In 2025, the rapidly expanding secondary market is coinciding with the rise of evergreen vehicles targeting non-institutional investors. This is not a coincidence. This is a timely convergence of supply and demand that’s reshaping how capital flows into private markets.
Evergreen vehicles, which are open-ended funds often structured under the Investment Company Act of 1940 (“’40 Act”), have surged to an estimated $80 billion in assets under management, doubling over the past 18 months1. That figure likely understates the true scale, as several managers are deploying capital from private evergreen structures that are not yet required to disclose fundraising activity or dry powder levels.
At the same time, secondary markets are offering precisely what evergreen vehicles need: mature, cash-flowing assets that enable them to deploy capital quickly and diversify broadly. Jefferies estimates that approximately 41% of evergreen NAV is now allocated to secondaries2, reflecting a deliberate strategy to match investor demand for liquidity and immediacy with seasoned private equity exposure. In fact, several managers have launched secondaries-only evergreen vehicles to squarely capitalize on the market opportunity.
Despite broader market volatility, transaction activity across both evergreen and secondary strategies has remained resilient. The timing couldn’t be better, with non-institutional investors increasingly seeking semi-liquid access to private markets, and secondaries providing the mechanism to deliver it.
Why Wealth Investors Favor Evergreen Funds
Evergreen funds offer several advantages for high-net-worth individuals and wider non-institutional investors, who have historically faced barriers to private market access:
- Immediate capital deployment into seasoned assets
- Periodic liquidity, often quarterly, versus the multi-year lockups typical of traditional private equity
- Broad diversification across sectors, geographies, and deal types
- Lower investment minimums and streamlined subscription processes
Importantly, evergreen vehicles are structured to issue Form 1099s instead of K1s, which are more common in traditional private equity. This makes tax filings easier and faster for individual investors, especially those who file independently.
How are Evergreen Vehicles Participating in the Secondary Market
As evergreen vehicles gain traction, their role in secondary transactions is becoming more sophisticated and strategic. Key areas of participation include:
- Diversified, buyout-focused LP portfolios of well-known managers
- Upsizing total commitment amounts alongside drawdown fund capital into GP-led transactions
- Smaller, often syndicate-level check sizes into GP-led transactions
These approaches allow evergreen vehicles to deploy capital efficiently while maintaining flexibility across deal structures.
Why Investment Managers Are Eager to Launch Their Own Evergreen Funds
For investment managers, evergreen structures offer compelling advantages that align with long-term strategic goals. Key drivers include:
- Expansion of stable assets under management with sticky, perpetual capital
- Continuous capital raising with recycling of cash flows, resulting in a flywheel of investible capital
- Expanded buying capacity, which amplifies deal-winning power, especially in secondary transactions
To fully capitalize on these benefits, managers must invest in robust cash management capabilities and establish or rely on existing distribution networks tailored to non-institutional channels.
Looking Ahead: A Market in Transition
The rapid growth of the secondary market and the emergence of evergreen vehicles accessing private investments have converged at an opportune moment. Non-institutional capital is helping to address the secondary market’s undercapitalization, easing the liquidity strain caused by historically low distributions.
This trend is still in its early stages, with evergreen vehicles expanding in scale and diversity to meet rising demand. As these vehicles grow, they will support larger commitments to individual companies, increasingly replacing upsized drawdown fund checks with lead equity investments from evergreen capital pools. Investors will benefit from a broader range of evergreen strategies, including those focused on private equity secondaries, credit, or infrastructure. Importantly, the penetration of non-institutional capital into private markets remains limited. With global financial wealth exceeding $305 trillion3, even a modest reallocation toward private markets—particularly secondaries—could unlock a generational shift in capital formation.
1: Based upon publicly available data; Funds registered under the SEC’s Investment Company Act of 1940 (’40 Act).
2: Based upon publicly available data; Portfolio composition calculated as a % of NAV as of March 31, 2025.
