Interval funds and non-traded REITs are often mentioned in the same breath because both offer access to illiquid, income-producing investments outside the public markets — but they're genuinely different vehicles. An interval fund is a registered closed-end fund (under the Investment Company Act of 1940) that makes scheduled, periodic repurchase offers — typically quarterly, for a set portion of shares — at net asset value, giving it a mandated liquidity mechanism. A non-traded REIT is a REIT structure focused on real estate, subject to the 90% distribution rule, whose liquidity comes through a discretionary redemption program the board can gate or suspend. They differ in structure (fund versus REIT), holdings (interval funds can hold diversified, multi-asset portfolios; non-traded REITs hold real estate), liquidity mechanics (scheduled versus discretionary), and tax reporting. This guide explains what an interval fund is, how its repurchases work, how it differs from a non-traded REIT, and which suits your goals. Both are illiquid and suit longer-term investors; verify the current rules with your advisor, and remember past performance doesn't guarantee future results.
What an Interval Fund Is
An interval fund is a type of registered closed-end fund — organized under the Investment Company Act of 1940 (the '40 Act') — that doesn't trade on an exchange and instead provides liquidity through periodic repurchase offers. The name comes from those intervals: at regular, scheduled times (most commonly quarterly), the fund offers to buy back a set portion of its shares from investors at net asset value. Between those windows, you generally can't redeem, which is what makes an interval fund a longer-term, illiquid investment despite its built-in liquidity mechanism.
Because it's a registered fund rather than a single-asset vehicle, an interval fund can hold a diversified, multi-asset portfolio of illiquid or alternative investments — real estate, private credit, private equity, infrastructure, and other strategies — that wouldn't fit easily in a daily-liquid mutual fund or ETF. This lets ordinary investors access institutional-style alternative strategies through a single, professionally managed fund, with the periodic-repurchase structure giving the manager the stable capital base needed to hold illiquid assets. So an interval fund pairs a '40 Act fund wrapper with scheduled, partial liquidity and the ability to hold diversified illiquid holdings.
So an interval fund is a registered '40 Act closed-end fund that offers scheduled periodic repurchases at NAV and can hold diversified, multi-asset illiquid investments — a longer-term vehicle with built-in but limited liquidity. So understanding what it is frames the comparison. What an interval fund is — a registered closed-end '40 Act fund, not exchange-traded, that provides liquidity through scheduled periodic repurchase offers (typically quarterly) at NAV and can hold a diversified, multi-asset portfolio of illiquid investments (real estate, private credit, and more) — defines the structure. It's a fund with mandated, partial liquidity. Understanding it frames the comparison with non-traded REITs. An interval fund is a registered '40 Act closed-end fund offering scheduled periodic repurchases at NAV that can hold diversified, multi-asset illiquid holdings — a longer-term vehicle with built-in but limited liquidity.
Periodic Repurchase Mechanics
The defining feature of an interval fund is its scheduled, mandated repurchase mechanism. The fund commits in advance to making repurchase offers at set intervals — most commonly quarterly, though some funds use monthly, semiannual, or annual schedules — and each offer is for a stated percentage of outstanding shares, typically in the range of 5% to 25% (5% is common for quarterly funds). Investors who want liquidity submit redemption requests during the offer window, and the fund buys back shares at the NAV determined for that repurchase, up to the offered amount.
Crucially, this repurchase is scheduled and mandated rather than discretionary: the interval fund is obligated under its policies to make these periodic offers, so investors know in advance when liquidity windows will occur. The main limit is the size of each offer — if redemption requests exceed the percentage being repurchased, the fund prorates the requests, fulfilling each only partially. So you have predictable, recurring liquidity windows, but you may not be able to redeem your entire position in a single window. This scheduled, proration-based mechanism is the heart of how interval funds balance illiquid holdings with investor liquidity needs.
