The growing adoption of semi-liquid strategies has transformed the alternative investments landscape in recent years, opening the door for high-net-worth clients and wealth management channels to access portfolios and returns that were once reserved for large institutional investors. And although developments in large private credit funds have raised questions about liquidity and the ability to meet sustained redemption requests, the industry still sees demand remaining strong.
“Some media outlets have warned that recent redemptions in certain evergreen private credit funds could trigger a cascading effect. However, net flows into U.S. evergreen strategies have in fact remained healthy,” specialist asset manager Neuberger Berman noted in a recent report.
According to the firm, investor interest has remained resilient. Through the end of last year, the private equity evergreen fund industry recorded 60 consecutive months of positive flows, from 2021 through 2025. A similar trend occurred in private credit vehicles, although that streak ended in December last year when net flows turned negative.
This demand has fueled significant growth in the semi-liquid segment. For example, evergreen fund launches reached their highest level in a decade last year, with 123 new vehicles introduced, according to data from private markets specialist Preqin.
In addition, assets in evergreen funds reached 530 billion dollars by the end of 2025, an increase of more than 100 billion dollars compared with 2024. The most popular structures were BDCs (Business Development Companies), while alternative credit strategies accounted for the largest share of activity.
Given that alternative credit was also the segment at the center of liquidity concerns, it naturally became the focus of market attention. “The final quarter of 2025 and the opening months of 2026 have seen a wave of headlines surrounding actual and potential redemptions in several credit funds, including some managed by the industry’s most prominent firms,” Morningstar noted in a recent analysis.
The Liquidity Question
Rather than extinguishing interest in the evergreen format, however, Morningstar argues that these episodes “ultimately reflect a structural reality of which investors are becoming increasingly aware.”
Specifically, “outside of interval funds, the liquidity terms of semi-liquid structures remain at the discretion of fund boards and allow redemption restrictions during periods of market stress, and managers will exercise that ability when they believe it is in the best interest of the fund.”
The bottom line, according to the financial services firm, is that liquidity is not guaranteed, and it is the responsibility of asset managers to protect investors from destabilizing events. That said, liquidity management has become a reputational risk that investment firms must carefully consider.
In this regard, Morningstar data show that semi-liquid private equity funds hold, on average, 15% of their portfolios in liquid assets, while private credit funds hold roughly half that amount.
This is where managers face a delicate balancing act. “If they hold too little cash or too few easily marketable assets, they may struggle to consistently meet oversubscribed redemption requests. Holding too many liquid assets, however, can weigh on returns,” the firm warned.
Market Sentiment
Although liquidity concerns are centered on the intersection between wealth management channels and alternative investment structures, demand remains strong.
According to a survey of global private banks conducted by Hamilton Lane at the end of last year, 86% of clients plan to increase their allocation to alternative investments this year.
The experience of alternative investment platform CAIS supports that trend. Based on nine advisor-focused events held this year, the firm says it has observed a structural shift.
“As the alternatives landscape has expanded and implementation has become more accessible, the conversation around portfolio construction has evolved,” the company noted.
Advisors now have access to a broad range of strategies across private equity, private credit, real assets, and structured investments, moving beyond the traditional practice of grouping everything under a single “alternatives” umbrella.
Looking ahead, the expectation is that wealth management channels will continue gaining ground within the alternative investment ecosystem. Estimates from consulting firm PwC suggest that total investable global wealth could reach 481 trillion dollars by 2030, with two-thirds of that amount linked to the mass affluent and high-net-worth individual (HNWI) segments. According to PwC, these pools of capital are expected to grow at compound annual growth rates of 5.7% and 6.5%, respectively.
