Interval Fund and Tender Offer Fund Liquidity

Two features of this sequence matter for anyone measuring exit time. First, the holder commits to sell before knowing the price. NAV can move between the request deadline and the pricing date, and the notice must warn of that risk. Second, the full cycle from notice to cash can take up to about nine weeks, and the next window may be a full quarter away.

The rule also requires the fund to prepare. From the notice date until the pricing date, assets equal to at least 100% of the offer amount must be ones the fund can sell in the ordinary course of business, at approximately their carrying value, within the period between the request deadline and the payment deadline. Boards must adopt written procedures to keep the portfolio liquid enough to meet the repurchase policy. A fund may suspend or postpone an offer only by a vote of a majority of its directors, including a majority of independent directors, and only in narrow cases such as a market closure or an emergency that makes valuing or selling assets impracticable.

Some interval funds now offer windows more often than the rule’s three-month minimum. The SEC has granted exemptive orders allowing certain funds to make monthly repurchase offers, and its September 2026 proposal would add a one-month interval to the rule for all interval funds. The proposal would also replace the 100% liquid-asset requirement with a principles-based standard, shorten the minimum notice to 14 days, and let new funds wait up to two years before their first window. These are proposed changes, open for public comment, and they may change before any final rule.

How tender offer funds work

A tender offer fund is a closed-end fund or BDC that offers liquidity through issuer tender offers rather than a fundamental repurchase policy. Section 23(c) of the Investment Company Act allows a closed-end fund to buy back its own shares through tenders open to all holders, and the tender itself runs under the Exchange Act’s issuer tender offer rule, Rule 13e-4, with a Schedule TO filed for each offer. Many non-traded BDCs, which hold private credit portfolios, use this route.

The practical difference from an interval fund is discretion. Each offer is a board decision. A fund’s prospectus may describe an intention to make regular offers, often quarterly, but the board can reduce an offer, skip a quarter, or stop the program. The SEC’s 2026 proposal draws the line in these terms: what matters is whether the repurchase is required or discretionary. Investors who value mandatory periodic liquidity, the release says, can choose interval funds.

The mechanics also differ. Under Rule 13e-4, a tender offer has traditionally had to stay open for at least 20 business days. In April 2026, the SEC’s Division of Corporation Finance issued an exemptive order allowing certain cash tender offers for equity securities, including partial issuer tenders, to stay open for a minimum of 10 business days if specified conditions are met. If more shares are tendered than the fund offered to buy, the fund may accept up to an additional 2% of the class without extending the offer, and beyond that it buys pro rata.

Price and payment terms vary by fund and are set out in each offer. Some funds pay a NAV-based price struck at or after expiration. Some pay through a promissory note that settles later, as in the example in the next section. For a holder measuring exit time, the relevant date is when cash arrives, which can be later than the expiration date.

A closed-end fund that is not an interval fund also has a third option: a discretionary repurchase under paragraph (c) of Rule 23c-3. Under the current rule, a fund can use this route no more than once every two years. The SEC’s proposal would change that to once a year, and notes that funds rarely use the provision today.

Proration: what happens when everyone tenders at once

Proration is the rule that turns a fund’s offer amount into a hard capacity limit. When holders tender more shares than the fund will buy, each tendering holder gets the same fraction of the request filled, and the rest of the position stays in the fund. Under Rule 23c-3, an interval fund may first buy up to an extra 2% of shares outstanding, then must prorate. The rule allows two narrow exceptions: a fund may fill small holdings of fewer than 100 shares in full, and may accept by lot the tenders of holders who elected all-or-none. Tender offer funds follow the same pattern under Rule 13e-4.

Two consecutive tenders by Blue Owl Credit Income Corp., a non-traded BDC, show how quickly the fill rate can change. In the offer that expired on December 31, 2025, holders tendered about 108.2 million shares. That was slightly more than the fund had offered to buy, so it used its 2% headroom and bought every share tendered, equal to 5.2% of shares outstanding, according to its final Schedule TO amendment. Every tendering holder got a full fill.

The next offer, for 5% of shares outstanding, expired on March 31, 2026. This time holders tendered about 463.8 million shares, or 21.9% of shares outstanding. The fund bought about 105.9 million of them pro rata, for roughly $964 million, according to the final amendment for that offer. Each tendering holder had 22.8% of the request filled.

In one quarter, the same fund went from filling every request to filling fewer than one share in four. The offer size stayed at roughly 5% of the fund; the volume of tender requests is what moved. The fund paid in both cases with non-interest-bearing promissory notes held by its transfer agent, so cash arrived after the expiration date.

The longer record shows how unusual that shift was. Through 2025, tender requests at the same fund ran between about 28% and 57% of the amount offered, crossed the offer only slightly at year end, and then jumped to more than four times the offer in the first quarter of 2026.

For a large holder, the math compounds. Suppose an allocator tendered a $10 million position in the March 2026 window. About $2.3 million would have been bought, and about $7.7 million would have stayed invested, to be tendered again in a later window. If the fill rate held at 22.8% every quarter, purely as an illustration, about 36% of the original position would still be in the fund after four quarters, and about 13% after eight. A position that looks like a quarterly-liquidity holding on paper can behave like a multi-year holding when many holders are trying to leave at once.

Proration can also create an incentive problem. Holders who expect proration may tender more than they actually need to sell, hoping the prorated fill matches their true target. If enough holders do this, reported tender volume overstates real demand to exit, and fill rates fall further. An allocator reading a high tender figure should keep that dynamic in mind before concluding that every tendering holder was trying to leave in full.

