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Understanding the Fund Structure

Large institutional investors incorporate alternatives to add an income-focused, uncorrelated diversifier into their portfolios. Yet, for years, you did not have the same option due to high investment minimums and complete illiquidity. Now, you can invest like these institutions.

An interval fund may invest a larger portion of its portfolio in less liquid or illiquid assets, offering the potential for uncorrelated returns with the ability to redeem shares through periodic liquidity.*

Understanding-Interval-Funds

* Interval funds typically allow for limited redemptions on a periodic (typically quarterly) basis. The interval fund’s prospectus will outline that fund’s redemption policy. Regardless of how the fund performs, there is no guarantee that shareholders will be able to sell all of the shares they desire in a quarterly repurchase offer. Due to this redemption feature, interval funds should be considered illiquid investments.

An interval fund is a closed-end fund registered under the Investment Company Act of 1940. These funds periodically offer to repurchase its shares from shareholders. They are continuously offered with shares available to purchase at the current net asset value.
An interval fund offers a liquidity feature of quarterly redemptions at net asset value of no less than 5 percent of the shares outstanding made available, redeeming more frequently than other real estate and private equity investments. Regardless of how an interval fund performs, there is no guarantee that shareholders will be able to sell all of the shares they desire in a repurchase offer.

Yield as of 6/30/19

Data as of 6/30/19. Corporate bond yield reflects the Yield-to-Worst, the lowest potential yield that can be received on a bond without the issuer defaulting. A further explanation is in the disclosure below. Bloomberg. Barclays U.S. Aggregate Total Return Value Index (Corporate Bonds), Bloomberg Barclays Municipal Bond Index Total Return Value Index (Municipal Bonds), US 10-year Treasury yield (U.S. Treasuries), NAREIT All Equity REITs Index (Real Estate), S&P/LSTA Leveraged Loan Index Interest Index (Senior Loans).

Key Benefit: Income Potential

If you are investing for the long-term, or do not need short-term liquidity, investing in alternative sources of income such as credit and commercial real estate through an interval fund may help deliver needed income.
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Real Estate Moves Differently Than Traditional Assets

Bloomberg. FTSE NAREIT All Equity REIT Index (Real Estate), S&P 500 Total Return Index (Equities), Barclays U.S. Aggregate Total Return Bond Index (Bonds), Bank of America Merrill Lynch U.S. Treasury Index (Treasuries). 3/31/13-6/30/19. Diversification does not ensure profit or guarantee against loss.

Key Potential Benefit: Low Correlation

In a volatile market, look for assets that have a low correlation to broader markets. Institutions utilize alternatives, like commercial real estate, to potentially diversify a portfolio and help mitigate risk.
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A Manager's Broad Mandate

Interval fund managers have flexibility in asset selection and strategic execution thanks to the vehicle’s structure.** This allows an interval fund to seek risk-adjusted returns.

1 The Wall Street Journal. What is ‘Illiquidity Premium?’ 10/7/16.

Interval funds are considered illiquid investments. Not every interval fund incorporates the same liquidity parameters or invests in the same asset classes. Please read a specific fund’s prospectus carefully before investing.

** Interval funds typically allow for limited redemptions on a periodic (typically quarterly) basis. The interval fund’s prospectus will outline that fund’s redemption policy. Regardless of how the fund performs, there is no guarantee that shareholders will be able to sell all of the shares they desire in a quarterly repurchase offer. Due to this redemption feature, interval funds should be considered illiquid investments. Interval fund managers have the flexibility in asset selection by having no limit on illiquid holdings other than having enough liquid assets to cover repurchase offers. Mutual fund managers can only invest up to 15% in illiquid assets. Institutional managers of private funds do not invest in public securities.

Not All Interval Funds are Created Equal

Portfolio composition, yield, and other aspects can vary from fund to fund. Make sure to receive the following information to help ensure that you select the fund that is right for your investment needs.

Yield

Income is a core objective. Based on its composition, a fund’s yield will vary.

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Interest Rate Exposure

Fixed-rate assets are more vulnerable as rates rise. An interval fund that includes floating-rate loans, apartments, or commercial mortgage REITs may serve as a hedge against interest rate risk.2

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Asset Pricing

Publicly traded assets offer price transparency and can be sold quickly. Private equity asset pricing is more complex and not always transparent.

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Liquid-to-Illiquid Ratio

To limit liquidity risk, look at funds that include publicly traded holdings. They have easier access to cash than funds that predominantly hold private equity assets.

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Investment Diversification

Some interval funds invest almost exclusively in equity, leaving them limited. Others may diversify with credit investments that may retain value during market downturns.

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Fund Management

A fund may carry a manager’s name, but are they actually managing it? Funds with in-house management may lower fees and better align interests with yours. It’s their main focus!

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Yield

Income is a core objective. Based on its composition, a fund’s yield will vary.

More

Liquid-to-Illiquid Ratio

To limit liquidity risk, look at funds that include publicly traded holdings. They have easier access to cash than funds that predominantly hold private equity assets.

More

Interest Rate Exposure

Fixed-rate assets are more vulnerable as rates rise. An interval fund that includes floating-rate loans, apartments, or commercial mortgage REITs may serve as a hedge against interest rate risk.2

More

Investment Diversification

Some interval funds invest almost exclusively in equity, leaving them limited. Others may diversify with credit investments that may retain value during market downturns.

More

Asset Pricing

Publicly traded assets offer price transparency and can be sold quickly. Private equity asset pricing is more complex and not always transparent.

More

Fund Management

A fund may carry a manager’s name, but are they actually managing it? Funds with in-house management may lower fees and better align interests with yours. It’s their main focus!

More

2 NYU Stern School of Business. Interest Rate Risk of Real Estate Investment Trusts. 5/15.

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Resource is the marketing name for Resource Real Estate, LLC, Resource Alternative Advisor, LLC, and their affiliates. Resource may distribute certain products through Resource Securities LLC, a wholly owned broker/dealer, Member FINRA/SIPC

 

The information contained herein does not constitute an offer to sell or a solicitation to purchase securities. Such offers or solicitations can only be made by means of a prospectus. Prior to making any investment decision, you should read the applicable prospectus carefully and consider the risks, charges, expenses and other important information described therein. The value of your investments may decline, and you could lose some or all of your investment. To obtain a prospectus containing this and other information, please call (866) 773-4120 or download the file from www.ResourceAlts.com. Read the prospectus carefully before you invest.

 

Resource has two interval funds that are distributed by ALPS Distributors, Inc. (ALPS Distributors, Inc. 1290 Broadway, Suite 1100, Denver, CO 80203). Resource Alternative Advisor, LLC, Resource Real Estate, LLC, their affiliates, and ALPS Distributors, Inc. are not affiliated.

 

Performance data quoted represents past performance. Past performance is no guarantee of future results and investment returns and principal value of the Fund will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data quoted above. For performance information current to the most recent month-end, please call toll-free (866) 773-4120 or visit www.ResourceAlts.com.

 

All statements and information other than statements of historical fact included on this website regarding strategy, future operations, financial position, estimated revenues, projected costs, prospects, plans and objectives of management are forward-looking statements. When used on this website, the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. You should not place undue influence on these forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make on this website are reasonable, we can give no assurance that these plans, intentions or expectations will be achieved because of the number of risks and uncertainties, many of which are beyond our control, including but not limited to uncertainties concerning the properties being operated and sold or refinanced, leverage and meeting debt service obligations, operating properties in different locations throughout the U.S., general, market or business conditions and changes in laws or regulations. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf. To check the background of Resource Securities LLC or any registered individual, please go to FINRA’s BrokerCheck.