Semiliquid funds are reshaping access to private markets by giving investors a way to participate in long term strategies with more frequent liquidity. As demand rises, their design, governance, and valuation practices are setting a new standard for modern alternative investing.
Nov 21, 2025, 12:00 AM
Written by:
Niko Ludwig
Table of Contents
Key Takeaways:
Semiliquid funds offer quarterly or annual redemptions instead of decade-long lockups. They combine private market returns with greater liquidity.
Redemption gates limit withdrawals to 5-10% of NAV per quarter. This prevents forced asset sales and protects fund stability.
Regulatory changes are lowering barriers to entry. The SEC now focuses on professional knowledge, not just wealth.
Immediate capital deployment creates higher effective returns. A 12% semiliquid return matches an 18% traditional PE return.
New governance frameworks are essential. Independent committees address conflicts between traditional and retail investors.
The private market landscape has a new player: semi-liquid funds. Driven by evolving investor demands for both robust returns and greater flexibility, these structures are gaining prominence. Historically, accessing high-growth private assets meant committing capital for extended periods, often a decade or more, with limited opportunities for early withdrawal. This traditional model, while offering substantial potential, presented a liquidity challenge for many investors.
Semiliquid, or evergreen, funds is a new category of investment that bridges this gap, reshaping how capital is raised and managed within the private sphere. They offer the best of both worlds, combining the long-term performance objectives typical of private equity and credit with more short-term liquidity, making returns more accessible.
Semiliquid funds are a category of open-ended investment methods that allow investors to redeem capital periodically (typically quarterly or annually) rather than waiting for a fixed fund term to expire.
Interval funds are the most regulated subset of this type of fund in the US. According to Deloitte, these “…funds are registered with the Securities and Exchange Commission (SEC) and may take the form of public non-traded real estate investment trusts (NT REITs), public non-traded business development companies (NT BDCs), tender offer funds, interval funds, or control stakes.”
Semiliquid funds can also include privately managed evergreen funds, tender offer funds, or long-term investment funds (ELTIFs offered in Europe). In the UK, they take the form of long-term asset funds (LTAFs).
Semiliquid funds combine the high-return potential of private markets with increased investor access. This unique hybrid model requires specific operational frameworks to manage liquidity, redemptions, and asset valuation effectively.
Liquidity management
Since a semiliquid fund combines the benefits of more frequent accessibility with the potential for strong returns from illiquid private assets, fund managers must balance both sides. On the one hand, semiliquid funds invest in private equity, private credit, or real estate—assets that can’t be sold quickly without compromising on the price. On the other hand, managers must monitor cash reserves, incoming capital, and the timing of these asset sales to enable periodic redemption requests or risk disrupting the investment strategy. This careful balance is crucial to meet investor expectations while preserving long-term investment goals.
Redemption gates
To maintain a solid investment strategy and potential capital creation, redemption gates are boundaries used to control the amount of capital that can be withdrawn. Sudden, large-scale withdrawals would compromise the fund’s stability and potentially require premature liquidation of illiquid assets at a loss. For example, limiting redemptions to 5% or 10% of the fund’s Net Asset Value (NAV) in any given quarter can help prevent this. Another safeguard involves prorating large requests among investors, with any remaining funds deferred to the next redemption period. This protects the fund from forced asset sales and ensures fair treatment for all investors.
Valuation policies
Private assets cannot be evaluated according to public market prices, so valuation of semiliquid funds must be done by independent third parties to calculate the NAV and maintain regulatory compliance. The NAV is crucial because it determines the price at which investors can redeem their shares. This quarterly or semi-annual process comprises methods such as discounted cash flow analysis, comparable company analysis, and recent transaction multiples, providing investors with a transparent reflection of their investment’s worth.