The key point is that capacity is shared. A 5% offer is 5% of the whole fund, split among everyone who tenders. A single holder’s exit capacity depends on the size of the window, the size of the holder’s position, and how many other holders show up.

Reading a fund’s repurchase history

A fund’s past repurchase windows are the best public evidence of how its liquidity behaves under pressure. The filings that hold this history differ by structure.

An interval fund leaves two records. For each window, it files Form N-23c-3 with the SEC within three business days of sending the shareholder notice. The form identifies whether the offer is periodic or discretionary, and the attached notice shows the offer amount and key dates. Once a year, Rule 23c-3 requires the fund’s annual shareholder report to list the number of offers made during the year, the offer amount and amount tendered in each, and whether any offer was prorated.

A tender offer fund or non-traded BDC files a Schedule TO for each offer, setting out its size and terms. After the offer expires, a final amendment reports the results: shares tendered, shares bought, the proration factor if one applied, and how holders were paid.

With that history in hand, an allocator can answer five questions.

How often has demand exceeded capacity? The ratio of shares tendered to shares offered is the most direct measure. A fund that has run below 100% for years has had room to spare. A fund that has crossed 100% in recent windows is already rationing exits, and a new position would join the queue.

Has the fund used its headroom? Buying the extra 2% allowed under both rule sets is a choice. A fund that routinely uses it when tenders exceed the offer is signaling a willingness to stretch capacity. A fund that never does is holding to the minimum.

For tender offer funds, has the board ever cut or skipped an offer? Because these offers are discretionary, the record of what the board actually did matters more than what the prospectus says it intends to do.

How is the fund paying? Repurchases can be funded from new subscriptions, cash and liquid holdings, portfolio repayments, or borrowing. Continuous sales can offset repurchases in good periods, so a fund’s flow picture matters. When new money slows and repurchase requests rise together, the fund has to lean on its portfolio or its credit lines.

When does cash actually arrive? Pricing dates, payment deadlines, and payment instruments such as promissory notes all push the cash date past the request deadline. For a holder who needs the money on a specific date, that lag belongs in the exit estimate.

Sizing and timing positions in semi-liquid funds

Interval funds and tender offer funds belong to a wider group often called semi-liquid or evergreen funds: vehicles that stay open to new money and offer periodic, capped exits. For an allocator building a portfolio of them, three practical habits follow from the mechanics above.

Size against the window. The useful ratio is the position’s share of the fund compared with the offer amount. A holder that owns 10% of a fund cannot exit in a single 5% window even if no one else tenders, because the whole window is half the position. Add other tendering holders and the number of windows grows. Ownership concentration data, which shows how much of a fund a single investor or platform holds, helps here.

Plan around the calendar. Each fund has its own request deadlines, and the holder commits before the price is known. An allocator who may need cash in a given quarter should count back from that need to the request deadline, which can fall up to three weeks before cash arrives from an interval fund, and longer where a tender offer fund pays by note. Holding funds whose windows fall in different months spreads the exit opportunities across the year.

Watch for shared pressure. Funds sold through the same distribution channels, or holding similar assets, can see tender demand rise at the same time. The early-2026 period described in the SEC’s proposal involved several funds at once. Diversifying across managers does less for liquidity if every fund in the portfolio faces the same wave of requests in the same quarter.

Semi-liquid funds can still earn a place in a portfolio. The structure does what it says: it gives investors access to less liquid assets with a defined, limited route out. The risk is in treating a capped, scheduled exit as if it were daily liquidity, or in sizing a position as if the holder will be the only one tendering.

How SQXray measures interval and tender offer fund liquidity

SQXray, SQX’s fund-level dataset, treats scheduled repurchases as their own exit channel. For an ETF, exit time comes from trading volume. For an interval fund or tender offer fund, SQXray measures it from the repurchase calendar and the capacity of each window.

For each fund that exits through periodic tenders, SQXray records the cadence of its liquidity windows, the date of the next window, and the capacity a window offers. It combines those with the fund’s net assets and flows to estimate how long a position of a given size would take to leave the fund, and assigns a liquidity tier that separates funds with room in their windows from funds where pressure is building. Status flags mark conditions an allocator would want to know about, such as an open tender window or heavy outflows.

The result puts semi-liquid funds on the same footing as the rest of a fund book. A risk team or allocator can see, in one dataset, which holdings exit in days, which exit on a quarterly calendar, and which are approaching a window with more demand than capacity. SQX delivers SQXray files by SFTP or Amazon S3, so the data loads into the systems allocators already use for monitoring and reporting.

What the fund holds decides what the window can pay

A repurchase window is only as reliable as the portfolio behind it. When tenders rise, a fund meets them from cash, loan repayments, sales of its more liquid holdings, or borrowing, and each of those depends on what the fund owns. That makes holdings data part of any serious liquidity review. For registered funds, the main public source is Form N-PORT, the monthly portfolio report funds file with the SEC. Its data arrives with a lag, and that lag shapes what an allocator can know about a fund at any point in time. How N-PORT works, what it shows, and how to read through the delay is the subject of the next guide in this series.

See the repurchase profile for your funds
Send SQX the list of interval funds, tender offer funds and non-traded BDCs you hold or are considering, and we will return an SQXray liquidity profile for each one: the exit channel, the window calendar, and the estimated time to exit at your position sizes. Tickers or CUSIPs are fine. Just contact SQX to learn more.

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