Designing a Private Markets Portfolio

Newsletter Review | August 2025

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Three considerations when selecting evergreens

Compared to traditional closed-ended funds, the success of evergreen funds depends more heavily on the fund manager’s continuous capital deployment capabilities, investment knowhow, and platform size – making manager selection critical. In particular, three aspects must be considered when evaluating evergreens:

1. ‍Liquidity management: While evergreen funds allow for periodic redemptions, liquidity is not guaranteed and must be managed effectively – especially if many investors seek to exit at once.
2. ‍Expertise and deal flow: The long-term success of an evergreen fund depends on the manager’s ability to continuously source high-quality deals, maintain deployment pace (as capital inflows often incur monthly), and ensure diversification.
3. ‍Valuation discipline: Equally important is the manager’s ability to value assets accurately and frequently, as most evergreen funds provide monthly unit pricing.

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The core-satellite playbook

By combining closed-ended and evergreen funds, investors can build a Private Markets portfolio that is both easily accessible and strategically focused. This is often referred to as a "core-satellite" model. Evergreen funds can reflect the broadly diversified core of the portfolio, while closed-ended funds serve as satellites, allowing for targeted investments in specific sectors, geographies, or strategies.

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The core-satellite model enables effective capital management (as exemplified below). Distributions from closed-ended funds can be reinvested into evergreens to keep capital deployed and maintain the desired allocation. Conversely, capital in evergreens can be redirected to closed-ended opportunities when the right ones arise.

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