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SEPTEMBER 2026
P R I VAT E E Q U I T Y W I R E
PLATFORM FOR DEMOCRATISATION THE EVOLVING ECONOMICS OF SEMI-LIQUID FUNDS
OV E RV I E W
EXECUTIVE SUMMARY
CONTENTS
In the transition from a theoretically phenomenal concept to a practically challenging reality, the democratisation of private markets has offered up a number of lessons.
KEY FINDINGS
3
For one, the industry needs clearer definitions – of the investor base being targeted, the extent of progress down the wealth chain, the liquidity parameters of the product, and the potential trade-offs between liquidity and performance. Education, which is seen as paramount, is futile if the rules of the game remain ill-defined.
SECTION 1
4
Also of the essence are boundaries. In chasing convergence between the public and private markets, there is a need to draw clear lines of what is desired, feasible and valid when it comes to mirroring the investor experience. The mechanics behind convergence represent a complex web of misaligned incentives, fragmented information flows and mismatched liquidity profiles, which need addressing if greater adoption is to be achieved. By exploring the demand drivers, portfolio construction, marketing, innovation, operational framework and administrative models of semi-liquid funds, this report uncovers wisdom drawn from democratisation so far, and lays down parameters for further penetration of private markets into the wealth and retail investor base. A special thank you to Caceis for making this research possible, and for lending in-depth operational expertise to the report commentary.
AFTAB BOSE
NEW DEFINITIONS
SECTION 2 CONVERGING EXPERIENCES
10
METHODOLOGY This research is based on a Private Equity Wire® survey of 110 private markets managers, with responses collected between June and August of 2026. Report commentary is based on Private Equity Wire®’s editorial analysis, and in-depth, qualitative interviews with industry experts and participants.
HEAD OF CONTENT
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KEY FINDINGS
41%
Say end-investor liquidity needs are the primary growth driver for semi-liquid funds, compared to 23% that say retail access expansion
32%
Say rebranding away from semi-liquids is the best strategy to address redemption challenges, while 47% say education and 26% say innovative portfolio construction
56%
Say multi-asset platform investments should be mirrored from the public market experience, followed by 41% that say digitalised portfolio monitoring
40%
Say a misalignment of priorities/incentives is the biggest pain point across the semi-liquid investment value chain, followed by manual processes for 20% and fragmented data for 15%
42%
Say they now structure their semi-liquid funds as a sleeve within a wider umbrella structure, while the rest administer them as standalone funds
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NEW DEFINITIONS Setting the parameters for the democratised access to private markets – across investors, produc ts and expec tations At the core of the private market pursuit for wealth and potentially retail capital is a debate around definitions. What do firms mean by wealth investors? How are retail investors defined? And, more to the point, what is the level of sophistication among this investor base? In many ways, sophistication is tied to liquidity. A more sophisticated investor would have the capacity and understanding to take a longerterm view on their private markets investments. Still, despite the fact that the current private
markets investor base is on the upper end of the sophistication spectrum, liquidity demands are elevated. This is not based on the headlines. Private Equity Wire®’s Q3 2026 Manager Survey finds that end-investor liquidity needs are the primary driver of growth in more liquid private markets products – variably described as open-ended, semi-liquid, hybrid, interval or evergreen funds – as cited by 41% of firms (see Figure 1.1.)
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Mitchell Caplan, CEO of Willow Wealth, stresses the importance of defining and understanding the investor base. “Being an accredited investor or a qualified purchaser does not necessarily entail sophistication. It means those investors have enough wealth to theoretically bear loss, but the assumption that they will be willing to forego liquidity is what creates a mismatch.”
Fig 1.1. Growth drivers for semi-liquid funds
6% 5%
11% 41%
14%
For many firms, the strategy has been to target the uppermost segments of the wealth space with semi-liquid fund products to ensure a degree of stability. According to Paul Newsome, Head of Investment Solutions and Capital Formation at Sagard, these funds solve for two problems: “One is that in the wealth space there’s an under-allocation to PE. Wealth represents around half of overall AUM in the whole investment sector, but only around 10% of PE AUM. The rest of the 90% is institutional. “Secondly, the promise of closed-end funds has been difficult to live up to. Investors in traditional funds expect to receive all their cash back after ten years, with initial distributions materialising between years five and eight. That’s not happening for various reasons, and evergreen funds provide investors with controlled exposure to private markets.”