So an interval fund's repurchase mechanics are scheduled and mandated (typically quarterly offers for 5-25% of shares at NAV), with proration if requests exceed the offer — predictable but limited liquidity. So the scheduled mechanism is the fund's signature feature. Periodic repurchase mechanics — the interval fund's commitment to scheduled, mandated repurchase offers (commonly quarterly) for a set portion of shares (typically 5-25%) at NAV, with proration when requests exceed the offer — give investors predictable, recurring liquidity windows, limited mainly by each offer's size. Liquidity is scheduled, not on-demand. Understanding the mechanics defines the interval fund. Interval funds make scheduled, mandated repurchase offers (often quarterly, for 5-25% of shares) at NAV, prorating if oversubscribed — predictable, recurring, but limited liquidity rather than on-demand access.
The interval fund's signature is the calendar: it commits in advance to buy back a set slice of shares at regular intervals, so you know when your liquidity windows will arrive — even if you can't redeem everything at once.
How It Differs From a Non-Traded REIT
An interval fund and a non-traded REIT differ first in their legal structure. An interval fund is a registered investment company — a closed-end fund under the '40 Act — so it's regulated as a fund, with the investor protections and disclosure that framework brings. A non-traded REIT is a REIT: a real-estate-focused entity that must satisfy the REIT qualification rules, including holding mostly real estate and distributing at least 90% of its taxable income. So one is fundamentally a fund and the other a real estate company, and that distinction drives many of the other differences.
The liquidity mechanism differs too. An interval fund's repurchases are scheduled and mandated by its policies — recurring offers at set intervals — whereas a non-traded REIT's redemption program is discretionary: the board can cap, reduce, gate, or suspend redemptions, and there's no equivalent standing obligation to make periodic offers. In practice both can prorate or limit redemptions, but the interval fund's liquidity is contractually scheduled while the non-traded REIT's is more discretionary. So the interval fund offers a more predictable (though still limited) liquidity cadence, while the non-traded REIT's redemptions depend more heavily on the board's discretion. These are structural differences, not guarantees about outcomes.
So an interval fund differs from a non-traded REIT in structure (a '40 Act fund vs. a REIT) and in liquidity mechanism (scheduled, mandated repurchases vs. a discretionary redemption program). So the structural and liquidity differences are central. How an interval fund differs from a non-traded REIT — the interval fund being a registered '40 Act closed-end fund with scheduled, mandated periodic repurchases, versus the non-traded REIT being a real-estate-focused REIT (subject to the 90% distribution rule) with a discretionary, gateable redemption program — comes down to structure and liquidity mechanics. One is a fund; the other a real estate company. Understanding the differences is central to choosing. An interval fund differs from a non-traded REIT in structure (a '40 Act fund vs. a REIT subject to the 90% rule) and liquidity (scheduled, mandated repurchases vs. a discretionary, gateable redemption program).
Liquidity & Holdings Compared
Comparing liquidity directly, the interval fund's scheduled repurchase offers give a more predictable cadence than the non-traded REIT's discretionary redemptions, but both are fundamentally illiquid: neither lets you exit on demand at a market price, both cap redemptions, and both can prorate when requests are heavy. The practical difference is that an interval fund is contractually obligated to make its periodic offers, while a non-traded REIT's board has more latitude to gate or suspend — so the interval fund's liquidity is somewhat more reliable in form, though still limited in amount and never guaranteed in stressed conditions.
Holdings are the other major axis. A non-traded REIT, by definition, holds real estate (and must satisfy the REIT asset and income tests), so it's a focused real estate vehicle. An interval fund is far more flexible: it can hold a diversified, multi-asset, multi-strategy portfolio — real estate alongside private credit, private equity, infrastructure, or other alternatives — so a single interval fund may give broader diversification across asset classes than a real-estate-only non-traded REIT. So the non-traded REIT offers concentrated real estate exposure, while the interval fund can offer a broader, blended alternative portfolio, depending on its mandate.