Feature | Traditional private equity fund | Semiliquid (evergreen) fund | Daily liquid mutual fund |
|---|---|---|---|
Structure | Closed-ended | Open-ended | Open-ended |
Investment focus | Illiquid private assets (e.g., private companies, real estate) | Illiquid private assets (e.g., private companies, real estate) | Liquid public securities (e.g., stocks, bonds) |
Liquidity/redemption | Very low; capital locked up for 10+ years; no redemptions | Periodic (e.g., quarterly, annually) with redemption gates | High; daily redemptions |
Investment horizon | Long-term (10-12+ years) | Long-term (perpetual) | Short to medium-term |
Capital calls | Yes, capital drawn over time | No, capital deployed immediately | No invested upfront |
Fund life | Finite (fixed term) | Perpetual (no end date) | Perpetual (no end date) |
Target investor | Institutional, ultra-HNW | Affluent, HNW, institutional | Retail, institutional |
Value determination | Infrequent, complex valuations | Frequent, complex valuations | Daily market prices |
Why ‘evergreen’ structures are reshaping private markets
Investor sentiment is changing. They still want higher private-market returns but expect more flexible access. With semiliquid funds, this is achievable, provided that excellent liquidity management, redemption gates, and thorough valuation policies are implemented.
A growing number of wealth managers are looking into private market investing and they want more user-friendly options. The opportunity to get higher returns and be able to have more frequent access to the funds is appealing.
The convergence between public and private investing models also plays a role in driving the shift because of retail demand and wealth management distribution. More private investors want to enjoy the benefits of the high growth that private companies can offer, and recent data indicates that they now contribute approximately 80% of new capital for these alternative investments.
Semiliquid funds bridge the gap between the long-term, closed-end nature of traditional private equity funds and the daily liquidity offered by mutual funds. With safeguards like liquidity management, redemption gates, and thorough valuation policies, investors get frequent transparent reassurances regarding their investment. Additionally, periodic redemption opportunities allow investors to participate in private market upside without the decade-long capital lockups.
Factors that are influencing the rise in semiliquid funds
The Ares European Strategic Income Fund has also seen major growth, as they “raised over $2.25 billion primarily from wealthy individuals for its open-ended European direct lending fund...to provide loans to mid-sized companies. First made available to individual investors in January 2024, the evergreen fund will finance businesses based primarily in Europe."
BlackRock is also following suit, according to WealthBriefing, having launched a private markets platform accessible to investors in Europe, the Middle East and Asia-Pacific. Wealth clients can explore evergreen funds and institutional-quality alternative investments in line with the new ELTIF 2.0 framework.
These examples of growth are due to the following benefits.
Four benefits of semi-liquid funds.
Getting quicker returns at higher rates. For comparison, in normal private equity you can commit $1M, but you’ll pay that in installments over years, and in the meantime, the rest of it will earn nothing while you wait. In semiliquid funds, your money can start working for you immediately, earning at a much higher rate.
Real impact: A semiliquid fund can triple your money at 12% returns, while a traditional PE fund needs 18% returns to achieve the same result (because of the waiting period).
2. Breaking the reinvestment cycle. Normal private equity (PE) funds end after 10 years, and then you must restart the cycle of researching a new fund and reinvest to generate more returns. Semiliquid funds continue without an end date, saving you and the fund manager time and money on returns by not having to repeat the cycle and raise funds again.
3. Easier access for more investors. In the US, the SEC has eased up on the criteria that determines who qualifies as an accredited investor, looking at professional knowledge and experience, not just wealth. Building on the opportunity, BlackRock launched a private markets platform accessible to investors in Europe, the Middle East and Asia-Pacific. Wealth clients can explore evergreen funds and institutional-quality alternative investments in line with the new ELTIF 2.0 framework.
The minimum investment requirements and caps have also been lowered to make it more accessible. Future possibilities have enormous potential as there are considerations to allow semiliquid funds in 401(k) retirement plans.
4. Simpler operations through tokenization. By turning fund shares into digital tokens that are easier to buy, sell, and track. This feature improves liquidity between redemption periods, allows for fractional ownership (you can buy a part, you don’t have to buy the whole), and can help automate paperwork through smart contracts for easier compliance.
Deloitte’s forecast puts the 80% new capital coming from private investors into context in terms of demand, along with the need to refine the methodology of managing semiliquid funds for repeatable, profitable returns at scale.
Key challenges in semi-liquid fund structures
"Semiliquid funds are becoming more accessible and gaining traction in the investment landscape, but their unique structures present challenges that warrant a reliable framework for evaluation," said Laura Lutton, Morningstar’s global head of manager research.
These challenges include concerns about the following aspects and potential negative impacts:
Potential conflicts may arise between evergreen and closed-end vehicles.
