Agefi Luxembourg - juillet août 2026

Juillet / Août 2026 33 AGEFI Luxembourg Fonds &Marchés P rivatemarkets are embra­ cing evergreen structures, but the reality is more nuan­ ced: liquiditymanagement, evol­ ving regulatory expectations, and modeldriven valuations require careful fund design. Astructural shift in access Private markets are undergoing a struc­ turaltransition.Longdominatedbyclosed endedvehicles tailored to institutional in­ vestors willing to lock up capital for ex­ tended periods, alternative strategies are increasinglybeingreconfiguredintoever­ green semiliquid formats. These funds blend periodic subscriptions, NAV based pricing and controlled liquidity, position­ ing themselves between traditional part­ nerships andopenended funds. They have become a central pillar of pri­ vate market retailization. Private wealth investorscannowaccessprivatecredit,in­ frastructure, real estate andprivate equity through structures more aligned with moderndistributionplatforms. Thegrowthhasbeenrapid. PitchBook re­ ported that in theUS, the evergreen/semi­ liquid private funds crossed USD 500 billion in assets under management in 2025, with expectations that it could ex­ ceedUSD1 trillionwithinfive years. (1) 98 new funds were launched during the year, bringing the active evergreen fund count to 547. Business development com­ panies (BDCs) were responsible for the largest share of the AUMwhile Interval and tenderoffer funds attracted more thanUSD 40 billion of net inflows, led by creditfocusedvehicles. (2) (See graph below) While theEuropeanevergreen fundmar­ ket remains smaller than its US counter­ part,itisexpandingatasignificantlyfaster pace from a lower starting base. The Eu­ ropean LongTerm Investment Fund (ELTIF) regime has become an increas­ ingly popular framework for distributing private market strategies to a broader in­ vestor base in Europe. Growth has accel­ eratednotablyfollowingtheenhancement of the ELTIF regime, evidenced by the launchof113newELTIFproductsin2025 and assets under management reaching EUR34billionandexpectedtohitEUR80 billion by 2028(3). However, the largest segmentofthemarketcontinuestoberep­ resented by nonELTIF evergreen struc­ tures, particularly Luxembourg Part II UCIs, which offer considerable flexibility for product structuring anddistribution. According toNovantigo, Europedomi­ ciled evergreen funds’ AuM rose from EUR84.2 billion in 2024 to EUR154.2 bil­ lion by yearend 2025, an 83% yearon­ year increase, across a dataset covering 430+ funds. (4) This positive momentum is expected to continue with the market projected to exceed EUR240 billion by the end of 2028. In sum, the global universe of evergreen semiliquid funds has already surpassed half a trillion dollars in assets and contin­ ues to expand, driven by sustained in­ flows and awideningproduct offering. This expansion reflects a convergence of several forces: persistent yield compres­ sion in public markets, growing appetite for private assets, the rise of wealth distri­ bution platforms, and the increasing use of technology to simplify onboarding. Assetmanagers,fortheirpart,areembrac­ ing perpetual capital structures as a way tosecuremorestableandscalablesources of funding. InEurope, thismomentumis actively shaped by a series of regulatory initiatives aimed at facilitating retail par­ ticipation, includingELTIF 2.0,AIFMD II, the Retail Investment Strategy and the Savings and Investments Union (SIU). In thiscontext,Luxembourghasemergedas one of the principal domiciles for these strategies, supported by its alternative in­ vestment ecosystem, the flexibility of structures such as RAIFs andSIFs, and its establishedcrossborderdistributioninfra­ structure. As managers increasingly seek scalableevergreensolutions,Luxembourg continues toplay a central role inproduct structuring and fundgovernance. (See graph above) The critical challenges behind the growth story “Evergreen funds are reshaping private markets, but their continued success will depend on getting the fundamentals of liquidity,valuationandgovernanceright.” As semiliquid and evergreen fund struc­ turescontinuetogainmomentum,robust governance is essential to supportingsus­ tainablegrowthandmaintaininginvestor confidence. Unlike traditional closed­ ended vehicles, these structures require continuousoversightofliquiditymanage­ ment, valuation methodologies, investor onboarding and redemption processes, andpotentialconflictsofinterest.Effective governancealsoplaysacriticalroleinnav­ igating an increasingly complex regula­ tory landscape, with managers expected to demonstrate strong controls, trans­ parency, fair treatment of investors, and compliance with evolving requirements