Key features for investment advisors
- Distribution
Interval and tender offer funds enable broad investor access, with offerings via the National Securities Clearing Corporation (“NSCC”) and Alternative Investment Product Services (“AIP”) allowing for easier settlement and access.
- Liquidity
With limited frequency of redemptions, both fund types enable longer-term investment strategies including the ability to hold larger amounts of illiquid investments.
Key features for investors
- Investment strategy
Both funds can provide investors with reduced investment minimum access to private equity investment strategies. They also expose investors to non-correlated asset classes and the potential for enhanced performance.
- Ease of access
The products are continuously offered and can be accessible through the largest retail platforms. Additionally, Interval and tender offer funds may be offered via the NSCC and AIP.
Registration under the 1940 Act
Fund registration under the 40 Act seeks to provide transparency and protection to investors.
- Tax reporting
They produce standard 1099 reporting familiar to retail clients.
Fund comparison
|
|
Interval fund |
Tender offer fund |
Standard private fund |
Open-end mutual fund |
ETF |
|
Continuous offering |
Yes |
Yes |
No |
Yes |
Yes |
|
Redemption frequency |
Periodic (Quarterly, semi-annually or annually) |
No set timeframe. Board of directors determines (typically quarterly) |
Varied |
Daily |
Daily |
|
1940 Act registration |
Yes |
Yes |
No |
Yes |
Yes |
|
Illiquid holdings limit |
No limit, but must align with repurchase period threshold |
No set limit. Board of directors determines with liquidity needs concerning repurchases |
None |
15% |
15% |
|
Tax reporting |
1099 |
1099 |
K-1 |
1099 |
1099 |
