BERWYN, PA — Envestnet Inc. has expanded its alternative investment research platform by introducing analyst-approved interval funds, a move aimed at helping financial advisors evaluate private market investments as demand for the asset class continues to grow.
The company said its manager research team at Envestnet PMC has completed due diligence on an initial group of interval funds, extending the same research process used for separately managed accounts, mutual funds, exchange-traded funds and strategist portfolios to the increasingly popular investment vehicle.
The expansion follows Envestnet’s March rollout of interval funds on its Unified Managed Account platform, where advisors can access account administration, trading, rebalancing and tax management services alongside private market investments.
Interval funds, which provide limited liquidity while investing in private assets, have gained traction among wealth managers seeking broader access to private equity, private credit and other alternative strategies. Envestnet said its research is intended to help advisors assess manager quality, portfolio construction, valuation practices, liquidity constraints, fees and expected risk before allocating client assets.
“Private markets can offer attractive income and diversification benefits, but manager selection matters immensely,” Todd Rais, head of investment products and services at Envestnet, said. “Unlike public markets, where performance differences between managers can be relatively narrow, private market returns can vary significantly from one manager to another.”
According to data cited by the company from Cambridge Associates, the performance gap between top- and bottom-quartile private equity managers is approximately 12.9 percentage points, compared with about 1.5 percentage points among public equity managers, underscoring the importance of manager selection.
Envestnet said its review process begins with screening a manager’s track record and assets under management before advancing to more detailed evaluations that include on-site visits, annual questionnaires, ongoing monitoring and committee review. Analysts also examine fees, sourcing strategies, valuation methodologies and deal flow before approving research coverage.
“It’s important you invest with the right manager if you’re going to invest in private markets, but most interval funds have short track records,” Dana D’Auria, Envestnet’s co-chief investment officer and group president of Envestnet Solutions, said. “Our deep-dive analysis examines the longer track records of managers and gives advisors the confidence to know what to expect in terms of liquidity restraints and risk/return expectations before they commit client dollars.”
The company cited Cerulli Associates research projecting advisor allocations to less-liquid private market strategies will increase from approximately $1.9 trillion to $3.7 trillion by 2029. Over the same period, the interval fund market has grown from roughly $75 billion in assets in 2020 to more than $300 billion across approximately 160 funds, according to industry data cited by Envestnet.
Additional information about Envestnet’s alternatives research is available at https://go.envestnet.com/Unlocking-Alts-with-Envestnet.
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