XA Investments' Flynn sees rapid growth in interval funds using alternatives

Kimberly Flynn, managing director of alternative investments at XA Investments, says that demand for alternative investments as a means of adding diversification to a portfolio has spurred tremendous growth in interval funds, whose limited liquidity makes them an ideal vehicle for many types of less-liquid securities. Flynn notes that there are 190 interval- and tender-offer funds in existence today, but that 27 new funds are in registration, many from companies just entering the interval-fund space. Flynn says it's still very early -- 'maybe the second inning' -- in the current interval-fund growth cycle, which will force investors and advisers to do heightened due diligence to make sure the new issues can perform up to expectations.