acrossjurisdictions.Asregulatoryscrutiny intensifies and investor expectations rise, a welldesigned governance framework serves not only as a safeguardagainst op­ erational and compliance risks but also as astrategicfoundationforscalable,resilient, and sustainable expansion. Themanaged liquidity The appeal of semiliquid funds lies in a combination of design elements, such as: periodic dealing windows, NAVbased pricing, diversified portfolios built from day one, and the possibility of controlled liquidity through redemption programs. Many funds also relyonallocationmech­ anisms such as pro rata redemptions, gat­ ing provisions when demand exceeds available liquidity, and side pockets or holdbackstomanagehardtovalueassets. Crucially, these features do not deliver daily liquidity, but rather amanaged and conditional form of access, governed by notice periods, caps on outflows and, wherenecessary, suspensionpowers. The distinction is fundamental: “semiliquid” is not the same as “liquid”, but it should be understood as a framework designed to balance investor access with the long­ termnature of the underlying assets. Themodelremainsviableaslongasthere is a robust alignment between three core elements: the liquidity profile of the as­ sets, the frequency and reliability of val­ uation,andthetermsofferedtoinvestors. For example, quarterly redemptionwin­ dows backed by largely illiquid credit or infrastructure assets can function effec­ tively in stable markets, but may come under strain if secondarymarketsdryup or valuationuncertainty increases.When this alignment weakens, tensions can emergequickly, particularly inperiodsof stress,whenpricingbecomeslessobserv­ able and exit routes narrow, testing both fund design and investor expectations. Thus, valuation serves not only as an ac­ counting exercise but also as a key in­ vestorprotection mechanism. Because subscriptions and redemptions are typi­ cally executed at NAV, any material val­ uation inaccuracy may result in an unintended transfer of value between transacting and remaining investors. Valuation as a fairnessmechanism Valuation sits at the core of semiliquid funds and increasingly at one of their most exposed fault lines. Unlike liquid strategies, these vehicles rely heavily on illiquid assets without continuous mar­ ket pricing, requiring models, assump­ tions, third party data providers and periodic appraisals. Even innormalmar­ ket conditions, executing this framework can pose significant operational chal­ lenges; under stress, it becomes even more fragile and can reveal weak processes brutally with massive conse­ quences for both GPs and LPs. Thisintroducesaninherentdegreeofsub­ jectivity into NAV calculations, particu­ larly when market comparables weaken or transaction volumes decline. In a semi­ liquidsetting(wheresubscriptionsandre­ demptions are processed at regular intervals)anylagormistakesinestimating values can translate directly into transfer ofvaluerisksbetweenenteringandexiting investors. Recent CSSF supervisorywork reinforces the importance of this issue. Its thematicreviewonthevaluationofliquid andlessliquidassetshighlightsseveralre­ curring vulnerabilities. These include an overreliance on a limited set of data sources, insufficient challenge of external valuer assumptions, and lack of consis­ tency in methodologies across asset classes andmarket conditions. In less liq­ uidsegments,theCSSFalsoobservedthat valuationadjustments arenot always ap­ plied in a timely or sufficiently forward­ looking manner, particularly in rapidly changing environments. Another key area of focus is governance. The CSSF places strong emphasis on the independence and expertise of valuation functions,clearsegregationofresponsibil­ ities, and robust oversight by boards and conductingofficers.Firmsareexpectedto evidence effective controls aroundmodel validation, pricing inputs and escalation processeswherejudgementplaysasignif­ icantrole.Thereviewalsounderscoresthe need for valuation frameworks to remain dynamic,capableofadaptingmethodolo­ gies whenmarket conditions shift, rather than relying on static approaches cali­ brated formore benignperiods. For semiliquid funds, these findings are particularly relevant. The interplay be­ tween valuation frequency and liquidity terms means that even small deficiencies can have amplified effects. Supervisory expectations are therefore converging around a clear principle: valuation must not only be technically robust, but also timely, consistently applied and embed­ ded within a strong governance frame­ work. A strong valuation process for illiquid investments is the cornerstone of investor confidence in semiliquid funds. If valuations are not robust, transparent, and