Assets in interval funds surged to $98 billion by the end of 2024, marking a 31% increase from the previous year, according to new research from Cerulli Associates.
While the structure’s expansion is notable, Cerulli said the market remains heavily concentrated, with a handful of providers – particularly Cliffwater – capturing the lion’s share of new flows.
Cerulli’s latest analysis highlights that the interval fund structure, which offers intermittent liquidity and access to private markets, has gained significant traction in the RIA channel.
The report notes that most asset growth has gravitated toward the largest managers. Cliffwater, for example, accounted for more than half of the interval fund category’s year-over-year asset growth, with its three products now representing about one-third of all interval fund assets.
“Cerulli expects the trend of traditional and alternative investment managers striking partnerships for private wealth product distribution to continue,” said Daniil Shapiro, director at Cerulli Associates. He added that the interval fund structure provides a “natural avenue to build a partnership base from which they then can expand.”
The competitive landscape is shifting as more firms – including Blackstone, KKR, and Capital Group – enter the interval fund market. These new entrants are expected to back their offerings with strong wholesaler distribution and competitive pricing.
For instance, Blackstone’s Private Multi-Asset Credit and Income Fund is positioned to leverage the firm’s extensive salesforce and educational resources. KKR and Capital Group are also targeting broader accessibility with lower management fees and no leverage.
Despite the influx of new products, matching the growth trajectory of established players like Cliffwater may prove challenging. Cerulli attributes Cliffwater’s success to its dedicated focus on RIAs, a no-load institutional share class, and a robust wholesaler team. The firm’s approach, which emphasizes providing access solutions rather than pitching alpha generation, has resonated with advisors seeking diversified private credit exposure.
The report also points to a broader trend of asset managers forming strategic partnerships to gain traction in private wealth and defined contribution segments. One high-profile example was Blackstone's tripartite partnership with Wellington and Vanguard, which was shortly after followed by an SEC filing to launch a multi-asset interval fund mixing public and private market exposure.
As firms aim for inclusion in model portfolios and target-date funds, collaboration among multiple alternative managers is expected to become more common. This could create opportunities for managers to position their interval fund solutions as complementary within diversified portfolios.
Looking ahead, Cerulli suggests that the interval fund structure is likely to see continued adoption, driven by its existing asset growth and growing familiarity among advisors. The structure’s operational support from industry utilities such as the Depository Trust and Clearing Corporation also provides a logistical advantage over other semi-liquid alternatives.
“An important industry lesson is that, as exemplified by the largest interval fund manager, Cliffwater, the offering of an access solution from a trusted party can go quite far, helping build the case for continued product development,” Shapiro said. He noted that interval funds are poised to become a key component of portfolio models, especially as issuers look to offer investable access solutions that can be rebalanced over time.
Still, the future of interval funds is not without uncertainty. The structure faces stiff competition from ETFs, which offer greater liquidity, and the defined contribution market, where collective investment trusts currently dominate private market exposures. Additionally, the concentration of interval fund assets in private credit – now accounting for 61% of the category, up from 38% in 2021 – could pose risks if demand for private credit wanes.
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