Evergreen and semi-liquid private market funds are not new, but over the last few years they have surged in popularity, with roughly a third of investors actively considering an allocation to these structures[1]. These are open-ended vehicles that allow periodic subscriptions and redemptions, with “evergreen” implying continuous capital deployment and “semi‑liquid” limited, periodic liquidity. While this has introduced flexibility and enhanced democratization in private markets, recent market stress has highlighted the structural risks associated with liquidity and retail investor behavior[2]. Regular dealing windows may smooth the experience, but they do not turn illiquid assets into liquid ones.
To help investors distinguish between vehicles engineered for resilience and those that rely on calmer conditions, we outline a practical framework built around five design principles that meaningfully strengthen outcomes across full market cycles.
Promised liquidity vs. realizable liquidity
Semi‑liquid funds gained traction by offering an attractive mix of open-ended, liquid-like-fund structural features, such as regular dealing, coupled with exposures to asset types typically only accessible via closed-end, drawdown-type vehicles. But when markets tighten, redemptions can rise just as liquidity disappears, pushing managers toward discounted sales, gating, or value leakage[3].
At the core lies a structural mismatch: short redemption cycles layered on top of long‑dated assets. Tools such as valuation smoothing, high redemption limits or reliance on secondary markets may delay pressure, but they cannot eliminate it and often amplify behavioral flows rather than stabilize them.
Prudent evergreen design tackles these constraints head‑on, incorporating buffers, utilizing disciplined redemption limits and targeted education provision so investors understand that continuous access is not the same as continuous liquidity.
What investors should look for: five design principles that matter
Five design principles for selecting resilient semi‑liquid portfolios[4]
The bigger picture
Across LTAFs and RAIFs, liquidity terms, notice periods, and fee structures vary widely. Some vehicles are built for accessibility and scale; others prioritize durability and capital protection.
As a result, liquidity terms often end up reflecting commercial positioning rather than underlying risk discipline.
Fee structures follow a similar pattern. Low headline fees can be misleading where liquidity costs are effectively spread across investors, instead of only charging those who use it, or where secondary sales are relied upon but not explicitly priced. By contrast, thoughtfully designed performance fees, with meaningful hurdles and high‑water marks, reinforce alignment.
Higher-quality structures encourage long-term investment outlook and holding periods among prospective and incumbent investors and even penalize (through early exit penalties) short-term, reactive investor behaviors which take advantage of underpriced liquidity to get in or out of the fund at the expense of others.
A practical due diligence checklist for investors[4]
- How experienced is the manager in running open‑ended illiquid portfolios?
- Who bears the cost of liquidity?
- Are investors structurally encouraged to think long‑term?
- What proportion of the fund can redeem, and how often, in stress?
- What assets fund liquidity in practice?
Conclusion
Semi‑liquid and evergreen funds can play a valuable role in long‑term portfolios, but their effectiveness depends on experience, alignment and transparent liquidity structuring. Recent market cycles have reinforced that resilience, and not just accessibility, is what ultimately defines a well engineered vehicle. Investors should therefore prioritize structures designed to operate effectively in both stressed and calm markets. When thoughtfully constructed and managed with discipline, semi‑liquid funds offer a compelling way to access private markets in a format that balances flexibility with stability.
To learn more about how WTW approaches semi-liquid portfolio construction and to discuss our range of solutions, please visit our page or contact our team.
Footnotes
- “Private Markets Study 2026”, Aviva Investors, 2026. Return to article
- “Private credit’s liquidity squeeze puts lenders in a tight spot”, Alexander Davis, PitchBook, 2026. Return to article
- “Evergreens: The Tree That Never Sheds”, EDHEC Infrastructure & Private Assets Research Institute, October 2025. Return to article
- WTW Manager Research, May 2026. Return to article
- “The State of Semiliquid funds 2025”, Morningstar, 2025. Return to article
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Private markets refer to investments not traded on a public exchange or market. Underlying private markets investments of the fund will normally be in unlisted companies and assets whose securities are not publicly traded and are therefore likely to be illiquid. They carry substantially higher risk than many investments in the equity of larger, listed companies, their public debt securities, or in listed real assets. Investors should regard an investment in private markets as a long-term investment which carries higher risk than many other forms of investment.
There is usually less transparency in place around the management of private markets investments given the lower disclosure requirements. In general, there is limited information available on the investments and performance of the underlying portfolio companies and assets, other than annual or semi-annual financial statements, or sometimes, quarterly reports. Such investments are more difficult to value given that they are not traded on a public exchange or market.
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