We continue to examine the pros and possible cons of evergreen funds for private markets, and the circumstances around their ascent.

This is the second article in a two-part feature and analysis of the rise of “evergreen” funds in the private markets space. To see the first part, click here.

Liquidity
Managing liquidity is a key part of the puzzle in making the evergreen trend work. 

In a note published on 21 October 2025, Alpha Financial Markets Consulting (Alpha FMC) said evergreens "present additional liquidity challenges in the effective management of subscription proceeds balanced against redemption demands. Excess liquidity results in performance drag due to under-utilised cash reserves, while also pressuring GPs to deploy capital quickly which may risk [the] quality of investments and result in divergence from the fund's investment strategy.

“On the flipside, insufficient liquidity may lead to shortfalls during periods of heightened redemptions, risking both regulatory and reputation damage to GPs across all kinds of investors,” it said.

Big shifts
Whatever the practical issues, there is clearly a need to widen access – with guardrails – to investors who might otherwise be frozen out from important return sources. Since the late 1990s, the total number of listed companies has shrunk, while firms take longer to go to IPO, or stay private permanently. Heavy reporting burdens on listed firms, for example – starting with the Sarbanes-Oxley accounting rule changes after the dotcom bubble burst â€“ were one of the first regulatory forces at work.

Not everyone buys into the idea that there’s a dearth of listed investments to invest in, however. Nicolas Roth, head of the private markets advisory team at Union Bancaire PrivĂ©e, told this publication last autumn that the demise of listed investment opportunities is exaggerated. If that's the case, then the need for retail/mass-affluent to enter the private markets sector is less urgent than some might claim it to be.

As of April 2025, figures from Investopedia showed that there are about 53,795 listed companies worldwide. (Some sources appear to have up to 58,000 companies, depending on sources and timing.) The Nasdaq market has more than 3,500 companies; the New York Stock Exchange has over 2,000; the Shanghai Stock Exchange has more than 2,100 companies; and the Tokyo Stock Exchange has more than 3,900 firms. There are more than 1,300 on the London Stock Exchange. 

The fine print
Even when the private markets route seems a smart move, and the evergreen channel is adopted, there are practical steps for fund managers and wealth managers to note.

"A significant challenge with evergreen funds is the increased volume of investors to be continuously onboarded to the fund. Onboarding and KYC/AML for typical closed-ended funds have historically not relied significantly on technology, rather driven by individual relationships and predominantly manual approach to the review and management of governing documents, possibly due to the lower volume of investors within such funds," Alpha FMC said in its report. This complexity might indicate why it is the firms with the financial infrastructure – such as Blackstone on the asset manager side – that have taken the plunge. (It also plays to the strengths of large banks with the scale to pay for the compliance work.)

Growth
That there is plenty of growth appears undeniable. 

In a note in February 2024, Preqin said “private wealth will accelerate growth in private markets’ assets under management,” and it estimates that total AuM has reached $16.3 trillion. In November 2025, meanwhile, PwC said in its 2025 Global Asset & Wealth Management Report that by 2030, private markets revenues are set to reach $432.2 billion and deliver more than half of the total asset management industry’s revenues by 2030. It’s hardly surprising, given such figures, that the sector is keen to multiply distribution channels and keep those revenues pouring in – and the evergreen route is part of the mix. 

One challenge is that after countries such as the US pushed up interest rates to curb a post-pandemic inflation rise, it hit sectors such as venture capital and private equity fundraising and delayed the date on which investors could exit. This marketplace indigestion also explains why large investment houses have targeted the private wealth channel, using evergreens as part of the strategy. At the same time, governments in the US and UK, as well as authorities in the European Union, have developed retail-type structures to foster such investment. Last year, the Donald Trump administration ruled that 401(k) retirement accounts could hold alternative investments.

Back at PwC Luxembourg, the firm says the investment industry has come a long way in developing robust approaches – but it is important for investors to take lessons on board.

“I’d say it has done a great deal to professionalise liquidity management, and today’s evergreens are materially more robust than early iterations. But they have not yet been tested through a classic multi-year recession where asset stress, exit drought and investor rebalancing all coincide,” René Paulussen alternatives leader at PwC Luxembourg, said. “The structures are built to survive that environment by slowing liquidity but whether investors fully internalise that reality remains the open question.”

Paulussen said the rise of secondaries is a natural evolution, and welcome. 

“The secondaries market has moved from being a cyclical relief valve to something closer to core private markets infrastructure. According to a report by Campbell Lutyens, the annual secondary market volume of last year is expected to be over $200 billion, a persistent rise since 2022. Activity is no longer dominated purely by LP portfolio sales as GP-led continuation vehicles, structured preferred deals and private credit secondaries have all expanded the toolkit. That breadth is exactly what you would expect from a market maturing into a systemic liquidity channel.

“That said, scale should be kept in perspective. Against the trillions in assets managed in global private markets, secondaries turnover holds a relatively small share of the asset base each year. In other words, it is an important pressure-release mechanism, but not one that could absorb universal selling in a downturn without price adjustments,” Paulussen added. (Campbell Lutyens is a private capital advisory firm.)

With all this talk of creating new access and democratisation, is the industry missing the fact that a long-standing way of getting in the door – listed investment trusts – is being ignored?

Connection Capital’s Claire Madden said the listed funds route should not be discounted.

“In private equity funds structured as traditional close ended vehicles, GPs don’t have an incentive to overvalue assets, and fees will not be affected. The GP and LPs will want a 'bump’ in value on exit which is when the GP’s carried interest is crystallised. Both sides are aligned in wanting a higher value in the longer term,” she told WealthBriefing.

“In the so-called 'semi-liquid NAV’ [structures] there can be conflicts of interest where there can be differences in how the underlying assets are valued, as this affects what managers are paid and their performance fees,” she said.

“I think it is about fundamentally recognising that if you are a retail investor and want exposure to private equity/venture capital, you have areas to go to such as the investment trust model. They are properly liquid,” Madden added.