Asset Class
Evergreen Fund
An Evergreen Fund is an open-ended vehicle with ongoing subscriptions and redemptions rather than a fixed life. Allocators evaluate evergreen structures through liquidity management, valuation policy, gating terms, and alignment of portfolio liquidity with investor redemption rights.
Evergreen vehicles offer continuous access but introduce liquidity and valuation complexities. For institutional allocators, the central risk is the mismatch between investor liquidity expectations and the liquidity of underlying assets.
How allocators define evergreen structure risk
They assess:
- Liquidity terms: notice periods, gates, suspension rights
- Portfolio liquidity: how quickly assets can be realized under stress
- Valuation policy: frequency, third-party inputs, mark discipline
- Subscription dynamics: dilution protection and equalization mechanics
- Leverage usage: liquidity amplification risk
- Side pockets: treatment of illiquid or distressed assets
Allocator framing:
“Can the vehicle honor redemptions without disadvantaging remaining investors?”
What slows decisions
- Unclear gating and suspension terms
- Valuation opacity and potential smoothing
- Hidden leverage and liquidity mismatch
- Limited disclosure on side-pocket mechanics
Key Takeaways
- Evergreen is about liquidity and valuation governance
- Terms must match underlying asset liquidity reality
- Transparency on gates and marks drives allocator trust