Registered Investment Advisors (RIAs) and their high-net-worth (HNW) clients face critical decisions around fund selection. Choosing the right fund structure is more than a matter of returns. It’s about balancing liquidity, risk tolerance, transparency, and portfolio fit. Different fund types offer distinct advantages and limitations, shaping how capital is deployed and accessed over time.
This article breaks down the key fund structures commonly approved for RIAs and their clients: closed-end funds, open-end funds, and deal-by-deal syndications. By understanding their unique characteristics, advisors can better tailor investment solutions that align with the financial goals, preferences, and timelines of sophisticated investors.
UNDERSTANDING FUND STRUCTURES
When evaluating fund structures, RIAs and their clients should consider key trade-offs. Closed-end funds typically require a long-term commitment and may pursue higher-risk, higher-return strategies, while open-end funds and syndications offer greater liquidity and flexibility. Diversification also varies, as funds generally provide exposure to multiple assets. Transparency and control also differ: private placement funds can offer more deal-specific visibility and potentially provide broader diversification with less direct oversight. Understanding these differences helps investors align structure choice with their risk tolerance, return expectations, and liquidity needs. [1][2][3]
CLOSED-END FUNDS
🗹 Raise capital once and invest over a fixed time horizon (often 5–10 years).
🗹 Illiquid during the investment, or distributions after the hold period/asset sale.
🗹 Capital is returned as assets are sold.
🗹 Common for value-add or opportunistic strategies. [3][4]
OPEN-END FUNDS
🗹 Ongoing fundraising; investors can enter and exit periodically (subject to redemption terms).
🗹 More flexibility, but potential valuation and liquidity management challenges.
🗹 Often used for core or core-plus strategies. [3][4]
DEAL-BY-DEAL SYNDICATIONS
🗹 Each investment is raised and executed individually.
🗹 Investors choose which deals to participate in.
🗹 Provides transparency and choice but lacks diversification and scalability.
🗹 Common for exclusive or niche investments. [5]
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This article is an excerpt from Multifamily Real Estate Funds: A Guide for RIAs. For additional multifamily real estate insights, visit Pathways to Passive Wealth, BAM Capital’s new platform designed to make real estate investing more accessible, transparent, and achievable for aspiring and experienced investors.
SOURCES
[1]: Multifamily Real Estate Funds: A Guide for RIAs. (2025). “Topic 2.1 | Anatomy of a Multifamily Real Estate Fund.”
[2]: Janover Multifamily Loans. (n.d.). “Understanding Different Multifamily Investment Types.” https://www.multifamily.loans/apartment-finance-blog/understanding-different-investment-types-core-core-plus-value-add-and-opportunistic/
[3]: Origin Investments. (2024). “What are the Differences Between Open-End and Closed-End Real Estate Funds?” https://origininvestments.com/open-end-and-closed-end-real-estate-funds/#:~:text=Closed%2Dend%20real%20estate%20funds%20have%20a%20predetermined%20life%20set,comes%20from%20the%20income%20stream.
[4]: Investopedia. (2025). “Closed-End vs. Open-End Investments: What’s the Difference?” https://www.investopedia.com/ask/answers/042315/what-are-primary-differences-between-closed-end-investment-and-open-end-investment.asp
[5]: Carta. (2020). “Deal-by-deal.” https://carta.com/learn/private-funds/structures/spv/deal-by-deal/
