Fundamentals & core concept · for beginners
By Niko Hatziiosifidis · last reviewed 23 Aug 2026
Semi-liquid funds — often called “evergreen funds” — are private-markets funds with no fixed term that issue shares continuously at net asset value (NAV) and redeem them at set dates within limits: typically quarterly, capped by a gate of around 5% of fund assets. Unlike a closed-end fund, the money is fully invested from day one; unlike an ETF, the exit can be planned but not guaranteed. In Europe they appear above all as ELTIFs under Regulation (EU) 2023/606 or as open-ended AIFs — at the end of 2025 Scope counted 268 registered ELTIFs with recorded assets of €34.0 billion, and worldwide the segment manages just under US$600 billion (as at March 2026).
93 of the 141 funds recorded — around two thirds — redeem quarterly, 25 monthly.
n = 141 · calculated from our fund database · as at Aug 2026
Only a small slice of the economy is listed on a stock exchange. The mid-sized engineering firm, the wind farm, the fibre network, the chain of medical practices — the vast majority of companies and projects are not listed. That is exactly where “Private Markets” invest: as equity (Private Equity), as debt (Private Credit) or in real assets such as infrastructure and real estate. The counterpart is “Public Markets” — shares and bonds that can be traded on an exchange at any time.
A wider choice than the stock exchange, returns that do not move in lockstep with equity markets — and the illiquidity premium: historically, tying your money up for longer has been rewarded with extra return. For a long time this was reserved for large investors; through ELTIFs it is now opening up to retail investors.
These investments are illiquid: no daily selling, your money is tied up for years. And the value is estimated rather than traded — which makes the line look smoother than the investment actually is. The volatility is there, you just see it later.
Through a fund: a manager pools the money of many investors and spreads it across many companies or projects. Traditionally as a closed-end fund (10+ years, no way out) — or in the newer, more open form: semi-liquid funds.
The quickest way to understand “semi-liquid” is to compare it with what you already know: an ETF can be traded at any time. A traditional closed-end Private Markets fund ties your money up for 10+ years with no way out. Semi-liquid funds (often called “evergreen”) sit deliberately in between:
| ETF / open-ended fund | Semi-liquid fund | Closed-ended fund | |
|---|---|---|---|
| Selling possible | any time, every trading day | on fixed dates, capped | practically not at all |
| Price | live exchange price | NAV struck at regular intervals | valuation, rarely |
| Entry | from a few euros | often from €1–10,000, one-off payment | large sums, capital calls over years |
| Term | indefinite | indefinite (“evergreen”) | fixed, usually 10+ years |
| Investments | listed | not listed (Private Markets) | |
Who this is not for: the emergency reserve and money with a date attached (buying a house, tuition). These funds belong at the long end of the portfolio — an investment horizon from about five years, as a satellite holding, not as the core.
The idea of giving retail investors access to private markets is not new — the first attempt simply failed. The ELTIF (“European Long-Term Investment Fund”) has existed as an EU legal framework since 2015. But the first version built in hurdles that almost nobody wanted to clear: a minimum investment of €10,000, plus the rule that investors with less than €500,000 in financial assets could put no more than 10% of it into ELTIFs, and narrowly drawn rules on the permitted investments. The tally at the end of 2021, six years after the start: a mere 54 products holding around €7 billion — across the whole of Europe (Scope, ELTIF-Studie 2023).
The relaunch came with ELTIF 2.0 — Regulation (EU) 2023/606, in force since 10 January 2024. It scrapped the minimum investment and the 10% wealth cap outright; in place of a bespoke access test, the ordinary MiFID II suitability assessment applies, the one you know from any advised securities purchase. At the same time the investment framework became more workable (at least 55% instead of 70% in long-term assets, fund-of-funds structures permitted) — and above all, the regulation expressly recognises open-ended, semi-liquid ELTIFs with rules-based redemptions. The technical detail followed in October 2024 as Delegated Regulation (EU) 2024/2759 (EUR-Lex).
The second force behind the boom is economic: the fund industry calls it “retailisation”. Institutional investors such as pension funds have largely filled their private-markets quotas — private wealth is the largest pool of capital still barely tapped. Large managers have therefore built structures that fit custodian banks, savings plans and smaller ticket sizes.
Together the two have multiplied the market in a very short time: at the end of 2025 Scope counted 268 registered ELTIFs; the 198 funds that reported assets came to €34.0 billion between them — up 54.7% in a single year, with 113 new products launched in 2025 alone. Around three quarters of ELTIFs are open to retail investors (Scope ELTIF-Studie 2026). Worldwide — with a clear centre of gravity in the US — the segment manages just under US$600 billion, more than twice as much as in 2022 (Morningstar, “The State of Semiliquid Funds 2026”). The market is young all the same: most funds have yet to live through a full market cycle — and 2025 brought the first stress tests: the property ELTIF Greenman OPEN temporarily suspended redemptions in December 2025, and Altaroc Horizon 2024 is being wound up (Scope, 2026). The growth is documented — the trial by fire is still running.
