Overview
This guide explains how interval funds (a type of investment with limited liquidity) can be used inside investment models on the SMArtX platform.
The goal is to make these funds easier to use while avoiding issues caused by their limited ability to be bought and sold quickly
⚠️Action required for accounts holding interval funds⚠️
Interval funds cannot be redeemed on demand — they have specific quarterly redemption windows. Without proper setup, routine rebalancing activity can trigger trades outside those windows, potentially causing overdrafts or portfolio drift.
Why Interval Funds Need Special Handling
Unlike standard mutual funds or ETFs, interval funds have strict liquidity constraints. They can only be redeemed during specific quarterly windows — meaning you can't treat them like fully flexible investments in everyday portfolio operations.
When an interval fund is included in a managed sleeve without proper configuration, SmartX's rebalancer may attempt to sell it outside its redemption window. This creates several downstream problems:
Quarterly redemptions onlyInterval funds can only be sold during specific windows, typically once per quarter. Each fund has its own dates. | Rebalancing riskIf swept into a normal rebalance, SMArtX may try to sell the fund outside its redemption window — which will fail. |
Overdraft exposureIf the rebalancer expects proceeds from a sale that can't execute, it may still purchase other positions — creating a cash shortfall. | Target allocation driftHoldings may fall out of alignment with target percentages when interval fund activity isn't accounted for correctly. |
When This Applies: Two Situations That Require Action
You'll need to take one of the steps below if either of these applies to a client account:
NEW SETUP | TRANSFER IN |
New to SMArtX tradingThe account holds an interval fund and is implementing SMArtX-managed trading for the first time. | Transferred from outsideAn interval fund was transferred into the account from outside the SMArtX platform. |
Your Two Options:
There are two ways to handle interval funds within the advisor managed sleeve. Pick the one that fits your strategy.
Simplest
1️⃣ Move to the protected sleeveBest if you want the fund set aside and untouched by rebalancing activity. |
1. Identify the interval fund in the account's managed sleeve. |
2. Move the holding to the protected sleeve within SMArtX. |
3. No further action needed — the fund is fully isolated from all trading and rebalancing. |
More Control
2️⃣ Keep in managed sleeve with an exclusionBest if you want the fund to count toward target allocations while remaining protected. |
1. Keep the interval fund in the managed sleeve (APM). |
2. Add a "Do Not Sell" exclusion to the holding in SMArtX. |
3. The fund is now protected from accidental liquidation during rebalances and other routine events. |
Advanced Quarterly Cycle Setup
Following Option 2: Including the fund in target allocationsIf you want SMArtX to actively manage the interval fund as part of the account's target weights, follow these additional steps after applying Option 2. |
1. Add a "Do Not Sell" exclusion
Apply the restriction as described in Option 2 above. This prevents SMArtX from trading the position outside the appropriate window. |
2. Set an expiration date Critical
Configure the exclusion to expire the day before the fund's next redemption date. This timing tells SMArtX exactly when it is allowed to evaluate the position. Always confirm redemption dates directly with the fund provider. |
3. SMArtX evaluates on redemption day
Once the exclusion expires, the rebalancer will include the interval fund in its analysis. If the fund is out of alignment with your target, SMArtX will generate a sale order on the correct redemption day. |
4. Repeat each quarter
After each redemption window closes, re-apply the exclusion with the next expiration date to maintain this cycle going forward. |
Using Interval Funds in Portfolio Models
When building models that include interval funds, the composition of the rest of the portfolio matters significantly for operational stability.
RECOMMENDED APPROACH
Use a hybrid model structure
The most reliable approach is to combine interval funds with liquid investments. Keep interval funds to no more than ~50% of the model, with the remainder in liquid assets like ETFs or mutual funds.
This keeps the model operationally flexible while still providing exposure to alternative investments.
ℹ️ If you need a mostly interval fund model
That's still possible — but maintain a 5–10% liquidity buffer in cash or liquid ETFs. This helps handle client withdrawals, allows partial rebalancing, and reduces operational friction. Think of it as a safety cushion for the model.
Simple rule of thumb:
Interval funds
Hold steady — protected from routine trading events | Liquid investments
Handle movement — absorb withdrawals and rebalancing activity |
Advisor Checklist
Before trading begins on accounts holding interval funds, confirm the following:
✔️ You've identified all interval fund holdings in the account's managed sleeve
✔️ You've chosen Option 1 (protected sleeve) or Option 2 (managed sleeve with exclusion) for each holding
✔️ If using the advanced quarterly cycle, you've confirmed redemption dates directly with the fund provider
✔️ Your portfolio model does not exceed ~50% interval funds (or has a 5–10% liquidity buffer if it does)
✔️ You've communicated to clients that withdrawals from these positions may take longer than standard assets
✔️ If using the quarterly expiration cycle (advanced), you've set a calendar reminder to re-apply the exclusion after each redemption window
Need Help?
Contact your SMArtX Client Support for assistance identifying redemption dates, applying exclusions, or moving positions between sleeves.
Always confirm redemption dates directly with the fund provider before setting expiration dates.