Variant Alternative Income Fund (NICHX) Repurchases: Requests Exceeded What It Bought in Five Straight Offers

What NICHX is, and a correction about its sister fund

Variant Alternative Income Fund began as a private fund in October 2017 and was converted into a registered interval fund in 2018. Variant Investments, LLC is the adviser. It sells one share class, Institutional, with a $1 million minimum initial investment that the fund may waive. The fiscal-2025 annual letter (July 2025) says the accredited-investor requirement was removed. The annual report describes a book spread over “approximately 100 investment strategies” in niches such as legal lending, film finance, music royalty advances, aircraft leasing, medical receivables and diamond lending. On the schedule of investments, 70.3% of net assets are credit facilities, 20.8% are stakes in private investment companies and 6.9% are special purpose vehicles (April 30, 2026).

The fund also has a sister, Variant Alternative Lending Fund (CIK 2022674, ticker XALFX). It is not a BDC: its own annual report says it is a registered closed-end fund that “operates as an interval fund,” converted from a tender-offer structure during the year, and had $71.8 million of net assets on April 30, 2026. It is a small fraction of NICHX and is not covered here. Where this page says “the fund”, it means NICHX.

Interval funds sit between a mutual fund and a private fund: you can only sell in the quarterly window, at the NAV on the pricing date, and the fund decides how much beyond the 5% minimum it will buy. For the full list of such funds, see our list of interval funds.

May 28, 2024: the write-off the April 2024 NAV did not include

The annual report for the year ended April 30, 2024 (filed July 5, 2024) carries a subsequent-events note. On May 28, 2024 the two positions, Montreux Healthcare Fund PLC and Montreux Holdings Limited, “were fully written off due to circumstances that did not exist as of April 30, 2024.” The note adds that the fund and Montreux’s senior lenders learned in late May 2024 that the manager of Montreux was pursuing a “scorched earth” policy, which led the senior lenders to accelerate a pre-pack administration. The fund states that “management has made the determination that the write off was not appropriate as of April 30, 2024,” and that the write-off would have affected returns by -4.00% had it been booked in that year.

The next annual letter calls it “the May 2024 full write down of a legacy Private LP investment that does not reflect the current portfolio focus targeting senior secured credit facilities,” and says it dampened the year’s 3.70% net total return. The statement of changes in net assets shows $114,976,717 of net unrealized depreciation and $35,918,632 of net realized losses for fiscal 2025; Montreux Healthcare Fund PLC alone went from $86.8 million to $0.46 million, a fall of $86.4 million (our arithmetic). Two points for a holder: the loss landed after the year-end NAV had been struck, and between the date of the repurchase notice and the pricing date NAV moved by $1.00 a share.

Twenty-one quarterly repurchases, May 2021 to June 2026

From the repurchase tables in the annual reports; the percentage is of shares outstanding. “Requests” says what the filing states about demand, which is nothing before fiscal 2026.

Three phases show up. Through March 2023 the fund bought between 0.7% and 3.9% of its shares a quarter. Demand rose in December 2023 (6.12%, above the 5% offer, so the fund used part of the extra 2%) and the fund took the full 7.00% in each of the four offers from June 2024 to March 2025. Then it went back to 5.00%, and stayed there while the annual report says requests were larger. The fund’s own notice sets the rule: “the Fund may, but is not required to, repurchase up to an additional two percent (2%).” If requests are above what the fund chooses to buy, it buys pro rata.

What 5.00% with excess requests means for a seller

The filings do not say how many shares were tendered, so we cannot give a fill rate. The arithmetic is simple, though: if the fund buys 5% of shares and requests total R% of shares, each seller gets about 5/R of the request (our arithmetic). Illustrative only; none of these request levels is reported.

