Open for business:
Evergreens and the transformation of access to private markets

Read this article to understand:

• Evergreen private market structures continue to grow rapidly, despite some adverse headlines
• The main reasons institutional investors say they are being drawn to these vehicles
• Why private market asset classes are not all equally suited to open-ended structures

Evergreen private market vehicles have attracted considerable scrutiny in recent months. Higher than anticipated redemption requests in US semi-liquid funds prompted capped redemptions and deferral notices that put the mechanics of these vehicles under the spotlight.

Yet strip away the noise and a more nuanced picture emerges. The vehicles at the centre of the story were, for the most part, doing what their documentation said they would do: managing redemptions in an orderly way to protect investors from forced selling at distressed prices. Furthermore, the problem was concentrated in a subset of US business development companies (BDCs) with outsized exposure to software companies perceived to be threatened by artificial intelligence driven disruption.¹

But outside of that specific stress point, the direction of travel is clear. Globally, semi-liquid evergreen private market funds were approaching $500 billion in assets under management by the end of 2025, having grown around 450 per cent over the past five years.²

In Europe, the reformed European Long-Term Investment Fund (ELTIF) framework is catalysing a parallel surge. While products in the first ELTIF regime were largely closed-ended with fixed maturity dates, the new regulations allow for evergreen structures. According to analysis from Scope Group, of the 113 new fund launches in 2025, over 60 per cent were evergreen. Scope forecasts total ELTIF AUM reaching €65–70 billion by 2027.³

Meanwhile, in the UK, the Financial Conduct Authority approved Long-Term Asset Fund (LTAF) strategies have reached approximately £7.3 billion in assets – up almost 50 per cent from 2024 – with around £3.1 billion of additional committed capital waiting to be deployed.⁴
 

The real driver of evergreens: Getting money in, not out 

The evergreen conversation is often framed around liquidity – giving investors the ability to redeem periodically rather than wait for the end of a fixed term. That framing is not completely wrong but mistakes the secondary benefit for the primary one.

For large institutional allocators, the more compelling argument is about deployment. The closed-ended model has always subjected investors to a structural inefficiency: an investment committee makes a strategic decision to allocate to private markets, the capital gets invested, the fund eventually returns it, and then the committee has to go through the same process all over again – re-underwriting a manager, repeating due diligence, returning to investment committee for approval. 

Evergreen structures remove that cycle. A perpetual allocation to an asset class offers continuous exposure without the friction of re-commitment. For investment teams without extensive internal resources, that matters. The appeal, in other words, is not primarily about exit flexibility; it is about staying invested and a continual, more efficient way to do this.

Our 2026 Private Markets Study, which surveyed 500 institutional investors representing $6.5 trillion in assets, bears this out. The top-ranked benefit of evergreen structures, cited by 79 per cent of respondents overall, was flexibility over contributions and withdrawals combined with the absence of a fixed lifespan. Enabling continuous investment came second at 69 per cent, well ahead of J-curve mitigation at 50 per cent or more frequent valuations – presumed to be a key draw of semi-liquid vehicles – cited by around three in ten investors.⁵

These findings suggest investors are not looking at evergreen structures for public-market-style pricing or daily liquidity. Rather, they are looking for a solution that lets them remain continuously invested without sacrificing the illiquidity premium that underpins private market returns.
 

There are also practical benefits for managers. Large private equity firms that have historically operated through closed-ended vehicles are moving into evergreen formats, not only in response to investor demand, but because fee predictability and permanent capital are better for their businesses. That alignment of commercial interests on both sides of the table is accelerating adoption.

Where evergreen works 

Not all private market asset classes are equally suited to open-ended structures, and the differences matter.

Private credit is a natural fit. In addition to the regular cash coming in from interest payments, when a loan matures, there is a genuine liquidity event – capital returns to the fund without the manager having to engineer an exit. Loan maturity windows can be staggered across a portfolio to smooth redemption cycles, providing predictable, natural liquidity. That is a different proposition from the equity side of private markets, for example a real estate fund may have to sell an asset to meet redemptions.

Infrastructure can be a more challenging fit for evergreen structures, but not insurmountable. Unlike private credit, cashflows are not driven by contractual maturities, and liquidity events tend to be manager-led rather than automatic. In practice, redemption capacity relies on a combination of operating cash yield, asset sales and portfolio construction choices. As a result they require a more deliberate approach to structuring the portfolio, often blending assets with different liquidity profiles while supporting that with broader liquidity management tools.

