Interval Fund

DEFINITION of 'Interval Fund'

A non-traditional type of closed-end mutual fund that periodically offers to buy back a percentage of outstanding shares from shareholders. Shareholders are not required to sell their shares back to the fund. 

BREAKING DOWN 'Interval Fund'

Interval fund shares typically do not trade on the secondary market although many interval funds do offer shares for sale at current net asset value (NAV) on a continuous basis.

Periodic repurchase offers come at preset intervals of three, six or 12 months, as outlined in the fund’s prospectus and annual report. The repurchase price is based on the per share NAV on a date specified (and announced in advance) by the fund.

Fees for interval funds tend to be higher than for other types of mutual funds, as do returns. Interval funds are regulated primarily under Rule 23c-3 of the Investment Company Act of 1940 and are subject to the rules of the Securities Act of 1933 and the Securities Exchange Act of 1934