Two terms from the August 25, 2026 notice matter here. First: “Subsequent repurchase requests will not be given priority over other shareholder requests.” An unfilled part goes back into the next queue. Second, the fund may take in full tenders from holders of fewer than one hundred shares who tender everything, and “will accept the total number of Shares tendered in connection with required minimum distributions from an IRA or other qualified retirement plan,” so in a prorated offer the proration is applied to everyone else’s requests (our reading). The annual report adds that proration “may cause some investors to tender more Shares for repurchase than they wish to have repurchased.” Requests can be withdrawn or changed until 4:00 p.m. Eastern on the deadline, proceeds are paid within seven days, and the fund charges no repurchase fee, though your broker may.

The last offer is closed and not yet reported. It ran from August 25 to September 15, 2026 at NAV on September 15. Its result will be in the semiannual report for the six months to October 31, 2026, which the fund filed on January 9 the last time. On the fund’s rhythm (notices filed on November 24, 2025 and February 20, May 22 and August 25, 2026) the next notice should come in late November 2026, with pricing around December 15.

Money in, money out

Shares sold fell 43.5% in fiscal 2025 and a further 50.7% in fiscal 2026 (our arithmetic). Repurchases peaked in the year of the four 7.00% offers. Net assets, shares outstanding (102.2 million at April 30, 2025 and 94.5 million at April 30, 2026) and the repurchase total all moved the same way. The quarter-end Form N-PORT reports carry the trend past the annual report:

Net assets fell about $537 million, or 18.6%, between October 2024 and July 2026 (our arithmetic) while borrowings rose by $89.7 million. The fund’s fiscal-2025 letter listed what funds its liquidity: “Annualized principal payments for NICHX totaled roughly a third of Fund AUM,” plus fundraising and credit lines. Since then fundraising has fallen by half and the credit lines are being drawn.

Income against the payout

In fiscal 2026 the fund earned $241.7 million of net investment income and distributed $252.3 million, of which $11.2 million was return of capital. The fund quotes a “1-year trailing distribution rate” of 9% (as of March 31, 2026), and the fiscal-2025 letter gave 9.75% for 2024. Since April 1, 2026 distributions are paid monthly instead of quarterly. The annual report cautions that a distribution “includes a combination of ordinary dividends, capital gain, and return of investor capital.”

What the income is made of matters as much as the total:

The fund explains that event-based investments “accrue to outstanding interest on a current basis and is paid as the investment’s underlying assets and collateral generate cash to pay down interest and principal.” PIK interest is added to principal and, per the cash-flow statement, is non-cash ($23,127,306). Event-based, PIK and profit-share interest total $85.4 million (our sum), 29.5% of income. The accrued event-based interest receivable stood at $87.9 million at April 30, 2026 (3.6% of net assets), up from $78.5 million a year earlier. Footnote (n) of the schedule marks lines whose accrual rate is set to zero in part or in whole because they are non-income producing, including the Medtrade and Kili Purchasing lines.

What it owns, and how much of it has a price

Percentages are of net assets (our arithmetic). No holding is Level 2. At April 30, 2026 the Level 3 total was made up of $1,722.0 million of credit facilities, $42.8 million of special purpose vehicles and small direct equity and warrant positions, and unrealized loss on the Level 3 credit facilities was $54.2 million for the year. The April 2025 cash pile is visible: the fiscal-2026 letter says cash was cut from a “high-water mark of 17% in May 2025 to 2% in April 2026.”

Concentration. The schedule of investments groups lines by strategy. The lines under the Litigation Finance heading inside credit facilities add up to the printed subtotal of $520.3 million, 21.2% of net assets (our reading of the schedule). The fund’s letter says that of its 13 asset categories, real estate contributed most to return, followed by legal lending, corporate loans and transportation, and inventory finance was the only detractor. The Form N-PORT at July 31, 2026 lists each loan separately; the ten largest lines were:

The report has 214 lines. A borrower with several loans appears several times, so the share by borrower is larger than these lines. The N-PORT also reports the fair-value level as “N/A” for nearly every line, so the 72.6% above comes from the annual report, not from the monthly filing.