The UK real estate market, meanwhile, provides an instructive case study on how open-ended structures can go wrong and how they can be fixed. In the years preceding the LTAF regime, open-ended property funds offered daily or near-daily dealing on assets that might require months to sell, creating a structural mismatch. 

In the buildup to the EU referendum in 2016 and a potential risk event, managers faced a difficult choice: maintain elevated cash buffers and face complaints from investors about paying management fees on cash or buy real estate investment trusts as synthetic liquidity and expose investors to market volatility. Neither proved viable when redemption requests spiked.

What the market has since settled on is a more pragmatic approach. The LTAF regime, developed in partnership with the UK Financial Conduct Authority, is built on closer alignment between asset liquidity and redemption terms.⁶ Different LTAFs carry different redemption windows based on the aggregate liquidity of the underlying portfolios, ranging from monthly to 90 days.   

What good liquidity management looks like

One lesson the industry absorbed from the property fund experience of the last decade is that liquidity management in evergreen private market funds cannot be an afterthought. 

In our view, liquidity frameworks should be manager led rather than investor led. Managers understand their portfolios, how individual assets will perform in different market conditions, what realistic sale timelines look like and where natural liquidity comes from. Redemption terms should flow from that analysis, not from what investors would prefer. Where the two are aligned, the structure works. Where they diverge, problems will likely follow.

Ongoing investor engagement is also essential. The recent episode with US private credit semi-liquid vehicles saw many retail buyers trying to exit simultaneously. Many would have been unable to do so due to the strict redemption guardrails in place in those fund structures. 

The institutional retail market works differently. In a defined contribution master trust governed by trustees with well-designed default strategies, herd behaviour is mitigated. 

This distinction between individual investors and institutional retail deserves more attention in the evergreen debate. The governance structure of an institutional DC vehicle changes the risk profile fundamentally. What we saw in parts of the US market reflects a combination of instrument, investor type and sector stress rather than problems with the evergreen structure itself.

Deferral mechanisms are not failures of fund design. They are fund design working as intended. The ability to defer redemptions during periods of acute market stress, protecting existing investors from selling assets at a discount to service exit requests, is a key benefit of the evergreen model. 

Adoption and what investors want from evergreens

Our latest Private Markets 2026 study shows that current evergreen usage varies between 15 and 24 per cent of respondents across private market asset classes; infrastructure leads, multi-asset strategies sit at the lower end, with real estate, private debt and private equity clustered around 20 per cent. More telling is the pipeline: across all five asset classes, roughly one-third of investors say they are actively considering evergreen structures.

Corporate defined benefit pension schemes are among the more active adopters, showing the highest current usage in real estate (29 per cent) and infrastructure (28 per cent). Evergreen structures address a specific and underappreciated challenge for DB funds running off over finite horizons: the closed-ended model, with lockup periods of several years, increasingly does not align with scheme dynamics. An open-ended structure offers a more natural fit as schemes move through the de-risking phase.

DC schemes show the highest expectation that evergreen will eventually become the dominant private markets vehicle (22 per cent of respondents). Low minimum investment thresholds and accessible entry points which rank particularly highly among DC schemes as desirable features reflect the practical requirements of building private market allocations from regular contributions.

Insurance companies present an interesting case, with low current adoption but significant levels of consideration, suggesting a cautious but genuinely open stance as regulatory and liquidity implications are worked through. 

Over the long term, the prevailing view of respondents is that closed-ended and evergreen structures will coexist in roughly equal measure. This highlight’s evergreen funds’ role as a new part of the toolkit, suited to specific objectives, operating alongside traditional structures rather than supplanting them. 

Structural shift

What we are seeing with evergreen vehicles is a structural shift in how private markets are accessed, one that has been building for years and reflects changes in investor needs, fund design capability and regulation.

The closed-ended model has served the industry well and will continue to serve specific purposes. But for a growing cohort of institutional investors, from DB schemes navigating finite horizons to DC platforms managing continuous flows to insurers optimising capital deployment, the case for evergreen access is becoming ever stronger.

According to MSCI analysis, evergreen structures have delivered returns broadly consistent with traditional private market vehicles, and in some periods have outperformed closed-end peers. The performance argument, which used to be deployed against evergreen structures on the grounds that liquidity buffers dragged on returns, is becoming harder to justify.²

Private markets took many years to move from the periphery to the institutional mainstream. The acceleration of evergreen structures is unlikely to take so long.