From closed-ended to evergreen

Evergreen gains momentum as Luxembourg captures the shift in private markets

Private markets are evolving beyond the traditional closed-ended model. With investors demanding flexibility and liquidity while maintaining long-term exposure to private assets, evergreen fund structures have started to gain real traction across Europe, with Luxembourg emerging as the preferred domicile.

The momentum is clear. According to Hamilton Lane’s “Evergreen Funds 2025 Market Overview,” evergreens already account for roughly 5% of global private markets AUM (around USD 700 billion) and could grow to 20% within the next decade, implying compound annual growth above 30%.

Regulatory tailwinds such as ELTIF 2.0 and the increasing use of UCI Part II vehicles have further strengthened Luxembourg’s positioning as a hub for these new structures. Luxembourg remains the leading ELTIF domicile, while UCI Part II alternatives (ELTIF & non-ELTIF) are projected to double AUA to around €200 billion by 2028, underscoring the scale of opportunity for local asset servicers.

KPMG’s ELTIF 2.0 – Navigating Technological Challenges analysis highlights how hybrid and evergreen models are reshaping the private asset servicing value chain — from investor services to cash monitoring, valuation, and reporting — making Luxembourg the natural innovation testbed. As this momentum builds, servicers should assess whether they are proactively positioned to capture these inflows or merely reacting to client demand.

Blurring the lines:

How evergreen bridges closed- and open-ended fund models

Unlike closed-ended funds with fixed terms, evergreen funds operate on a perpetual basis, allowing new subscriptions, elections for distributions, periodic withdrawals, and reinvestment flexibility. They combine the long-term horizon of private capital with the accessibility of open-ended funds yet retain sophisticated valuation and governance features.

When compared to traditional open-ended UCITS or closed-ended PE/DE/RE/INFRA funds, evergreens occupy the “middle ground,” requiring tailored operational and oversight frameworks to manage their ongoing liquidity, valuation, and investor activity. For Luxembourg administrators, a central consideration is whether existing governance and systems can genuinely support this continuous capital model, or whether they remain limited to start-and-finish fund lifecycles.

Investor appetite, regulation and market reality:

The forces powering evergreen growth

The rise of evergreen funds is not an accident. It reflects shifting investor expectations, changing market conditions, and a supportive regulatory environment that together have created fertile ground for new fund formats. Across Europe and particularly in Luxembourg, managers are actively exploring how to align long-term private market exposure with more flexible liquidity profiles.

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Investor demand

Institutional investors are looking for long-term exposure with periodic liquidity to align their strategies.

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Market dynamics

Fundraising slowdowns, extended holding periods, and fewer exit opportunities (IPOs, trade sales) are pushing GPs toward vehicles that avoid forced exits and sustain performance.

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Regulatory catalysts

ELTIF 2.0 and Luxembourg’s flexible regulatory framework (UCI Part II, RAIF) are paving the way for new evergreen strategies across private equity, credit, and infrastructure.

As managers innovate with multi-asset, semi-liquid vehicles distributed via wealth platforms, servicers should ask whether their operating models are ready for greater collaboration with distributors and private bank networks, which now play a pivotal role in product design and client experience.

Behind the flexibility:

Operational and technological challenges across the value chain

While evergreen structures offer investors greater flexibility and access, this adaptability introduces significant operational and servicing challenges for managers, administrators, and technology providers. The ongoing nature of capital flows, valuations, and investor interactions requires systems and processes that can balance liquidity, ensure fair valuation, and maintain robust reporting, all within a framework not originally designed for perpetual vehicles.

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Liquidity management

Segregation of drawdowns, lock-up tracking, and dynamic notice periods.

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Valuation and pricing

More frequent NAVs, equalization mechanisms, and FIFO capital calls require higher accuracy.

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Technology

Legacy systems built for closed-ended funds often lack the flexibility for ongoing rebalancing or investor-level reporting. Evergreen models need higher automation, continuous data flows, and timely processing between functions to support rolling valuations, liquidity management, and investor transparency.