“Semi-liquid” describes the mechanics, not the legal form — and the legal form is worth a second look, because investor protection and access both hang on it. Three wrappers dominate in Europe. The ELTIF is the only private-markets vehicle with an EU-wide distribution passport for retail investors; its redemption rules have been harmonised across Europe since 2024. The Luxembourg Part II fund (Part II UCI) is a regulated open-ended AIF that many large houses use for their evergreen strategies — more flexible than the ELTIF, but it needs its own distribution authorisation in every country and is often aimed at wealthier or semi-professional investors. And the German open-ended property fund is the oldest semi-liquid structure of all — with a statutory 24-month minimum holding period and a 12-month notice period, it is stricter than most ELTIFs (see the property chapter). US vehicles such as interval funds or non-traded BDCs work in much the same way, but as a rule are not accessible to European investors — they serve as a yardstick, not as something you can buy. For you that means: the same “semi-liquid” label, different rules — which framework applies is set out on every one of our fund detail pages.
The right to redeem is not a free extra — it is paid for in three places, and you can read up on all three in the prospectus.
First: the liquidity buffer costs return (“cash drag”). So that the fund can meet redemptions, it holds part of its assets in cash, money-market instruments or listed securities. The ELTIF detail rules make the link explicit: a fund that redeems frequently and offers short notice periods has to hold more liquid assets — under one of the two calibration options in the RTS, monthly redemption requires at least 25% in liquid assets (Del. Reg. (EU) 2024/2759, Annex II). The arithmetic is simple: if 15% of the fund earns money-market rates and only 85% is working in private-markets assets, every per centage point of return difference between the two pots dilutes the overall result. The more comfortable the redemption terms, the larger this effect — flexibility and the full market return are not available at the same time.
Second: the fee base. In a classic closed-end fund the management fee is initially charged on committed capital; in a semi-liquid fund it runs on NAV — that is, from day one on all the money you have paid in, liquidity buffer included. That is more honest than it sounds (you pay on what you have actually invested), but it is not cheap: Morningstar puts the average ongoing cost ratio of semi-liquid funds at around 3% a year — with performance fees not yet fully counted in (Morningstar, 2026).
Third: you are buying an existing portfolio at an estimated value. When you buy in, you take on a pro-rata share of everything the fund already holds — at the NAV as determined, with no discount and no room to negotiate. Whether that NAV is a good match for market value right now is something you only learn later (see Valuation & NAV). And incoming new money still has to be invested: if more flows in than the pipeline can absorb, that money too sits in the buffer and dilutes the return further. For evergreens, deployment discipline is a standing task, not a one-off one-off effort.
When a closed-end fund reports “20% return” and an evergreen “11%”, the obvious suspicion is that the evergreen is barely half as good. The comparison is skewed all the same — because the two figures measure different things. Closed-end funds work with the IRR (internal rate of return): it measures the return only on the money actually working in the fund — and only for the time it is working. Your capital, however, is called down over years and paid back out early; across the term, as much as half the commitment is often never called at all and sits waiting in your account (Partners Group, “Accessing private markets: Evergreen funds”, 2024). An evergreen, by contrast, reports a time-weighted return on your fully invested money — comparable to the return figure quoted for an ETF.
Partners Group works the example through: a closed-end fund with a 20% net IRR turns a commitment into roughly 2.8 times the money over ten years — an evergreen reaches that same 2.8 times with around 11% a year, because there every euro works from day one and proceeds are reinvested automatically (ibid.; a provider source, so bear the vested interest in mind). The honest yardstick is therefore not the per centage but: what becomes of one euro over the same period? Then there is the J-curve: because of start-up costs, closed-end funds often begin in the red with book losses; an evergreen skips that phase, because you are buying into a finished portfolio. The reverse holds too: the evergreen carries its liquidity buffer and its NAV-based fees permanently — for disciplined investors who manage capital calls themselves, a very good closed-end fund can leave more in the pot in the end. Morningstar also cautions that, after costs, few semi-liquid funds are likely to beat their benchmarks (Morningstar, 2026). Which route is “better” therefore depends less on the per centage in the factsheet than on whether you can shoulder capital calls, how long your money is meant to work — and what you earn on uncalled capital while you wait.
Look at the illiquidity premium in detail. Its size depends on the period, the segment and the measurement method; alongside the lock-up of capital, factors such as leverage, company size and manager selection also contribute to the historical excess return. That is precisely why the strategy and track record of the individual fund are worth a look.
Valuation smoothing distorts the metrics. NAV series rest on estimates that are adjusted only slowly. Reported volatility and the correlation with equities therefore come out lower than the economic fluctuation. If you model allocations, you can un-smooth NAV series or bring in listed proxies alongside them — then the diversification effect holds in the model as well.
Evergreen does not fully replace vintage diversification. The traditional approach spreads money across launch years; an evergreen is fully invested from day one — but you buy into an existing portfolio whose valuation sets your entry NAV.
Choose the position size with the whole portfolio in view. Rebalancing is possible less often than with listed investments; if the liquid positions in the portfolio fall, the Private Markets share rises arithmetically (denominator effect). Plan for it and it will not catch you out.
