Last week, I moderated a session at the CII Private Assets conference on the latest trend: “evergreen” strategies. We all know our industry loves a fancy term (this one clearly borrowed from the tree, I guess). Evergreen funds have no fixed end date and usually offer some liquidity, unlike traditional closed-end funds, where your money is locked up for 7–10 years with pretty much no way out.

Like everything, there are pros and cons, and we discussed how some assets are better suited to an evergreen structure than others. For me, the key point is that in a major market dislocation, liquidity will vanish, as everyone runs for the exit and the fund suspends redemptions. This is why it is important to understand the technical details of how the evergreen structure works and to be clear on why you’ve chosen this structure and the assets that back it.

Liquidity is something I have a real bee in my bonnet about. The truth is it doesn’t matter… until it does. By then, it’s too late. It’s something you need to be aware of and manage at the total wealth level.

That brings me to another trend we’ve seen: the surge in LITs, LICs and ETFs backed by illiquid assets such as private credit and private equity. These products often claim to provide liquidity where, in reality, the underlying assets are anything but liquid. I worry about the ability of retail investors (the so-called “mums and dads” investors) to fully understand what they’re buying. Caution is warranted here. At the end of the day, the assets remain illiquid, and in a major market dislocation, things can turn ugly. Caveat emptor.

Kind regards,

Shelley Marsh
Outsourced Chief Investment Officer (OCIO) & Founder
Wealth Differently

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