The Rise of Evergreen Funds: A New Way to Access Private Markets

Evergreen funds are at the center of the next wave for private assets.

While access to private markets was once largely possible through multimillion-dollar commitments, it’s now available through vehicles with perpetual life and lower investment minimums.

And investors are seizing this opportunity. Evergreen fund net assets exceeded $600 billion as of June 2026. We estimate that number will balloon to $1.1 trillion by the end of the decade.

Like any investment, evergreen vehicles aren’t perfect, so we believe investors will benefit from taking a balanced view of this emerging space.

Here, we unpack the performance of evergreen funds and outline the main due diligence considerations for financial advisors. For a deeper dive into their rise, download the US Evergreen Fund Landscape.

What‘s inside:

• A deep dive into the growing convergence of retail investors and private markets.
• Key considerations around fund structures and how they dictate liquidity.
• Analysis of why private real estate may be recovering after several challenging years.

Also called semiliquid funds, evergreen funds are investment vehicles that offer access to private companies by investing in asset classes like private credit and private equity. They raise capital continuously and invest it indefinitely while providing some liquidity at periodic intervals.  

Traditional private asset funds have a fixed lifespan and deploy capital from commitments over time. In contrast, evergreen funds operate on a perpetual basis. These funds accept new investments and make distributions to investors without a predetermined end date. 

US evergreen funds include a range of fund structures, including interval funds, tender offer funds, unlisted business development companies, and unlisted real estate investment trusts. They can also hold different types of private capital depending on their objectives.  

Evergreen fund categories include:

• Direct lending funds often originate loans to corporate borrowers, which tend to be unrated small- to medium-sized companies.
• Alternative credit funds focus on debt extended to private companies. They can hold a variety of debt types, including mezzanine, distressed, leveraged loans, and others.
• Real estate funds make direct equity investments in property, or invest in other funds that do so. Common property types include warehouses, residential multiunit, retail, and hotels.
• Private equity funds take a controlling stake or provide growth capital to established businesses, or invest in other funds that do so.
• Infrastructure funds make direct equity investments in infrastructure projects, or invest in funds that do so. Some project examples include alternative-energy ventures, bridges, and data storage.
• Private multi-asset funds hold a mix of private asset types, as the name indicates.

Wide performance dispersion is a defining feature of private markets, and it persists in the evergreen format.

The Morningstar PitchBook US Evergreen Fund Indexes provide insights into the category’s aggregate performance. While preliminary and subject to revision, these results are a benchmark across asset classes for comparison.

The chart below shows that evergreen funds entered 2026 with strong gains across all major categories in 2025. Compared with 6.9% in 2024 and 7.4% in 2025, the broad Evergreen Fund Index returned 1.6% through April 30, 2026, held down by the index's large weighting in direct lending.

Performance across evergreen strategies has been mixed so far this year, with return dispersion remaining a defining characteristic of private markets. Differences in outcomes highlight the importance of careful manager selection.

Real estate performance over the past four years shows a sharp drop from 2022 to 2023 due to rising rates, followed by a slow, gradual recovery.

The Real Estate Evergreen Index has outperformed the Morningstar US Real Estate Index since inception and over the five- and ten-year periods, but shorter horizons have favored public markets, returning 2.6% year to date through April 2026 versus 10.4% for the public benchmark. Return dispersion is narrower than in private equity and alternative credit but still notable, given the uneven recovery across property types, capital structures, and sub-strategies.

Private equity fund performance remains positive, but continues to trail the Morningstar US Market Index, returning 3.4% against 5.8% for public equities year to date through April 2026.

The gap is far wider over longer horizons, with trailing one- and three-year returns of 12% and 8.6% versus 31% and 21.5% for public equities. Part of that disparity reflects a public equity bull run propelled largely by AI- linked megacap technology. Meanwhile, return dispersion remains widest in private equity, showcasing the importance of manager selection.

Infrastructure led all evergreen categories year to date at 5.4% on rising power demand, energy security, grid investment, and datacenter build-out.

The same theme threatening software borrowers in private credit is driving power and datacenter demand that support this category. However, listed infrastructure equities, particularly power and utility names, have surged well ahead of private marks, leaving the evergreen index trailing its public benchmark over a short comparison window.

The Morningstar PitchBook US Private Debt Evergreen Fund Index has outpaced a comparable public benchmark, the Morningstar LSTA US Leveraged Loan Index, for one, three, five, and ten years since inception.

Direct lending performance was particularly strong in the three- and five-year periods ended April 2026, though it returned just 0.9% through April 30, 2026, a markedly slower start for a strategy that has anchored aggregate evergreen returns in recent years. Even so, direct lending has shown a more consistent profile, with its worst three-year performer still returning a positive 3.7%.

