CONTRIBUTORS
Tony Davidow, CIMA®
Senior Alternatives Investment Strategist
Franklin Templeton Institute
In the latest episode of the Alternative Allocations podcast series, I had the opportunity to sit down with Kim Flynn, president of XA Investments. Kim and I discussed the growth and evolution of evergreen funds (i.e., interval and tender-offer funds). Kim has been one of the leading voices as her firm has been tracking the evolution and adoption of evergreen funds.
We began our discussion by addressing the size of the market and the challenges for advisors. “We're at the point where there are over 300 funds. So, I think a lot of financial advisors are grappling with, on one hand, a lot of options, a lot of good choices, but you're trying to decide the best firms and the best strategies to diversify your portfolio.” Kim noted that the market has grown by roughly 25% over the last 10 years.
Historical Interval and Tender-Offer-Fund Market Overview
Sources: XA Investments; CEFData.com. Data as of December 31, 2025, or latest publicly available.
1. Total managed assets is inclusive of leverage.
2. Fund closures (or conversions) for 2025 include the CPG Cooper Square International Equity, LLC, the Cross Shore Discovery Fund, the Stone Ridge Post-Even Reinsurance Fund, the NB Private Markets Fund III (TI) LLC, the NB Private Markets Fund III (TE) LLC, Morgan Creek Global Equity Long/Short Institutional Fund, Hatteras Core Alternatives TEI Institutional Fund, L.P., Hatteras Core Alternatives TEI Fund, L.P., Hatteras Core Alternatives Institutional Fund, L.P., Hatteras Core Alternatives Fund, L.P., Kingsbarn Parallel Income Fund, TCW Spirit Direct Lending LLC, Bluerock Total Income (plus) Real Estate Fund, Tax-Exempt Private Credit Fund, Inc., AIP Multi-Strategy Fund A, and the AIP Multi-Strategy Fund P.
3. Represents the 10-year compound annual growth rate (CAGR) of net assets for interval and tender-offer funds, as of December 31, 2025.
Kim noted that private credit represents roughly half of the interval fund universe. “I think that private credit is always going to be a dominant part of this market. I think for many fund sponsors, private credit is the first foray into the interval fund marketplace, partly because it's easier to get to a daily NAV [net asset value] on private credit. There's a wide liquidity spectrum when you're talking about credit instruments.”
Kim went on to say that there are a growing number of private equity, real estate and infrastructure funds in the market—and she is beginning to see more interest in hedge funds after having been out of favor. She anticipates more niche and differentiated strategies in the future like technology, artificial intelligence, health care and energy funds.
“I think we’re in the end of the third inning, probably in terms of where there is white space left. Most new fund sponsors don't realize how many competitors they have, either direct or indirect competitors.” While the industry has grown, there is still white space and areas for improvement.
Kim and I discussed the challenge for advisors in conducting due diligence. We both agreed that it is beneficial to leverage due diligence conducted by headquarters and/or third-party providers when available. We also encouraged advisors to ask the salespeople who call on them: Who are your competitors? How does your fund compare? What is your unique edge?
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WHAT ARE THE RISKS?
All investments involve risks, including possible loss of principal. The value of investments can go down as well as up, and investors may not get back the full amount invested.
Investment strategies involving Private Markets (including investments in private companies and/or securities) are complex and speculative, entail significant risk, should not be considered a complete investment program, and are suitable only for persons who can afford to lose their entire investment. Such strategies may have limited liquidity in both the investment products and their underlying investments. Underlying investments may never list on a securities exchange and lack available information due to their private nature. These factors may negatively impact such investments’ market value and a manager’s ability to dispose of them at a favorable time or price. Additionally, certain investment fund types mentioned are inherently illiquid and suitable only for investors who can bear the risks associated with the limited liquidity of such funds. Such funds may only provide limited liquidity through quarterly repurchase offers that may be suspended at the discretion of the manager or the fund’s board. There is no guarantee these repurchases will occur as scheduled, or at all. Shareholders may not be able to sell their shares in the fund at all or at a favorable price.
Diversification does not guarantee a profit or protect against a loss. Past performance does not guarantee future results.
WF: 9020271