Interval funds are a unique type of investment vehicle that combines elements of a traditional mutual fund and a closed-end fund. They are designed to offer investors access to investments that are less liquid, such as private credit, real assets, re-insurance and even art, while still providing some degree of liquidity through widely known, periodic redemption periods.
The strategies deployed in an interval fund are often far less correlated to traditional stock and bond investments. They also may be more complex strategies, and in order to make sure each investor fully understands the investment framework and risks, many interval funds are only abbe to be purchased in an account that is managed by a professional advisor. Individual investors who manage their own portfolio may not have access.
During the redemption period, investors can request to redeem shares, and the manager will determine how many of those redemption requests will be granted. Often there is a stated maximum amount of the portfolio that will be permitted on each redemption date in order to protect generally less liquid positions from having to be liquidated at fire-sale prices in order to meet waves of redemption requests. Outside of the redemption period, investors generally cannot sell shares. Generally, purchases can be
made on any day that the markets are open.
Interval funds often have high minimum investment amounts, in the hundreds of thousands or even millions of dollars. However, most interval funds also apply those minimums at the Registered Investment Advisor level, which means that an RIA can allocate the interval fund across many individual accounts in much smaller position sizes as long as the total of all of those accounts exceeds the minimum threshold.
Sundial uses a variety of interval funds in portfolios, and generally considered them illiquid positions as there is no guarantee that a redemption request will be fully granted on any specified redemption date.
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