Following a flurry of interest in “liquid alt” funds (also known as alternative mutual funds), Interval Alts are becoming increasingly popular. In 2015 alone, there have been ten filings for new Interval Alts. Interval Alts are non-traded closed-end funds registered under the Investment Company Act of 1940, but they function very much like traditional hedge funds. In addition to employing alternative strategies, they have terms similar to those of hedge funds, such as monthly subscriptions and quarterly or semi-annual liquidity. Because of the commonality in offering terms, many Interval Alts also charge fees similar to their sister hedge funds managed by the same manager (e.g., fees of 2 and 20, or some variation thereof). Unlike hedge funds, however, they may be publicly offered and therefore may be offered in a variety of distribution channels. In a guest article, George M. Silfen and Ronald M. Feiman of Kramer Levin Naftalis & Frankel examine the regulatory basis for Interval Alts; explore the differences between such structures and liquid alternative funds; and address the marketing advantages of Interval Alts versus traditional hedge funds. The authors also provide an extensive chart comparing Interval Alts to alternative mutual funds and traditional hedge funds. For additional insight from Silfen, see “Kramer Levin Partner George Silfen Discusses Challenges Faced by Hedge Fund Managers in Operating and Distributing Alternative Mutual Funds
,” Hedge Fund Law Report, Vol. 6, No. 16 (Apr. 18, 2013); and “How to Mitigate Conflicts Arising Out of Simultaneous Management of Hedge Funds and Alternative Mutual Funds Following the Same Strategy (Part Three of Three)
,” Hedge Fund Law Report, Vol. 8, No. 15 (Apr. 16, 2015). For more from Kramer Levin partners, see “OTC Derivatives Clearing: How Does It Work and What Will Change?
,” Hedge Fund Law Report, Vol. 4, No. 24 (Jul. 14, 2011).