wellgoverned, even small inaccura­ cies can lead to material mispricing, in­ equitable investor treatment, liquidity mismatches, and significant reputational and regulatory consequences. Avoiding “backwards” product design As semiliquid funds expand into retail markets, a key risk is designing products fromtheoutsidein:startingwithdistribu­ tion goals rather than the realities of the underlying assets. Wrapping illiquid strategies inmore accessible formatsmay broaden reach, but it does not change their fundamental constraints. Thediscipline lies in ensuring that struc­ ture follows substance. Liquidity terms, valuation frequency and investor disclo­ suresmust befirmlyalignedwith thebe­ havior of the underlying portfolio, its cashflows, exit horizons andpricingvis­ ibility. Where this relationship is based on overly optimistic assumptions, vul­ nerabilities can surface abruptly during periods of market stress. Supervisors are increasingly focused on this dynamic, expectingfirms todemon­ strate that products are internally coher­ ent across market cycles, not simply “retailready”. In this context, accessibil­ ity should be the outcome of robust de­ sign, not its starting point. Equally, this implies a stronger emphasis on product governance throughout the lifecycle of the fund. Target market defi­ nitions, distribution strategies and ongo­ ingmonitoringneed to remainconsistent withtheevolvingriskprofileoftheassets. Asportfoliosmatureormarketconditions shift, firmsmay need to recalibrate terms ordisclosurestopreservethatconsistency; semiliquidstructuresrequirecontinuous discipline, not just careful initial design. Concluding perspectives: Discipline as the foundation for sustainable growth Evergreen semiliquid funds are set to become a defining feature of capital markets, reshaping access to private market investments and their distribu­ tion. But their longterm success will depend on execution. The strongest products are likely to be thosewhere the liquidity termsmatch the asset liquidity, the manager has genuine sourcing capacity, valuationgovernance is robust, and investors understand that “semiliq­ uid”means limited, conditional liquidi­ ty, not mutualfund liquidity. Muhammad Salman FAROOQUI, EY Luxembourg Assurance Partner Francis GODDARD, EY Luxembourg Financial Accounting Advi­ sory Services Partner Gvantsa TSUTSKIRIDZE, EY Luxembourg Assurance Senior Manager 1)Q12026USEvergreenFundLandscapePitchBook 2) NewQuarterly Report fromMorningstar and PitchBook BringsTransparencytoRapidlyExpandingEvergreenFund Universe|Morningstar Q12026USEvergreenFundLandscapePitchBook 3)ELTIFmarketwithstronggrowth–assetsundermanage­ mentroseby55%toEUR34bn in2025ScopeExplorer 4)Europe’sEvergreenPrivateMarketFundsBoom:ELTIF’s GrowthandtheShiftTowardMultiAssetSolutions Private markets go evergreen: The rise of semi-liquid funds and the discipline they demand L ’Autorité européenne desmar­ chés financiers (ESMA) a an­ noncé le lancement d’une action commune de supervision portant sur la fonctionde gestion des risques des sociétés de gestion d’OPCVM(UCITS) et des gestion­ naires de fonds d’investissement al­ ternatifs (AIFM) dans l’ensemble de l’Union européenne. Cette opération, qui se déroulera en 2026 et 2027, sera menée en collaboration avec les autorités nationales compétentes. Son objectifestdevérifierlerespectdesprinci­ pales exigences européennes en matière de gestiondes risques. L’ESMAsouhaitenotammentévaluerl’ef­ ficacité, l’indépendance et le niveau d’ex­ pertisedeséquipeschargéesdecettefonc­ tion, essentielle pour assurer la protection des investisseurs et préserver la stabilité financière.Lesautoritésnationalesconcen­ treront leurs contrôles sur trois axes prin­ cipaux : l’organisation et la gouvernance de la fonction de gestion des risques, les méthodes d’identification et de suivi des risques, ainsi que les mécanismes de reporting destinés à la direction générale et aux organes de gouvernance. Afin d’assurer une approche harmonisée dans l’ensemble de l’Union européenne, les contrôles s’appuieront sur un cadre d’évaluation commun élaboré par l’ESMA. Les conclusions de cette cam­ pagnedecontrôleserontpubliéesdansun rapport final attendu en 2028. Les fonds européens sous surveillance renforcée ©magnific Unlisted evergreen fundnet AUM($B) by structure Sources:MorningstarandPitchBook•Geography:US Note:DatawasaggregatedonMarch13,2026.Themostrecentdatesofthedisclosuredocumentsrange fromJune30toDecember31,2025. Europedomiciled evergreen fund andELTIFAUM(€B) by structure Source:NovantigoEvergreenFundsNavigator•Geography:Europe Note:2024 fundtypevaluesupdatedbasedonsuppliedgrowthratecalculations.2023componentsplitnotprovided;totalshownassupplied.