented assets while staying true their investment processes. Investors like the funds as a means to access alternative strategies that offer low correlation to traditional investments. The features of the Interval Fund structure, a hybrid between private funds and mutual funds, is what makes them so appealing.
As the economy reopens, and many companies are able to successfully raise funds, investment opportunities in IPOs, private equity and venture capital could take off, particularly in the second half of this year.
Interval funds are growing in popularity, in large part, because investors are able to access private markets in a way they have not been able to through traditional mutual funds.
With Higher Yields and Strong Growth Potential, Now is a Great Time to Invest in a Real Estate Interval Fund()
The real estate sector was hit hard by the COVID-19 pandemic and forced lockdowns, but as the economy reopens the strong growth potential has the sector poised for a strong rebound year.
As banks have faced greater regulatory scrutiny since the adoption of Dodd-Frank in 2008, interval funds are becoming the new liquidity provider in structured credit finance. During the Alternative Credit Investing panel during the Active Investment Company Alliance’s (AICA) Interval Fund Boot Camp and Manager Spotlight on March 31, Christian Aymond, a Principal at A3 Financial Investments, noted that alternative credit assets work best in an interval fund structure, in large part because the funds do not have to offer daily liquidity.
Low Interest Rates and Wider Spreads Providing Greater Opportunities for Fixed Income Interval Funds()
Credit investments can be seen as an insurance policy, and the best time to make these investments is right after a great deal of dispersion and volatility in the markets, as we saw in 2020. Following last year’s market volatility, spreads are currently widest, and managers and investors are essentially paid to take on more risk right now.
The SEC’s decision in May to rescind the Boulder No-Action letter, allowing a closed-end fund to opt into a state control share statute without risking an enforcement action, could have a chilling effect on activism, and could face litigation for violating the Investment Company Act.
While closed-end funds (CEFs) have traditionally been perpetual offerings, more CEFS have term offerings that allow investors to liquidate at net asset value and minimize premium discounts.
Although indiscriminate volatility has caused valuations to decline significantly since March, managers have been able to take advantage of lower prices to cheaply buy some company equities.
In today's low-interest-rate environment, principal perseveration a key fundamental present in bond strategies and managers must find yield without taking on too much undo risk.
There has been an ongoing trend of new issuances in taxable municipal closed-end funds (CEFs), particularly from institutional and foreign investors as yields have been higher than other debt products.