By: Laura Sankowich
Allvue Marketing Thought Leadership and PR
April 24, 2025
Private equity has long operated within the confines of closed-end fund structures, where investment horizons are fixed, exit pressures are high, and capital recycling is a logistical burden. But as the market evolves, and investors seek flexibility, liquidity, and long-term alignment – a new model is gaining momentum in private equity: evergreen funds. Driven by growing demand for perpetual investment strategies and improved access, evergreen funds are defining how capital is raised, deployed and managed. With their open-ended structure and rolling capital inflows, they’re creating exciting opportunities and complex operational challenges both for investors and fund managers. These funds differ from traditional investment funds in that they have a perpetual structure, meaning they don’t have a set end date. This structure empowers both investors and fund managers to focus on sustainable growth rather than short-term performance pressures.
In this guide, we’ll dive deep into the world of evergreen funds, exploring how they work, their key benefits, and what they mean for the future of private equity investing.
Evergreen Funds: The Investor Advantage
Evergreen funds are private equity vehicles with no fixed end date, often called open-ended or perpetual-capital funds. Unlike traditional closed-end funds that typically wind down after 10–15 years, an evergreen structure can raise new commitments on a rolling basis, giving managers a steady stream of capital.
Investors, in turn, may request redemptions at scheduled intervals—usually quarterly—subject to any gating provisions, offering liquidity rarely found in standard PE funds. They can also reinvest distributions to capture new opportunities without re-underwriting a fresh fund commitment.
Some real-world examples of evergreen funds include:
The appeal of evergreen funds for investors
Evergreen funds are attractive to investors for a wide range of reasons.
Investment flexibility
Evergreen funds enable investors to tailor the investment experience to their unique needs, goals, and preferences. Investors can enter or exit investments based on their preferences rather than being locked into a specific timeline. Additionally, investors can choose between receiving regular distributions or reinvesting returns back into the funds for continued growth.
Accessibility through lower investment minimums
Evergreen funds often require lower minimum investments than private equity funds. This opens the door to a broader range of investors, including smaller institutions and individual investors. In fact, the minimum investment for an evergreen fund can be as little as $5,000 for a qualified investor. What’s more, the investor won’t be subject to mandatory capital calls throughout the life of the investment which are common in traditional, closed-end private equity funds.
Compounding through reinvestment
Capital gains or profits from successful investments can be reinvested into the fund, continuously compounding returns over time. This reinvestment capability creates the potential for higher long-term growth. This structure also enables investors to rebalance their portfolios and adjust exposure to private market opportunities.
Alignment with long-term investment goals
Evergreen funds align well with the objectives of investors with long-term horizons. There’s no fixed fund timeline and investors can choose to remain invested as long as they wish to accumulate as much growth as possible.
Immediate funds deployment
With evergreen funds,investor funds are deployed immediately after they are committed. That means investors can start benefiting from capital growth of returns from day one, unlike with traditional PE funds whereby investors may have to wait for up to several months before funds are actually put to work.
Diversification
Many evergreen funds often maintain diversified portfolios spanning multiple asset classes, such as infrastructure, real estate, or growth-oriented businesses. This diversification mitigates risk while providing steady performance, even in volatile markets.
What are the benefits for general partners (GPs)?
Reduced pressure to exit
Traditional private equity funds often come with the pressure to exit investments within a set timeframe, which may not align with optimal market conditions. With evergreen funds, there is no such pressure. The GPs can hold an investment in order to ride out adverse market conditions or even garner more growth in bullish markets.
Simply put, evergreen funds allow GPs to focus on maximizing long-term value creation for a PE fund and its investors. It gives them the freedom to execute long-term strategies.
Continuous capital-raising opportunities
Evergreen funds enable GPs to raise capital on an ongoing basis rather than adhering to a rigid fundraising schedule. This flexibility ensures a steady inflow of capital and empowers managers to be opportunistic and deploy capital against opportunities without the constraints of predefined timelines.
Stable fee income
Because evergreen funds operate continuously, they provide GPs with a more predictable and stable fee income stream. This stability is a marked departure from traditional closed-end funds, which often experience revenue fluctuations tied to fundraising and exits.
Stable relationships with investors
The perpetual nature of evergreen funds fosters stronger relationships with investors. Regular touchpoints, periodic reporting, and ongoing opportunities to contribute or withdraw capital keep investors informed and engaged. This continuous engagement fosters more trust between the two parties and thus a stronger partnership.
The rise of evergreen funds in private markets
Evergreen funds have exploded in the last couple of years. For example, according to alternative assets data provider, Preqin Ltd, between 2018 and 2023, the number of global evergreen funds doubled to more than 500.