23% End investor liquidity needs Retail access expansion Marketing and competition for capital End investor capital efficiency needs Intermediary demand generation Other
Retail access expansion, marketing and competition for capital, and end-investor capital efficiency were together cited by 48% of firms as the primary growth drivers for semiliquids. Having tapped into a greater share of this market, the challenge is now to firm up definitions – of the end investor base, as well as the product itself.
Expectation mismatches have created very public challenges this year, and in solving for them, communication and definition take precedence over operations. Nearly half (47%) of all firms say greater investor education and awareness will be their strategy to address redemption challenges, while short of a third (32%) say rebranding away from the term ‘semiliquid’ is the best way forward (see Figure 1.2.). Raluca Jochmann, Head of Private Markets Solutions at Allianz Global Investors, says: “The industry has made significant progress in broadening access to private markets, but with greater accessibility comes a responsibility to ensure investors fully understand the longterm nature of these investments and the circumstances under which redemption requests may be delayed.” “Terminology also matters. Labels such as “semi-liquid” can sometimes create unrealistic expectations if investors focus more on the word “liquid” than on the realities of the underlying assets. Clear communication about investment horizons and liquidity mechanics is therefore critical.” Stephanie Richards, Head of EMEA Alternatives for Third Party Wealth at Goldman Sachs Asset Management, has a similar view: “While some might call these vehicles “semi-liquid”, we think it’s important to call these vehicles evergreen or open-ended given it’s possible the liquidity is not necessarily always available depending on the redemption requests/gates.”
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According to Newsome, education around gating in particular is of the essence. “If gates do get triggered, there are maybe two different situations. One is a market crisis overall, like 2008, in which case gates are crucial to protecting existing investors/investors staying in the fund. Certain closed-end private equity funds that came through 2008-09 ultimately generated strong returns. “The second is if the fund is underperforming, in which case redemption pressure reflects a deeper problem with the fund. Maybe it grew too fast, deployed into low-quality assets, or promised liquidity terms that were never really matched to the underlying portfolio. There I would say the gate is a symptom rather than a safeguard. Education and transparency around liquidity, returns and portfolio fit are as essential as ever.” Internal strategic and operational measures such as innovative portfolio construction and tighter gating were each cited by around a quarter of firms as effective strategies to address redemptions. Jochmann says: “Education alone is not sufficient. Strong product design remains necessary. Tools such as lock-up periods, notice periods, redemption limits and gating mechanisms are important safeguards, not failures of the structure. “The industry’s objective should not be to maximise liquidity at any cost. It should be to provide investors with appropriate and predictable access while preserving the integrity
of the investment strategy. In private markets, prudent liquidity management and investor education must go hand in hand.” Managers employ a range of strategies for portfolio construction. Many (35%) hold a higher proportion of liquid assets than closed-ended funds, while 32% hold shorter-duration illiquid investments (see Figure 1.3.). Secondary sales for liquidity, either ad-hoc (19%) or regular (16%) combined make up a very popular strategy. Newsome says: “Different closed-end fund strategies have varying duration profiles. With our European evergreen fund, in the buildup stage we are doing more secondaries. In the more steady-state phase, it will map approximately 50% secondaries and 50% directs and co-investments.
