Evergreen funds see fewer launches as private equity eyes retail investor base

The number of evergreen private market funds launched is on track to decline for the third consecutive year, even as alternative asset managers continued to push beyond their traditional institutional investor base into the potentially massive retail market made up of wealthy individual investors.

Evergreen funds are key to unlocking that market. They typically offer lower investment minimums and regular liquidity opportunities — attributes that make them better suited for individual investors than the closed-end private market funds that serve the institutional market, which can lock up capital for a decade or more.

Fifteen evergreen private market funds launched globally in 2024, including eight open-ended investment vehicles dedicated to private equity investments, according to an S&P Global Market Intelligence analysis of Preqin Pro data. It was the lowest annual count since at least 2019. Only five evergreen private market funds have launched so far in 2025.

Still, fund managers who have struggled in recent years to raise capital from institutional investors such as public pension funds, sovereign wealth funds and endowments are keeping a close eye on the private wealth market. Globally, the number of individuals with wealth of at least $1 million tripled between 2000 and 2023, when they collectively held $214 trillion, or nearly half of global wealth, according to the latest edition of UBS' Global Wealth Report.

Work in progress

Tapping the full potential of the investor base made up of wealthy individuals remains a work in progress. Success so far has mainly come at the upper end of the wealth spectrum with ultra-high-net-worth individuals, said Vinay Mendiratta, US private client group lead for HarbourVest Partners LLC.

"But there's been increased demand from a broad array of investors, so you've seen a bunch of firms like ourselves offer products to qualified clients and accredited investors," Mendiratta said, referring to terms applied to individual investors in the US.

A qualified client has a net worth of at least $2.2 million and at least $1.1 million in assets under management with an investment adviser. Alternative asset manager executives such as Blackstone Inc. President Jonathan Gray and Blue Owl Capital Inc. co-CEO Doug Ostrover have suggested that even a small increase in their average private market allocation would unlock tens of trillions in capital for fund managers.

Accredited investors must have an annual income of at least $200,000 as an individual, a combined income of $300,000 together with a spouse or a net worth of at least $1 million, either individually or with a spouse.

Mendiratta said managers of evergreen funds face a fundamental challenge: As they lower the requirements for entry into the funds, they face higher structural and regulatory hurdles. Those barriers have so far prevented fund managers from opening evergreen vehicles for the so-called "mass affluent," a term often used to describe those ranging from the comfortably middle-class up to the average millionaire.

"The industry is still working on how best to offer a product in that market. It hasn't been easy given the regulatory concerns and the concerns of plan sponsors," Mendiratta said.

Anticipating growth

The total value of global private equity fundraising fell for a third consecutive year in 2024. But even as private equity fundraising from institutional investors such as pension funds, sovereign wealth funds and endowments slows, the appeal of the retail investor base has grown, said Steve Brennan, co-head of evergreen portfolio management for Hamilton Lane Inc.

"The high-net-worth space has none of those fundraising challenges that institutional investors are facing today. They have little to no exposure to the private markets, and they are just establishing allocations," Brennan said.

Preqin recorded 141 evergreen fund launches since 2019, including five this year between Jan. 1 and March 25. They target private equity, private debt, venture capital, real estate, infrastructure, natural resources and multi-asset investments.

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Private equity evergreen funds are part of a wider world of primarily private open-ended funds attracting wealthy individual investors. Open-ended funds include vehicles from business development companies, European long-term investment funds, interval funds, long-term asset funds and nontraded real estate investment funds. These funds numbered 531 globally in 2024, up 8.4% from 490 in 2023, according to Preqin data.

Hamilton Lane estimated that all open-ended funds account for about 5% of global private market assets under management, or $700 billion, and predicted their share would grow to 20% in a decade.

Outlook

At the start of April, HarbourVest announced the launch of HarbourVest Private Investments Fund, its first evergreen private equity fund for US retail investors, in response to rising demand, said Monique Austin, leader of the firm's evergreen solutions team. The bar for access is set at the level of qualified clients.

Austin said further regulatory hurdles would have to fall for HarbourVest to offer similar products to a wider group of retail investors, adding that the shift could begin under US President Donald Trump's pick for SEC chair, Paul Atkins, who is viewed as favoring a lighter regulatory touch.

"We're quite optimistic about the experience that the incoming chief of the SEC brings in this space," Austin said.