The wrapper determines liquidity, tax reporting, suitability gates, and the typical cost load. Advisors routinely conflate these four structures because they can hold identical assets — a middle-market loan book, say — while behaving completely differently for the client. The distinction that matters most is the liquidity mechanism, because that is what a client actually feels in a stressed market.
Registered private-market fund structures compared
| Structure | Liquidity mechanism | Pricing / NAV | Suitability gate | Typical cost load | Tax form |
|---|
| Listed closed-end fund / traded BDC | Sell on the exchange any trading day at the market price (which floats to a premium or discount vs. NAV). | Market price daily; NAV reported periodically. | None beyond a brokerage account. | No load; brokerage commission only (often $0). Management + incentive fees inside. | 1099 |
| Interval fund | Mandatory periodic repurchase offers under Rule 23c-3 — 5% to 25% of shares at NAV, at a set interval (usually quarterly). Pro-rata if oversubscribed. | NAV struck daily or weekly; purchases usually daily. | Generally none; many require no accreditation. | Management fee + Layer 2; share-class load/servicing varies (see Sec. 5). | 1099 |
| Non-traded BDC | Perpetual/evergreen share-repurchase program, typically ~5% of shares per quarter at NAV, at board discretion; often a 2% deduction on shares held under one year. | NAV struck monthly; subscriptions monthly. | Net-worth / income suitability standards; varies by state. | Highest retail load potential: management + two-part incentive fee + share-class load/servicing. | 1099 |
| Tender-offer fund | Discretionary tender offers under the Exchange Act, most often quarterly, in a size and frequency the board sets — not guaranteed by rule. | NAV usually monthly or quarterly; purchases monthly or quarterly (some daily). | Often none; some limit to accredited investors. | Management fee + Layer 2; share-class load/servicing varies. | 1099 |
Source: BIP Capital framework; Rule 23c-3 and Exchange Act tender-offer rules.
Three things every advisor should be able to say out loud about this table. First, “quarterly liquidity” is not a promise. An interval fund’s 5% floor is a rule; a non-traded BDC’s and a tender-offer fund’s repurchases are board discretion. In a rush for the exits, redemptions can be gated — and that is the moment a client most wants out. Second, listed vehicles trade the load away but add price volatility: you avoid the sales charge entirely, but you accept a market price that can sit at a discount to NAV. Third, the tax form is a genuine convenience: all four of these registered wrappers issue a 1099 rather than the K-1 that a direct private-fund LP receives, which for most clients removes real administrative drag.
On terminology. The distinction between an interval fund and a tender-offer fund is legal, not cosmetic: interval funds repurchase on a mandatory schedule under Rule 23c-3, while tender-offer funds repurchase at the board’s discretion under Exchange Act rules. Some newer tender-offer and evergreen vehicles now accept daily subscriptions while still limiting redemptions to periodic tenders — useful to know when a product is marketed on its “daily” access without equal emphasis on how rarely a client can get out.
