The rise of evergreen funds is transforming the private markets landscape, with Hamilton Lane predicting a significant expansion over the next decade.
While these open-ended investment structures currently account for just 5 per cent of private markets, approximately $700 billion in assets, they are expected to grow to at least 20 per cent by 2035.
To reach this level, evergreen funds will need to expand at nearly 30 per cent per year, almost triple the historical 11 per cent annual growth rate of private markets.
One key driver, according to Hamilton Lane’s 2025 Market Overview, will be the US high-net-worth channel, where evergreen allocations currently sit at just 1 per cent. If this increases to 5–6 per cent over the next decade, the projected 20 per cent market share will be within reach.
According to the report, 415 new evergreen funds were launched globally between 2017 and 2023, with anecdotal evidence suggesting “hundreds of new funds under discussion and development at any point in time today”.
“The various types of evergreen funds that have exploded recently show no signs of slowing down,” Hamilton Lane’s report said.
“Institutional investors will increasingly adopt evergreen structures as yet another portfolio tool,” the alternative investment manager tipped.
According to the firm, their appeal lies in offering a balanced mix of institutional-grade private market exposure, user-friendly structures and some degree of liquidity.
“Our view is that evergreen structures will come to form a major part of the private markets landscape in a very short time frame, and their place in the landscape will not just be limited to retail portfolios.”
Hamilton Lane also expects evergreen funds to grow faster than the overall rate of public markets over the next five years.
“The growth of evergreen funds will result in the largest private markets firms getting larger and smaller private markets firms struggling to get any market share,” the alternative investment manager said.
Earlier this year, Hamilton Lane also discovered that Australian advised clients exhibited the highest enthusiasm for private markets out of all the regions, with 61 per cent of clients described as “very interested”. The US followed at 53 per cent for eager clients, Canada at 42 per cent, and Europe at 33 per cent.
