The funds that never end: Why evergreen fund structures are here to stay

Private markets are facing fundraising headwinds from traditional sources while also finding new opportunities created by regulatory change. This dynamic is fueling the rise of evergreen funds as a tool to broaden distribution. However, these structures come with complexities that differ greatly from the traditional closed-end or open-end fund.

Assets under management for private market evergreen funds doubled in just three years, rocketing from $267 billion in 2022 to $534 billion in 2025, according to PitchBook data. Additionally, evergreen funds holding private assets are projected to grow to $1.1 trillion by 2029, according to Morningstar. While evergreen funds have traditionally been managed by large asset managers, the trends driving their formation are beginning to take hold in the middle market.

How evergreen funds work: A closer look

Evergreen funds are distinct from traditional funds. Here’s a look at the differences:

• Traditional closed-end funds have a fixed capital raise during a defined fundraising period, a set term and no investor redemptions during the term; capital is generally returned after an asset liquidation event. Compared with open-end and evergreen funds, they have a longer timeline for returning capital.
• Traditional open-end funds allow investors to subscribe and redeem capital on a periodic basis, have no fixed term, continuously deploy and reinvest capital, and typically hold more liquid assets than closed-end and evergreen funds.
• Evergreen funds sit between the two. Capital is raised on an ongoing basis like an open-end fund, with period subscription and redemption windows, but is often invested in private, less liquid assets and reinvested without a predetermined termination date. Evergreen funds are also frequently referred to as semiliquid funds due to the blend of closed-end and open-end fund mechanics.

Evergreen fund structures: Growth to meet demand

The rapid expansion of evergreen fund structures represents a fundamental shift in asset managers’ product offerings to meet evolving demands from investors and managers. Several factors are occurring simultaneously to drive this trend.

The private wealth channel in the United States is currently experiencing explosive growth, with total household net worth at nearly $174 trillion, and some financial services organizations are offering retail-friendly products to meet this demand. Historically, private funds have largely been funded by institutional investors, which can allocate upward of 20% of their portfolio to alternative investments, according to Preqin research. In comparison, private wealth allocation to alternative investments is 2%−3%, per Cerulli Associates.

Asset managers have identified fundraising opportunities in this segment of the investor market and are deploying new funds to meet the needs of the private wealth investor community. By 2030, about two-thirds of total investable wealth is expected to come from affluent investors (those with $100,000 to $1 million in investable assets) and high net worth individuals, according to PitchBook and Morningstar’s Q1 U.S. 2026 Evergreen Fund Landscape report.

Regulatory shifts driving growth in evergreen funds

The regulatory effort to reduce burdens that historically prevented defined contribution plans from participating in alternative investments is another factor in evergreen funds’ popularity. The U.S. administration’s August Executive Order 14330, "Democratizing Access to Alternative Assets for 401(k) Investors," has significant implications for asset managers and the $13 trillion held in 401(k) plans at the end of June 2025. Like the private wealth channel, 401(k) investors need regular access to liquidity for movement in and out of retirement plans.

From a global perspective, a parallel trend exists in the European Union and the UK. The revised European Long-Term Investment Fund (ELTIF 2.0) framework, effective as of January 2024, removed minimum investment thresholds, broadened eligible asset classes, and relaxed marketing and investment rules. The accompanying Regulatory Technical Standards, finalized in October 2024, provided the necessary framework for managers to construct open-end products with periodic redemption gates, effectively enabling the evergreen model under EU regulations. In December 2025, the European Commission further confirmed that perpetual ELTIF structures are expressly permitted and that member states may not impose additional duration restrictions.

In the UK, the Financial Conduct Authority issued final legislation in 2023 permitting retail investor participation in an evergreen fund structure called long-term asset funds (LTAFs). While the LTAF market is still relatively small, a growth trend is starting to emerge. Per Morningstar research, total assets under management in LTAFs grew from 5 billion GBP in 2025 to 7.3 billion GBP in 2026.

Corporate Adviser reported in 2025 that 86% of private fund managers either launched (28%) or plan to launch (58%) semiliquid funds targeting retail investors. (Evergreen funds are typically semiliquid, though not all semiliquid funds are evergreen.)

Similarly, a 2025 State Street survey of investment firms found that 55% of respondents expect that at least half of private market fundraising will come through semiliquid vehicles focused on retail investors, potentially as soon as within the next two years.

How asset managers can address challenges related to evergreen funds

Asset managers may face numerous challenges when expanding into evergreen funds, particularly in serving retail investors. Below we look at some of those challenges, and actionable solutions:

• Investor education: The recent increase in redemption requests in the private credit space demonstrates a challenge for evergreen funds. While most asset managers disclose limits on redemption requests, investors may ultimately be dissatisfied with the product if they cannot attain desired liquidity.
  
  Asset managers can proactively educate investors about the nature of evergreen funds and limited redemption requests, setting long-term expectations to help them navigate market stress.

• Regular net asset value (NAV) reporting: With the expansion of retail and 401(k) investors into private markets, more regular and even daily NAV reporting may be necessary to drive investor trust and provide 401(k) managers with necessary information for movement in and out of retirement plans. While this may be more difficult for private equity investments in evergreen funds, asset managers are developing methodologies to measure NAV daily for credit assets.
  
  At least one large firm has announced it will soon price credit investments daily, which could set the stage for others to follow.
  
  Asset managers can respond by enhancing valuation frameworks, leveraging third-party pricing solutions, and prioritizing transparency to align reporting frequency with investor expectations and product design.

• Liquidity management: Daily NAV reporting can also facilitate more accurate investor redemption pricing. Under the current monthly NAV reporting, valuation measurement can lag actual market conditions and create artificially higher redemption pricing. This difference can cause leakage to the fund and impact remaining investors.
  
  To mitigate this risk, managers can strengthen liquidity forecasting and governance processes, while aligning redemption policies with underlying asset liquidity and market conditions.

• Technology: Daily NAV reporting can be meaningful only if the technology to deliver the information exists.
  
  Managers can address this by modernizing data architecture, investing in scalable reporting platforms, and partnering with technology providers to improve data quality and accessibility.

Looking ahead

To address heightened expectations around regular reporting, technology implementation and investor education, asset managers will need to consider new approaches to investor relations. We expect these trends to continue extending into the middle market, requiring managers to stay current with market developments and accelerate operational innovation. Evergreen funds’ ability to offer a long-term investment strategy, paired with growing demand for managed liquidity, positions them as a durable solution in an evolving asset management landscape.