Semi-liquid funds — evergreen vehicles holding illiquid assets with periodic redemption windows — have grown quickly. They solve a real access problem, but they introduce a structural mismatch that boards need to understand before allocating.
The core issue is simple: the assets are illiquid, but the units are not. Redemption gates, notice periods and queue mechanics are not fine print — they are the product.
Our oversight approach treats liquidity terms as a first-order risk: we model queue scenarios, review the manager's liquidity buffer policy, and test how the vehicle behaves when many investors want out at once.
We also track secondary-market discounts for these vehicles, which often reveal stress before official NAVs do.
Used deliberately — sized correctly and understood honestly — semi-liquid structures can be a useful bridge to private markets. Used naively, they are a liquidity promise the portfolio cannot keep.
Key takeaways
- Semi-liquid funds trade liquidity access for structural mismatch risk
- Gates and queues are product features, not fine print
- Oversight must model redemption stress, not just returns
- Secondary-market pricing often signals stress before NAVs do