Wealth-focused evergreen funds are set to grow at 11 per cent annually by 2029 as wealth managers focus on private credit.
According to Franklin Templeton’s 2026 Private Markets Outlook, it said wealth-focused offerings will significantly outpace those institutional evergreen vehicles.
Considering the base case for private credit assets under management (AUM) by 2029, the fund manager said wealth-focused evergreen funds are set to make up 12.5 per cent of AUM.
Funds in this category are set to grow at 11 per cent annually to reach US$2.4 trillion by 2029.
“As private credit continues to evolve into new verticals, it is well-positioned to address evolving borrowers and investor needs.
“With PitchBook’s expectations of an accelerated growth in evergreen funds for private credit, fund structures that offer some liquidity would favour segments of the private credit market that offer steady and predictable cash flows.”
While evergreen focused on wealth managers stood at 12.5 per cent, it was far smaller for those associated with institutions which stood at just 4.8 per cent. Combined, the two sets of evergreen assets would make up 17.3 per cent of private credit AUM by 2029.
Insurance will dominate with a third of AUM followed by direct lending at 24.8 per cent and private debt (other) at 13.5 per cent.
In October, Fortitude Investment Partners launched an evergreeen small-cap private equity fund. This invests in targeted deal flows in selected sectors of health, digitalisation and technology, energy transition, and food and beverage across lower mid-market companies, classed as those with an enterprise value of less than $200 million.
This followed an evergreen fund launch from Partners Group to provide advisers and investors with access to its cross-sector royalties strategy, investing in pharmaceuticals, music, broader media & entertainment and the energy transition.
Elsewhere in private credit, Franklin Templeton saw a “compelling opportunity” in commercial real estate (CRE) debt for portfolio diversification and to access new income sources.
“CRE debt offers the potential for attractive risk-adjusted returns and is often backed by prime properties with structural protections. Resilient sectors such as industrial, multi-family, health care, and necessity retail help preserve income, making CRE debt a defensive choice for diversified portfolios, particularly as lower rates may further boost real estate.”
Franklin Templeton recommended working with experienced managers who demonstrated rigorous underwriting and risk management.
“With the increasing flow of capital, we believe manager selection will be of critical importance. Identifying the best managers and avoiding the laggards will likely lead to dramatically different results. When considering a manager or fund, begin by focusing on the “four-Ps:” people, process, philosophy and performance.
“Ultimately, integrating private market investments and diversifying across multiple dimensions equips investors to better withstand market disruptions, pursue consistent returns and adapt to the evolving complexities of the global economy.”
