Interval funds offer to repurchase its shares from its investors - generally every three, six, or twelve months, as disclosed in the fund's prospectus and annual report. That is to say, funds will periodically offer to buy back a stated portion - typically 5 percent - of its shares from investors, but investors are not required to accept these offers. Interval funds will periodically notify its investors of the upcoming repurchase dates. When funds make a repurchase offer to its investors, it will specify a date by which investors must accept the repurchase offer. Also, shares typically do not trade on the secondary market. Instead, their shares are subject to periodic repurchase offers by the fund at a price based on net asset value. Funds are permitted to continuously offer their shares at a priced based on the fund's net asset value. The price that investors will receive on a repurchase will be based on the NAV per share determined as of a specified date. This date will occur sometime after the close of business on the date that shareholders must submit their acceptances of the repurchase offer. In addition, interval funds are permitted to deduct a redemption fee from the repurchase proceeds. The fee is paid to the fund and is intended to compensate the fund for expenses directly related to the repurchase. Interval funds may charge other fees as well.
The very first interval fund, the Ladenburg Thalmann Alternative Strategies Fund, has $19.5 million in assets. It was launched in 2010 and is managed by Ladenburg Thalmann Asset Management Inc., which sells it through its related network of three independent broker-dealers. Sponsors of non-traded REITs and other real estate funds are lining up to sell interval funds as well. American Realty Capital, which sponsors several non-trade REITs, has one interval fund in registration, the American Realty Capital Real Estate Income Fund. Also, Bluerock Real Estate LLC has an interval fund in registration, the Bluerock Total Alternatives Real Estate Fund. In addition, wholesalers are already on the road to present the product to independent broker-dealers. This has caused securities regulators to set their sights on alternative investment offerings by independent firms. Even if broker-dealers decide to tread softly due to government oversight, investors should carefully read all of an interval fund's available information, including its prospectus and most recent shareholder report, before investing.
Have you suffered losses resulting from an investment in an interval fund? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at email@example.com for answers to any of your questions about this blog post and/or any related matter.