Evergreen funds have taken off with private wealth investors, but recent volatility raises questions about whether these funds are experiencing growing pains or facing real headwinds
Everyone is talking about evergreen funds. As the asset management industry looks for ways to bring private market assets to a broader range of investors, evergreen funds have emerged as a popular structure for private credit firms.
For private wealth investors, interest in alternatives has been on the rise, but high minimum investments and long lockup periods have been barriers to entry alongside regulatory restrictions. Now that regulators have made it easier for private wealth to invest in alternatives, asset managers have moved quickly to offer share classes and structures with lower minimums and more liquidity. Evergreen funds are one structure.
Evergreen funds claim to provide access to the same types of private credit and real estate deals that institutions have access to with quarterly liquidity. Unlike traditional commingled funds which have an investment/holding period, evergreen funds are always open and always reinvesting. The deals in these funds often come from the fund sponsor making purchases of LP stakes on the secondary market. These stakes are typically shorter dated and because of that are meant to facilitate quarterly liquidity.
A number of brand name sponsors offer evergreen funds including Apollo, Blue Owl, Carlyle, and KKR. So far, the uptake has been significant. According to data from Morningstar, evergreen funds held more than $493 billion in total net assets as of the third quarter of 2025. Morningstar analysts estimate that number will balloon to $1.1 trillion by 2029.
While these funds are primarily marketed toward the private wealth channel, small and midsize institutions have also started taking a closer look. The lower initial minimum investment can be an attractive entry point for those investors. At the upcoming AIF Institute Private Wealth Investing Symposium, academic experts, investors and industry practitioners will consider what the implications of these funds could be for private wealth investors and institutional investors.
Increased secondaries volume
One area where the impact of evergreen funds is already being felt is in the secondaries market. Institutional investors have long used the secondaries market as a way of keeping portfolio exposures manageable and offloading funds that are no longer aligned with the long-term goals of a portfolio. For institutions exploring a secondary sale now, they might find especially willing buyers.
The private capital secondary market reached a record high in 2025, with annual transaction volume exceeding $200 billion for the first time, according to data from Evercore. Evergreen funds have raised approximately $46 billion to purchase short-dated investments on the secondary market. Evercore analysts expect that figure will increase in 2026 as this fund category continues to expand. 25% of secondary buyers currently in the market for stakes have an evergreen fund, Evercore says.
These funds are willing to pay up for secondary stakes as they need fresh deals coming into the fund on a continuous basis. Evercore analysts suggest this is already leading to investors being able to fetch higher prices on the secondary market than they would have otherwise. It may be especially beneficial for stake sales of older vintages as these funds are closer to exit and more supportive for evergreen funds. By way of comparison, when a group of New York City pensions did a significant stake sale in 2025, that sale included older vintages but only resulted in a net drag on the portfolio of 4%. Analysts expect that in a pre-evergreen fund secondaries market, they could’ve seen a significantly higher portfolio drag given the overall age of the stakes they sold.
Growing pains likely
While there are some early positives for institutional investors, it’s still unclear what the overall impact of evergreen funds will be for either institutional investors or private wealth investors. In fact, private credit evergreen funds have already experienced a few speedbumps.
In January and February, listed asset managers including Blue Owl, Carlyle and KKR exhibited volatility in their share price. At the time, analysts speculated that markets were getting wary about private credit exposure. Those worries were exacerbated by Blue Owl trying to find liquidity solutions for a $1.7 billion evergreen fund, eventually leading to them gating redemptions while they built up the necessary cash reserves needed to provide liquidity.
What Blue Owl did isn’t necessarily unusual, although it does raise questions when asset managers gate redemptions. However, for private wealth investors, this may be the first time they encounter getting put into a redemption queue rather than just being able to take their money out.
The pace of redemptions also raises questions about whether or not private credit is ultimately appropriate for private wealth investors. Typically, these investors have shorter time horizons and are more reactive to macroeconomic conditions. Private credit has built out its infrastructure with capital from investors that have very long investment time horizons and are less likely to pull money out before the end of a fund cycle. Private credit secondaries are growing, but not at the same rate as private equity stake sales.
Blue Owl’s sales also raise questions about what remains in their evergreen funds. Typically, asset managers sell their best performing assets first, because they are easier to sell. That could mean investors are left with a lower quality fund that they can’t get out of right away.
“Investors are likely to focus on what wasn’t sold – both within ODBC II [the evergreen fund] and across [Blue Owl’s] broader credit platform,” wrote Glenn Schorr, an analyst at Evercore ISI.
The other challenge is that investors and analysts don’t have a historical track record to look to in this moment. That makes it hard to say whether these are the growing pains associated with a new type of fund structure or a warning sign investors should keep an eye on. The AIF Center For Private Wealth Investing will delve deep into what these trends might mean at our upcoming event in New York on March 3 and through our content.