Chicago, June 16, 2026, 08:05 (ET)
- Semiliquid fund assets neared $600 billion by late March 2026, more than twice what they were at the end of 2022.
- Private credit demand slowed in early 2026. Private equity and venture capital funds kept drawing new inflows.
- Morningstar pointed to high fees, tight redemption periods and low advisor awareness as main risks for investors.
CHICAGO — Morningstar said Tuesday semiliquid fund assets are close to $600 billion, with investors piling into products that offer private markets exposure but limit withdrawals. The firm’s State of Semiliquid Funds 2026 report pointed to a tougher stage for the sector, as outflows from private credit pick up and funds move more money toward private equity and venture strategies. “The semiliquid market has scaled rapidly on the back of investor enthusiasm,” said Jason Kephart, senior principal at Morningstar. Business Wire
Semiliquid funds, sometimes called evergreen funds, cover interval funds, tender-offer funds, nontraded business development companies, and nontraded REITs. These funds have let more investors into private assets who wouldn’t normally get into standard private funds. But they don’t provide daily liquidity like mutual funds or ETFs. Net assets in semiliquid funds rose more than 120% since the end of 2022, according to Morningstar. Direct-lending private credit still accounts for about 40% of the sector, Morningstar said, even as demand has softened.
Flows saw the sharpest shift. Morningstar said private credit demand started to slow down in the second half of 2025 as worries grew about software exposure, credit quality, and lower base rates. Net assets in private credit slid by around $1 billion in Q1 2026. Over the 12 months through March 2026, venture capital semiliquid funds pulled in about $8 billion, and private equity saw $14.5 billion in net inflows.
The report comes while investors are watching liquidity in private markets more closely. Reuters reported Monday that Swiss pension fund consultants said institutional investors have grown more selective after recent turmoil at evergreen private-market funds. That includes capped withdrawals at Partners Group and a similar step by Blackstone in private credit. The consultants said there is more focus now on valuations, lending standards and liquidity terms.
Morningstar flagged costs as a big barrier. The firm said the average annual report net expense ratio for semiliquid funds, including borrowing costs, came in just over 3%. That can leave out some charges since incentive fees and acquired fund fees aren’t always reported the same way. Morningstar reported rating 19 semiliquid fund strategies as of May 30, but only four of the cheapest share classes got Bronze or Silver Medalist Ratings.
Liquidity is still the sticking point for investors. Morningstar said big private credit semiliquid funds saw redemption requests pile up in the first quarter, with most funds capping withdrawals at 5% each quarter. The firm said only 16% of financial advisors called themselves “very familiar” with semiliquid fund structures. That’s a gap as asset managers try to push more private-market funds into retirement vehicles like 401(k) plans. Business Wire
