Liquidity benefits help drive evergreen AUM to US$1tn
Evergreen funds are set to experience growth of around 20 per cent a year, set to surpass $1 trillion by 2029.
Analysis from private market firm Harbourvest, which has US$146 billion ($218 billion) in assets under management, found evergreen funds are a response to rising retail and wholesale demand.
These types of funds offer greater liquidity and open-ended access to private equity which are more investor-friendly ways to access the asset.
As a result, assets have reached $427 billion in AUM and Harbourvest is projecting conservative forecasts of 20 per cent annual growth.
This will see it reach US$1 trillion by 2029.
In its 2026 outlook, Harbourvest said: “Private markets firms are responding to rising demand from an increasingly diverse set of investors with varying needs and objectives by creating innovative products.
“Some form of periodic liquidity, the structural tax reporting advantages, plus the simplicity of making single investments (as opposed to being required to meet drawdown commitments) are particularly valued by individual investors and smaller institutional investors.”
Earlier this year, private markets manager Fortitude Investment Partners launched a small-cap private equity evergreen fund while Hamilton Lane launched a global venture capital fund in an evergreen structure.
Research by Hamilton Lane earlier this year stated 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.
Meanwhile, Netwealth found where traditional closed-end funds leave advisers navigating blind pool risk, complex performance metrics, and high administrative burden, evergreen funds tend to offer built-in liquidity features, immediate diversified exposure, and easier access and reporting.
In a report exploring how advisers are using evergreen funds, it said there has been a move among advisers toward evergreen funds due to their ability to provide more flexible and accessible investment formats. In fact, advice firm Lipman Burgon told the platform it now uses more evergreen private market offerings than closed.
However, there are still limitations when using evergreen funds as they may have some restrictions on liquidity, particularly in times of stress, while advisers and clients will need to be comfortable with the valuation of funds, as calculated by the manager.
AUTHOR
Laura Dew
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