We talk to a US-listed investment firm that focuses on private markets and has pushed into the "evergreen," or "perpetual" model of putting clients' money to work. It appears to be an expanding trend.

In the never-ending production of new terms for wealth managers to remember, another worth adding to the list is “evergreen.” And it’s not connected to ESG investing. 

The term applies to types of private market portfolios which – unlike traditional private market funds – are open-ended funds that offer monthly or quarterly liquidity, subject to caps. Sometimes these funds are known as “perpetual” funds, or perps. Another distinguishing feature is that there isn’t a defined lifespan during which a person holds an investment, with all the attendant capital calls and complexity in reporting. And that can appeal to clients who might not have the wealth for the $1 million-plus ticket sizes typically needed to get a seat at the table.

“It is part of the maturation of the private markets industry. In many ways, and for certain types of investors in particular, this model is more efficient and appealing,” Stephen Brennan, managing director and head of private wealth solutions at Hamilton Lane, said. 

For HNW individuals with little exposure in this area, the “evergreen” model is a good way to encourage people to enter the private markets space. A benefit, Brennan told Family Wealth Report, is that capital is deployed from day one. There are no capital calls and specific holding periods. This makes liquidity management much easier, he said.

In October 2022, Hamilton Lane, which specializes in private markets, launched the Hamilton Lane Senior Credit Opportunities Fund, a senior private credit vehicle intended for investors seeking safety and yield. Hamilton Lane is not the only “evergreen” player.Blackstone, one of the world’s largest businesses in the private markets space, has spoken about how this model is gaining ground.

The hope of such firms is that evergreen funds will help those affluent clients who are under-invested in private markets. For example, affluent private investors typically allocate only about 5 per cent to alternative investments although institutions can invest up to 20 per cent or more of all portfolios into the space.

Hamilton Lane’s work in the evergreen fund space started more than four years ago. Today its platform has more than $3.4 billion across three products, as of January 31, 2023. 

Such evergreen investments can be available for investors for at least $125,000 – far less than the traditional drawdown structure, Brennan said. 

Regulators considering whether to make such asset classes more available to the mass-affluent market will perhaps be more at ease with evergreen rather than drawdown models, he said. 

Among recent developments, in January this year Hamilton Lane announced that it had completed the final closing of a fund with about $2.1 billion in total commitments. High net worth clients are among the investors in the Hamilton Lane Equity Opportunities Fund V.

Hamilton Lane employs more than 575 professionals operating in offices throughout North America, Europe, Asia-Pacific and the Middle East. In total, it oversees nearly $824 billion in assets under management and supervision.