How Interval Funds Crack Open Private Markets for Retail

That last point is where the education gap shows up. Advisors need to match client time horizons to the illiquidity of the underlying assets. An interval fund holding private equity is not a cash substitute. The redemption queue exists precisely because the assets cannot be sold quickly. DeGrosa emphasized that the fund’s ability to plan for redemptions – rather than being forced to sell into a down market – is what makes the structure work.

Manager selection matters more in private markets than in public ones. The dispersion between top-quartile and bottom-quartile returns is wider. The persistence of outperformance is harder to achieve. DeGrosa argued that the interval fund wrapper does not solve for manager quality. It only solves for access. The underlying skill of the general partner still drives results.

The diversification case is structural. As public equity markets concentrate into fewer names, the correlation benefits of adding private assets become more compelling. The trade-off is real. The illiquidity premium only materializes if the investor can hold through the full cycle. An advisor who puts a client into an interval fund without explaining the redemption mechanics is setting up a problem at the first market drawdown.

Zephyr’s platform helps advisors locate interval fund strategies that match their clients’ needs. The key is matching the vehicle to the investor’s liquidity profile, not the other way around.