# Interval and tender-offer funds: the wrappers bringing private markets to advisors

URL: https://www.financialadvsr.com/guides/interval-funds-explained
Updated: 2026-10-10
Publisher: Financial ADVSR (https://www.financialadvsr.com)

Interval funds and tender-offer funds are SEC-registered closed-end funds that do not trade on an exchange and instead buy back a limited share of their stock at net asset value from time to time. Interval funds must make repurchase offers of 5% to 25% of outstanding shares at fixed three-, six- or 12-month intervals under SEC Rule 23c-3, while tender-offer funds repurchase only when their board decides to. Advisors use them, along with non-traded BDCs and REITs, to give clients access to private credit, private equity and real estate in a structure with lower minimums than a traditional private fund, in exchange for higher fees and limited liquidity.

Key points:
- Under SEC Rule 23c-3, an interval fund must offer to repurchase 5% to 25% of its outstanding shares at three-, six- or 12-month intervals, and today must hold liquid assets equal to 100% of the offer amount from notice until the pricing date.
- Tender-offer funds repurchase shares at the board's discretion under Exchange Act Rule 13e-4, which neither requires scheduled offers nor caps their size.
- On Sept. 30, 2026, the SEC proposed amendments (Release No. 33-11444) that would add a monthly repurchase interval to Rule 23c-3; as of October 2026 the proposal is not final.
- XA Investments counted 308 interval and tender-offer funds with $233 billion in net assets at year-end 2025, and a record 67 new launches during 2025.
- FINRA says interval funds often charge management fees above 1.5% and total annual fees above 3.5%, plus repurchase fees of up to 2% of proceeds.
- Since June 29, 2026, the SEC's qualified client thresholds under Rule 205-3 are $1.4 million under management or more than $2.7 million in net worth, according to Akin.
- Cerulli Associates projected in July 2026 that advisors' holdings of less-than-fully-liquid products, now about $2.2 trillion, will grow by about $2 trillion over five years.

## What is an interval fund?

An interval fund is a closed-end fund registered with the SEC under the Investment Company Act of 1940. Most interval funds do not list their shares on an exchange. Instead, the fund itself periodically offers to buy shares back from investors at net asset value, according to the SEC's investor bulletin on interval funds. Investors can generally buy shares on any business day at NAV, which is why FINRA describes the structure as a blend of open-end and closed-end features.

The repurchase schedule is set by SEC Rule 23c-3. Under the rule, a fund must make repurchase offers at three-, six- or 12-month intervals, and each offer must be for 5% to 25% of outstanding shares. The fund also must keep liquid assets equal to 100% of the offer amount between the notice of the offer and the pricing date, according to law firm Morrison Foerster's summary of the rule. FINRA says most interval funds make offers quarterly.

Because repurchases are mandatory but limited, an interval fund can hold far more illiquid assets than a mutual fund. FINRA notes that interval funds are not subject to the 15% cap on illiquid assets that applies to open-end funds, and that they may hold assets such as private loans, real estate, private equity funds and catastrophe bonds.

## How is a tender-offer fund different?

A tender-offer fund is also an unlisted, registered closed-end fund, but its repurchases are discretionary. The board decides whether to make a tender offer and on what terms, under Exchange Act Rule 13e-4 and Schedule TO. Unlike Rule 23c-3, Rule 13e-4 does not require repurchases on a fixed schedule and does not set a minimum or maximum offer size, according to Dechert.

In practice, many tender-offer funds say in their prospectuses that they intend to make offers about quarterly, often for around 5% to 25% of shares, but that is a fund policy rather than a legal requirement. The board can decide to skip or shrink an offer if it concludes doing so is in the fund's interest.

Rules for interval funds may change. In a proposing release dated Sept. 30, 2026 (Release No. 33-11444), the SEC proposed adding a one-month repurchase interval to Rule 23c-3, so funds could offer monthly liquidity without individual exemptive relief, and letting a new fund defer its first repurchase offer for up to two years. The SEC also asked whether monthly funds should be allowed a lower 2% minimum offer. As of October 2026, the proposal is open for comment and not final.

## How do non-traded BDCs and non-traded REITs fit in?

Non-traded business development companies and non-traded real estate investment trusts are the other main semi-liquid, evergreen vehicles sold in wealth channels. A BDC is a closed-end vehicle that elects special treatment under the Investment Company Act and invests mainly in private or smaller U.S. companies, often through loans.

Because their shares are not listed on an exchange, investors in non-publicly traded BDCs have fewer ways to sell, the SEC says in its investor bulletin on those products. Liquidity comes from share repurchase programs that the vehicle's board can limit, suspend or end.

