Semiliquid Funds vs. Evergreen Funds: Key Differences

What’s the difference between evergreen and semiliquid funds? The terms “evergreen” and “semiliquid” are often used interchangeably to describe funds that offer access to private investments, including interval funds, tender-offer funds, unlisted business development companies, and unlisted REITs. However, there are nuances to note when it comes to the specific features of these funds.

Morningstar uses “semiliquid.” Institutional investors and other industry participants use “evergreen.” While both refer to the same public/private investment vehicles, the difference lies in what each term highlights. Regional differences between US and European markets can also affect how these labels are applied.

For the investors you serve, the terminology matters less than the underlying mechanics of funds. To cut through the confusion, let’s explore the nuances of each term.

The term "evergreen" refers to a continuously offered fund with an indefinite or perpetual life.

Investors can add capital to evergreen funds on an ongoing basis, reflecting their continuously offered structure. Rather than raising capital during a limited fundraising window, these funds can accept new investments over time while continuing to operate and deploy capital.

Evergreen funds also aren’t required to wind down on a fixed timeline—they exist in perpetuity unless assets fall to zero or the manager chooses to wind them down.

In private-market contexts, this label shows how evergreen funds differ from closed-end funds or drawdown funds, which have predetermined capital commitments and finite lifespans. The use of "evergreen" may be commonly used among institutional investors who typically invest in drawdown funds.

However, the term “evergreen” doesn’t always resonate with retail investors, who are used to traditional investment vehicles. Open-ended mutual funds and exchange-traded funds also accept ongoing investments and do not have a defined termination date. For those investors, liquidity is what separates interval funds from mutual funds.

A semiliquid fund offers periodic liquidity, meaning investors can request redemptions only at certain times. In contrast, vehicles like ETFs offer daily liquidity, and drawdown funds are fully illiquid.

Morningstar uses the term semiliquid funds to emphasize the investor experience. These products exist along a spectrum of liquidity, with a tradeoff between access to capital and the ability to invest in less-liquid assets.

Many semiliquid funds place limits on the amount of capital that can be redeemed during a given period. These redemption gates help prevent large volumes of withdrawals from forcing the sale of less liquid investments, supporting the fund’s liquidity management framework while continuing to provide investors with periodic access to capital.

The word “evergreen” is widely used in the industry to refer to funds that help private wealth investors gain exposure to private assets.

Strictly, the term evergreen typically implies a truly perpetual structure. However, the industry has bucketed some finite life funds into this definition. In Europe and the United Kingdom, similar investment products may be labeled evergreen but might have long-dated, defined lifespans.

For example, European long-term investment funds and long-term asset funds are conceptually grouped with evergreen funds but differ from each other in technical structure and lifecycle.

Unlike many US evergreen vehicles that are designed to operate indefinitely, ELTIFs and LTAF structures may have fund lives that extend for decades but are ultimately finite. As a result, two products may both be described as evergreen even though one is perpetual and the other has a defined end date.

These differences highlight why relying solely on labeling can be misleading without understanding the underlying mechanics.

"Evergreen” and “semiliquid” frequently describe the same vehicles from different angles.

Rather than getting caught up in terminology, advisors and portfolio managers should help investors seeking private assets exposure to understand the structure, terms, and strategy of semiliquid or evergreen funds.

The structure and terms of a fund define its regulatory framework, liquidity mechanics, and how it raises and manages investor capital over time. For example, interval funds are mandated to offer redemptions at certain periods, while nontraded BDCs periodic share repurchase programs are at board discretion.

As a result, two products may both be considered semiliquid even though the timing, frequency, and mechanics of investor liquidity can differ meaningfully.

Strategy defines the fund’s asset class exposure, its risk drivers, and return profile. For example, direct lending strategies often originate loans to corporate borrowers, which tend to be unrated small- to medium-sized companies.

Understanding this distinction helps investors evaluate funds based on how they behave before adding them to their portfolios.