White Paper Summary: Closed-End Funds, Interval Funds, Alternative Strategy Registered Funds, and Business Development Companies

Closed-End Funds, Interval Funds, Alternative Strategy Registered Funds, and Business Development Companies

Summary: white paper by K&L Gates LLP

• Registered funds have expanded traditional investments to meet investor demand in the post-crisis period of low interest rates and high equity volatility. Many funds now include alternative assets in an investor’s diversified investment portfolio.

• Tender offer funds and interval funds are continuously offered closed-end funds that provide periodic liquidity to investors. These fund types differ primarily based on when they offer repurchases. Interval funds must do so based on a predetermined time period while tender offer funds offer repurchases at the discretion of the fund’s board.

• In 2017, the Treasury Report encouraged the SEC to create rules that will allow for greater investment in private companies by registered funds. These include new rules on liquidity that may push certain asset classes to be less liquid.

• Because these recommendations are focused on encouraging investment into illiquid assets, managers are increasing their attention to tender offer funds and interval funds.

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