Ask anyone working at a large private markets investment manager and they will tell you that one critical area of focus recently is their private wealth strategy.
The past three years have witnessed an explosion of activity in the space, as managers race to launch new products to capture share in global high-net-worth and mass affluent investor portfolios — a true land grab moment.
Historically, private equity managers have financed investment activity via long-term, illiquid capital commitments from institutional investors in closed-end — aka drawdown — funds.
The mechanics of these vehicles are, in broad strokes, as follows:
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secure 10-year investor commitments;
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draw down capital and acquire stakes in private companies during a five-year investment period;
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sell these stakes after a four to six year holding period; and finally
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distribute capital and profits from these exits to investors.
Distributions are then recycled into new long-term commitments, and the process repeats.
Three years ago, these mechanics broke down. A boom in post-Covid mergers and acquisitions activity stalled in late 2022, and private equity exit activity dropped sharply as buyers and sellers struggled to agree on valuations amid rising interest rates, tepid economic growth, and a volatile macroeconomic environment. With exit activity stalled, distributions to investors slowed to a trickle and, predictably, global fundraising figures declined sharply.
This industry-wide drop in new institutional commitments coincided with both the easing of regulations around individual investors’ access to alternatives and the growing recognition that these investors represent a massive, underpenetrated source of capital.
According to Bain & Company’s Global Private Equity Report 2025, individual investors account for 50 per cent of global wealth but only 16 per cent of AUM in alternative investment funds — with roughly half of that allocated to private market strategies, data from McKinsey’s Global Growth Cube shows.
While alternatives have long been a staple in ultra-HNW and family office portfolios, allocations among investors with less than $5mn in assets — who collectively control more than $107tn in wealth, according to UBS’s Global Wealth Report 2025 — are virtually non-existent. That said, demand for alternatives is on the rise, as individuals seek to diversify beyond public equities and enhance expected portfolio returns.
Private market firms have stepped into this void, building out the products, relationships, and expertise needed to tap the private wealth channel. A new generation of semi-liquid, evergreen funds is appearing on private bank, wealth management and even robo-adviser platforms, supported by expanded distribution and marketing teams within fund managers.
Indicative of this growth, AUM in US-registered semi-liquid private equity funds rose fourfold between 2018 and 2023, according to Bain. And, as in so many areas today, private credit growth is leading the way: non-traded, evergreen BDC assets have grown from zero in 2020 to $200bn as of Q1 2025, according to S&P.
Evergreen funds increase and simplify access to private markets for individual investors. These vehicles offer low minimum investment thresholds and allow investors to subscribe or redeem capital at regular, fixed intervals, often on a quarterly basis.
The subscription and redemption process is akin to buying or selling mutual fund shares, with evergreen pricing based on a published net asset value. Evergreens also provide investors with immediate and consistent exposure to a fully-invested portfolio of private assets — eliminating the need to manage capital calls and fund recommitments.
That said, many of these products are new and relatively untested. While some prominent franchises have managed evergreen funds for over a decade, most have not. With short track records and investment dynamics that may be unfamiliar to retail investors, the onus is on private market firms to educate this audience not only on the benefits but also the risks of investing in these vehicles.
At the top of the list are risks associated with the liquidity mismatch between terms offered to evergreen investors and the illiquid nature of a fund’s underlying investments. Under normal market conditions, this necessitates maintaining a cash buffer to meet redemptions, which reduces overall fund performance in most market environments.
In times of market stress, when liquidity becomes constrained, fund managers may, at their discretion, impose redemption gates — temporarily halting redemptions to protect fund performance and remaining investors’ interests. So, ‘semi-liquid’ comes with a large asterisk.
Investors should also familiarise themselves with other liquidity and risk management tools associated with evergreens, such as lock-up and notice periods, swing pricing, redemption fees, and suspension rights.
While tapping individual investor wealth may represent the final fundraising frontier for private markets managers, product innovation is likely to continue. Recent announcements from several managers planning to launch blended portfolios combining private and public market content highlight both this potential and the ongoing blurring of the once clear lines between traditional and alternative assets.
Bowen White is the author of two books on private market investing and an adjunct professor at Singapore Management University