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Berwyn, Pa.-based wealthtech firm Envestnet announced an initial series of interval funds is now available within its Unified Managed Account platform. 

This will enable advisors using the platform to oversee all aspects of interval funds—part of the broader family of semiliquid funds have become popular among advisors increasing allocations to private markets—within the UMA. This includes research, trading, rebalancing, tax-loss harvesting and model updates. 

Envestnet is starting with a limited set of interval funds that have been whitelisted. It has performed a review of custodial availability, conducting due diligence with asset managers and going through an acceptance committee process. It plans to make additional interval funds available throughout the year. 

The firm is also working to develop functionality to allow for other types of evergreen funds to be used in its UMA program, including tender offer funds, non-traded business development companies, non-traded REITs and operating companies.

Envestnet started with interval funds for several reasons, according to Todd Rais, head of research and CIO support at the firm. Interval funds, unlike other semiliquid products, have five-letter tickers, open subscription windows and daily net asset valuations, making them an easier lift since they don’t require any enhancement on Envestnet’s trading engine for purchasing. 

Prior to the enhancing, using interval funds “relied on an advisor to be aware of trade dates and submit redemption requests and figure out the spreadsheet math to redeem and figure out what it meant for the rest of a portfolio.” Rais said. “By offering it in a UMA, you are putting that burden on Envestnet, and we built an algorithm to make those decisions. It takes that piece off the advisor’s desk.”

The firm built enhancements on the back end to account for the limited redemption windows and then factor that into how to handle rebalancing and getting models into appropriate risk ranges.

It also built in some additional disclosures that advisors must acknowledge to prevent them from unintentionally adding interval funds to a model. 

“When an advisor adds them to a model, they have to acknowledge that they’ve added a position with intermittent liquidity so that they can’t fat finger a ticker in there,” Rais said. Users must click through a series of messages during the proposal and model processes.

“We baked in a lot of guardrails that home offices can put on accounts,” he said. 

Envestnet is currently developing processes to eventually add other semiliquid products with more limited subscription windows, which Rais said could be live in about a year. 

Because those funds don’t have universal tickers, Envestnet will need to build specific tickers for each product for its system. It will also need to account for purchase windows in addition to redemption windows, as well as the different subscription documents that go with those products. 

“Not surprisingly, when introducing them into models, home offices want a lot more oversight and review baked in,” Rais said.