Issue link: https://resources.envestnet.com/i/1542481
2 Private markets are no longer the sole purview of institutional investors and billionaires. In recent years, technological improvements and operational enhancements have begun to broaden access to asset classes such as private credit, private real estate, and private equity. Interestingly, Apollo Global Management reports that $16 trillion in private capital currently exists, with $11 trillion of private capital added since 2013. 1 Because private assets are not listed on exchanges like publicly traded securities, it only makes sense that alternative vehicles are often needed to invest in them. The daily liquidity of mutual funds and the continuous liquidity of exchange traded funds (ETFs) match poorly with the relative illiquidity of complex loans, private companies, and physical buildings. The longstanding interval fund structure has been increasingly leveraged by the asset management industry to provide access to less liquid investments while still enabling periodic fund transactions. According to XA Investments, almost $146 billion is invested in interval funds, and the number of these products keeps growing, too. 2 0 20 40 60 80 100 120 140 160 180 2021 75 86 95 124 158 2022 2023 2024 3Q25 Number of Interval Funds Source: XA Investments. Data as of September 30, 2025. Now, it is time to dive deeper. In this introductory analysis, we will describe how an interval fund operates and how interval funds compare to traditional drawdown funds. We will also consider interval funds in a portfolio context, including their risks. HOW INTERVAL FUNDS WORK A new interval fund accepts money from investors and deploys it predominantly to acquire illiquid assets like loans (private credit), non-public companies (private equity), or structures and land (private real estate). All interval funds are registered with the Securities and Exchange Commission (SEC) under the Investment Company Act of 1940 and can operate indefinitely. This uniform type of registration means that every interval fund must comply with the same reporting and legal requirements. Importantly, interval fund investors do not have to meet onerous Accredited or Qualified Investor wealth, income, or sophistication requirements. This accessibility means that interval funds can be offered to clients who are not highly affluent. The 1099 tax documents provided by interval funds also make Internal Revenue Service (IRS) filings much more manageable than funds that require K-1 reporting. Unlike drawdown funds with distinct fundraising, investing, and distribution phases before ultimate closure, interval funds are designed to operate perpetually. They are "evergreen" because they continuously raise, allocate, and return capital to investors without any time limits. This flexibility eliminates the complex liquidity challenges and potential vintage year similarities of drawdown funds. The J-curve, a return pattern often found in drawdown funds, may be mitigated by interval funds, too. As shown in Figure 1, interval funds and other evergreen funds should invest capital immediately, whereas traditional drawdown structures go through a cycle of commitments, drawdowns, and distributions. 1 Apollo Global Management. Outlook for private markets. October 2025. 2 XA Investments. Data as of September 30, 2025. FOR ONE-ON-ONE-USE WITH A CLIENT'S FINANCIAL ADVISOR ONLY © 2025 Envestnet. All rights reserved. 20251218-5072926