Shifts in the asset management landscape are pushing the semi-liquid fund market— particularly interval funds and tender offer funds within that market—into a new level of maturity. Data from XA Investments reveals that semi- liquid and tender offer assets grew to $252 billion in total assets under management as of September 30, 2025.

What’s driving this growth? For one, traditional asset managers are facing mounting pressure in public markets— fee compression, manager competition, and performance headwinds. As a result, many are turning to private markets for diversification, alpha generation, and long-term growth—and the semi-liquid space is a great place for them to start that journey.

But finding success in the booming semi-liquid fund space means choosing the right vehicle. The structure through which semi-liquid private market exposure is offered determines everything: who can invest, how often they can redeem, what operational infrastructure is required, and how the strategy is governed, particularly liquidity.

In this article, we focus specifically on two of the most prominent semi-liquid structures—interval funds and tender offer funds—to help managers evaluate which vehicle best aligns with their strategy, investor base, and operational capabilities.

Interval funds and tender offer funds: An overview

As the semi-liquid fund market matures, asset managers are increasingly evaluating which structures best support their investment strategies and investor needs. Interval funds and tender offer funds are two vehicles which stand out for their unique approaches to balancing access and liquidity. Understanding the distinctions between these options is essential for managers seeking to align fund design with operational capabilities and investor expectations.

Interval funds are registered closed-end funds designed to offer investors liquidity at regular, predefined intervals, most commonly on a quarterly basis. These funds are required to offer a set percentage of their net asset value (NAV) for redemption during each interval and must maintain sufficient liquidity to meet these obligations. The structure is intended to strike a balance between providing access to private markets and meeting the liquidity needs of investors. For managers, interval funds present an opportunity to broaden their investor base, including retail investors who may be seeking exposure to private assets but require some degree of liquidity and regulatory safeguards.

Tender offer funds, by contrast, are also closed-end funds but provide liquidity through periodic tender offers, typically at the discretion of the fund’s board. These offers may occur quarterly or semi-annually, and the timing and terms are not fixed in advance. This flexibility allows managers to tailor redemption schedules to the liquidity profile of the underlying assets and adjust for prevailing market conditions, making tender offer funds particularly well- suited for strategies involving illiquid investments such as private equity, venture capital, or real assets. For investors, tender offer funds can offer access to asset classes that are otherwise difficult to reach, albeit with less frequent opportunities to redeem their positions.

Key considerations for vehicle selection

Selecting the right semi-liquid fund structure requires a nuanced understanding of several interconnected factors, including investment strategy, investor accessibility, distribution channels, liquidity alignment, and fee structure considerations.

Investment strategy and liquidity

The liquidity of the underlying assets is perhaps the most critical consideration. Funds that invest in more liquid, income-producing assets—such as private credit—are often well-suited to interval funds. These strategies can meet regular redemption schedules and deploy new capital efficiently, minimizing the risk of cash drag. In contrast, strategies focused on highly illiquid assets, like private equity, may be better served by tender offer funds. The flexibility to limit new capital inflows and discretion in redemption offerings allows managers to maintain alignment with investment objectives and avoid undue transaction costs or negative price impacts.

For example, an interval fund investing in private credit can offer quarterly redemptions without compromising its ability to generate returns, as the underlying loans can manufacture liquidity through income-generating assets. Conversely, a tender offer fund focused on private equity may restrict redemptions to semi-annual intervals, reflecting the longer investment cycle and limited liquidity of its holdings.

Investor accessibility and distribution channels

The target investor base also plays a significant role in vehicle selection. Retail investors typically expect liquidity, transparency, and regulatory safeguards, having grown accustomed to daily NAVs and ease of transacting in mutual funds and ETFs. Interval funds, with their predictable redemption schedules and regulatory oversight, are often the preferred choice for this segment. Institutional and high-net-worth investors, on the other hand, are generally more comfortable with illiquidity and less frequent reporting, in exchange for the potential of higher returns. Tender offer funds are typically valued less frequently. They have the ability to restrict investor liquidity, and as a result can accommodate a greater degree of illiquid asset classes, in turn making them better suited to more targeted investor segments rather than retail channels.

Distribution considerations are increasingly important as managers seek to scale their offerings. Wirehouses, broker-dealers, and investment platforms favor fund wrappers that are easy to onboard, scalable, and compliant with platform standards. Semi-liquid funds, unlike closed-end drawdown funds, offer continuous or periodic marketing windows, allowing intermediaries to promote them without the stop- and-start cycles associated with traditional private funds. This continuous availability can enhance the appeal of semi-liquid funds to both managers and distributors, facilitating broader market access.

