According to TheStreet, while traditional closed-end fund openings are decreasing recently, interval funds are on the rise, having doubled in the last two years and representing one-sixth of all closed-end funds. Interval fund managers can use interval funds to pursue illiquid assets more advantageously than regular closed-end funds, especially during economically uncertain times. Interval funds are better protected from fire sales during a market downturn and don't have a cap for illiquid investments. A reason for caution with these funds, however, is the cost of the investment and how investments are tied up quarterly. "I expect interval funds will undergo explosive growth," says Michael Terwillger, portfolio manager of the Resource Credit Income Fund, a closed-end interval fund. "In my view, interval funds have a structural advantage [that] better helps protect principal and helps to generate higher returns."
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