In The News
Semi-liquid funds (also referred to as evergreen funds) and other complex structures have increasingly become mainstays in the private market landscape. Firms best positioned to capitalize on this momentum will be those with precise, yet flexible operating models equipped to support bespoke structures, complex liquidity mechanics, and growing demands for data transparency.
In recent years, evolving fund structures, regulatory reforms, and expanding distribution channels have broadened access to alternative investments beyond traditional institutional investors. In Europe, for example, the revised European Long-Term Investment Fund regime (ELTIF 2.0, Regulation (EU) 2023/606) and the UK’s Long-Term Asset Fund (LTAF) under the Financial Conduct Authority (FCA) Handbook (COLL 15) are specifically designed to facilitate, and in some cases broaden, investor access to private market strategies. Alongside these, jurisdictions such as Luxembourg and Singapore have introduced flexible fund vehicles (including the Reserved Alternative Investment Fund (RAIF) and the Variable Capital Company (VCC)) that support the structuring and distribution of alternative strategies, though these are generally targeted at professional or well-informed investors. In the Asia-Pacific region, frameworks such as Singapore’s VCC regime and Australia’s managed investment scheme (MIS) regime continue to support the development of semi-liquid and private market products.
Due to this evolution globally, operational agility is increasingly recognized as a foundational requirement for private market operations and asset managers seeking to scale effectively.
Semi-liquid Fund Operations
Asset managers continue to launch complex semi-liquid funds in addition to accessing secondary markets and continuation vehicles. Semi-liquid or evergreen fund structures are generally described as neither fully open-ended nor closed-ended funds with continued investment and redemption periods. Expanding into these complex structures introduces operational demands that foundationally differ from traditional closed-end funds.
While evergreen structures vary, subscriptions and redemptions are ongoing and require carefully considered liquidity. NAV calculations, fee modeling and other key services become more complicated due to inflows and outflows with no fixed maturity date. Investor operations such as AML/KYC and transfer agency services are intensified due to ongoing fundraising. Notably, matching liquidity between investors and investments becomes complicated when compounded by slow pay provisions or lock-in periods.
In some cases, asset managers are trying to “fit a square peg in a round hole,” using operating models originally designed for more standardized funds and investor pools to support unique structures with diverse investors. Unsurprisingly, the result is often significant operational risk, and the potential for errors impacting fund managers and investors.
Managers looking to utilize bespoke fund structures should carefully consider their operating model to ensure it encompasses an agile approach with continuous refinement. At MUFG Investor Services, our technology and solutions are custom-fit to meet the specific needs of evergreen funds throughout the investment lifecycle.
Liquidity Management and Redemption Planning
All semi-liquid funds share a common requirement: balancing investor access while investing in illiquid assets. Given this balance, when contemplating a complex strategy, managers may first consider the end stages of the fund lifecycle. How and when will investors access liquidity? How are redemption requests addressed? How will redemption proceeds be funded? What happens during periods of market stress? How and when will performance fees and carried interest be allocated?
Addressing these end stage questions at the onset helps inform decisions around portfolio considerations, liquidity reserves, valuation policies, and investor communications. There is also an impact to fund manager incentive structures, whether it be performance fees as traditionally seen in hedge funds or carried interest frequently seen in private equity or venture capital.
The calibration required for semi-liquid fund-of-fund (FOF) strategies remains an essential aspect of their design and ongoing management. Given the multi-manager structure, FOF liquidity management is more like a chain reaction, where each component influences the next. Portfolio-level cash flows need to be reflected as well as the timing of underlying manager distributions and capital calls. For example, if capital is unexpectedly called from the underlying portfolio, the fund needs to quickly ensure liquidity is available which could impact investor liquidity at the fund level.
Given our experience supporting semi-liquid funds, we know redemptions are not simple transactions and require continued workflows across core services. Redemption design is a key component, as redemptions need to be matched with the illiquid underlying funds. This may require liquidity sleeves, including those featuring cash or money market instruments, to support investor requests.
Additional liquidity tools firms may wish to utilize include gating provisions, notice periods, and swing pricing. At MUFG Investor Services, we partner with asset managers to provide customized fund administration and other services to support varying redemption needs.
Continuation Vehicles and Operational Complexity
Facilitating evergreen fund exits through secondary transactions creates unique operational considerations. Managers are increasingly turning to secondaries, with some reports indicating that continuation vehicles have tripled in deal volume since 2021 and accounted for approximately 14% of all private equity exits in 2025.
Continuation vehicles are an important General Partner (GP)-led secondary tool to offer liquidity solutions. However, these vehicles often result in additional valuation, governance, and other challenges as the manager is tasked with simultaneously addressing liquidity events while managing ongoing subscriptions and redemptions for large investor pools. Operational precision, in addition to timely access to reliable data, is required to streamline continuation vehicle processes and mitigate potential execution risk.
Data Governance and Reporting Transparency
Data consistency and insight are mission critical, yet managers often contend with fragmented systems, varying reporting requirements and non-standardized formats. Operational risk can emerge when managers are faced with navigating multiple systems for accounting, transfer agency, treasury, and other services.
Due to the continuous nature of semi-liquid funds, challenges are notably heightened with multiple share classes and more frequent valuation cycles. Version control issues also emerge as valuation updates are continually produced. As all investors do not participate in the same underlying investments at the same time, varying portfolio exposures and NAVs will result across the investor base.
To address these and other concerns, managers need strong data governance frameworks and an integrated approach with automated solutions. Experienced providers ease the operational burden for managers to obtain timely and accurate end-to-end reporting for complex fund structures and vehicles.
While deal making and returns will remain the top performance indicators, asset managers are increasingly impacted by their ability to support complex vehicles and reporting requirements. Firms that rely on trusted operational foundations to help streamline workflows and enhance transparency will be well positioned to embrace market evolutions and scale with confidence.
[1] See https://www.skadden.com/insights/publications/2026/04/insights-april-2026/mainstream-not-marginal