Liquidity alignment

Aligning the liquidity of the investment strategy with the expectations of the target market and distribution platform requirements is essential. Interval funds typically produce daily NAVS, allow for daily subscriptions, and provide predictable quarterly redemptions required to be between 5–25% of NAV, which makes them well-suited for retail investors and the investment platforms catering to the segment. However, this can limit the fund’s ability to be fully allocated to highly illiquid strategies with the potential to raise capital faster than it can be invested, or be forced to hold excess liquidity to avoid the risk of being unable to fulfill redemptions. This can negatively impact fund performance due to cash drag, as managers are forced to hold more liquid assets than the strategy might otherwise dictate. Tender offer funds, with ad-hoc liquidity subject to board approval, are better suited for investors who can tolerate less frequent access and allow for greater flexibility in investing in illiquid asset classes.

Fee structure trade-offs

Fee structures in the semi-liquid fund space reflect the investment complexity, operational challenges, and the demanding regulatory requirements of these vehicles. As such, semi-liquid funds typically carry significantly higher fees than mutual funds, ETFs and private funds alike, as investors are paying for access to nuanced asset classes and the expertise required to manage them along with the protections of a more stringent regulatory framework.

Historically, access to alternative and illiquid assets has been restricted to private funds that are often accompanied with some form of performance or incentive fees. While performance-based fees are permitted on semi-liquid structures, it requires restricting access to accredited investors and qualified clients, i.e. institutions and high net worth individuals. Managers will need to determine whether to apply this restriction which will put limits on who qualifies as an eligible investor, though not subject to the limits on the number of investors as 3c-1 and 3c-7 fund structures are, or forego incentive fees to allow for much wider distribution opportunities.

In addition, and particularly for private fund managers new to the semi-liquid registered fund space, these funds do not allow for investor-specific fee arrangements. This warrants consideration when seeking to broaden an existing strategy by using a semi-liquid fund wrapper with the hopes that existing investors in similar strategies will follow, or be seed investors, if they currently have a favorable fee structure in place within an existing mandate.

Balancing both the extent of the fund fees and expenses as well as the structure and flexibility with the target investor types, asset accumulation targets, and preferred distribution platforms is critical to both short- and long-term success.

Operational changes and challenges

Bringing together the world of alternative and illiquid assets with the regulatory framework of the registered fund presents new and unique operational challenges and considerations. Transitioning to semi-liquid fund structures often requires significant changes to operational and compliance infrastructure.

Traditional managers venturing into non-public investments may encounter challenges such as more complex cash management and the need for specialized back-office software to value and report on private and illiquid assets.

Expanding into the semi-liquid space may also require reevaluating relationships with fund administrators, custodians, transfer agents, valuation and data vendors, and technology platforms to ensure scalability, automation, and transparency.

Private fund managers moving to regulated structures like interval or tender offer funds must develop processes for compliance, valuation, reporting, and governance that are much more comprehensive than they are likely accustomed to. Furthermore, there is extensive work to register and create the fund requiring the proper legal counsel to establishing a trust and fund board, appointing fund officers, and implementing stringent oversight policies to meet regulatory expectations.

Northern Trust offers integrated support across these requirements, drawing on deep experience with various fund structures and investor types. Their solutions cover valuation, compliance, distribution, and support for managers transitioning from private to semi-liquid vehicles, helping to streamline operations and ensure regulatory compliance.

The path forward for the semi-liquid space

The semi-liquid fund space—particularly tender offer and interval funds—has emerged as a strategic bridge between traditional public market products and fully illiquid private investments. But navigating this space demands a deliberate match between fund structure and strategy, investor expectations, and operational readiness.

Choosing the right vehicle means understanding how liquidity constraints shape portfolio construction, how investor eligibility influences fee structures, and how distribution channels impact scalability. Managers must also be prepared to meet the regulatory and governance expectations that come with these hybrid structures, especially as they transition from either private fund models or traditional mutual fund frameworks.

From valuation and reporting to investor servicing and compliance, the demands of semi-liquid funds require purpose-built solutions and experienced partners. Northern Trust offers integrated support across these needs— helping managers align fund design with investor experience and long-term growth goals.