Interval funds are hybrid investments that are legally classified
as closed-end funds, but which act very differently. Unlike
closed-end funds—which have an IPO and then close their
portfolios and subsequently trade their shares via a stock
exchange—interval funds do not trade in the secondary market.
Instead, they start life like an open-end mutual fund, but
with a relatively closed portfolio offering only limited, not
daily, redemptions. Also, like mutual funds, interval funds
may continuously sell new shares to investors.
Interval funds take their name from their unique structure,
which allows them to offer investors periodic repurchases
of a portion of their shares at NAV at certain predetermined
intervals (such as quarterly, semiannually or annually). During
those specific redemption windows, an interval fund’s manager
allows a specific percentage of the fund’s total shares to be
tendered for sale (typically from 5% to 25%) on a pro-rated basis.
ETFs and Interval Funds: Opposites
ETFs differ from interval funds in most aspects. ETFs rely
on the creation/redemption process, not direct investments
from investors. ETFs trade on a stock exchange; interval
funds don’t. ETFs face short bursts of trading premiums or
discounts that facilitate the use of arbitrage by APs; interval
funds trade at NAV at all times. ETF shares can be purchased
and sold at any time throughout the day via a stock exchange;
interval funds do continuously offer shares for purchase, but
limit redemptions to specified intervals and, again, do not
trade on an exchange.
This information is subject to change at any time and should not be construed as a recommendation of any specific security
or strategy.
This information does not constitute tax advice. Please consult your tax advisor and/or state and local tax offices for more
complete information.
Securities are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks,
including the possible loss of the principal amount invested.
RydexShares™ are distributed by Rydex Distributors, Inc., an affiliate of Rydex Investments.
For more complete information regarding Rydex funds, call 800.820.0888 or click here for a prospectus. Investors should consider the investment objectives, risks, charges and expenses of a fund carefully before investing. The fund's prospectus contains this and other information about the fund. Read the prospectus carefully before you invest or send money.
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