Fig 1.2. Strategies to address redemption challenges
Investor education and awareness 47% Rebranding away from ‘semi-liquid’ 32% Innovative portfolio construction 26% Tighter gating 24% Longer hard lock period 21%
“Our concentrated co-investments lie in the middle market, so they have a typical holding period of around five years. The secondaries typically have a holding period of two-to-four years. Blending those together is intended to support the desired cash-flow and duration profile, allowing us to seek to balance quality and performance with liquidity needs.” “There shouldn’t be an over-reliance on these discounted secondaries. These are tempting for an evergreen manager, as it may result in an immediate pop on reported performance, which may subsequently moderate or deteriorate. On the other hand, what tends to happen with high-discount secondaries is an initial pop in performance followed by a deterioration. Jochmann adds: “The key is to mirror the
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Fig 1.3. Portfolio construction for semi-liquids
19%
16%
Ad-hoc secondary sales to meet liquidity demands
Regular secondary sales for liquidity buffers
30%
Same portfolio construction as closed-ended
35%
Higher proportion of liquid assets
32%
Shorter-duration illiquid investments
14% Higher cash buffer
investment exposure, not necessarily every structural feature. Investors choose private markets to access the illiquidity premium and the characteristics of assets such as infrastructure, private credit and private equity. That exposure should remain at the heart of the portfolio. “At the same time, managers must recognise that evergreen vehicles operate differently from traditional drawdown funds. Liquidity management, redemption governance and
portfolio monitoring become integral parts of portfolio construction.” Interestingly for 30%, portfolio construction for semi-liquids is the same as closed-ended funds. Concerns remain over potential performance dispersion between open-ended wealth products and closed-ended returns aimed at institutions. Some argue that the cash drag in semi-liquids offsets dry powder in traditional funds. According to Caplan, some dispersion is to
be expected. “By definition, running a liquidity sleeve in order to avoid forced sales will bring down the return of an interval fund. The tradeoff is return for semi-liquidity. Some investors understand this while others will pick something more to their comfort. Our job is to really give choice and education.” “There are question marks around the argument that dry powder in traditional funds offsets the cash drag in intervals. Closed-ended funds have credit lines they can use for initial investments,
and capital calls are made only at the point of final funding. There is a cash drag if capital is called too soon, but most of the sophisticated investors are managing through that.” To summarise, there appears to be a degree of divergence in what can be offered from a portfolio construction and investment perspective in a closed-ended versus an openended structure. The same can be said of the investor experience, which we will explore in detail in section two.
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“Being an accredited investor or a qualified purchaser does not necessarily entail sophistication. It means those investors have enough wealth to theoretically bear loss” Mitchell Caplan, CEO, Willow Wealth
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KEY FINDINGS
Tackling redemptions:
Communication trumps operations
External communication strategies
Internal operational strategies
47%
32%
26%
24%
Education
Rebranding
Portfolio construction
Tighter gating
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CONVERGING EXPERIENCES Exploring the extent to which the public and private markets investor experience and operational framework can mirror each other With a clearer definition of the investor base and product set in hand, the next port of call is to refine the investor experience of semi-liquid funds. The push towards retail and wealth investors is seen to symbolise a convergence of public and private markets. And while there is impetus to mirror the experience directly to the extent possible, there is a growing acknowledgement of the boundaries. For some, the line needs to be clear and unequivocal. Stephanie Richards of Goldman Sachs Asset Management says: “Public market investing is relatively easier to do. One needs
a simple brokerage account and can easily buy and sell securities that trade daily with full transparency into pricing and liquidity. On the private market side, clearly the level of transparency, pricing, liquidity and volatility is very different. We think it makes sense that the experience of investing in private markets is different from public markets given the illiquidity and risk/return profile of the underlying investments.” Still, our survey finds an acceptance among firms that some aspects of the experience should be mapped over. A multi-asset platform
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Fig 2.1. Facets of public markets that should be mirrored in semi-liquids 56%
Multi-asset platform investments Digitalised portfolio monitoring Daily pricing
16% 41%
Fig 2.2. Pain points across the investment value chain (managers, platforms, intermediaries, investors) 8% 5%
40%
13% Misalignment of priorities/incentives Manual processes and lags Fragmented data and information Regulatory complexities Poor system integration Other
15%
experience is top of this list, cited by 56% of firms, while 41% say digitalised portfolio monitoring can be replicated (see Figure 2.1.). Raluca Jochmann of Allianz Global Investors says: “We should mirror the aspects that improve accessibility, transparency and usability, while being careful not to create unrealistic expectations around liquidity. Investors should be able to access private markets through the same wealth platforms where they hold traditional investments. Consolidated portfolio views, regular statements and efficient subscription processes are all positive developments that can improve the investor experience. “However, private markets remain fundamentally different from public markets because the underlying assets are not traded daily. The structure should reflect the characteristics of the asset class rather than force private assets into a public markets framework. In our view, successful distribution means making private markets easier to access and understand, not pretending they are public markets.” Lowest on the list of replicable items is the much-debated subject of daily pricing, cited by only 16% of firms. This is widely viewed as an add-on that serves as a regulatory unlock for pension and insurance capital, rather than an inherent value-add from an investment perspective. Limitations largely relate to validity.
