Burgeoning evergreen funds are shaping up to become a major part of the private markets landscape, extending beyond just retail investment portfolios.
Hamilton Lane’s 2025 Market Overview explored the booming evergreen landscape and the compelling case it offers to a rising number of investors.
Open-ended evergreen structures allow investors to make long-term investments in private companies without a fixed end date. The investment vehicles also provide an appealing balance between access to the types of private markets exposure institutions have long had with more user-friendly structures and some degree of liquidity, Hamilton Lane explained.
According to the report, 415 new evergreen funds were launched globally between 2017 and 2023. The private markets investment manager cited anecdotal conversations of “hundreds of new funds under discussion and development at any point in time today”.
These structures currently account for approximately 5 per cent of the broader private markets, representing $700 billion. In Hamilton Lane’s view, evergreen funds are poised to take up at least 20 per cent of total private markets in a decade’s time.
To reach that level – and assuming private markets continue to grow at their historic 11 per cent growth rate – evergreen funds would need to grow almost triple that rate, nearly 30 per cent annually.
“The various types of evergreen funds that have exploded recently show no signs of slowing down. Our view is that evergreen structures will come to form a major part of the private markets landscape in a very short time frame, and their place in the landscape will not just be limited to retail portfolios,” the report wrote.
“Institutional investors will increasingly adopt evergreen structures as yet another portfolio tool.”
Money Management previously reported how fund managers are looking to semi-liquid vehicles as a way to reach retail investors who may be nervous about the liquidity of the ever-growing private markets asset class.
Financial advisers have also welcomed the introduction of more semi-liquid or evergreen products to the market by fund managers to mitigate the typical problems with alternatives.
In addition to institutional investors becoming bigger players in the evergreen space, Hamilton Lane also expects evergreen funds to grow faster than the overall rate of public markets over the next five years.
Evergreen fund fees will decrease over time, the report continued, while closed-end funds in certain strategies will decline and largely disappear altogether.
“The growth of evergreen funds will result in the largest private markets firms getting larger and smaller private markets firms struggling to get any market share.”
Earlier this year, Hamilton Lane also discovered that Australian advised clients exhibited the highest enthusiasm for private markets out of all the regions, with 61 per cent of clients described as “very interested”. The US followed at 53 per cent for eager clients, Canada at 42 per cent, and Europe at 33 per cent.
