Morningstar Data Shows Evergreen Capital Rotating Towards Private Equity and Venture Capital
US evergreen fund assets have surpassed $650bn, with private equity and venture capital expanding as private credit faces its first significant liquidity test.
Capital is shifting between evergreen private-market strategies as investors reassess their exposure to private credit, according to Morningstar’s latest US Evergreen Fund Landscape research.
US evergreen fund assets have risen above $650bn, despite slowing growth and mounting liquidity pressure in parts of the private credit market. Morningstar’s Q3 2026 analysis describes a market undergoing a rotation of capital rather than a broad retreat from evergreen investment structures.
Private equity evergreen funds have doubled their net asset value since the end of 2024, while venture capital vehicles have grown from approximately $3bn to more than $20bn. Direct lending, by contrast, has pulled back slightly after tripling in size since 2022.
The figures highlight diverging fortunes within a fund structure that has become an increasingly important route into private markets. Evergreen vehicles allow investors to maintain exposure to private assets through open-ended structures with periodic liquidity mechanisms, rather than relying exclusively on traditional closed-ended funds.
However, their liquidity provisions do not eliminate the constraints associated with underlying private assets. Redemption requests can exceed the amounts a fund is permitted to return during a given period, making liquidity management a central consideration for managers and investors.
Morningstar’s research also examines fund flows, fee transparency and developments across alternative credit, real estate and infrastructure, illustrating the growing importance of comparing evergreen strategies on more than asset growth alone.
The expansion of private equity and venture capital vehicles suggests that demand for evergreen access to private markets remains significant, even as direct lending strategies encounter more challenging conditions.
For asset managers, the divergence creates both an opportunity and a challenge: attracting capital into growing strategies while demonstrating that liquidity arrangements, valuations and fees are appropriate for investors.
The findings underline a broader development in private markets. As evergreen structures extend access to less liquid assets, investor demand is becoming increasingly differentiated by strategy, placing greater emphasis on fund design, liquidity management and transparency.