We are thrilled to announce the availability of two new interval funds—PIMCO Flexible Credit Income Fund and BlackRock Credit Strategies Fund—as part of our growing suite of alternative investment options. These funds are currently available exclusively for Brokerage business and represent the first of many alternative investment opportunities we plan to offer.
Key Details:
- Available Now: These new interval funds are currently available exclusively for Brokerage business.
- Licensing Requirement: You must have a Series 7 license to offer interval funds.
- New Account Opening Process: To get started, there is a new account opening process for these investments.
- Mandatory Training: All representatives interested in offering these funds must complete a training program through AI Insights, which will soon transition to iCapital.
- Exam Requirement: After completing the training, representatives must successfully pass an exam to qualify for offering these alternative investments.
Investing in interval funds provides access to a segment of the market that offers potential benefits, including higher current income and enhanced diversification. These new funds provide a great opportunity to diversify your clients’ portfolios and offer innovative solutions in the current market environment.
What Are Interval Funds?
An interval fund is a type of closed-end fund that periodically repurchases shares from shareholders at the fund’s net asset value (NAV), typically four times per year. These funds are unique because they invest in illiquid and private assets, which have traditionally been accessible only to large institutional investors. Unlike open-end mutual funds that are restricted to holding a maximum of 15% in illiquid assets, interval funds have no such limits, making them well-suited for alternative investment strategies. However, it’s important to note that while interval funds offer periodic repurchases, there is no guarantee that investors will be able to redeem the desired quantity of shares at any given interval due to limited liquidity.
Benefits and Considerations
Investing in interval funds provides access to potentially higher-yielding investments and enhanced diversification, making them a valuable addition to a well-rounded portfolio. However, they also come with significant risks, including limited liquidity and the challenge of valuing illiquid assets. As such, interval funds are best suited for clients with a long-term investment horizon, who do not require immediate access to capital, and who can tolerate potential principal loss.
Suitability, Risks, and Position Limits:
- Client Suitability: Ideal for clients with a long-term investment horizon and who do not need immediate liquidity.
- Risks: Limited liquidity, potential difficulty in valuing illiquid assets, and no secondary market for shares.
- Investment Limits: It is recommended that clients should not invest more than 5% of their liquid net worth in a single interval fund, or 10% in multiple interval funds.
New Funds Available:
- PIMCO Flexible Credit Income Fund
- Share Classes: A-2 Share (PFALX), Institutional Share (PFLEX)
- Minimum Investment: $2,500
- PIMCO PFLEX Fact Sheet
- BlackRock Credit Strategies Fund
- Share Classes: A Share (CRDAX), Institutional Share (CREDX)
- Minimum Investment: $2,500
- BlackRock CREDX Fact Sheet
New Account Opening Process:
To begin offering these interval funds, representatives must follow a new account opening process:
- Mandatory Training: Complete the Interval Fund training through AI Insights, which will soon transition to iCapital.
- If you need a user ID for AI Insights, contact Dan Randall at drandall@nationallife.com or JC Gepigon at jgepigon@nationallife.com.
- Log into aiinsight.com, navigate to Education Modules, and complete the “Introduction to Interval Funds” course.
- Exam Completion: After training, pass the exam, retain the completion certificate, and email a copy to ESILicensing@Nationallife.com.
- Account Application: Use the NFS brokerage application in Docupace to select the desired fund and applicable share class.
- For ESI Illuminations, select the institutional share class.
- Purchase Disclosure: Submit an Interval Fund Purchase Disclosure for all purchases. Once approved by Operations, the ESI Trading Desk will process the order.
Support and Resources:
For more information on these funds, visit the National Life website: Products > Investment Products > Alternatives. If you have any questions about the interval fund purchase process, please contact ESI Business Development at 800-344-7437.
We are excited to offer these new investment opportunities and look forward to helping you leverage them for your clients.
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