So in liquidity, both are illiquid but the interval fund's scheduled repurchases are more predictable than the non-traded REIT's discretionary redemptions; in holdings, non-traded REITs are real-estate-focused while interval funds can be diversified and multi-strategy. So both axes matter to the choice. Liquidity and holdings compared — both vehicles being illiquid, with the interval fund's scheduled, mandated repurchases offering a more predictable cadence than the non-traded REIT's discretionary, gateable redemptions, and with non-traded REITs holding focused real estate while interval funds can hold diversified, multi-asset, multi-strategy portfolios — capture the practical differences. Liquidity form and breadth of holdings both differ. Understanding them informs the choice. Both are illiquid, but interval-fund repurchases are scheduled (more predictable) while non-traded REIT redemptions are discretionary; and non-traded REITs are real-estate-focused while interval funds can hold diversified, multi-strategy portfolios.
- An interval fund is a registered '40 Act closed-end fund with scheduled, mandated periodic repurchases (often quarterly, for 5-25% of shares) at NAV.
- A non-traded REIT is a real-estate-focused REIT (subject to the 90% rule) with a discretionary redemption program the board can gate or suspend.
- Interval funds can hold diversified, multi-asset portfolios (real estate, private credit, and more); non-traded REITs hold real estate.
- Both are illiquid and suit longer-term investors, but they differ in tax reporting — interval funds use 1099/fund taxation, non-traded REITs use REIT-dividend taxation with §199A.
Tax & Reporting Differences
Taxation and reporting differ because the two vehicles are taxed under different regimes. A non-traded REIT is taxed as a REIT: it passes most of its income through to shareholders as REIT dividends, reported on Form 1099-DIV. Most REIT ordinary dividends are taxed as ordinary income (since the REIT pays no corporate tax), but a 20% deduction under Section 199A applies to qualified REIT dividends, and distributions can also include return-of-capital and capital-gain components. So a non-traded REIT investor gets REIT-dividend tax treatment, including the §199A benefit on qualifying dividends.
An interval fund is taxed as a registered investment company (a regulated fund), so its distributions are reported on Form 1099 and taxed according to the character of the underlying income the fund earns and passes through — which may include ordinary income, qualified dividends, capital gains, and (for some funds) return of capital. The mix depends on the fund's holdings and strategy. Notably, if an interval fund itself invests in REITs, some of its distributions may carry through the §199A-eligible REIT-dividend character, but in general an interval fund follows fund taxation rather than direct REIT-dividend taxation. So the reporting and the character of income differ between the two structures.
So tax and reporting differ: a non-traded REIT delivers REIT-dividend taxation (1099-DIV, ordinary income with §199A and possible return of capital and gains), while an interval fund delivers fund taxation (1099, with character depending on its holdings). So the tax treatment is a real point of distinction. Tax and reporting differences — a non-traded REIT taxed as a REIT (1099-DIV, mostly ordinary income with the §199A deduction on qualified REIT dividends, plus return-of-capital and capital-gain components), versus an interval fund taxed as a registered fund (1099, with the character of distributions depending on the fund's underlying holdings) — distinguish the two. Different regimes, different reporting. Understanding the tax difference matters; confirm specifics with your tax advisor. A non-traded REIT delivers REIT-dividend taxation (1099-DIV, ordinary income with §199A), while an interval fund delivers fund taxation (1099) with income character depending on its holdings — verify the details with your tax advisor.
Even the tax forms diverge: a non-traded REIT hands you a 1099-DIV with REIT-dividend treatment and the §199A deduction, while an interval fund reports fund-style distributions whose character depends on what the fund actually holds.
Which Suits Your Goals
Which vehicle suits you depends on what you want from the investment. An interval fund tends to fit an investor who wants diversified, multi-strategy alternative exposure (real estate alongside private credit, private equity, or other alternatives) in a single registered fund, values the predictability of scheduled periodic repurchases, and is comfortable with fund-style taxation. The interval fund's breadth and scheduled liquidity cadence appeal to investors seeking a blended alternatives allocation with a more predictable (if still limited) exit rhythm.
