Evergreen Funds: Lay of the Land
Market size, key players, and rapid growth
I’m attending the Morningstar Investor Conference this week, and wanted to give you an update on the state of the (evergreen) market.
The CEO’s opening keynote was centered on two things: AI and public/private markets convergence (if you missed it, I did an interview with him on this very topic).
From the sessions I’ve attended, the message is pretty consistent: private assets are becoming more accessible, but there is work to be done on structuring them in a way that meets investor liquidity needs and sets the right expectations. One change everyone seems to agree on: investors need more transparency.
This question that came up repeatedly during the conference: do investors get compensated enough for the illiquidity of some products?
The following chart is from the Morningstar State of Semiliquid Funds report:
The chart on the left shows the fee waterfall of Blackstone Private Credit Fund (BCRED). The chart on the right shows the same for an SPDR ETF. Net result: the more liquid option generated 8.18% (vs. 7.38% for BCRED) net of fees for FY2025.
Let that sink in for a second. The liquid, low-cost alternative outperformed BCRED net of fees during FY2025. These aren't identical portfolios, but the question remains: how much illiquidity premium are investors actually receiving after fees?
So, since evergreens are the topic du jour, I thought I’d give you the lay of the land. This is Part 3: how big the market is, who the players are, and how it’s shaping up.
In Part 1 we covered how these funds are structured (incentives, liquidity mechanics, and valuation.)
In Part 2 we covered how they perform relative to drawdown funds (and what makes them an attractive option).
Disclaimer: This article is for educational purposes only and does not constitute investment advice, tax advice, or a recommendation to invest in evergreen vehicles. Consult with qualified tax and financial professionals before making any investment decisions.
How Big is the Pie?
The semiliquid (or “evergreen”) fund market is approaching $600 billion in assets, more than double its size at the end of 2022. The growth was driven, overwhelmingly, by private credit.
