How do you choose a good Evergreen fund?

How can you identify a good evergreen fund? This question is coming up more and more often, even though this investment category is still in its infancy and its track record remains limited. Evergreen funds have primarily emerged in recent years to meet the liquidity needs of retail investors, whereas institutional investors have been investing in private equity for about 60 years through traditional “vintage” funds. Not all evergreen funds are created equal: some focus on debt, real estate, or infrastructure, but very few are 100% invested in private equity, as they are complex to manage. The key question is what the fund actually holds. Why would a “ Fund manager ” put its best assets into such a fund, at the risk of no longer being able to sell its vintage funds to institutional investors? Only a handful of managers worldwide opt for an open architecture, investing with the best external managers. Structuring liquidity is just as important, including “gates”—mechanisms that allow for the temporary limitation or suspension of redemptions. Any evergreen fund must, in fact, balance the performance of illiquid assets with the partial liquidity offered to retail investors. Management and performance fees also warrant careful scrutiny. Finally, the returns on evergreen funds remain structurally lower than those of the best vintage funds—a gap that many investors accept in exchange for true liquidity.

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