A non-traded REIT tends to fit an investor who specifically wants real estate exposure with REIT-dividend tax treatment (including the §199A deduction on qualifying dividends), is comfortable with a discretionary redemption program, and wants a focused real estate vehicle rather than a multi-asset blend. For an investor whose goal is targeted real estate income with REIT tax characteristics, the non-traded REIT is purpose-built. So the choice often turns on whether you want focused real estate with REIT taxation (non-traded REIT) or diversified alternatives with a scheduled-liquidity fund wrapper (interval fund) — and both require accepting illiquidity and a longer time horizon.
So which suits your goals depends on whether you prioritize focused real estate with REIT-dividend taxation (non-traded REIT) or diversified, multi-strategy alternatives with scheduled liquidity and fund taxation (interval fund). So matching the structure to your goals is the deciding step. Which suits your goals — an interval fund fitting investors who want diversified, multi-strategy alternative exposure with scheduled repurchases and fund taxation, versus a non-traded REIT fitting investors who want focused real estate with REIT-dividend taxation (and §199A) and accept a discretionary redemption program — depends on your objectives, both requiring illiquidity tolerance and a long horizon. Match the structure to your goals. Understanding this guides the decision. Choose an interval fund for diversified, multi-strategy alternatives with scheduled liquidity and fund taxation; choose a non-traded REIT for focused real estate with REIT-dividend taxation — both illiquid and longer-term.
How Baker 1031 Helps You Compare Interval Funds and Non-Traded REITs
Baker 1031 Investments helps investors compare interval funds and non-traded REITs — what an interval fund is, how its scheduled periodic repurchases work, how it differs from a non-traded REIT in structure and holdings, the liquidity and tax differences, and which suits your goals — so you can choose the structure that fits your objectives, liquidity needs, and time horizon.
Interval fund and non-traded-REIT interests and related securities are offered through the broker-dealer, Aurora Securities, Inc. (member FINRA/SIPC), and any recommendation follows a suitability review — interval funds and non-traded REITs typically require accredited or otherwise suitable investors, are illiquid, and suit longer-term investors. We help you understand the structural differences (a '40 Act fund versus a REIT), the liquidity mechanics (scheduled, mandated repurchases versus a discretionary redemption program), the breadth of holdings (diversified multi-strategy versus focused real estate), and the tax reporting (fund taxation versus REIT-dividend taxation with §199A), and, if suitable, access the appropriate vehicle. We're candid that both are illiquid, that redemptions are limited and can be prorated or gated, and that fees apply. Baker 1031 does not provide tax or legal advice; your CPA handles how each vehicle's distributions are taxed in your situation, which can be technical. Yields and returns are never promised — past performance doesn't guarantee future results, and NAV and distributions can fluctuate. Our role is to help you compare the structures clearly and invest only when suitable for your goals and risk tolerance.
Frequently Asked Questions
What is an interval fund?
An interval fund is a type of registered closed-end fund, organized under the Investment Company Act of 1940 (the '40 Act'), that doesn't trade on an exchange and instead provides liquidity through periodic repurchase offers. The name comes from those intervals: at regular, scheduled times — most commonly quarterly — the fund offers to buy back a set portion of its shares from investors at net asset value (NAV). Between those windows, you generally can't redeem, which makes an interval fund a longer-term, illiquid investment despite its built-in liquidity mechanism. Because it's a registered fund, an interval fund can hold a diversified, multi-asset portfolio of illiquid or alternative investments — real estate, private credit, private equity, infrastructure, and other strategies — that wouldn't fit in a daily-liquid mutual fund or ETF. This lets ordinary investors access institutional-style alternative strategies through a single, professionally managed fund. So an interval fund pairs a '40 Act fund wrapper with scheduled, partial liquidity and the ability to hold diversified illiquid holdings — a vehicle for longer-term, suitable investors seeking alternative exposure with a predictable (if limited) liquidity rhythm.