The firm reports that at the end of 2023, evergreen funds represented $350bn of global net asset value, which is actually a conservative estimate given that almost a fifth of the existing funds don’t disclose the latest valuation. The real figure could even be higher than that.
Evergreen funds challenges
Evergreen funds offer several benefits to both LP and GPs as we’ve seen. But they also come with several challenges and risks that investors should be aware of.
Valuation complexity
Evergreen funds require frequent portfolio valuation to enable redemptions and new subscriptions, unlike traditional closed-end PE funds. Accurately valuing illiquid assets, especially without a clear exit event, can be difficult and may lead to disputes among investors about what constitutes fair valuation.
Liquidity management
These funds must maintain a balance between liquidity for redemptions and the long-term illiquidity of PE investments. Managing cash flow to meet redemption requests without compromising the portfolio’s integrity is a constant challenge, especially during market downturns or periods of high redemption activity.
Fee structure confusion
Traditional PE fee structures, like carried interest, may not fit seamlessly with evergreen funds. Designing a transparent and fair fee model that aligns investor and manager interests is often complicated, especially when investors can enter and exit at different times.
Regulatory and compliance risks
As open-ended funds, evergreen funds may face regulatory hurdles that are not present in closed-end funds. They must comply with various reporting and transparency requirements that could vary by jurisdiction and that are ever-changing. This creates operation complexity and increases the administrative burden and costs of operation.
Risk of complacency
The lack of an exit deadline can sometimes lead to complacency from the fund’s managers. They might not work as hard to optimize growth.
How Allvue’s PE software helps manage evergreen funds
Managing the complexities of evergreen funds requires advanced solutions to ensure efficiency, compliance, and transparency. Allvue Systems provides a powerful private equity software with advanced features that enable seamless management and administration of this type of fund.
Here are four specific capabilities that make Allvue an invaluable solution for evergreen fund management.
Real-time portfolio monitoring and tracking
Allvue provides real-time portfolio monitoring tools that offer instant visibility into key metrics such as asset performance, capital flows, and investment valuations. This capability helps fund managers:
- Stay informed on portfolio health at all times.
- Identify trends and make proactive adjustments to strategies.
- Ensure alignment with long-term investment objectives.
With Allvue’s real-time portfolio monitoring and tracking, fund managers can make data-driven decisions that enhance overall fund performance.
Comprehensive reporting
Ongoing reporting is vital to keep stakeholders informed and maintain transparency. Allvue’s platform simplifies this process by offering comprehensive reporting tools that generate customizable, on-demand reports covering key metrics such as returns, distributions, and valuations.
Investor relations
Allvue’s software supports robust investor relations through:
- Secure investor portals that give them access to performance updates, statements, and distribution schedules.
- Tools for responding to investors’ inquiries and tracking investor interactions.
- Customizable dashboards that allow fund managers to tailor information based on individual investor needs.
Integrated compliance tools
Compliance in evergreen funds can be complex due to their ongoing nature and varying regulations. Allvue addresses these challenges with integrated investment compliance tools that:
- Automate the tracking of regulatory requirements and filing deadlines.
- Ensure alignment with jurisdictional rules across different markets and asset classes.
- Monitor investor eligibility and maintain up-to-date documentation to reduce compliance risks.
Wrapping up
Evergreen funds represent a forward-thinking evolution in private equity combining flexibility, sustainability, and long-term growth. As seen, these funds offer a wide range of benefits for both fund managers and investors alike.
However, to unlock the full potential of evergreen funds, having the right tools is essential. Allvue’s private equity software empowers your firm to optimize fund management and drive exceptional outcomes with cutting-edge solutions like real-time portfolio monitoring, comprehensive reporting, investor relations tools, and inbuilt compliance management.
Ready to take your fund management to the next level? Request a free demo of Allvue today.
Sources
Preqin. Evergreen capital funds hit record high at $350bn on private wealth demand. https://www.preqin.com/insights/research/blogs/evergreen-capital-funds-hit-record-high-at-350bn-on-private-wealth-demand
Pantheon. Pantheon launches evergreen private equity fund for global investors on growing private wealth platform. https://www.pantheon.com/news/pantheon-launches-evergreen-private-equity-fund-for-global-investors-on-growing-private-wealth-platform/
Ares Wealth Management Solutions. Ares Strategic Income Fund (ASIF).https://www.areswms.com/solutions/asif
More About The Author
Laura Sankowich
Allvue Marketing Thought Leadership and PR
An expert in digital strategy, content marketing, PR, and thought leadership, Laura brings more than 20 years of B2B marketing and communications experience to Allvue. Laura has extensive experience working for both publicly and privately held Fintech firms.
