XA Investments, a specialist in tracking closed-end interval and tender offer funds, has launched the XAI Interval Fund Index (INTVL) to track the total returns of a basket of 77 existing funds with a combined $103 billion in total net assets. It has a January 2023 base date with two years of historical performance.
The index includes individual interval and tender offer funds registered under the Investment Company Act of 1940 with over $100 million in net assets. Overall, XA estimates the index captures roughly 60% of the total net asset value for the entire interval and tender offer fund market. Additional funds could be incorporated into the index during quarterly rebalancing periods.
“The XAI Interval Fund Index will give asset managers and financial advisors an unprecedented level of clarity in a market that has been notoriously difficult to track,” XA President Kim Flynn said in a statement. “By applying our in-house research, proprietary data and rigorous methodology, XA Investments has been able to create the first index tracking the interval and tender offer fund market.”
According to XA, the index aims to offer “market insights through daily intelligence to monitor and track the interval and tender offer fund market,” and it’s designed to “act as a barometer.”
The index could not directly be used as a basis for an ETF as the SEC’s current regulations limit the percentage that any ETF or mutual fund can allocate to illiquid or semiliquid assets.
“The INTVL index is not really investable by individual investors on a direct basis,” Flynn said. “Currently, interval funds are sold only via financial advisors. Interval funds are not sold on Fidelity or Schwab in the same manner that you might a mutual fund, on their supermarkets. The index might become investable in the future in a fund of funds format or if the industry expands access to make interval funds more available on a direct basis.”
There has been explosive growth in asset managers launching evergreen products, with new funds becoming effective almost weekly and around 50 funds working their way through the SEC’s approval process at any given time.
In 2024, the two structures saw a 21% increase in the number of funds and a 35% increase in managed assets during 2024, according to XA. Overall, the firm said there are now 257 total funds (124 interval funds and 133 tender offer funds) with a combined $172 billion in assets, with about 60% of assets in interval funds. Overall, XA projects that total assets in interval and tender offer funds could reach nearly $350 billion by the end of 2027.
“The introduction of the XAI Interval Fund Index is another example of XA Investment’s leadership in providing the closed-end interval and tender offer marketplace with the innovative research and data needed to solidify investor interest in this burgeoning investment option,” Philip Hasbrouck, senior managing director, Cliffwater, said in a statement. (Cliffwater operates the single largest interval fund in the U.S., the Cliffwater Corporate Lending Fund (CCLFX), which has more than $26 billion in assets.)
The mix of funds captured in the index crosses investment strategies and asset classes, including credit, real estate/real assets, hedge funds, specialty, multi-asset, tax-free bonds and venture/private equity. The index is calculated daily and rebalanced quarterly.
Indxx Inc. serves as the index calculation agent. The index is available on Bloomberg under the ticker INTVL.