Semi-Liquid Private Credit: A Quiet Revolution

Key Points

• These structures, known as semi-liquid funds, offer a number of key advantages for wealth investors with features designed to meet their unique liquidity, risk and performance needs.
• Semi-liquid funds have grown fastest in private credit, an asset class exhibiting liquidity, diversification and valuation features that are well suited to these structures.

Democratizing access to alternatives
A recent report projects that alternatives AUM will rise to $32.0 trillion by 2030, having more than doubled since 2021.¹ As alternative asset investing continues to see robust growth, the investor base is inevitably broadening out as fund providers innovate to meet a more diversified set of investor needs.

In particular, the wealth management segment is fast emerging as a key growth area. Our own research indicates that alternatives could reach 5% of U.S. wealth management assets by 2029, up from 3.5% in 2025, a rise of $2.7 trillion in assets.² Investor requests for increased liquidity and accessibility has been a an increasingly important feature of the alternatives’ quiet but steady take-off in the wealth channel.

Asset managers are responding to these needs by developing new fund structures and adjusting strategies to help address their varied requirements. In short, they are “democratizing” access by taking a range of private markets asset classes that have historically been the preserve of institutional investors and making them available to a wider investor audience.

Often called semi-liquid funds, these innovative structures offer several advantages for professional and non-professional investors catered to in the wealth management channel.

There are also important liquidity and performance considerations to which investors should remain aware. In this paper, we walk through the main features of semi-liquid funds. We then highlight semi-liquid funds’ suitability for private credit, an increasingly in-demand private markets sector.

Investing on an ongoing basis
Traditional private market funds, known as drawdown or close ended funds, typically have a pre-defined marketing period after which the investment manager (“General Partner” or “GP”) gradually calls down investor (“Limited Partner” or “LP”) capital subscriptions, typically over four to six years. In contrast, semi-liquid funds are open ended and provide ongoing access, allowing asset owners to remain invested for as long as they choose. From the investor perspective, this is often seen as the democratization of alternatives, placing them closer to traditional investments in how they are transacted. To attract investors into these new structures, investment minimums have also been lowered by some regulators through the introduction of new types of investment vehicles.

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