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The Evergreen Revolution: Bold Predictions for Private Markets' Next Frontier

February 11, 2025 | 6 min read

How permanent capital structures are poised to transform private markets for wealth management and institutional investing

Evergreen funds are experiencing the same dynamic they promise to investors: compounding. Early adoption has shown the structure works. What we believe comes next is acceleration at a speed that will make the current moment look like a warm-up.

At a time of year when many investors have just published their annual forecasts (including HarbourVest’s own Scott Voss, with his 2026 Private Markets Predictions), we are taking a step back to look further ahead.

Here are our top 10 predictions for what is in store over the next several years for evergreens — and private markets, as a result.

We have designed these topics to be thought-provoking. Will we get everything right? Most certainly not. Ideally, this serves as a conversation starter about themes that could shape the future.

1. The VC Arbitrage: Venture Capital Evergreens Unlock a $3 Trillion Opportunity

Despite venture capital and growth equity representing 27%¹ of the private equity market — with venture capital assets totaling $3.2 trillion — they constitute only 3.4% of evergreen funds. Private equity evergreens, meanwhile, achieved record inflows in 2025.²

The convergence of these trends represents one of the greatest arbitrage opportunities in private markets today. To capture it, in 2026, we expect that multiple venture capital and growth equity evergreen funds will launch, offering wealth investors access to alpha potential from investments previously reserved for institutions and ultra-high-net-worth individuals and families. By extension, we also anticipate that the related secondary market and technology-enabled liquidity options will continue to expand and mature.

2. The Continuation Vehicle Pipeline: Continuation Vehicles Become the "Quality Intake Valve" for Evergreen Private Equity

Secondary deal volume for private assets reached a record $226 billion in 2025, marking a 41% increase from 2024, driven by deal structure innovation and ongoing liquidity needs. Nearly half of all secondary activity, about $106 billion, was general partner (GP)-led transaction volume, with single-asset continuation vehicles representing roughly 42% of GP-led transactions.³

Our prediction here is that single-asset and concentrated continuation vehicles will emerge as the most reliable sourcing mechanism for evergreen private equity portfolios. This will enable GPs to hold onto their best assets longer and offer evergreens access to seasoned, risk-mitigated exposures with substantially lower J-curve drag. Continuation vehicles can function as a cost-effective way to extend transformational company growth without the disruption of a change-of-control event.

3. The Co-Investment Squeeze: Evergreen Funds Crowd Out Others

Approximately $16 billion was raised in evergreen funds in the first half of 2025 alone.

We think the proliferation of evergreen vehicles will create a structural crowding-out effect related to co-investment deals. Top-tier GPs now have to balance several constituencies all competing for the same excess capital from high-quality deals, including their own internal evergreen funds, long-standing institutional limited partners (LPs) with established co-investment rights, and growing demand from other evergreen funds to serve the wealth channel. This zero‑sum dynamic means that co‑investment opportunities may become materially scarcer in 2026 and 2027, particularly for smaller platforms. This scarcity could drive a strategic shift toward multi‑manager funds with embedded co‑investment programs, secondary‑focused vehicles that acquire co‑investment positions, or direct investment platforms. Access to top-tier GP co-investments will be a key differentiator for evergreen fund managers.

4. The Private Credit Expansion: Beyond Senior Lending to Structural Solutions

Private credit remains dominant, with direct lending assets tripling since 2022, but the future lies beyond vanilla senior secured lending as investors increasingly seek exposure to more sophisticated sub-asset classes.⁴ The volume of credit secondaries transactions rose from $6 billion in 2023 to $10 billion in 2024, with expectations to increase to more than $17 billion in 2025.⁵ The expansion includes credit secondaries addressing LP and GP liquidity needs, opportunistic credit strategies in distressed, special situations, and structured credit, and infrastructure and asset-based lending covering equipment, aircraft, shipping, and real estate-backed credit.

Investors seeking yield in a declining-rate environment, diversification from traditional fixed income, and inflation protection will drive continued expansion into these sub-asset classes, which we expect will command 35-40% of private credit evergreen allocations by 2027, up from approximately 20% today. Private credit secondaries could reach more than $40 billion in transaction volume by 2027, creating entirely new investment opportunities.

5. The Great Stress Test: Redemptions Expose the Unprepared

A market dislocation – whether a credit spread blow-out or macro shock – will expose which evergreen fund managers have genuine operational scale and structural safeguards versus those operating with fragile liquidity management. As Warren Buffett famously said, “It’s only when the tide goes out that you discover who’s been swimming naked.”

