This article was originally published in The Investment Lawyer, Vol. 32, No. 9, September 2025.
Interval funds have seen a surge in popularity, with assets under management quadrupling in the past five years. As asset managers continue to explore avenues to democratize the private credit markets and broaden their investor base, interval funds offer expanded opportunities to provide investors with access to alternative investment strategies. To date, all existing interval funds have been structured as registered closed-end funds (CEFs) under the Investment Company Act of 1940, as amended (1940 Act). However, structuring an interval fund as a business development company (BDC) may provide asset managers with certain regulatory flexibilities that are not available to CEF structures, while also introducing certain regulatory trade-offs. This article explores the regulatory and structural tradeoffs between BDCs and CEFs for an investment vehicle operating as an interval fund.