The largest line is also a near-term maturity. SCPFL I, LLC was $122.4 million (3.9% of net assets) at April 30, 2024, $136.0 million (5.0%) a year later and $157.1 million (6.4%) at April 30, 2026, at a 12.57% rate, with a stated maturity of December 16, 2026. Its footnote says part of the interest is contingent on a specific event.

Positions marked down. The annual reports list lines carried far below cost:

Medtrade’s $45.4 million gap between cost and fair value is 28.7% of cost (our arithmetic). Across the whole portfolio, tax-basis gross unrealized depreciation was $272.5 million against $219.2 million of appreciation, a net -$53.3 million at April 30, 2026. The fund’s own caution on the structures: payments in these notes “are subject to the risk that a borrower could default when actual cash interest or principal payments are due.”

Fees, expenses and leverage

The expense limit excludes leverage interest and acquired-fund costs, so the prospectus itself expects total expenses above 1.45%. The actual ratios in the annual report do not include acquired fund fees and expenses, while the fee table estimates 0.33% for them, which is part of why 2.13% is higher than the 1.80% actually reported.

Leverage. At April 30, 2026 the fund had $185.1 million of principal outstanding on two credit lines, $42.5 million on the first (maximum $85 million, matures December 26, 2026) and $142.6 million on the second (maximum $175 million, matures December 21, 2026), both at 7.65%. That is 7.6% of net assets (our arithmetic), and the N-PORT shows $219.7 million at July 31, 2026, or 9.3%. On May 20, 2026 the fund signed a third line for up to $300 million at 3.60% over one-month Term SOFR. The fiscal-2025 letter described the fund as generating returns “without the use of structural leverage”; the consolidated balance sheet at that date carried $127.8 million of revolving credit facility borrowings, 4.7% of net assets (our arithmetic). The prospectus estimates borrowings at between 0% and 15% of assets.

What a holder can do with this

• If you want out: requests are made in the window in each N-23C-3 notice, directly with the fund’s administrator or through your adviser or broker. Because the last five offers were filled at 5.00% against larger requests, plan for a partial fill and for the remainder to compete again next quarter, with no priority.
• If you tendered in 2025 or 2026: the fund does not report your fill rate. Your confirmation shows what was bought; the difference is the part you must resubmit.
• If you are staying: the numbers to watch are in the next semiannual report and the next notice: whether the fund returns to 7.00%, whether sales recover, and whether the SCPFL I loan (December 16, 2026) and the two credit lines (December 2026) are repaid or extended on the same terms.
• If you are weighing a purchase: ask your adviser what 72.6% Level 3 means for NAV, how often the NAV has stepped down (the $1.00 drop around the June 2024 offer), and whether you can wait one or more quarters for a full exit.
• Taxes: a tender is generally a taxable sale; the notice points to the prospectus. Distributions can include return of capital.

Compare other funds in the same position in the private credit redemptions tracker and in evergreen funds compared. Two interval funds with their own series are Stone Ridge’s LENDX and Cliffwater’s CCLFX.

FAQ

All figures are from SEC filings of Variant Alternative Income Fund (CIK 1736510) read on EDGAR on October 8, 2026: annual reports on Form N-CSR for the years ended April 30, 2022 to 2026 (accessions 0001398344-22-013133, 0001398344-23-012786, 0001213900-24-059491, 0001213900-25-061814 and 0001213900-26-076673), semiannual reports (0001398344-24-000273, 0001213900-25-002142 and 0001213900-26-002829), ten Form N-23C3A repurchase notices (May 2024 to August 2026), the registration statement and prospectus filed August 28, 2026 (0001213900-26-095044), and eight Form N-PORT reports from October 2024 to July 2026. The sister fund’s data come from the annual report of Variant Alternative Lending Fund (0001213900-26-076676). The number of shares tendered in each offer is not disclosed. Percentages, sums and ratios are our arithmetic. This is analysis of public documents, not investment, legal or tax advice.