Thirst for Diversification Leads More Advisers to Interval Funds

Excerpt from Investment News, published April 16, 2019


Because interval funds generally invest in illiquid areas such as private real estate, private lending and reinsurance policies, that limited liquidity is considered a portfolio management necessity, which proponents of the strategy strongly defend.

"I like to be able to access asset classes that can't be easily accessed in other ways for most investors, and the structure helps protect client returns from hot money moving in and out," said Eric Walters, president of Silvercrest Wealth Planning.

Mr. Walters, who allocates between 2% and 7% of client assets to interval funds, is currently using funds that allow for monthly redemptions.

"I'd be happy with quarterly or even annual redemptions, as long as it's not the kind of multiyear lockups you see with private equity and hedge funds," he said.

Net of fees, which tend to be higher than mutual fund fees, Mr. Walters said his clients are earning between 6% and 7% annually from interval funds invested in small business loans.