January 9, 2026
Brian Ponte reports on the surge of traditional asset managers entering the interval fund market, using their vast distribution networks to compete with incumbent alternative managers in the race to bring private market assets to retail investors. After an acceleration in registrations in 2024, 2025 shaped up as the year of execution, with 67 new interval fund launches, including 22 from traditional asset managers, according to Kimberly Flynn, President of XA Investments. Unlike prior cycles, Flynn said, many traditional firms did not quietly incubate strategies but instead entered the market with significant seed capital to bypass the “incubation phase” entirely.
The surge of new entrants has shifted the market’s composition, though assets remain heavily concentrated. Year-end data shows 308 interval and tender offer funds managing $275 billion in assets, with more than a third of market share controlled by Cliffwater, Partners Group, StepStone and SilverBay, while the largest new traditional entrant, Franklin Templeton’s Lexington Private Markets Fund, has grown to roughly $1.6 billion. Lacking decades-long private markets track records, traditional managers have relied on distribution as their “strongest weapon,” and Flynn highlighted that Capital Group and KKR’s joint credit funds were added to Morgan Stanley’s platform within the first quarter of launch—an outcome that “doesn’t usually happen that quickly for other fund sponsors.” She added that gatekeepers “want the traditional managers on their platform because they know that’s what they’re good at,” noting that “they can educate financial advisors.”
With the middle-market direct lending trade becoming crowded, the new wave of funds has been forced to innovate to find flows. Credit remains a staple, with $116.1 billion in net assets as of Dec. 31, according to XA Investments data. Venture and private equity strategies attracted $2.2 billion in net inflows over the same period and had the most capital among new traditional entrants at year-end, while real assets and infrastructure strategies raised $358 million as managers sought duration-matched assets to differentiate themselves.
Despite the rush into the space, risks remain. Flynn warned that when firms partner to enter the interval fund market, they “inherit all of the… industry issues,” highlighting concerns around operational complexity, liquidity management and reputational risk as the market becomes more saturated and competitive.
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