Richards says: “With the emergence of evergreen private markets structures, valuations for private investing strategies have generally trended from being quarterly to being monthly. Given the underlying investments in private markets strategies are illiquid – be it real estate, infrastructure, a privately held company or a loan depending on the asset class – they do not price or trade daily. We think having pricing that aligns with the subscription and redemption frequency of the vehicle makes sense so investors know where they are buying and selling.” Jochmann adds that daily pricing is not a pre-requisite for successful private market investing. What matters is robust and transparent valuation governance. “Investors need confidence that valuations are fair, consistent and reflective of underlying asset values. Increasing valuation frequency may improve user experience, but it should never create the illusion that the underlying assets have become liquid simply because a NAV is calculated more frequently. The focus should be on valuation quality rather than valuation frequency.” Valuation techniques are increasingly under scrutiny, and need refinement to account not just for balance but for speed in an open-ended fund. According to Paul Newsome of Sagard, having up-to-date information on portfolio company performance is crucial, but this needs to be complemented with links to traded companies.
20%
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MOUNIR ABOUFARAS
Group Head of Client Design & Strategic Integration for Private Assets, on servicing different operating rhythms within one fund
For me, this is one of the most interesting aspects of hybrid funds. Different parts of the same portfolio can operate at completely different speeds. Liquid assets may be priced daily and settle within days, while private assets may rely on quarterly valuations, capital calls, distributions or information received with a significant time lag. At the same time, investors may expect monthly or quarterly subscription and redemption opportunities. The servicing challenge is therefore not simply to administer different asset classes. It is to synchronise different operating cycles within the same fund. This impacts the entire servicing chain: NAV production, valuation governance, cash forecasting, liquidity monitoring, investor dealing, reconciliations and reporting. These activities can no longer be viewed independently; they increasingly need to operate as one interconnected framework. In this environment, the role of the asset servicer is progressively moving from processing transactions to orchestrating the fund lifecycle.
CUSTOMISATION VERSUS SCALABILITY Clients increasingly expect asset servicers to take on activities they previously performed internally, from sophisticated reporting and customised data to additional operational services.This creates an important challenge. Responding to individual client needs is becoming part of the servicing proposition, but creating a new manual process or specific IT development for every requirement is neither scalable nor sustainable. The objective must therefore be to industrialise customisation: building flexible solutions that can accommodate different client requirements while maintaining automation, strong controls and operational efficiency. DATA IN FOCUS This evolution also changes the role of data. Historically, data was largely an output of fund administration. Today, clients increasingly expect it to be a service in itself. They want consolidated portfolio information, greater look-through, liquidity information, investor activity and operational KPIs, sometimes across several funds, structures and jurisdictions.
The difficulty is that this information can come from multiple internal systems, external managers and underlying investments, with different formats and frequencies. The ability to collect, reconcile, normalise and deliver this information consistently is therefore becoming a core part of the servicing model.
become simpler, with greater transparency, better access to data and fewer operational touchpoints. For me, this is where alternative asset servicing is heading. The differentiator will increasingly be the ability to combine alternative-fund expertise, operational orchestration, data and technology with simple and integrated client experience
MAKING COMPLEXITY INVISIBLE
If I had to summarise my perspective in one sentence:
The next step is to provide clients with one integrated digital environment where they can access their data, monitor activity, interact with their asset servicer and follow the lifecycle of their funds, regardless of the operational complexity behind the scenes. This is not simply a future vision. It is an area in which we are investing significantly and actively working today. We are developing a more integrated digital client journey, bringing together data and interactions that historically sat across different systems and processes, with the objective of providing clients with easier access to information and a more seamless servicing experience.
“The challenge is not to make illiquid assets liquid. It is to build the right liquidity and servicing framework around them, connecting valuation, cash, data and investor activity without passing that complexity on to the client.”
