Private Markets Are Becoming More Liquid—Their Assets Are Not

Private markets were built around a blunt bargain. Investors accepted long lock-ups because the assets could take years to buy, improve and sell.

Evergreen and semi-liquid funds soften that bargain. They accept capital continuously and offer scheduled redemption windows while the portfolio remains private. UBP, citing Goldman Sachs, reported that these vehicles reached USD 426 billion in net asset value in the third quarter of 2025, after growing at a compound annual rate of 40% since 2021.¹

Evergreen funds change the access model

A traditional closed-end private-equity fund calls capital as opportunities arise and returns cash after exits. An evergreen fund can invest capital from the start into an existing portfolio, reinvest distributions and offer periodic redemptions. Mirabaud describes the format as easier to plan around because it avoids irregular capital calls and distributions.²

The structure can offer smaller entry amounts and faster deployment. Its dealing terms do not change the assets underneath. A private company, infrastructure project or privately held property does not become easier to sell because its fund opens every quarter.

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A redemption window is a feature of the wrapper, not a source of liquidity in the assets.

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Every redemption must be funded

Cash can come from reserves, new subscriptions, portfolio distributions, asset sales or secondary transactions. If those sources fall short, the fund can defer, prorate or limit withdrawals according to its terms.

Pictet observed that semi-liquid products often cap quarterly redemptions at 3–5% of net asset value.³ Mirabaud gives 5% per quarter as a typical maximum in the strategy it discusses.² Under a different US framework, FINRA says interval funds generally offer to repurchase 5–25% of fund assets at fixed intervals, and excess requests may not be fulfilled.⁴

These figures are not universal limits. Periodic dealing remains materially different from daily liquidity.

Liquidity has a cost

Holding more cash makes redemptions easier but leaves less capital invested in the assets the fund was built to own. Mirabaud states the trade-off directly: too much cash can dilute performance, while too little can compromise redemption capacity.²

Subscriptions can relieve that pressure while inflows remain healthy. Reliance on new money can create pressure if subscriptions slow as existing investors seek cash.

ESMA's technical work on European Long-Term Investment Funds links notice periods and liquid-asset requirements with redemption limits, gates, anti-dilution tools and mechanisms that match sellers with incoming buyers.⁵ The variables show how fund-level liquidity can be created and rationed.

New demand changes the secondary market

Evergreen funds receive capital continuously, while attractive private-market deals arrive unevenly. Holding cash can weaken expected exposure; deploying it too quickly can mean accepting worse terms.

Secondaries help deploy subscriptions and can provide cash when a portfolio sells.

UBP argues that open-ended and semi-liquid vehicles increasingly use secondaries for both deployment and liquidity management. It also says their demand has compressed discounts, reducing part of the liquidity and complexity premium that once made secondaries attractive.¹ A tool used to solve the fund's timing mismatch can therefore become more expensive as more funds use it.

Stress test the structure, not the label

Healthy subscriptions, regular exits and modest withdrawals do not test liquidity design. The harder case combines slow subscriptions, weak exits and rising redemption requests.

UBP says private-wealth vehicles have not faced a coordinated stress scenario at their current scale.¹ Pictet cites Blackstone Real Estate Income Trust, which restricted redemptions for 16 months from 2022 to early 2024.³ BREIT is a private real-estate vehicle, not a template for every evergreen fund, but it shows how contractual limits become visible when many investors seek the same exit.

Investors can ask how much liquidity comes from cash rather than expected subscriptions or sales; what share of NAV can be redeemed; whether requests can be deferred or queued; and what remains after the most saleable holdings fund withdrawals.

Evergreen structures can provide diversified exposure, reinvest proceeds and remove irregular capital calls. Those benefits are strongest when redemption terms match the investor's own cash needs. A quarterly window has a capacity limit, and that capacity matters most when ordinary inflows and exits stop doing the work.

Footnotes

1. UBP, Private Markets Outlook 2026 ↩ ↩² ↩³

2. Mirabaud, How are evergreen strategies redefining access to private markets? ↩ ↩² ↩³

3. Pictet, Be careful when making something illiquid liquid ↩ ↩²

4. FINRA, Interval Funds—6 Things to Know Before You Invest ↩

5. European Securities and Markets Authority, ESMA finalises technical standards under the revised ELTIF regulation ↩