Family Offices Urged to Scrutinise Evergreen Fund Terms and Liquidity

Family offices are being urged to scrutinise evergreen fund terms as managers expand access to private markets through perpetual-life vehicles, according to a senior executive at a London-based family office.

Evergreen funds, which allow subscriptions at net asset value and periodic redemptions, have grown rapidly as family offices seek income and flexibility without long lock-ups.

Assets in evergreen funds have more than doubled to USD500bn since 2022, according to PitchBook.

However, evergreen fund liquidity requires assets to be marked to market and cash to be held back for redemptions, reducing capital available for deployment.

The executive warned that this opportunity cost can weigh on returns for family offices unless leverage increases.