What's Happening?
Morningstar, Inc. and its subsidiary PitchBook have released a new quarterly report titled 'The Evergreen Fund Landscape,' which provides a comprehensive analysis of the rapidly expanding evergreen fund
market in the United States. These funds, also known as semiliquid funds, have seen significant growth, with assets under management doubling since 2022 to approach $500 billion. The report highlights the increasing investor demand and regulatory changes that are driving the convergence of public and private markets. Key findings include the rapid growth of direct lending, which has more than tripled in assets under management since 2022, and the record number of new evergreen fund launches in 2025. The report also notes that while credit-focused vehicles have seen substantial inflows, real estate funds have experienced net outflows. Additionally, the report emphasizes the wide variation in performance and fee structures among these funds, underscoring the importance of careful manager selection.
Why It's Important?
The expansion of evergreen funds represents a significant shift in how private markets are accessed by investors. This growth is crucial as it reflects a broader trend of public-private market convergence, offering investors new opportunities and challenges. The increasing popularity of these funds could lead to more diversified investment portfolios, but also requires investors to be more vigilant about the associated risks and fees. The report by Morningstar and PitchBook provides essential transparency and benchmarking tools that can help investors navigate this evolving landscape. As evergreen funds become more central to private market access, understanding their dynamics is vital for financial advisors, asset managers, and individual investors looking to optimize their investment strategies.
What's Next?
The report's findings suggest that the evergreen fund market will continue to grow, driven by ongoing investor interest and regulatory support. Morningstar and PitchBook plan to launch the Morningstar PitchBook US Evergreen Fund Indexes in early 2026, which will provide a standardized framework for comparing fund performance across strategies. This development is expected to enhance transparency and comparability in the market, aiding investors in making informed decisions. As the market matures, further innovations in fund structures and strategies are likely, potentially leading to new investment products and opportunities.