The toolkit is bigger than the gate. Prospectuses combine redemption frequency, notice period, lock-up, redemption discount, swing pricing, side pockets and suspension — plus credit lines and the netting of new subscriptions against redemptions. These tools primarily protect the investors who stay. It is worth reading in which order and with how much discretion they may be used — that is exactly where funds differ.
Buffer and inflows are a management task. The liquid share makes redemptions predictable but takes a little off the return (cash drag). At the same time, new money coming in needs to be invested promptly and with discipline — the manager’s deployment history and pipeline show how well that is done.
The mechanism has already been through its practical test. At the end of 2022 a large US real estate vehicle (BREIT) met redemptions pro rata over several months — exactly as the fund documents provide. The case shows both things: gates really are used, and they work as orderly protection for all investors instead of a race for the exit.
Redeeming at NAV means redeeming at the valuation. Because the NAV rests on regular valuations, it can reflect market moves with a delay — in both directions. Tools such as swing pricing and redemption discounts make sure that the investors who trade and the investors who stay are treated fairly; the exact design is set out in the prospectus.
ELTIF 2.0 ties redemptions to the buffer. The technical standards link the maximum redemption ratio, the notice period and liquid assets; in addition, matching mechanisms are possible, in which units are transferred between investors leaving and investors joining.
Four metrics that make an evergreen factsheet readable at all. First, the net exposure ratio: what share of NAV actually sits in private-markets assets (look-through, including irrevocable commitments), and what share in the liquidity buffer? Two funds with an identical strategy and a 10% versus 25% sleeve are different products — in return profile as much as in liquidity profile. Second, the sleeve share in relation to the redemption terms: the ELTIF RTS (Del. Reg. (EU) 2024/2759, Annexes I/II) tie redemption frequency, notice period and minimum liquidity together in tabular form — which lets you test whether a fund can cover its redemption promise structurally or depends on inflows. Notice periods shorter than three months have to be justified by the manager to the supervisor (Art. 5(8)). Third, the fee base: management fee on NAV (sleeve included) plus performance fee — what matters is the hurdle, the high-water mark, and whether the performance fee is charged on realised or unrealised gains; the latter also rewards valuation success, not just realisations. Fourth, the deployment mechanics: how quickly is new money invested (ramp-up history), are there subscription queues, how are subscriptions netted against redemptions, and does the fund publish the execution rate for each redemption date?
Typical misreadings. (1) Setting the IRR of a drawdown fund against the time-weighted return of an evergreen — different metrics; the clean comparison is between terminal values. (2) Feeding smoothed NAV series into Sharpe ratios and correlations — the reported volatility is an artefact of valuation lag (see Valuation & NAV). (3) Over-reading young evergreen track records: many vehicles started with a small, hand-picked seed portfolio; the first few years are rarely representative. (4) Ignoring the Morningstar findings: in 2025 only 4 of 19 rated semi-liquid funds received a Medalist Rating of “Bronze” or “Silver”, and only 16% of the advisers surveyed described themselves as very familiar with the structure — product knowledge is a genuine bottleneck (Morningstar, 2026). For further reading: Zeisberger/Prahl/White (“Mastering Private Equity”, Wiley 2017), Phalippou (“Private Equity Laid Bare”) and Ilmanen (“Investing Amid Low Expected Returns”, 2022).
A fund for unlisted assets (private equity, private credit, infrastructure, property) with no fixed term, which issues shares regularly at NAV and redeems them at set dates within limits. It sits deliberately between an ETF (tradable at any time) and a closed-end fund (no exit for 10+ years). Quarterly redemptions with a notice period and a gate of around 5% per date are typical.
ELTIFs are regulated (EU regulation, depositary, supervision) — that protects you against fraud, not against losses. The assets can fall in value, the NAV is an estimate, and in periods of stress redemptions can be capped or suspended; in 2025 that happened to individual products in Europe (Scope, 2026). The right question is not “safe?” but: do the capital lock-up and the risk of fluctuation fit your situation?
In the normal case, several weeks to around half a year pass between giving notice and payment, depending on the fund (redemption date plus notice period). If too many investors want out at once, the gate takes effect and payment is stretched across several dates. There is no guaranteed payment date.
“Evergreen” describes the structure (unlimited term, continuous subscription and redemption), “ELTIF” an EU legal framework. Many ELTIFs are built as evergreens, but not all — and many evergreens are not ELTIFs but, for instance, Luxembourg Part II funds. Only the ELTIF has an EU-wide distribution passport for retail investors.
Considerably more than an ETF: a management fee on NAV plus, often, a performance fee is the norm; Morningstar puts the segment’s average ongoing cost ratio at around 3% p.a., with performance fees not fully counted in (as at 2026). On top of that come entry charges, depending on the distribution channel. You will find the cost figures for each fund in our database.
Then the gate takes effect: the fund executes redemption orders only up to the cap, usually cut back pro rata; the remainder rolls into the next date or has to be resubmitted. In extreme cases redemptions are suspended altogether. This is the built-in protection for the investors who stay — details in the gating chapter.
Last reviewed: 23 Aug 2026 · Methodology · Not investment advice.