Operationally, each function across the value chain faces unique adjustments:

Transfer agency: Segregation of drawdowns, lock-up tracking, and dynamic notice periods.
Fund accounting: More frequent NAV adjustments and periodic crystallization of profit and loss to ensure fair treatment of investors, alongside updated distribution-allocation models that maintain consistency between realized and unrealized cash flows.
Depositary & custody: Integration of continuous monitoring processes and oversight of multi-cycle drawdowns and distributions.

For many asset servicers and ultimately for their technology providers, evergreens expose the current gap as they are too complex for open-ended workflows, yet too dynamic for closed-ended systems.

From administrator to enabler:

How Luxembourg servicers can turn complexity into opportunity

Evergreen funds bring longer maturities and recurring liquidity cycles, making them stickier, long-term mandates, but also significantly more demanding from a technology perspective. Most Luxembourg servicers operate with multiple core systems across the value chain, such as:

eFront, Allvue or Investran for private equity accounting and investor-level allocations;
Multifonds or GP3 for open-ended fund accounting and NAV control; and
Dedicated transfer-agency/KYC tools for onboarding and distribution connectivity.

Because these platforms rarely communicate seamlessly, many servicers face parallel data models, manual reconciliations, and cross-system workflows that strain scalability and profitability. Administrators should therefore examine which core and satellite systems are affected by evergreen and how to connect data across them without losing control or auditability. The question is no longer whether this integration is needed, but how fast organizations can execute it and at what cost to margin in order to seamlessly manage the ‘in between’ funds.

For Luxembourg servicers, this represents both a challenge and an opportunity. Those who can transform their operational frameworks, from NAV calculation to liquidity management, will not only improve margins but also position themselves as strategic partners for GPs that want to explore semi-liquid formats. While this strategic positioning initially supports the rise of evergreen structures, it can also unlock broader opportunities across the private equity value chain, enabling servicers to expand their role and capture adjacent mandates as managers diversify their fund offerings. As a result, the question that service providers need to ask themselves is: How can we position ourselves as a strategic enabler rather than just an operator?

Luxembourg’s opportunity to define the European evergreen standard

With regulatory momentum and investor appetite aligned, evergreen structures are set to become mainstream. Luxembourg’s service providers, managers, and technology providers together have a once-in-a-cycle opportunity to define the European servicing standard for semi-liquid and evergreen funds.

Building the foundations for the next wave of private market servicing

Evergreen funds represent a structural shift in private markets. They offer GPs flexibility and investors ongoing access but demand new levels of operational excellence and technological adaptability.

For Luxembourg’s asset servicing ecosystem, the opportunity is clear: those who invest early in automation, data integration, and value chain collaboration will capture and sustain the next generation of private capital flows. The key is to start actively exploring right now how to adapt operating models, connect systems, and build the talent base needed to make the perpetual fund model sustainable at scale.

Questions for fund administrators and managers

As Luxembourg cements its position in the evergreen and semi-liquid fund space, asset servicers, administrators, and depositaries may wish to consider the following questions to assess their readiness and strategic positioning:

How prepared are we as an organization to service evergreen fund structures: from investor onboarding through valuation, liquidity management, and reporting, under a continuous capital model?
- Is my current software suitable for this change?
- Do I have the right team to handle the new challenges, both in terms of knowledge and capacity?
- Do I know the impact on all parts of my value chain?
Have we assessed the profitability and scalability of our current servicing model for long-duration, sticky evergreen mandates compared to traditional vintage-based funds?
Are our technology platforms and data models flexible enough to handle ongoing subscriptions, distributions, withdrawals (with challenges including rebalancing, P&L crystallization, and allocation rules) and investor-level reporting requirements unique to evergreen funds?
How are we leveraging our cross-manager experience to support GPs launching evergreen or semi-liquid strategies? Can we position ourselves as a strategic enabler rather than just an operator?
What partnerships could enhance our ability to capture and scale the servicing of evergreen fund models in Luxembourg?