For hybrid and alternative funds, this is critical. As servicing becomes more complex behind the scenes, the client experience should
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KEY FINDINGS
Pain points across the semi-liquids value chain
40%
Misalignment of incentives/priorities
20%
Manual processes and lags
15%
Fragmented data
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Fig 2.3. Preferred mode of fund structuring
58% Standalone semi-liquid fund
Newsome says: “If your portfolio is 20% exposed to healthcare and public healthcare companies in your subsectors go down by 20% during the quarter, you need to somehow properly reflect that in your valuation, because even if the companies in your portfolio are performing well, their valuations are expected to go down, or else it presents an arbitrage opportunity.” Fundamental to mirroring aspects of the public market experience and building a more transparent proposition is the free flow of information exchange. At the moment, given the range of stakeholders involved in the semiliquid value chain, this is far from streamlined. In the first instance, firms report a misalignment of priorities and incentives as a
significant pain point, cited by 40% (see Figure 2.2.). End-investor preferences and demands are influenced by adviser intermediary fiduciary responsibilities, and vice-versa. Distribution platforms favour marketing materials and education capabilities, creating imbalances of access. And there are many more examples. Entirely aside from this, more than a third of firms say their biggest pain points relate to either manual processes and lags (20%) or fragmented data flows (15%). Investors are accessing open-ended funds for their ease of use, efficiency of capital deployment and, to an extent, liquidity. Delivering this experience is far from a simple undertaking, and will require firms to collate and consolidate their data and operational infrastructure – feeding across the entire investment value chain.
42% Semi-liquid sleeve in umbrella structure
Newsome says: “Subscription and redemption requests at scale can be much more complex compared to a closed-end shop. Firms need a platform that helps with that. Cash management entails anticipating distributions from underlying portfolio companies and evaluating when contributions are required, so that the cash buffer can remain in balance. It shouldn’t climb to 20% or 30%, but it shouldn’t fall to 5% either.” Streamlining the back end is crucial for enabling effective management of semiliquids. While firms traditionally structured and administered these funds on a standalone basis, and this remains the method for more than half (58%), others are increasingly positioning them as semi-liquid sleeves within an umbrella fund structure (see Figure 2.3.).
Umbrella structures can have their own operational burdens, including the varying liquidity profiles (41%), allocating shared fund expenses across compartments (18%) and producing a single, audited annual report on illiquid asset values (15%) (see Figure 2.4.). But if managed externally by a service provider, these structures can have a wide range of benefits, and potentially feed into a more platform-style investor experience that more closely mirrors public markets (see Boxout). According to Mitchell Caplan of Willow Wealth, delivering a more converged experience should undoubtedly be the direction of travel. “In the world of private markets, certainly for retail adoption through the advised and the direct-to-consumer channels, we’re still in
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the early stages of getting to mass adoption. The products are hardly yet fungible or commoditised, though some are becoming more so.” “There have been decades now of experiential digital experiences created across every feature and flavour of public market assets, whether in an online broker, a wirehouse or a trading shop, whatever it may be. Journey matters, and customer experience matters a lot. I think we owe it to ourselves to try to create a parallel construction of the experience that a self-directed investor is used to in the public markets with whomever they do business with, so it feels consistent and legitimised in a way. A more commoditised offering would, according to Caplan, move the industry beyond early adopters to mass adoption. There is certainly headroom, with private markets currently occupying a very small share of the global wealth wallet, not to mention retail capital. Still, many believe the industry should retain its unique structural features to a large extent. How far the convergence progresses, both from an operational and investor experience standpoint, will be fascinating to watch.
Fig 2.4 Most administratively burdensome aspect of umbrella fund structures
41%
18%
Managing distinct liquidity profiles under a single Prospectus
Allocating shared fund expenses across compartments
15%
Producing a single, audited annual report on illiquid asset values.
44%
Firms below $10bn AUM struggle more with this aspect, compared with 7% among the $10bn+ subset.
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“In our view, successful distribution means making private markets easier to access and understand, not pretending they are public markets” Raluca Jochmann, Head of Private Markets Solutions, Allianz Global Investors
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