“Be Very Careful and Don’t Be a Sheep”
 

Happy new year everyone and welcome back to Officium — I hope you had a nice break. Personally, I had a few weeks off over the holiday period and was lucky enough to visit India for some of that time. Of course, I couldn’t help but think about family offices while I was there. I would love to hear from any readers there who might be able to give me a rundown of how things really operate; I know there are many of you in Mumbai especially. Please reach out. 

Back to today’s newsletter: At an II event late last year there was a lot of discussion about the rise in evergreen funds, which PitchBook defines as “interval, tender offer funds, unlisted BDCs, unlisted REITs and other perpetual-life vehicles” that “offer continuous subscriptions at NAV, periodic liquidity, and streamlined tax reporting.”

II has had an eye on evergreen funds for years now: This article from Alicia McElhaney in 2021, for example, spelled out the problems with permanent capital funds and the challenges that they pose to allocators. And just this week, Michelle Celarier wrote a story asking if evergreen funds are just too good to be true.

But amid the push for democratization of the private markets, which we have also covered extensively, there has been renewed interest in evergreen funds as a way for managers to offer private market access to retail investors. There has also been an uptick in interest from family offices that are looking for steady cash flow, flexibility, and liquidity within their portfolios and want private market access without the burdens of long lock up periods. Without capital calls, families are afforded continuous exposure with limited diligence and increased liquidity, reducing the need for asset sales to cover unexpected funding. 

It’s easy to see why evergreen funds are attractive to family offices. But not everyone is bullish.