How do interval fund repurchases work?
An interval fund's repurchases are scheduled and mandated by the fund's policies. The fund commits in advance to making repurchase offers at set intervals — most commonly quarterly, though some funds use monthly, semiannual, or annual schedules — and each offer is for a stated percentage of outstanding shares, typically in the range of 5% to 25% (5% is common for quarterly funds). When a repurchase window opens, investors who want liquidity submit redemption requests, and the fund buys back shares at the NAV determined for that repurchase, up to the offered amount. The key limit is the size of each offer: if redemption requests exceed the percentage being repurchased, the fund prorates the requests, fulfilling each only partially. So you have predictable, recurring liquidity windows, but you may not be able to redeem your entire position in a single window, and heavy redemption demand can mean partial fulfillment. So interval-fund repurchases give scheduled, recurring, but limited liquidity — more predictable in timing than a discretionary program, yet still capped and subject to proration. Review the specific repurchase policy before investing.
What is the difference between an interval fund and a non-traded REIT?
The main differences are structure, holdings, liquidity mechanics, and tax. Structure: an interval fund is a registered closed-end fund under the '40 Act (a fund), while a non-traded REIT is a real-estate-focused REIT subject to the REIT rules, including the 90% distribution requirement (a real estate company). Holdings: an interval fund can hold a diversified, multi-asset portfolio (real estate, private credit, private equity, and more), while a non-traded REIT holds real estate. Liquidity: an interval fund makes scheduled, mandated periodic repurchase offers (commonly quarterly, for 5-25% of shares), while a non-traded REIT's redemption program is discretionary and can be gated or suspended by the board. Tax: an interval fund follows fund taxation (1099, with income character depending on its holdings), while a non-traded REIT follows REIT-dividend taxation (1099-DIV, mostly ordinary income with the §199A deduction). So one is a diversified fund with scheduled liquidity, the other a focused real estate vehicle with REIT taxation and discretionary redemptions. Both are illiquid and suit longer-term investors. The right choice depends on your goals.
Are interval funds and non-traded REITs both illiquid?
Yes — both interval funds and non-traded REITs are fundamentally illiquid, meaning you can't exit on demand at a market price the way you can with an exchange-traded security. Neither trades on an exchange; both provide liquidity only through periodic buyback mechanisms, and both cap how much can be redeemed in a given period. The difference is in how that liquidity is structured. An interval fund's repurchases are scheduled and mandated — recurring offers at set intervals (often quarterly) for a stated percentage of shares — so the timing is predictable, though each offer is limited and can be prorated. A non-traded REIT's redemptions come through a discretionary program the board can cap, reduce, gate, or suspend, so the liquidity is somewhat less predictable in form. So while the interval fund offers a more reliable liquidity cadence, both are illiquid and never guarantee that you can redeem your full position when you want to, especially in stressed markets. So treat both as longer-term commitments and don't count on ready access to your capital. Confirm the specific redemption terms before investing in either.
What can an interval fund invest in?
An interval fund can invest in a wide and flexible range of assets, which is one of its main advantages. Because it's a registered closed-end fund that provides liquidity only periodically (rather than daily), it can hold illiquid and alternative investments that wouldn't fit in a daily-liquid mutual fund or ETF. Common holdings include real estate, private credit (private loans and debt), private equity, infrastructure, structured credit, and other alternative or less-liquid strategies — often blended into a diversified, multi-asset portfolio within a single fund. This lets ordinary investors access institutional-style alternative strategies through one professionally managed vehicle, with the periodic-repurchase structure giving the manager the stable capital base needed to hold illiquid assets without forced selling. By contrast, a non-traded REIT is limited by the REIT rules to holding mostly real estate. So an interval fund's flexibility to hold diversified, multi-strategy alternatives is a key distinction — though the specific mix depends entirely on the fund's mandate. So review what a particular interval fund actually holds, since 'interval fund' describes the structure, not the underlying strategy.
