Glossary · Structures

What is an evergreen fund?

An evergreen fund has no fixed end date and lets investors join and redeem on a regular schedule, often quarterly, instead of locking money up for a decade.

In practice

Evergreen funds are usually open-ended, with subscriptions and redemptions priced off a periodic NAV, so valuation policy matters a great deal. Redemption terms vary: gates, notice periods, early-redemption charges and suspension rights are common. They are often confused with interval funds, which are a registered form with mandated repurchase offers, and with closed-end funds that have a fixed term.

An example

Round numbers, not a real fund

Say an evergreen fund lets investors redeem up to 5% of its value each quarter. If more ask, the fund may pay out only part of each request.

Why it matters

It is how private assets are being sold to smaller investors, and its liquidity depends on how the fund manages its limits.

In the news

Related terms

Interval fundAn interval fund is a registered closed-end fund that offers to buy back a set share of its shares, between 5% and 25%, at regular intervals such as quarterly.
NAVNet asset value, or NAV, is a fund’s assets minus its liabilities. In private funds it is usually reported quarterly and rests on the manager’s valuations.
Fair valueFair value is what an asset would fetch in an orderly sale between willing buyers and sellers on the measurement day. Accounting standards require funds to report it.
BDCA BDC, or business development company, is a U.S. investment company that lends to or invests in private mid-sized businesses, and typically passes most of its income to shareholders.
LPAThe limited partnership agreement, or LPA, is a private fund’s main contract. It sets the fees, carry, investment limits and the rights of the manager and the investors.

The terms, in the news each morning.

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