Tom Stabile, the editor for FundFire Alts, writes about the latest phase in the growth of the interval fund market with the increasing adoption of interval funds at the wires. His article, titled “Merrill, UBS, Morgan Pump Up Interval Fund Rosters,” explores the delay between the registered investment advisor (RIA) market and the wirehouse firms in making interval funds available to investors.
Kimberly Flynn, XA Investments Managing Director of Alternative Investments, explains that the process of getting an interval fund approved at a wirehouse firm can be lengthy. “The starting point for these interval funds is still in the RIA channel,” she says. “Raising that first $100 million to $200 million is critical to getting [wirehouse] consideration. Then it can take 12 months – you have to get in line and be patient.”
This delay is largely a result of these firms applying due diligence processes created for other types of funds to interval funds, which may not always be a good fit. “If you have thousands of mutual funds, that kind of screening is appropriate,” she says. “But this universe is small, and while yes, there is more risk, you can judge each interval fund on its merits. You need a process that assesses the manager and alts strategy, but why wait for $300 million and a three-year track record?”
Many of the interval funds that are currently available at wirehouse firms are credit-focused, with a few exceptions. Moving forward, Flynn expects that these firms will look to add more variety to their interval fund lineups. “What we’re going to see next is the wirehouses start to assess their criteria to expand their platforms,” she says. “What’s not on there yet are insurance-linked securities or venture capital or other real estate strategies.”
To read the full article, please click here.