How are interval funds taxed?
An interval fund is taxed as a registered investment company — a regulated fund — so its distributions are reported on Form 1099 and taxed according to the character of the underlying income the fund earns and passes through to shareholders. That income can include ordinary income (such as interest from private credit holdings), qualified dividends, short- and long-term capital gains, and, for some funds, return of capital. The exact mix depends on the fund's holdings and strategy, so two interval funds can have quite different tax profiles. If an interval fund itself invests in REITs, some of its distributions may carry through REIT-dividend character that's eligible for the Section 199A deduction, but in general an interval fund follows fund taxation rather than direct REIT-dividend taxation. This differs from a non-traded REIT, which is taxed as a REIT and reports REIT dividends on Form 1099-DIV. So interval-fund taxation depends on what the fund holds and is reported via fund tax forms. So Baker 1031 doesn't provide tax advice; confirm the specific tax treatment of any interval fund with your tax advisor, since it varies by the fund's underlying strategy and your situation.
Which has more predictable liquidity, an interval fund or a non-traded REIT?
An interval fund generally offers more predictable liquidity in form, because its repurchase offers are scheduled and mandated by the fund's policies. The fund commits in advance to making periodic repurchase offers (commonly quarterly) for a stated percentage of shares, so investors know when liquidity windows will occur. A non-traded REIT's redemption program, by contrast, is discretionary: the board can cap, reduce, gate, or suspend redemptions, so there's no equivalent standing obligation to make periodic offers, making the timing and availability somewhat less certain. That said, 'more predictable' doesn't mean unlimited or guaranteed. Both vehicles cap how much can be redeemed in a given period, both can prorate requests when demand is heavy, and even an interval fund's offers are limited in size and can be affected by stressed conditions. So the interval fund's scheduled cadence is more reliable in timing, but both remain illiquid with limited redemption capacity. So if predictability of liquidity windows matters to you, the interval fund's mandated schedule is an advantage — but neither vehicle should be treated as a source of ready, on-demand liquidity.
Can an interval fund invest in real estate?
Yes — an interval fund can invest in real estate, and many do, either as a primary focus or as one component of a diversified, multi-asset portfolio. Because the interval-fund structure is designed to hold illiquid assets (thanks to its periodic rather than daily liquidity), real estate fits naturally, and some interval funds are built specifically around real estate or real estate debt. The difference from a non-traded REIT is that an interval fund isn't required to focus on real estate — it can blend real estate with private credit, private equity, infrastructure, and other strategies, whereas a non-traded REIT must hold mostly real estate to satisfy the REIT rules. So a real-estate-focused interval fund and a non-traded REIT can offer overlapping exposure, but the interval fund is a fund (with fund taxation and scheduled repurchases) while the non-traded REIT is a REIT (with REIT-dividend taxation and a discretionary redemption program). So if you want real estate specifically, both can provide it — but they differ in structure, liquidity mechanics, and tax. So compare the specific vehicle's holdings, liquidity terms, and tax treatment rather than assuming they're interchangeable.
Do interval funds have fees?
Yes — interval funds have fees, and they're an important factor to evaluate. Like other registered funds, an interval fund charges an annual expense ratio covering management and operating costs, and because interval funds hold illiquid, actively managed alternative strategies, their expense ratios are often higher than those of plain index mutual funds or ETFs. Some interval funds also charge performance or incentive fees tied to returns, and certain share classes may carry sales charges or ongoing distribution and servicing fees. In addition, because interval funds can invest in underlying private funds or strategies, there may be layered fees at the underlying-investment level. Over a long holding period, these costs can meaningfully affect net returns. So when evaluating an interval fund, examine the full fee schedule — the expense ratio, any performance fees, share-class charges, and underlying fund expenses — not just the headline number. So interval funds are not low-cost index vehicles; they're actively managed alternative funds with fees to match. So weigh the fees against the diversification and access the fund provides, and review the prospectus carefully before investing.
