Quick answer
What is an interval fund?
An interval fund is an SEC-registered closed-end fund that does not trade on an exchange but must offer to repurchase between 5% and 25% of its shares at fixed intervals of 3, 6 or 12 months, under Rule 23c-3 of the Investment Company Act. Most offer quarterly repurchases and invest in less liquid assets such as private credit or real estate.
Key takeaways
- 01Must offer to repurchase 5–25% of shares each interval.
- 02Intervals are 3, 6 or 12 months; quarterly is most common.
- 03Oversubscribed offers are filled pro rata.
- 04Common holdings: private credit, real estate, specialty lending.
| Rule | SEC Rule 23c-3 |
|---|---|
| Repurchase size | 5–25% of shares |
| Intervals | 3, 6 or 12 months |
| Pricing | Net asset value |
| Exchange-listed? | No |
| 2026 proposal | Monthly offers (not final) |
The Short Answer
What is an interval fund?
An interval fund is an SEC-registered closed-end fund that does not trade on an exchange but must offer to repurchase between 5% and 25% of its shares at fixed intervals of 3, 6 or 12 months, under Rule 23c-3 of the Investment Company Act. Most offer quarterly repurchases and invest in less liquid assets such as private credit or real estate.
Shares are bought at net asset value, often continuously. If more investors ask to sell than the repurchase offer allows, the fund buys back shares pro rata. On September 30, 2026 the SEC proposed changes to the rule, including allowing monthly repurchases; the proposal is not final.
The Rules
How do interval funds work?
Under Rule 23c-3, an interval fund adopts a fundamental policy to make repurchase offers at a fixed interval and for a set percentage of its shares, between 5% and 25%. The fund sends notice before each offer, sets a request deadline, and prices the repurchase at NAV within 14 days of that deadline. It must keep enough liquid assets to meet the offer.
Fund announces the offer
Shareholders are told the percentage offered and the deadline.
Repurchase request deadline
You submit how many shares you want to sell.
Within 14 days
Shares are repurchased at NAV on this date.
Shortly after pricing
If requests exceeded the offer, each investor receives a pro rata share.
Liquidity
How liquid are interval funds?
Liquidity is periodic and partial. If a fund offers 5% each quarter and 20% of shareholders ask to sell, each one gets a quarter of their request filled. The rest must be resubmitted next time.
Chart
Share of a redemption request filled in one quarter
Some funds may repurchase an additional 2% of shares if requests exceed the offer. That still leaves investors exposed if many want to exit at once.
What They Hold
What do interval funds invest in?
Interval funds are popular for assets that are hard to sell quickly: direct loans and other private credit, real estate debt and equity, asset-backed lending, reinsurance and venture or private equity stakes. The structure lets the manager stay fully invested without being forced to sell assets every day.
Where Embark fits
An interval fund needs cash in and returns it on a schedule. What could your stock target in income?
Run your ticker to see what a position could target without a taxable sale.
- Starts with appreciated stock you already own instead of new cash for a credit fund
- §721 in-kind contribution: $0 tax at contribution, no sale to fund the allocation
- Targets 10%+ annual income; a target, not a guarantee, with a 3-year lock-up
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Fees
What fees do interval funds charge?
Interval funds are more expensive than index funds. Expect a management fee, sometimes an incentive fee, distribution and servicing fees on some share classes, and fund expenses including interest on any borrowing. All-in costs of 1.5–3% a year or more are common. Always read the fee table in the prospectus.
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2026 Proposal
What did the SEC propose for interval funds in 2026?
On September 30, 2026 the SEC proposed amendments to Rule 23c-3 that would, among other things, permit more frequent (including monthly) repurchase offers and replace some prescriptive liquidity requirements with a principles-based liquidity duty. It is a proposal open for comment, not a final rule; current rules apply until any change is adopted.
Embark
How does Embark differ from an interval fund?
An interval fund is bought with cash and redeemed on a schedule. Embark starts from appreciated stock you already own: the shares are contributed in kind to a §721 SPV, with $0 tax at contribution, and the SPV targets 10%+ annual income. Shares have a 3-year lock-up. Income is a target, not a guarantee. Accredited investors only.
FAQ
Frequently asked questions
Are interval funds a good investment?
They can give access to illiquid assets, but fees are high and liquidity is limited. Suitability depends on your time horizon.
How often can you redeem from an interval fund?
At the fund's fixed interval, usually quarterly, and only up to the offer size.
What is the difference between an interval fund and a mutual fund?
A mutual fund redeems shares daily; an interval fund repurchases a limited share periodically.
Do interval funds trade on an exchange?
No. Shares are bought from and repurchased by the fund at NAV.
What happens if an interval fund is oversubscribed?
Requests are filled pro rata, and the fund may buy back up to an extra 2% of shares.
Who regulates interval funds?
The SEC, under the Investment Company Act of 1940 and Rule 23c-3.
Sources
Primary sources
Sources
- 17 CFR §270.23c-3: Repurchase of securities of closed-end companies (interval funds)
- Federal Reserve FEDS Notes (May 2025): Bank Lending to Private Credit: Size, Characteristics, and Financial Stability Implications
- IMF Global Financial Stability Report, April 2024, Chapter 2: The Rise and Risks of Private Credit
- 26 U.S. Code §721: Nonrecognition on contribution to a partnership
Cite this article
Embark Funds Research. “What Are Interval Funds? Periodic Liquidity, Explained.” Embark Funds, updated October 29, 2026. https://www.embarkfunds.com/insights/what-are-interval-funds
Not tax, legal or investment advice: This article is educational and is not tax, legal, investment or Medicare advice. Rules and dollar amounts change every year and depend on your facts. Work with a CPA or financial planner before acting. Embark income figures are targets, not guarantees. Contributed shares have a 3-year lock-up, and Embark is open to accredited investors only.
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Alternative Access
Income From Stock You Already Hold
Contribute appreciated stock to Embark's SPV with $0 tax at contribution and target 10%+ annual income. 3-year lock-up; accredited investors.