While investors like the liquidity features of evergreens, the funds typically also have some type of “gating” restrictions to limit redemptions, meaning they allow only a portion of assets to be redeemed within a set time period. When redemption requests spike simultaneously during market stress, funds without robust liquidity reserves will be forced to sell assets at below-market prices, destabilizing their portfolios. We believe this is inevitable.

Following this type of shake-out, capital will concentrate toward demonstrated performers and trusted brands with transparent, sound valuation practices. Regulators around the world will likely implement stress-testing requirements similar to those applied to banks and insurance companies, permanently changing the evergreen landscape.⁶

6. The Valuation Wars: AI Daily NAV Triggers Regulatory Focus

AI-powered valuation models are poised to become the industry standard for daily net asset value (NAV) calculations in evergreen funds. This technological adoption is likely to trigger fierce regulatory and industry debates.

For many evergreen funds, monthly or even daily NAV calculations are required. This creates challenges because many underlying investments are illiquid, are infrequently priced, and rely on differing valuation approaches. As a result, legitimate concerns about valuation accuracy persist. We believe the proliferation of AI-driven marks will spark controversies over transparency, “black box” methodologies, mark-to-model gaming, potential manipulation, and manager conflicts of interest in valuation governance. We expect the U.S. Securities and Exchange Commission (SEC) and international regulators to demand standardized valuation disclosure, independent third-party validation of algorithms, and enhanced audit trails for all machine-learning-driven marks by 2027. Some managers may challenge these requirements, while others will embrace transparency as a competitive advantage, creating a two-tier market of valuation credibility.

7. The Trans-Atlantic Takeover: ELTIF 2.0 Explodes Past €75 Billion

As of May 2025, a total of 159 European Long-Term Investment Funds (ELTIFs) had been registered, designed to make private assets more accessible to European retail and institutional investors.⁷ The pace of expansion is quickening. After 62 were authorized in 2024, there were over 80 new ELTIFs launched through the first three quarters of 2025.

The ELTIF 2.0 structure’s dramatic momentum in Europe, particularly in France where the government required insurers to allocate a portion of life insurance and pension savings to unlisted assets, demonstrates the power of regulatory support for democratizing private markets.⁸

Most respondents of an October 2025 Scope survey expected that by 2027, total ELTIF assets under management would reach €31-41 billion – a 30% increase from current levels (€20.5 billion in October 2025).⁹ We believe ELTIF assets will grow more quickly, surpassing €75 billion by late 2026, continuing the development of evergreen strategies designed to capture European wealth and institutional capital flows, creating truly trans-Atlantic product platforms.

8. The 401(k) Evolution: Private Markets in Defined Contribution Plans Start Slow, Transform by 2055

With guidance set to be issued soon, U.S. regulatory changes encouraging private market exposure in retirement accounts seem likely to accelerate the shift toward alternatives in defined contribution plans. We anticipate near-term adoption will be slow, as plan sponsors carefully consider fiduciary concerns, operational complexity around valuation and liquidity, participant inertia and low financial literacy, and limited product availability with appropriate fee structures.

However, we believe the 30-year transformation will be revolutionary. Personalized glide paths incorporating both public and private assets will become standard. Target‑date funds in 2055 could more closely resemble today’s endowment‑style portfolios.

By 2055, defined contribution plans may be largely unrecognizable versus today, with portfolio construction completely re-thought. Portfolios might include at least 15-25% private market allocations, with evergreen funds enabling seamless integration of private equity, credit, real assets, and infrastructure exposures as well as standard allocations to cryptocurrencies and digital assets. Concurrently, public market allocations could shrink to 50-60% of portfolios, compared with more than 95% today.

9. The Mass Customization Era: Fund-of-One Evergreens Become an Attractive Standard for Institutions and Family Offices

In our view, ultra-high-net-worth families, large advisor groups, and institutional investors will increasingly adopt high-touch, bespoke perpetual structures that integrate evergreen features and expertise to deliver against personalized objectives. This shift will represent a fundamental repositioning of evergreen vehicles – from liquidity-focused alternatives to institutionalized partnership platforms that emphasize long-term value creation.

We believe institutional evergreen separately managed accounts (SMAs) will be set up to deliver:

Bespoke strategy access and tactical portfolio construction: Customized exposure to niche sectors, emerging and longstanding managers, and/or proprietary deal flow with dynamic rebalancing and tactical decision-making authority.
Liquidity, cash, and exposure optimization: Tailored distribution policies and capital deployment pacing that match institutional cash flow requirements, liability schedules, or strategic reallocation needs without the constraints of standardized tender policies.
Continuous engagement and greater transparency: Ongoing knowledge transfer through dedicated investment teams, real-time portfolio monitoring, and collaborative decision-making that builds internal institutional capabilities.