Which is better for real estate exposure, an interval fund or a non-traded REIT?
Neither is universally better — it depends on what you want from your real estate exposure. A non-traded REIT is a focused real estate vehicle that delivers REIT-dividend tax treatment (including the §199A deduction on qualifying dividends) and is purpose-built for real estate income; it suits an investor who specifically wants real estate with REIT tax characteristics and is comfortable with a discretionary redemption program. A real-estate-focused interval fund delivers real estate exposure within a fund wrapper that offers scheduled periodic repurchases and fund taxation, and it may also blend in other strategies for broader diversification; it suits an investor who values the scheduled liquidity cadence and possibly a multi-asset mix. So if you want pure, REIT-taxed real estate income, the non-traded REIT may fit better; if you want real estate within a diversified, scheduled-liquidity fund, an interval fund may fit better. Both are illiquid and suit longer-term investors. So compare the specific offerings' holdings, liquidity terms, fees, and tax treatment, and choose based on your goals — there's no one-size-fits-all answer, and a suitability review applies to both.
Are interval funds and non-traded REITs suitable for all investors?
No — interval funds and non-traded REITs are not suitable for all investors. Both are illiquid, longer-term investments, and both are typically offered to accredited or otherwise suitable investors through a broker-dealer after a suitability review that considers your financial situation, goals, liquidity needs, and risk tolerance. They're generally not appropriate for capital you might need in the near term, because liquidity is limited — interval funds offer only periodic, capped repurchases, and non-traded REITs offer only discretionary, gateable redemptions. They also carry fees and real investment risk: NAV and distributions can fall, and the underlying illiquid holdings can lose value. So these vehicles suit longer-term investors who understand the illiquidity, can leave the capital invested, and for whom the investment fits as part of a diversified portfolio. So if you're considering either, expect a suitability review and confirm you meet the requirements and can tolerate the illiquidity. So they're tools for suitable, longer-term investors — not broadly appropriate, and not substitutes for liquid investments or emergency funds. Coordinate with your advisor to confirm the fit before committing capital.
Can I hold both an interval fund and a non-traded REIT?
Yes — many investors can hold both, since they serve somewhat different purposes and can complement each other within an alternatives allocation. A non-traded REIT gives you focused real estate exposure with REIT-dividend tax treatment, while an interval fund can give you diversified, multi-strategy alternative exposure (real estate alongside private credit, private equity, or other strategies) within a fund wrapper with scheduled liquidity. Holding both can broaden your alternatives diversification across asset classes and structures. That said, both are illiquid, so the combined allocation to these vehicles should be sized carefully relative to your overall portfolio and your liquidity needs — you don't want too much of your capital locked in limited-redemption structures at once. Both also carry fees and real risk, and each requires a suitability review. So combining an interval fund and a non-traded REIT can make sense for a suitable, longer-term investor seeking diversified alternative exposure, as long as the total illiquid allocation is appropriately sized and diversified. So decide based on your goals, liquidity needs, and risk tolerance, and coordinate with your advisor to structure the combination sensibly within a broader plan.
Why are interval funds becoming more popular?
Interval funds have grown in popularity because they offer a registered, accessible way for ordinary investors to reach alternative and illiquid strategies that were once mostly available only to institutions or very wealthy investors. The structure solves a specific problem: many attractive alternative strategies — private credit, private real estate, private equity — are inherently illiquid, so they don't fit in daily-liquid mutual funds or ETFs. The interval fund's periodic-repurchase design gives managers a stable capital base to hold those illiquid assets while still offering investors scheduled, partial liquidity. Add in the diversification of a multi-asset portfolio, professional management, and a registered '40 Act wrapper with its disclosure and investor protections, and interval funds became a convenient on-ramp to alternatives. Demand for income and diversification beyond public stocks and bonds has reinforced the trend. So interval funds are popular because they democratize access to alternatives within a regulated, scheduled-liquidity structure. That said, popularity isn't a reason to invest — they remain illiquid, fee-bearing, and suitable only for longer-term investors. So evaluate any interval fund on its own merits, not its popularity.