Non-traded REITs work in a similar way. Blackstone Real Estate Income Trust (BREIT), for example, limits repurchases under its plan to 2% of NAV per month and 5% per calendar quarter, and its board can modify or suspend the plan. BREIT reported in its 2022 annual report that requests exceeded those limits in November and December 2022, and that it repurchased 43% and 4% of requested amounts in those months.

## Who can invest: accredited investors, qualified purchasers and qualified clients?

Registered interval and tender-offer funds can generally be sold to any investor, subject to each fund's own minimums. That differs from most private funds. For years the SEC staff, during registration review, asked registered closed-end funds that invested more than 15% of assets in private funds to limit sales to accredited investors. The staff said in May 2025 that it would stop doing so, according to Dechert.

An accredited investor, as defined in SEC Rule 501(a) of Regulation D, includes an individual with net worth above $1 million alone or with a spouse or spousal equivalent, excluding a primary residence, or income above $200,000 (or $300,000 jointly) in each of the past two years with the same expected this year. Holders of certain professional credentials designated by the SEC also qualify.

A qualified purchaser, under Section 2(a)(51) of the Investment Company Act, is generally an individual or family company owning at least $5 million in investments, or a person investing at least $25 million on a discretionary basis. This test gates Section 3(c)(7) private funds.

A qualified client, under Advisers Act Rule 205-3, is a client an adviser may charge a performance fee. After the SEC's 2026 inflation adjustment, effective June 29, 2026, the tests are at least $1.4 million under management with the adviser or a net worth above $2.7 million, excluding a primary residence, up from $1.1 million and $2.2 million, according to Akin.

## What do these funds cost, and what are the liquidity risks?

Fees are higher than for most mutual funds. FINRA says investors can expect management fees above 1.5%, service fees of up to 0.25% and total annual fees above 3.5%, before any front-end sales charges, commissions or repurchase fees. Interval funds typically charge a repurchase fee of up to 2% of proceeds, which the SEC says is meant to cover costs of the repurchase. Sales loads, if any, depend on the share class.

The core risk is that an investor may not be able to get out when they want. If more shareholders ask to sell than the offer covers, the fund buys back shares pro rata and the investor keeps the rest, FINRA warns, and the investor won't know the exact price until after accepting the offer. The SEC's investor bulletin cautions that less liquid holdings may be hard to sell or may have to be sold at a discount.

That risk has played out. AIMA, summarizing the SEC's 2026 proposal, noted that in early 2026 some investors sought to tender more shares than funds had offered to repurchase.

FINRA also cautions that high distribution rates are not the same as total return, since payouts can include return of capital, which can have different tax consequences.

## How are private assets in these funds valued?

Because most holdings have no market price, a fund's NAV, and therefore the price investors pay and receive in repurchases, depends on fair value estimates made by the fund and its adviser under board oversight.

The share of hard-to-value assets is large. According to Simpson Thacher, at year-end 2025, 54% of interval fund assets and 44% of tender-offer fund assets were classified as Level 3 under accounting standard ASC 820, meaning they rely on significant unobservable inputs. Another 21% of interval fund assets and 42% of tender-offer fund assets were in private funds typically valued at those funds' reported NAV.

On Sept. 28, 2026, SEC staff from the Office of the Chief Accountant and the Division of Investment Management issued a statement on fair value measurement and disclosure for private assets, with a focus on private credit, covering interval funds, tender-offer funds and BDCs, according to Simpson Thacher. The firm said the statement reinforces existing requirements rather than creating new ones.

## How fast are semi-liquid evergreen funds growing in wealth channels?

XA Investments, a sponsor that tracks the market, reported in January 2026 that interval and tender-offer funds reached 308 funds and $233 billion in net assets at year-end 2025, up $61 billion during the year. It counted 158 interval funds and 150 tender-offer funds, and a record 67 new launches in 2025.

The growth is more recent than the structure. The SEC's 2026 proposing release, as summarized by AIMA, said the number of interval funds rose from 58 in 2020 to 139 in 2025, with assets growing from $38 billion to $101 billion. Fund counts and asset totals vary by source depending on whether they measure net or total managed assets.

Advisors are expected to keep adding. Cerulli Associates' 2026 report on U.S. private markets, covered by InvestmentNews in July 2026, put advisors' current holdings of products that can't be sold at any time at about $2.2 trillion, and expects that figure to rise by roughly another $2 trillion within five years as interval funds, similar semi-liquid funds and model portfolios with built-in alternatives catch on.

## How should advisors think about suitability?

Broker-dealers recommending these products to retail customers must meet Regulation Best Interest, and investment advisers owe clients a fiduciary duty. Both standards require understanding the product and the client before recommending it, which for these funds means weighing illiquidity, fees and valuation uncertainty against the client's goals.

