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The Rise of Evergreen Funds Within Alternatives
Published Date : July 14, 2025
Evergreen funds, also known as open-ended, semi-liquid, or perpetual vehicles, are transforming the private market landscape by offering a more accessible, flexible alternative to traditional illiquid funds. These continuously reinvesting vehicles enable ongoing subscriptions and redemptions across a wide range of private market sectors including real estate, infrastructure, credit, and equity. Unlike conventional private equity funds that rely on capital calls with long lock-up periods, evergreen funds allow immediate capital deployment, reduce administrative friction, and minimize the “J curve” effect. The ability to deploy capital from day one has made them increasingly attractive to investors seeking smoother and more efficient exposure to private markets.1
A key advantage of evergreen funds is the improved liquidity profile. While still designed for long-term investing, they offer periodic redemption opportunities—typically quarterly—by maintaining liquidity sleeves containing cash and liquid credit with additional borrowing potential from lines of credit. Though not guaranteed to meet 100% of redemptions, these mechanisms help address one of the private markets’ biggest pain points, inflexible lockups. Additionally, evergreen structures invest across multiple vintages and companies, which enhances diversification and reduces risks tied to business cycles or concentrated positions.
By eliminating the need for a set fund life or exit timeline, evergreen vehicles also support a more patient, long-term investment approach. Fund managers are not pressured to realize gains prematurely, allowing portfolio companies the time to fully mature and exit under favorable market conditions. Profits are reinvested into the fund, creating a compounding effect that can enhance returns over time. This structure is especially valuable in periods of weak IPO activity, enabling investors to remain flexible while still participating in private market growth.
Accessibility is another major draw. Evergreen funds are increasingly used to bridge the gap between institutional and individual investors. Historically, access to top-tier private market strategies required significant capital commitments and exclusive LP relationships. Now, more investors, including those that don’t qualify as accredited, can gain exposure through vehicles with lower minimums and simplified subscription processes. As of March 31, 2025, evergreen solutions have exponentially grown to $413 billion in assets under management across 228 funds with nearly half of those assets held by sub-accredited investors and 22% owned by investors without minimum investment qualifications.2
Still, evergreen funds come with structural challenges. Chief among them is cash drag, as the need to hold liquid reserves for redemptions can dilute performance. Additionally, the structure’s limited track record raises questions about how it will perform across full market cycles. Balancing the need to offer liquidity while investing in assets that are illiquid creates risks—investors may not intend to invest over a long period of time, uncertainty about what the assets are really worth, and the possibility that withdrawals could be limited during periods of market stress.
Ultimately, evergreen funds offer a blend of liquidity, access, and long-term growth potential. As this structure continues to evolve, successful outcomes will depend on thoughtful fund design, prudent liquidity and risk management, and experienced managers capable of navigating the evolving private market landscape in a manner that makes it available to a wider audience of investors. Please consult with a financial advisor to determine if this type of vehicle is appropriate for your financial goals.
1- The “J-curve” describes the typical pattern of returns over time, characterized by an initial period of negative returns followed by a subsequent sharp upward trend, resembling the letter “J” when plotted on a graph. This pattern reflects the investment process of private equity funds, where initial costs and fees lead to losses, but these are later offset by the growth and realization of investments.
2 – Perpetual Alternatives Fund Report Q2 2025 Cliffwater
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All video presentations discuss certain investment products and/or securities and are being provided for informational purposes only, and should not be considered, and is not, investment, financial planning, tax or legal advice; nor is it a recommendation to buy or sell any securities. Investing in securities involves varying degrees of risk, and there can be no assurance that any specific investment will be profitable or suitable for a particular client’s financial situation or risk tolerance. Past performance is not a guarantee of future returns. Individual performance results will vary. The opinions expressed in the video reflect Sand Hill Global Advisor’s (“SHGA”) or Brenda Vingiello’s (as applicable) views as of the date of the video. Such views are subject to change at any point without notice. Any comments, opinions, or recommendations made by any host or other guest not affiliated with SHGA in this video do not necessarily reflect the views of SHGA, and non-SHGA persons appearing in this video do not fall under the supervisory purview of SHGA. You should not treat any opinion expressed by SHGA or Ms. Vingiello as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of general opinion. Nothing presented herein is or is intended to constitute investment advice, and no investment decision should be made based solely on any information provided on this video. There is a risk of loss from an investment in securities, including the risk of loss of principal. Neither SHGA nor Ms. Vingiello guarantees any specific outcome or profit. Any forward-looking statements or forecasts contained in the video are based on assumptions and actual results may vary from any such statements or forecasts. SHGA or one of its employees may have a position in the securities discussed and may purchase or sell such securities from time to time. Some of the information in this video has been obtained from third party sources. While SHGA believes such third-party information is reliable, SHGA does not guarantee its accuracy, timeliness or completeness. SHGA encourages you to consult with a professional financial advisor prior to making any investment decision.
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