Institutional investors are allocating capital to Blackstone and KKR evergreen funds designed for wealthy individuals, signaling a shift in the traditional private equity landscape. Evergreen funds, which permit regular withdrawals rather than long-term lock-ups, have become a vehicle to broaden access to private markets. However, these structures, typically charging lower fees and targeting modest returns, are now attracting significant institutional interest.

Blackstone's Joan Solotar noted a "small percentage" of institutions had invested, with interest growing over the past year. Similarly, KKR's Eric Mogelof recently launched institutional share classes across buyout, credit, and infrastructure evergreens to satisfy "growing demand." This influx of large investors into evergreen vehicles raises questions about the sector's future, particularly regarding the traditional 10-year fund model. Listed private markets firms are increasingly targeting retail investors to fuel growth and diversify revenue streams away from performance fees.

Concurrently, many institutions have hesitated to commit fresh capital amid challenges selling assets and returning cash since interest rate hikes in 2022. The rise of evergreen funds, offering beta returns and regular liquidity, poses pressure on fees. Patrick Dwyer of New Edge Wealth observes that the "commoditisation" of the sector favors lower-fee evergreens.

While institutions with complex cash flow management may still prefer traditional funds, the UK's Universities Superannuation Scheme exemplifies a trend of backing both structures, highlighting a evolving dynamic in private markets liquidity.