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The Institutional Limited Partners Association (ILPA) believes that sustained focus on alignment of interest, good fund governance, and transparency serves as the foundation for the partnership between Limited Partners (LPs) and General Partners (GPs).1
Retail vehicles, typically characterized by their fully funded nature (versus a drawdown model), continuous investment period with no defined end date, and ability to access liquidity through defined redemption windows,2 represent a sea change for private markets. The rapid growth of these vehicles introduces a series of new issues for LPs to consider in their relationships with existing and prospective GPs, relating to investment allocation, conflicts of interest, economics and incentives, transparency, and governance.
With this whitepaper, ILPA intends to educate our LP members on the specific impacts these offerings have on institutional funds and the overall health of the market. Perhaps most importantly, this paper presents specific questions that LPs should ask GPs about current or planned retail vehicle offerings.
More pointedly, ILPA elevates these issues at a time when the underlying mix of investments of these products may exacerbate a strategy-structure misalignment, i.e., an increasing allocation to longer hold private equity (PE) investments versus retail portfolios in private markets that more typically skewed in the past towards yield-generating investments in private credit, real estate, or infrastructure. PE has historically generated outperformance because its long-term investment strategy aligns with the long-term structure of institutional funds. Retail vehicles, by contrast, leave investors exposed to issues stemming from a “right strategy, wrong structure” dynamic, especially in times of economic stress (the most acute example being during the Great Recession).3
For the full paper please click here.
1 In later parts of the whitepaper, we will refer to GPs as “Investment Advisers”, given this is the terminology found in the 1940 Investment Company Act (1940 Act).
2 For simplicity, we use the term “retail vehicle” throughout the whitepaper. The referenced characteristics are why synonyms are used for these offerings: evergreen funds, perpetual capital funds or semi-liquid funds. The term semi-liquid is a misnomer - while technically these vehicles are “semi-liquid”, they are more accurately described as “almost entirely illiquid”.
3 Albourne, Lessons from Navigating the Evergreen Private Markets Funds Landscape, March 2025. This paper is available to Insights Users, please request access to Insights, or for media requests: contactus@albourne.com
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