While there are many types of evergreen funds, direct lending funds make up the bulk of the evergreen fund universe. The category has more than tripled in total net AUM since 2022, reaching over $236 billion by March 2026. 

Here, we highlight the five largest active funds in the space.

Because of their semiliquid structure, public/private investment vehicles come with different risk considerations than their mutual fund counterparts.

Main risks of evergreen funds include:

• Liquidity. Managing a fund’s periodic liquidity is critical to its success. As funds grow, they need to have dedicated liability and liquidity management teams to ensure the fund strategy functions.
• Capacity. With traditional drawdown funds, managers don’t call capital until they have a compelling investment opportunity. In contrast, evergreen fund managers face more pressure to continually put capital to use.
• Valuation methodologies. Evergreen fund investors transact based on NAVs calculated frequently, even though illiquid assets don’t have verifiable values on the same timetable.

Deal flow, deployment capabilities, and valuation policies will be key areas of due diligence on evergreen funds.

Financial professionals can also use Morningstar Medalist Ratings to explore our conviction on a fund’s ability to beat its category peers, whether in the public or private market category.

We assign ratings according to a five-tier scale: Gold, Silver, Bronze, Neutral, and Negative. A Medalist is a fund that holds a Gold, Silver, or Bronze rating, indicating that we believe it will outperform its peers over a full market cycle. The rating is a useful starting point for financial advisors when researching and comparing private-market offerings.

To date, we’ve rated 19 interval funds, mostly in private credit. In 2026, the rating will cover an additional 30-plus evergreen strategies, including tender-offer funds, non-40-Act funds, unlisted business development companies as well as non-US offerings.

Evergreen funds can be much more expensive than mutual funds or exchange-traded funds. As of March 2026 (the latest data available), evergreen funds averaged an annual net expense ratio of over 3%. Meanwhile, passive mutual funds and ETFs charged 0.38% on average, and active ones charged 1.02%.

To avoid sticker shock, advisors should walk investors through the potential hidden costs in private investment vehicles, which have more complex fee structures that can create a drag on returns.

Evergreen fund fees may include:

• Management fees. Evergreen vehicles typically apply a management fee on net asset value rather than committed capital. Median management fees cluster around 1.25%.
• Incentive fees. Although not levied by all funds, incentive fees can be charged on realized and unrealized gains. A 10% fee is common for private equity funds, while 12.5% is the most common carry rate for real estate funds. Credit funds are a bit more mixed without a dominant benchmark.
• Acquired fund fees. These stem from the management fees and carried interest charged by the underlying funds in which they invest. These costs arise when evergreen vehicles gain exposure to investment structures where the external managers’ economics flow through to the investor.

Traditional and alternative asset managers are collaborating on new public/private offerings. These partnerships combine alternative asset managers’ expertise in private markets with traditional asset managers’ large presence and salesforce in key distribution channels, such as 401(k) plans and the RIA market.

Some smaller asset managers, like Cliffwater, have been successful at raising capital and attracting investors. But smaller firms face an uphill climb in defined-contribution markets where major players like Vanguard, BlackRock, T. Rowe, and Fidelity are deeply entrenched.

Noteworthy public-private asset manager partnerships to date include:

• Wellington, Vanguard and Blackstone have announced a strategic alliance on multi-asset solutions.
• T. Rowe Price and Goldman Sachs are collaborating on target-date strategies and model portfolios that incorporate private market assets.
• Capital Group and KKR are partnering on a target-date funds solution and public/private model portfolios.
• Blue Owl Capital and Voya Financial are partnering on collective investment trusts for defined-contribution retirement plans.

Right now, evergreen funds are only available through a financial advisor.

Many of the major investment platforms have begun offering model portfolios that incorporate both public and private assets, typically with 10–30% private market exposure. Platforms are working to make these custom model portfolios more accessible to advisors and smooth the sub-documentation process.

Platforms that currently offer public-private model portfolios include:

• GeoWealth
• Envestnet
• AssetMark
• iCapital

Still, private markets may soon be a part of more investors’ portfolios, as regulatory developments have encouraged private-market adoption in retirement plans.

In the United States, an August 2025 executive order instructed the Securities and Exchange Commission and the Department of Labor to work on a framework that would allow for the inclusion of private market investments in defined-contribution plans. And in the United Kingdom, 17 pension plan providers have signed the Mansion House Accord, pledging to allocate at least 10% of their defined contribution default funds in private markets by 2030.

These measures, however, are still in their infancy and will be worth monitoring in the months to come, as the evergreen fund universe expands and the lines between public and private markets continue to blur. While the addition offers new opportunities for diversification and returns, but it also introduces complex liquidity challenges.