Choosing Interval Funds Over Mutual Funds


The average investor has a lot more options available to them these days than they did just a few short years ago. Our parents may have preferred the familiar mutual fund, but today’s investor has far more investment options, with the number of mutual funds triple what it was ten years ago, ETFs in abundance, and other options available to create  a more diversified portfolio. One alternative to the traditional mutual fund that is beginning to gain traction in recent years is the closed end interval fund. Closed end interval funds  offer some clear advantages over traditional open end mutual funds, but there are drawbacks. Deciding what to invest your money in can be a difficult decision and there really is no one right answer for everyone. An investor needs to understand their own financial position well  to make sound investment decisions.


Open vs Closed End Funds

Interval funds and mutual funds are both open investments in the sense that anyone with the minimum required initial purchase can purchase shares in the fund at any time. The big difference between the two is that an investor can sell their interest in a mutual fund at the end of any day the New York Stock Exchange is open,  while interval funds only accept redemptions at the end of each month or each quarter, depending upon how the prospectus is written.  This reduced liquidity can be a problem for investors that may need quick access to their assets during times of financial crisis.

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Frank "Kip" Meadows
Frank "Kip" Meadows is the founder of Nottingham in Rocky Mount, North Carolina. Nottingham provides turnkey structural and operational solutions for mutual funds, private funds and other pooled investment vehicles including, foundations, endowments, and government investment pools. Nottingham has focused on the various structures available for pooling investment assets since that time.