Global Alternatives Strategist
Just as ETFs have made public stock market investments more accessible and easier to execute, a wave of innovation has lowered barriers to entry in private markets.
Illiquid assets like real estate, private equity and private credit have been repackaged for individual investors, with lower minimums, friendlier tax treatment and less paperwork.
Among these new structures are interval funds, tender offer funds, non-traded BDCs and non-traded REITs, each offering some form of periodic liquidity. Collectively, they are known as “semi-liquid” funds.
But as recent headlines on private credit remind us, the “semi” in semi-liquid deserves more attention than it typically gets. To understand why, it helps to step back and look at the original private market investment vehicle: the drawdown fund.
How drawdown funds work
The drawdown structure is still the workhorse of institutional private market funds, which hold more than 90% of global alternatives AUM. Consider a real estate fund that plans to acquire a portfolio of offices over several years. When an investor commits capital, they don’t send the full amount on day one. They pledge a total commitment, and the fund manager (GP) calls capital as properties are identified and purchased. Distributions flow back from rental income and the eventual sale of properties, typically over a 10-12 year life.
For institutions with long time horizons, the lack of liquidity is tolerable when returns compensate for it. But for individual investors, having their capital locked up for more than a decade is rarely desirable.
The benefits - and trade-offs - of semi-liquid funds
The semi-liquid fund is an attempt to meet individual investors halfway—offering a door that opens periodically, rather than one locked shut for a decade.
Semi-liquid funds offer periodic subscriptions, quarterly redemptions (usually capped at around 5% of net asset value) and an evergreen structure — a perpetual life with no fixed end date.
A further appeal is that investors buy into an already built-out portfolio of assets, which means their capital can begin compounding immediately rather than sitting through a multi-year ramp-up phase.
These features have proven appealing, and assets have grown accordingly. As of the end of 2025, evergreen and semi-liquid vehicles AUM amounted to ~$535bn.
That said, semi-liquid funds have not been without challenges. In early 2026, concerns about credit quality in semi-liquid private credit funds triggered a surge of redemption requests, and several funds imposed “gates”, or limits, on how much capital investors could withdraw. Without gates, a fund facing heavy withdrawals would have to conduct a fire-sale of assets at depressed prices — an outcome that would harm all stakeholders. Investors were reminded that semi-liquid can, at times, mean semi-illiquid.
Managing the trade-offs
Semi-liquid funds are the most accessible way to invest in alternative assets, but they do come with trade-offs. For many investors, the tradeoffs are worth making in exchange for access to unique investment opportunities with attractive returns. Investors considering these vehicles should size their allocations with the expectation that redemptions could be delayed when markets are unsettled, and view their capital as committed for the long term even if earlier liquidity might be possible.
By Aaron Mulvihill - April 24, 2026