This evolution recognizes that institutions and family offices value expertise, continuity, and structural alignment over liquidity optionality, positioning evergreen SMAs as perpetual partnership vehicles rather than quasi-liquid or finite-lived alternatives.

10. The Public-Private Convergence: Portfolio Construction Gets Reimagined

Evergreen funds can provide a simple way to manage private market allocations while delivering the benefits of compounding returns.

The artificial distinction between “public” and “private” markets will erode rapidly as wealth investors increasingly target exposure to equities, credit, and infrastructure with greater focus on risk-return profiles, liquidity needs, and time horizons than on public versus private investment classification.

Technology will evolve to meet the growing needs of wealth clients, with central hubs emerging where investors can easily buy and sell both public and private securities from a single dashboard. By 2028, we expect tech-enabled simple solutions will be available for rebalancing across public stocks, bonds, ETFs, and evergreen private market funds, with AI-powered portfolio construction tools recommending optimal allocations across the entire liquidity spectrum.

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Conclusion

We expect evergreen adoption will only compound from here, but truthfully there are myriad possibilities. We foresee potential impacts in areas we’ve covered: on private market asset classes themselves, evergreen fund operational models, and acceptance by various investor types.

What do you think?

Footnotes

Preqin Global Reports “Private Equity in 2026” and “Venture Capital in 2026” Venture Capital AUM is $3.2T (March 2025); Private Equity AUM excluding Venture Capital is $8.6T (December 2024)
Morningstar Pitchbook “Evergreen Fund Landscape” (Q4 2025)
Evercore Private Capital Advisory “2025 Secondary Market Highlights” (January 2026)
Morningstar Pitchbook “Evergreen Fund Landscape” (Q4 2025)
Jefferies “A Dramatic Shift in the Credit Secondaries Market” (July 2025)
AIF European evergreens already have liquidity stress-testing requirements.
ELTIF 2.0 – A Widening Investment Spectrum for Retail and Institutional Investors (May 2025)
Scope Explorer “Solid growth in ELTIF market; new regulation to drive further expansion” (May 2024)
Scope Fund Analysis “ELTIF Market Update” (4 November 2025) ELTIF is an EU framework designed specifically for long-term investments in private assets. This compares to SICAV vehicles which are flexible legal structures that can be used for liquid and daily traded funds.

Disclosure

HarbourVest Partners, LLC (“HarbourVest”) is a registered investment adviser under the Investment Advisers Act of 1940. This material is solely for informational purposes; the information should not be viewed as a current or past recommendation or an offer to sell or the solicitation to buy securities or adopt any investment strategy. In addition, the information contained in this document (i) may not be relied upon by any current or prospective investor and (ii) has not been prepared for marketing purposes. In all cases, interested parties should conduct their own investigation and analysis of the any information set forth herein and consult with their own advisors. HarbourVest has not acted in any investment advisory, brokerage or similar capacity by virtue of supplying this information. The opinions expressed herein represent the current, good faith views of the author(s) at the time of publication, are not definitive investment advice, and should not be relied upon as such. This material has been developed internally and/or obtained from sources believed to be reliable; however, HarbourVest does not guarantee the accuracy, adequacy or completeness of such information. The information is subject to change without notice and HarbourVest has no obligation to update you. There is no assurance that any events or projections will occur, and outcomes may be significantly different than the opinions shown here. This information, including any projections concerning financial market performance, is based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons. The information contained herein must be kept strictly confidential and may not be reproduced or redistributed in any format without the express written approval of HarbourVest.

Evergreen Investing Risk. An evergreen fund is an alternative investment fund that has an indefinite life span and continuously raises capital rather than having a predetermined fundraising period and lifecycle, as do traditional private equity or venture capital funds. Prospective investors should be aware that an investment in an alternative investment is speculative and involves a high degree of risk. Alternative Investments often engage in leveraging and other speculative investment practices that may increase the risk of investment loss; can be highly illiquid; may not be required to provide periodic pricing or valuation information to investors; may involve complex tax structures and delays in distributing important tax information; are not subject to the same regulatory requirements as mutual funds; and often charge high fees. There is no guarantee that an alternative investment will implement its investment strategy and/ or achieve its objectives, generate profits, or avoid loss. An investment should only be considered by sophisticated investors who can afford to lose all or a substantial amount of their investment.

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