FINRA's investor guidance frames the key questions: whether the product fits the client's risk tolerance, and whether the client might need the money on short notice. Practical diligence includes reading the prospectus for the repurchase policy, fee table, sources of distributions, valuation approach and the board's ability to limit or suspend repurchases.

This guide is general information, not investment, tax or legal advice. Fund terms differ, and each fund's prospectus and current filings govern.

## Questions

**What is SEC Rule 23c-3?** Rule 23c-3 under the Investment Company Act lets an interval fund make periodic repurchase offers at three-, six- or 12-month intervals, each for 5% to 25% of outstanding shares, at net asset value. An SEC proposal from Sept. 30, 2026, would add a monthly interval but was not final as of October 2026.

**What is the difference between an interval fund and a tender-offer fund?** An interval fund must make repurchase offers on a fixed schedule and within a set size range under Rule 23c-3. A tender-offer fund repurchases shares only when its board decides to, under Exchange Act Rule 13e-4, with no required schedule or size.

**Do you need to be an accredited investor to buy an interval fund?** Generally no. Interval and tender-offer funds are registered with the SEC and can be offered to retail investors, though individual funds may set their own minimums or eligibility requirements. In 2025 the SEC staff stopped asking funds that invest heavily in private funds to limit sales to accredited investors.

**Can I get my money out of an interval fund at any time?** No. Shares are bought back only during periodic repurchase offers, and if requests exceed the offer amount, the fund repurchases pro rata, so an investor may receive less than requested and must wait for the next offer.

**How much do interval funds cost?** FINRA says investors can expect management fees above 1.5% and total annual fees above 3.5%, plus possible sales charges and repurchase fees of up to 2% of proceeds. The fund's prospectus fee table shows the actual costs.

**How large is the interval and tender-offer fund market?** XA Investments reported 308 interval and tender-offer funds with $233 billion in net assets at year-end 2025. Other trackers report somewhat different totals depending on how they measure assets.

Sources:
- SEC Investor.gov: Investor Bulletin: Interval Funds (https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/investor-bulletin-interval-funds)
- FINRA: Interval Funds: 6 Things to Know Before You Invest (https://www.finra.org/investors/insights/interval-funds)
- SEC: Interval Fund Modernization; Expansion of Multiple Share Class Relief (Release No. 33-11444) (https://www.sec.gov/files/rules/proposed/2026/33-11444.pdf)
- Dechert: Tender Offer Funds: Structure Meets Strategy (https://docs.dechert.com/tender-offer-funds--structure-meets-strategy/4/)
- Morrison Foerster: SEC Proposes Changes to Interval Fund Exemptive Rules (https://www.mofo.com/resources/insights/261005-sec-interval-fund-exemptive-rules)
- eCFR: 17 CFR 230.501: Definitions and terms used in Regulation D (https://www.ecfr.gov/current/title-17/chapter-II/part-230/subject-group-ECFR6e651a4c86c0174/section-230.501)
- Cornell Legal Information Institute: 15 U.S. Code § 80a-2: Definitions; applicability; rulemaking considerations (https://www.law.cornell.edu/uscode/text/15/80a-2)
- Akin: SEC Issues Final Order Increasing Qualified Client Thresholds (https://www.akingump.com/en/insights/alerts/sec-issues-final-order-increasing-qualified-client-thresholds)
- Dechert: SEC Staff Opens Door to Expanded Retail Access to Private Funds (https://www.dechert.com/knowledge/onpoint/2025/5/sec-staff-lifts-key-limit-on-retail-access-to-private-funds.html)
- SEC Investor.gov: Non-Publicly Traded Business Development Companies (BDCs): Investor Bulletin (https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/investor-bulletin-non-publicly-traded-business-development-companies-bdcs)
- Blackstone Real Estate Income Trust (SEC filing): Form 10-K for fiscal year 2022 (https://www.sec.gov/Archives/edgar/data/1662972/000166297223000030/breit-20221231.htm)
- Simpson Thacher: SEC Joint Statement on Valuation of Private Assets (https://www.stblaw.com/about-us/publications/view/2026/10/02/sec-joint-statement-on-valuation-of-private-assets)
- XA Investments (via Barchart): XA Investments Reports Record Growth in 2025 in Its Fourth Quarter 2025 Market Update (https://www.barchart.com/story/news/37066823/xa-investments-reports-record-growth-in-2025-in-its-fourth-quarter-2025-market-update)
- InvestmentNews: Private markets seen adding $2 trillion to advisor books within five years (https://www.investmentnews.com/alternatives/private-markets-seen-adding-2-trillion-to-advisor-books-within-five-years/267633)
- AIMA: SEC proposals to increase indirect retail access to private markets (https://www.aima.org/article/sec-proposals-to-increase-indirect-retail-access-to-private-markets.html)