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 only 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 funds held more than $493 billion in total net assets as of the third quarter of 2025. We estimate that number will balloon to $1.1 trillion by 2029.

Source: Morningstar, PitchBook. Data as of Sept. 30, 2025.

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.

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, which officially launch in early 2026, 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 alternative credit and direct lending have tended to outperform the overall composite evergreen fund index since 2022. Private multi-asset data is only available going back to 2024, but it has also outperformed the index since then. Private equity and real estate, on the other hand, have shown mixed results.

Source: Morningstar, PitchBook. Data as of Oct. 31, 2025.

Since its inception in early 2015, the Morningstar PitchBook US Private Real Estate Evergreen Fund Index has outperformed its comparable public benchmark, returning 6.6% vs. 4.9%. However, this masks a considerable sub-period of underperformance as the evergreen fund index’s three-year return is 0.5% versus 7.1% annualized for the Morningstar US Real Estate Index.

Some of this might be a lag effect in private real estate, as the public index has already absorbed and recovered from the impact of rising rates.

The Morningstar PitchBook US Private Equity Evergreen Fund Index has significantly lagged listed US equities, which have seen substantial growth led by the tech sector. The evergreen fund index has returned 8.4% since its inception in May 2021, versus US equities’ 12.2% gain in that period.

Public markets’ outperformance is owed to a multi-year bull run that began upon their recovery from the interest rate and inflation headwinds of 2022. Private equity could not keep pace with the accelerated growth in listed equities, particularly the big tech firms driving the index aggregate.

As of November 2025, the Morningstar PitchBook US Private Infrastructure Evergreen Fund Index is behind public equities. (The infrastructure evergreen fund index has returned 7.3% since February 2024, while the public index has returned 14.3%.)

AI-fueled energy demand boosted returns for some listed utilities stocks in 2025. Some renewable energy stocks have also added value in public markets, bypassing recent policy noise and antagonism.

However, we think that a longer track record is necessary to get a full picture of public versus private performance in infrastructure.

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. Since May 2014, the private debt evergreen fund index has returned 5.0%, inching ahead of a 4.9% return for the public index.

Looking ahead, we believe that private debt exposures can still provide relative value if spreads versus US Treasuries remain attractive.

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 $209 billion by November 2025.

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

Source: Morningstar, PitchBook, fund documents. Data as of Oct. 31, 2025.

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 13 interval funds, mostly in private credit. In 2026, the rating will cover an additional 30-plus evergreen strategies, including tender-offer funds and 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 Q3 2025 (the latest data available), semiliquid funds averaged an annual net expense ratio of over 3%. Meanwhile, passive mutual funds and ETFs charged 0.37% on average, and active ones charged 0.97%.

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 1.3%, yet the spread ranges from 0.7% at the low end to 2.7% in the top decile of venture capital funds.
• 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.