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Large Asset Managers Continue to Dominate Interval Fund Market

by Jacob Mohs

Interval fund asset growth accelerated slightly in 2018Q3. Total interval fund net assets equaled $26.2 billion as of the most recent public filings, up 50% compared to the prior year, and 13% compared to the prior quarter.

Although new entrants are gaining share, interval fund assets remain highly concentrated. The five largest alone account for 65% of total net assets. Click here for AUM data on active interval funds.

Fastest growing interval funds

Of active interval funds, 36 interval funds reported net asset growth in the most recent quarter, and 12 reported a decrease. Additionally, 8 recently launched funds have still not yet filed their first financial statements. In general, large asset managers continue to dominate fundraising. The following list shows the 10 fastest growing interval funds, based on net asset growth in the most recent reported quarter.

Fund

Date of Reporting Period

Net Assets Increase MRQ

ACAP Strategic Fund

June 30

$271,237,227

Griffin Institutional Access RE Fund

June 30

$247,482,962

Versus Cap Multi-Manager Real Estate Income Fund

June 30

$177,936,192

Pioneer ILS Interval Fund

July 31

$172,271,210

Versus Capital Real Assets Fund LLC

June 30

$163,049,154

Stone Ridge Trust V

May 31

$136,126,557

PIMCO Flexible Credit Income Fund

June 30

$114,025,000

Total Income+ Real Estate Fund

June 30

$111,083,943

Blackstone GSO Floating Rate Enhanced Income Fund

July 31

103,959,639

FS Credit Income Fund

July 31

$72,445,000

Fee structures are becoming more standardized, and several service providers have become critical to the interval fund ecosystem. For detailed information on fund structure trends click here.

Pipeline of new funds

Although not every new fund will succeed in raising capital, the pace of fund registrations and launches is a reliable leading indicator of future sector growth.

New fund registrations

Six interval funds filed initial registration statements with the SEC in 2018Q2.

Fund Name

Registration Date

Strategy

Lord Abbett Credit Opportunities Fund

2018-09-28

Credit

BlackRock Credit Strategies Fund

2018-09-21

Credit

1WS Credit Income Fund

2018-08-10

Credit

FNEX Ventures

2018-07-19

Other

Thrivent Church Loan & Income Fund

2018-07-13

Real Estate

Broadstone Real Estate Access Fund*

2018-07-10

Real Estate

*Broadstone replaced an earlier fund registration, simply changing from Maryland Corporation to Delaware Statutory Trust.

BlackRock’s interval fund

BlackRock’s plan to enter the interval fund space is notable. With $6.3 trillion in AUM, it requires a lot of assets to move the needle. They clearly see potential for growing acceptance of the structure. The BlackRock Credit Strategies Fund will invest across a variety of credit subsectors. Bloomberg recently profiled BlackRock’s post financial crisis growth.

There are currently 27 interval funds in registration, pending the release of final prospectuses and SEC approval. Based on number of funds, credit strategies, broadly defined, continue to be the most popular among fund managers getting ready to launch an interval fund.

New funds declared effective

The SEC declared effective 5 interval fund registrations statements in 2018Q3, bringing $1.85 billion in new equity for sale into the market. Several of these funds are officially launching very quickly after filing initial registration statements. It’s not clear whether this is due to an expedited SEC approval process, or simply fund managers moving quicker to get registration statements finalized.

The public interval fund offerings declared effective in 2018Q3 are shown in the following table:

Fund Name

Effective Date

Investment Strategy

Maximum Offering Proceeds

American Beacon Apollo Total Return Fund

2018-09-12

Credit

$250,000,000

Pioneer ILS Bridge Fund

2018-09-11

Insurance Linked Securities

$300,000,000

Variant Alternative Income Fund

2018-08-30

Credit

$200,000,000

PIMCO Flexible Municipal Income Fund

2018-07-19

Credit

$1,000,000,000

Flat Rock Opportunity Fund

2018-07-02

Credit

$100,000,000

The interval fund space has expanded rapidly in recent years. Click here for historical data on fund launches.

Note: All data in this post is based on SEC filings available as of October 1, 2018, unless otherwise indicated.  

Note: this was originally posted by the author on Interval Fund Tracker.    

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Filed Under: Interval Funds