Open-ended “evergreen” private-market funds are drawing large inflows and leaning heavily on secondaries. That structure has a direct impact on how early performance appears. “Those assets are often bought at a discount, and you tend to see an immediate uplift in reported performance,” said Evan Clark, a senior private-market analyst at the EDHEC Infrastructure & Private Assets Research Institute.
Once confined to specialist corners of the market, evergreen vehicles are moving quickly into mainstream portfolios. They offer rolling subscriptions and redemptions, smoother return profiles and more frequent pricing — features that sit uneasily alongside assets whose value is realised over long horizons.
As these vehicles scale, the key question is shifting. It is no longer whether private markets will continue to grow, but how their performance is generated and presented, particularly in the early years of a fund’s life.
At the Private Markets Valuation Conference hosted by PwC Luxembourg on 20 January, those timing effects were a central theme. “Private markets continue to grow in size, influence and complexity,” said Grégoire Huret, advisory partner and deals leader at PwC Luxembourg, adding that this growth comes with rising expectations from regulators and investors for “rigorous, transparent and decision-useful valuations”.
From niche to scale
Clark, a regular reference point for institutional investors analysing private-market performance, set out the scale of the shift in the United States. “In the US, evergreen private equity has grown from practically nothing to about $80,000m in assets under management,” he said. “It is over $500,000m if you include all other asset classes.”
About 40% to 50% of the assets under management in these funds is going into secondaries.
European and UK markets remain smaller, but the direction of travel is similar. Clark pointed to regulatory changes — including the revised ELTIF regime — as a catalyst for more open-ended structures that mirror US formats and strategy mixes.
Why secondaries dominate
The composition of those funds matters as much as their growth rate. “About 40% to 50% of the assets under management in these funds is going into secondaries,” Clark said.
Secondary exposure fits naturally with an evergreen format. It provides immediate portfolio breadth and allows capital to be deployed without the long ramp-up associated with primary deal origination. It also aligns with the promise of more frequent dealing and reporting, particularly as demand grows from long-term allocators seeking private-market exposure without decade-long lock-ups.
Returns pulled forward
That strategy mix has a predictable side-effect: it can pull performance forward. In evergreen structures, return patterns that would normally be spread across a vintage can look concentrated in early reporting periods, especially when funds are built through secondary acquisitions.
You don’t achieve those returns immediately; they accrete over time.
The mechanism is straightforward. Buying seasoned assets at a discount compresses the classic private-equity J-curve and can turn what would normally be a slow build in returns into an early jump in reported value. “You don’t achieve those returns immediately; they accrete over time,” Clark said.
In an evergreen wrapper, where performance is observed continuously rather than by vintage, that early uplift can loom large. It can also make early track records harder to compare across funds that differ in the balance between secondaries and primary investments.
What early performance really shows
None of this makes the returns illusory. It does, however, change what early performance means — and what it does not. A fund reporting strong early gains may be reflecting transaction timing and valuation uplift as much as operational improvement in underlying companies.
The same applies to risk metrics. If reported volatility is subdued, the explanation may lie in valuation mechanics and the rhythm of reappraisals rather than in a genuinely lower-risk exposure. That is not an allegation of misconduct; it is a reminder that private assets can look smoother on paper than they feel in real time, particularly before a cycle has tested redemption terms and liquidity management.
For investors, the practical question is how much weight to place on short track records in products whose structure can front-load returns. For managers, the challenge is to explain those dynamics plainly — and to ensure that disclosures keep pace with a market that is scaling fast, broadening its investor base and inviting closer scrutiny of how private-market performance is measured.