How Do You Choose a Good Evergreen?

Evergreen funds are a relatively recent way to gain access to private equity, particularly for private investors.
However, not all Evergreen funds are structured the same way.
The first factor to analyze is the fund’s investment strategy.
An Evergreen fund may invest in private equity, debt, real estate, infrastructure, or a combination of asset classes.
It is also important to distinguish between funds that invest solely in assets managed by their own manager and those that operate under an open-architecture model.
An open-architecture fund allows investors to select different managers and different opportunities in the market.
Liquidity is another key criterion to consider.
Private equity assets are inherently illiquid, whereas an Evergreen fund seeks to offer investors greater flexibility.
It is therefore important to review the redemption terms and check for any mechanisms that might temporarily limit redemptions.
The duration of the assets held in the portfolio also plays an important role in this liquidity management.
Management fees, performance fees, and the fund’s transparency must also be examined.
Ultimately, a good Evergreen fund must strike a balance between exposure to private equity, performance potential, and the investor’s ability to recover their capital.

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