Evergreen Fund

Traditional private equity and private credit funds typically have fixed lives of around ten years. Investors commit money at the start, the manager calls it over several years, and the fund returns money as investments are sold, then closes.

Evergreen funds work differently. Investors usually invest their money immediately, and the fund reinvests proceeds from sales rather than distributing them. Investors can buy into the fund at regular intervals, often monthly, and request withdrawals, often quarterly, subject to limits.

For example, an evergreen private equity fund might allow investors to withdraw up to 5% of the fund’s value each quarter, with the manager able to limit withdrawals if requests exceed that amount.

Evergreen funds have become popular as a way to give wealthy individuals access to private markets, since they are simpler and require smaller minimum investments than traditional funds.

However, the underlying investments remain illiquid. If many investors ask for their money back at once, the fund may limit or suspend withdrawals, as happened with some large property funds. Investors also need to understand how the fund values its assets, since values are based on estimates.