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Evergreen funds gain traction as private markets boom, but experts warn of risks

Semi liquid, 'evergreen' funds are growing in popularity but experts from EQT, Frontier and JANA all say they are not without risks.

Jassmyn Goh
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EQT's head of private wealth APAC Sueann Yeo says more and more sophisticated investors are putting capital into evergreen funds. Supplied.

Evergreen, semi-liquid funds are gaining in popularity in Australia amid surging demand for exposure to private markets. But as more evergreen products hit the market, experts are warning investors to be wary of red flags in the space, including funds packaging up inappropriate underlying strategies such as venture capital or distressed assets, or vehicles run by inexperienced managers.

So-called 'evergreen' funds are open-ended vehicles that allow investors to get exposure to private markets without locking away their money for an extended period (most traditional private fund structures are closed-end vehicles that operate on five to seven year time frames).

In 2023, there were 520 evergreen funds globally, double the number from five years earlier, according to Preqin data. Frontier Advisors estimates that there are almost 100 evergreen funds available in Australia.

Some recent launches include Coller Capital Private Equity Secondaries Fund earlier this year, and Hamilton Lane’s Senior Credit Opportunities Fund in 2024.