The financial services industry evolves by constantly innovating products and services to meet investor needs. One of these innovations is closed-end “interval” funds. While first permitted as an investment product some 25 years ago, interval funds are receiving renewed attention from fund companies and advisers alike who are seeking increased product and portfolio diversification while providing wider access to less-liquid, longer-term investments that typically make up interval fund portfolios. Interval fund assets continue to expand within the marketplace, with aggregate assets over $40 billion as of August 2021, up nearly 30% year-over-year.
In conjunction with the DTCC, ICI Broker/Dealer Advisory Committee (“BDAC”) and the ICI BDAC Interval Funds Task Force (“IFTF”), valuable enhancements to NSCC Fund/SERV® have been identified to enable smooth and efficient processing among industry stakeholders. These changes will improve the shareholder experience, enable stronger risk management practices, and create greater transparency for Firms/intermediaries, Fund Companies, and Service Providers.
This guide describes updates that uniquely identify Interval Funds as a security type, allow future-dating of shareholder repurchase orders, support pre-confirmation acknowledgement of repurchase orders between Firms and Funds, and enable identification of de minimis repurchases as allowed under select Fund Company prospectuses.
pdf Interval Funds: Repurchase Processing User Guide & Best Practices (706 KB)