The Rise of Evergreen Fund Structures for Private Credit
As private credit evolves, fund managers are increasingly turning to evergreen structures to meet investor demand for flexibility and ongoing access. Traditionally, private credit has been offered through closed-end fund structures, characterised by fixed terms (e.g. 7-10 years), capital calls and predefined exit horizons. However, evergreen fund structures — open-ended vehicles with no fixed termination date — are increasingly gaining traction in private credit.
The evergreen principle is not new, but more innovative structures are coming to market. Different fund types are characterised as ‘evergreen’, ranging from semi-liquid funds aimed at non-professional investors, through perpetual institutional vehicles, structured based on a ‘NAV-in, runoff-out’ investor liquidity model, to rolling vintage funds.
Why the Shift?
Investor Demand for Flexibility
High-net-worth (HNW) and institutional investors are seeking liquidity, regular income and simplified onboarding. Evergreen structures allow for:
- Lower barriers to entry compared to traditional drawdown funds
- Ongoing subscriptions and redemptions
- Regular income distributions
Appealing to Investors
Investors value the flexibility of evergreen funds, especially during redemption windows, given the slowdown in exit markets. HNW investors find evergreen funds appealing due to lowered entry barriers and increased flexibility. Evergreen funds reduce investor admin, with efficient due diligence and automatic reinvestment decisions. Longer tenure fosters strategic relationships. Institutional investors prefer structures that maintain pure asset class exposure. They lack immediate liquidity needs, but value long-term allocation flexibility and reduced operational burden from automatic reinvestment.
Private Wealth Channel Expansion
Platforms targeting private clients (e.g. wealth managers, family offices, RIAs) prefer evergreen vehicles for their:
- Simplified operations (no capital calls)
- Lower minimums
- Familiar mutual fund-like experience
Benefits for Fund Managers
Evergreen structures are an effective tool for fund managers to access capital from underexposed investors. They differentiate managers from competitors by addressing pain points of investing in closed-end structures. Evergreen capital is permanent, eliminating the pressure to liquidate assets at a fixed point. Unlike periodic fundraising, evergreen funds provide a continuous pool of capital, reducing the need for frequent fundraising. Managers can hold investments indefinitely, avoiding forced exits due to a fixed fund lifecycle. Fund managers can continue to the market to increase investment, benefiting from uplifts and boosting investor interest with good performance. This enables more frequent, ideally perpetual, fundraising, avoiding ramp-periods between separate fund vintages.
Stability of Private Credit
Asset-backed private credit’s low volatility, security package, predictable cash flows and floating rate nature make it suitable for open-ended strategies. Evergreen funds can continuously reinvest maturing loans and redeploy capital efficiently, potentially generating attractive risk-adjusted investor returns.
Operational Innovation
Advances in fund administration, valuation and liquidity management have enabled evergreen funds to operate with:
- Regular NAV calculations (e.g. monthly or quarterly)
- Transparent fee structures
- Prudent gating/redemption policies to manage liquidity risk
Conclusion
Evergreen fund structures are reshaping how private credit is accessed and managed. As private markets increasingly intersect with private wealth, evergreen funds offer a hybrid model that combines the return profile of private credit with the usability of public market vehicles. They are becoming an essential part of the toolkit for asset managers, wealth platforms and investors seeking income, diversification and access to alternatives in a more flexible format.
About Channel
Channel is a leading global alternative asset manager with deep industry expertise that deploys private capital across asset-based lending solutions to the innovation economy and specialty finance sectors. Since 2007, our investing expertise has served the financial return needs of our clients and provided businesses with innovative debt capital solutions for growth. As of June 30, 2025, Channel had approximately $26 billion in cumulative capital invested and facilitated financing in over 35 countries. For more information, please visit www.channelcapital.io.
