Interval Funds

Apr 19. 16:32

Interval Fund Essentials: Buying Shares

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Because of their unorthodox structuring, it can be difficult for new investors to navigate the process of buying shares in an interval fund. Here’s what you need to know.

IMPORTANT REMINDERS

You may be familiar with the basics of interval funds, but the steps required to purchase shares for your portfolio can be confusing. Here are a few key facts to remember about interval fund shares:

· They’re offered continuously, which means investors can buy shares at any time of the year.

· They’re sold periodically, which means investors can only sell them at predetermined intervals (usually once a quarter).

· They’re priced at net asset value (NAV), which is the total amount of money invested in the fund divided by the number of shares the fund has issued.

· NAV is calculated daily, so the price you’re getting is current and accurate to within 24 hours.

HOW TO BUY INTERVAL FUND SHARES

How does buying shares in an interval fund differ from buying shares in another continuously offered fund, like a mutual fund or ETF? In short: the exchange.

While retail investors can log into their individual accounts with brokers like Fidelity and Charles Schwab and purchase shares in ETFs and mutual funds, this usually isn’t the case for interval fund shares. Although these services might offer quotes on the performance and structure of a given interval fund, they don’t allow individuals to purchase shares on their exchanges.

Instead, interval fund shares must be purchased directly from the investment company that manages the fund. Here’s how to do that:

1. Find the company’s website under the fund’s name.

2. Navigate to the “investor” section on the website, usually under “invest with us” or “investor login.”

3. Create an account with the company, and link a bank account or other source of capital.

4. Research the fund’s objectives, performance, and fees.

5. When you feel ready, submit a purchase order for the number of shares that fits your personal investing goals.


Note: Some interval funds are only accessible to accredited investors with recent income and net worth. Although there are many publicly available interval funds, be aware of this possible limitation.

Note: If the company doesn’t have a website, you can complete this process over the phone. You can find a phone number for the company in the fund’s latest prospectus, which can be found under the fund’s name or on its SEC index site.

FEES TO CONSIDER

Interval funds will sometimes add a sales charge for new purchases, which can be either a flat fee or a percentage of the total purchase amount. Make sure you’re informed about that fee, which can be found on the fund’s prospectus under “sales charge” or “front-end load.”


Next: Interval Fund Essentials: Selling Shares

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