Non-Listed Closed-End Funds Surge in Q1 2025: XA Investments Reports Record Growth and Shifting Landscape

XA Investments’ latest market update reveals a vibrant start to 2025 for non-listed closed-end funds (CEFs), with record fund launches, growing assets under management, and a notable shift in market dynamics. The sector’s expansion is fueled by new entrants, evolving investor preferences, and regulatory tailwinds, positioning it as a key player in alternative investments.

Fund Launches and Market Expansion

The first quarter of 2025 saw 14 new non-listed CEFs launched—up 40% from the 10 debuted in Q1 2024—pushing the total number of active funds to 270. Notably, interval funds now dominate the landscape, accounting for 134 of these (49%), surpassing tender offer funds (136) in sheer quantity for the first time. This shift reflects investor demand for more flexible liquidity terms, as interval funds typically allow quarterly redemptions, whereas tender offer funds require less frequent buyback processes.

Total managed assets (including leverage) reached $220 billion as of March 2025, with net assets hitting $181 billion—a $9 billion increase from Q4 2024. The entry of three new sponsors—HarbourVest, Gemcorp, and Pop Venture Advisers—highlights the sector’s widening appeal. Meanwhile, 27 funds remain in SEC registration, underscoring ongoing momentum.

Asset Flows and Investor Preferences

Investor behavior in 2024 underscored a clear preference for accessibility. Over half (53%) of net flows went to daily NAV funds without investor suitability restrictions, attracting $118.2 billion (54% of total managed assets). This trend suggests that removing accreditation barriers can significantly boost asset accumulation, as unrestricted funds outperformed those limited to accredited or qualified investors.

Sector-wise, private credit funds led capital raising, amassing over $20 billion in net assets—a reflection of investors’ appetite for steady, income-generating assets. Venture/private equity funds followed with $11 billion, indicating cautious optimism about growth opportunities in private markets.

Regulatory and Structural Trends

The SEC’s role remains pivotal. While review times for new funds average seven months, Tax-Free Bond funds have streamlined the process to 160 days. With 58 funds in the review pipeline—a 53% year-over-year jump—the regulatory burden is rising, though sponsors appear undeterred.

XA Investments’ launch of the XAI Interval Fund Index™ (INTVL) addresses a critical gap in market transparency. As the first total return index tracking interval funds, it offers investors a benchmark for performance evaluation, potentially attracting more institutional and retail capital to the sector.

The Role of Accessibility and Market Concentration

A decline in market concentration signals broader opportunities for newcomers. The top 20 funds’ share of assets dropped from 65% to 60% between Q4 2024 and Q1 2025, suggesting that smaller funds are gaining traction. This diversification aligns with investor demand for lower barriers to entry, as unrestricted funds now account for nearly half of all active vehicles.

Outlook: A Dynamic Market on the Rise

The sector’s trajectory remains bullish. New sponsors, evolving asset classes, and tools like the INTVL index are expected to drive further growth. Kimberly Flynn, XA’s president, emphasized that 2024’s record year set a strong foundation, with co-investment relief provisions easing capital-raising constraints for sponsors.

With $38 billion in net inflows during 2024 and 67% of funds reporting positive flows, the data paints a compelling picture: non-listed CEFs are no longer niche. Their ability to offer liquidity, diversification, and exposure to specialized asset classes—particularly in private credit—positions them as a mainstream alternative to traditional investments.

Conclusion

Q1 2025 marks a pivotal moment for non-listed closed-end funds. The surge in launches, growing assets, and declining concentration indicate a maturing market with broadening participation. Key drivers—accessibility, regulatory clarity, and the INTVL index—will likely sustain this momentum. Investors should take note: with over $181 billion in net assets and a pipeline of innovative funds, this sector is primed to capture a larger share of the alternative investment landscape. As the SEC’s role evolves and sponsors diversify their offerings, the next phase of growth may hinge on how well the industry balances liquidity innovation with regulatory compliance. For now, the numbers speak clearly—the non-listed CEF market is open for business, and its potential is just beginning to unfold.