Extending Fund Lifespans: Typical Durations And Consent Requirements

As noted in our previous article, the lifespan of a closed-end fund typically ranges from 8 to 12 years, depending on the asset class. However, to provide flexibility to deal with issues related to illiquidity of assets, unresolved claims, and potential market downturns, almost all funds permit extensions beyond the stipulated term.

The duration of these extensions varies by asset class, but analysis of the Goodwin Terms Database for Private Investment Funds reveals some additional clear patterns, particularly regarding the approval authority for such extensions.

Extension Durations Across Asset Classes

While fund documents typically provide for two one-year extensions, some funds allow three. The likelihood of three one-year extensions is higher in infrastructure funds and venture capital funds than in credit funds and real estate funds.