The interval fund structure has proven successful in the registered investment advisor (RIA) channel, and competition is set to ramp up as more asset managers launch interval fund products in hopes of replicating the track record of dominant industry players, according to the latest Cerulli Edge—U.S. Asset and Wealth Management Edition.

Cerulli’s research shows assets in the interval fund structure ended 2024 at $98 billion, up 31% from 2023. While the structure’s growth rate is attractive, flows have gravitated heavily toward the largest providers. Managers seeking to launch products in the structure must offer attractive pricing and back their product with wholesaler distribution. While forming strategic partnerships may provide a leg up, timing a launch to a particular private capital category, a critical success factor, will be more difficult.

“Cerulli expects the trend of traditional and alternative investment managers striking partnerships for private wealth product distribution to continue,” says Daniil Shapiro, director. “Key partnerships quickly can transcend structures and segments. The interval fund structure is a natural avenue to build a partnership base from which they then can expand,” he adds. Looking forward, Cerulli expects managers to continue to strike partnerships—perhaps more than one per firm—as they build private wealth and defined contribution segment capabilities.

As firms seek inclusion in models and within target-date funds in the defined contribution segment, more partnerships are likely, as both will likely require the support of multiple alternative managers within the construct of one investment portfolio. This will create opportunities for managers to work together to position their solutions as complements, helping advisors use the strategies, and potentially lead to future partnership opportunities.

“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,” says Shapiro. “The interval fund structure is likely to gather adoption based on existing asset growth and familiarity, and it also is likely to be a key component of models, as issuers seek to offer investable access solutions that also can be rebalanced over time,” he concludes.