How does Baker 1031 help me compare interval funds and non-traded REITs?
We help investors compare interval funds and non-traded REITs — what an interval fund is, how its scheduled periodic repurchases work, how it differs from a non-traded REIT in structure and holdings, the liquidity and tax differences, and which suits your goals — so you can choose the structure that fits your objectives, liquidity needs, and time horizon. Interval fund and non-traded-REIT interests are offered through the broker-dealer, Aurora Securities, Inc. (member FINRA/SIPC), and any recommendation follows a suitability review; interval funds and non-traded REITs typically require accredited or otherwise suitable investors, are illiquid, and suit longer-term investors. We help you understand the structural differences (a '40 Act fund versus a REIT), the liquidity mechanics (scheduled repurchases versus a discretionary redemption program), the breadth of holdings (diversified multi-strategy versus focused real estate), and the tax reporting (fund taxation versus REIT-dividend taxation with §199A), and, if suitable, access the appropriate vehicle. We're candid that both are illiquid and that fees apply. Baker 1031 doesn't provide tax or legal advice; your CPA handles your specific situation. Yields and returns are never promised; past performance doesn't guarantee future results.
Glossary
- Interval Fund
- A registered closed-end fund offering scheduled periodic repurchases.
- Closed-End Fund
- A '40 Act fund with a fixed share count, not exchange-redeemable.
- '40 Act
- The Investment Company Act of 1940 governing registered funds.
- Repurchase Offer
- An interval fund's scheduled, mandated buyback of shares at NAV.
- Repurchase Interval
- The set schedule (often quarterly) for repurchase offers.
- Proration
- Partial fulfillment when redemption requests exceed the offer.
- Non-Traded REIT
- An SEC-registered, real-estate-focused REIT not exchange-listed.
- Discretionary Redemption
- A non-traded REIT program the board can gate or suspend.
- 90% Distribution Rule
- The REIT requirement to pay out most taxable income.
- Net Asset Value (NAV)
- Per-share value used to price repurchases for both vehicles.
- Multi-Asset Portfolio
- An interval fund's blend of real estate, credit, and more.
- Private Credit
- Private loans an interval fund may hold for income.
- Form 1099-DIV
- The form reporting a non-traded REIT's dividends.
- Fund Taxation
- An interval fund's tax treatment via its underlying income.
- Section 199A Deduction
- The 20% deduction on qualified REIT dividends.
- Suitability Review
- Assessing whether either illiquid vehicle fits the investor.
Sources & References
- U.S. Securities and Exchange Commission. Investor.gov — Mutual Funds and Exchange-Traded Funds (ETFs)
- U.S. Securities and Exchange Commission. Investor Bulletin: Non-Traded REITs
- FINRA. Real Estate Investments
- Nareit. What's a REIT (Real Estate Investment Trust)?
Disclosures
This article is published by Baker 1031 Investments, LLC for general educational purposes for accredited investors and is not an offer to sell or a solicitation of an offer to buy any security, nor is it tax, legal, accounting, or investment advice or a recommendation. Any securities offering is made solely through a sponsor’s private placement memorandum (PPM) following a suitability determination. Securities offered through Aurora Securities, Inc. (ASI), member FINRA / SIPC; Baker 1031 Investments is independent of ASI.
Oil & gas mineral and royalty interests and DST programs are speculative, illiquid securities sold only to verified accredited investors and involve substantial risk, including possible loss of principal, commodity-price and production-decline risk, lack of control, and the risk that an intended 1031 exchange fails to qualify for tax deferral. Whether a particular interest qualifies as like-kind real property is a fact-specific legal determination that varies by state and by the terms of the instrument. Tax results depend on your individual circumstances. Consult your own CPA and attorney before acting. Past performance does not guarantee future results.