Traditional LPs have operated on a specific set of rules for a long time, and they expect big returns. But with new private investors who are also investing and wanting more accessibility, it becomes a challenge to manage both.
LPs are concerned about differing liquidity constraints.
They question whether they receive equal access to top-tier opportunities without losing out to GPs, especially when targeting similar assets. It becomes a question of how to balance and set regulations to manage and safeguard each one’s interests. LPs can help address these concerns by ensuring they stay updated on the latest developments and discussing the consequent implications and requirements with fund managers for transparent accountability.
Fund managers face operational complexity in managing dual structures.
Frequent valuations, redemption queues, and transparent allocation policies demand resources that many firms are still building. The Institutional Limited Partners Association (ILPA) is developing best-practice guidance. This may include significant adjustments to the Limited Partners Agreement (LPA) requiring more transparency regarding where funds are allocated, the redemption timeline, deal sharing rights between evergreen and traditional funds, etc. (PEI reporting, 2025).
Capital is coming in faster than governance and regulation structures are evolving.
It’s a new situation and therefore, untested at scale. PEI stated in their article that “With the possibility that more retirement funds like 401(k) plans start investing in private equity, a tsunami of capital could be heading for the industry.” Missteps risk both regulatory attention and institutional relationships.
All these concerns can negatively impact the trust in these business relationships, thereby also impacting transactions and successful outcomes for all parties involved. As crucial as transparent communication is to success in this industry, this situation requires even more. Managers must demonstrate caution and structural safeguards (such as independent allocation committees or explicit sequencing rules) to assure limited partners that their interests remain protected.
How industry leaders are handling concerns
Morningstar: The investment firm Morningstar developed a ratings methodology called the Medalist Rating System for Semiliquid Funds to apply to various limited-liquidity vehicles and internationally, to ELTIFs and the UK’s LTAFs. These ratings will “offer insights on factors including risk, cost, manager tenure, and portfolio fit. The evaluation will also address whether a given vehicle is suited to an investor’s goals and liquidity profile.”
Mintz: The law firm Mintz, which works with LPs and GPs, is incorporating the cost of building out infrastructure to manage new requirements under LPAs (PEI reporting, 2025).
Partners Group: This investment firm works on tailored solutions across strategies and various assets and develops methods to allocate investments fairly. Their experienced portfolio management team oversees the finer details of portfolio construction and frequent valuations. Their head of private wealth, Rob Collins, says: “There shouldn’t be different valuations on the same investment. We believe all clients should be treated the same way, and there should be guardrails around that.” (PEI reporting, 2025).
Blackstone: This global investment firm implements strict investment allocation policies and has an allocation committee tasked with checking opportunities for additional capital requirements. They recently acquired sandwich chain Jersey Mike’s for approximately $8 billion, which included $5 billion of equity. The biggest investment that Blackstone could make via their PE fund was $2 billion, so they supplemented it with co-investment capital from BXPE (PEI reporting, 2025). This approach of scaling co-investing across flagship vehicles makes it mutually beneficial, rather than a competitive threat.
Communication as a competitive edge
Semiliquid funds have significant potential, but the success of this new structure depends as much on clarity as on innovation. While wealth managers will need to sharpen their skills to balance all the requirements and safeguard the ability to ensure good returns, investors will have to sharpen their knowledge and grasp of liquidity terms, valuation policies, and risk profiles.
This means that the next generation of private fund marketing will focus more on investor education and less on product promotion. Clear communication is valuable and will become increasingly crucial to maintain a competitive edge. When both parties have clarity on reasonable expectations and possibilities based on compliant valuations, these factors will form an accountability structure that inspires trust from investors.
The bottom line
In conclusion, these hybrid structures will define the next fundraising cycle, fundamentally changing how capital is accessed and deployed. As semiliquid funds become an integral part of the institutionalization of private markets, they inherently demand higher standards in fund design, transparent disclosure practices, and robust brand credibility.
For fund managers, this necessitates meticulous operational planning and clear communication to navigate the complexities of liquidity management and valuation at scale. For investors, it requires a deeper understanding of these nuanced structures to make informed decisions.
Ultimately, this evolution proves that financial engineering now succeeds through narrative engineering. Numbers only flourish on a solid basis of clarity, detailed communication, and cultivated trust.
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