Interval Fund vs Tender Offer Fund

Legal basis: interval fund, Rule 23c-3 under the Investment Company Act; tender offer fund, Rule 13e-4 tender offers under the Exchange Act (Section 23(c) of the 1940 Act permits the repurchase).

Obligation: interval fund, fundamental policy, shareholder vote to change; tender offer fund, board discretion each period.

Frequency: interval fund, every 3, 6 or 12 months as stated in the policy; tender offer fund, typically quarterly, may skip.

Size: interval fund, 5 to 25 percent of outstanding shares, 5 percent in practice; tender offer fund, as the board sets, typically up to 5 percent of net assets.

Notice and timing: interval fund, notice 21 to 42 days before the repurchase request deadline, pricing within 14 days after the deadline, payment within 7 days after pricing; tender offer fund, Schedule TO, offer open at least 20 business days, valuation date after expiry, payment on the offer's schedule.

Liquidity reserve: interval fund, liquid assets at least equal to the offer amount from notice to pricing date; tender offer fund, none required.

NAV frequency: interval fund, at least weekly and daily during the five business days before the deadline; tender offer fund, monthly or quarterly is common.

Performance fee: interval fund, generally none (a fulcrum fee is possible but rare); tender offer fund, incentive fee permitted when investors are qualified clients.

Eligibility and minimums: interval fund, usually open to all, $1,000 to $25,000; tender offer fund, often accredited or qualified client, $25,000 to $100,000.

Subscriptions: interval fund, daily at NAV in most cases; tender offer fund, monthly or quarterly.

Early repurchase fee: interval fund, up to 2 percent under the rule; tender offer fund, commonly 2 percent within one year.

Leverage: both, 300 percent asset coverage for debt (33 percent of assets) and 200 percent for preferred stock.

Tax and reporting: both, RIC with a 1099, Form N-2 registration, N-CSR annual and semiannual reports, N-PORT monthly holdings.

Typical strategies: interval fund, private credit, real estate credit and equity, insurance-linked securities, multi-asset income; tender offer fund, private equity, secondaries, venture, private credit, hedge fund of funds.

A fundamental policy stating the interval (3, 6 or 12 months) and the timing of the repurchase request deadline.

Each offer for not less than 5 percent and not more than 25 percent of outstanding shares; the board may also make discretionary offers no more than once every two years.

Repurchase price at the NAV on the repurchase pricing date, which may be no later than 14 days after the deadline (or the next business day).

Payment within seven days after the pricing date.

A repurchase fee, if any, of no more than 2 percent, paid to the fund to compensate it for the costs of the repurchase.

Liquid assets equal to at least 100 percent of the offer amount from the time notice is sent until the pricing date, with board procedures for maintaining them.

NAV computed no less frequently than weekly, and daily on the five business days before the deadline.

Suspension only in enumerated circumstances, by a majority of the independent directors.

Board resolution each quarter authorizing an offer for a stated percentage of net assets or number of shares.

Schedule TO filed with the SEC containing the offer to purchase, the expiration date and the valuation date; the offer must stay open at least 20 business days and give all holders the same terms.

Tenders may be withdrawn until expiry; after expiry the fund accepts shares, prorating if the offer is oversubscribed.

Price is the NAV on the valuation date, usually quarter end, after expiry; an early repurchase fee may be deducted.

Payment in cash or, in some funds, a non-interest-bearing note payable after the quarter-end NAV is finalized.

Amendment to the Schedule TO reporting shares tendered and accepted; a fund's Schedule TO history on EDGAR is its actual liquidity record.

If the strategy is credit, real estate or income and the fund is open to the public with no performance fee, it is almost certainly an interval fund; the question is the share of Level 3 assets against the 5 percent offer.

If the strategy is private equity or secondaries with an incentive fee, it is a tender offer fund; the question is the Schedule TO record and whether inflows have been funding tenders.

In either case, read the proration history in the shareholder reports: repeated full proration at 5 percent means the fund's holders want out faster than the structure allows.

Check the early repurchase fee and who receives it; a fee paid to the manager rather than the fund is a conflict.

Compare total expense ratio from the N-2 fee table, including acquired fund fees and interest expense, not the management fee alone.

For a tender offer fund, confirm you meet the qualified client or accredited standard and understand that the subscription may be monthly with a notice period.

Investors usually apply this term by tying the definition back to the controlling documents and then asking which cash flows, rights, restrictions, or valuation assumptions it changes. A useful review looks at the term alongside fees, leverage, liquidity, reporting frequency, and manager discretion rather than treating it as a standalone concept.

The practical diligence test is simple: identify who benefits if the assumption is wrong, who has control when conditions change, and what evidence the investor receives after closing. Terms that cannot be reconciled to documents, cash movements, and monitoring data should be treated as marketing shorthand until proven otherwise.