With private asset markets drawing increasing interest from institutional investors and retail clients alike, the financial landscape is evolving.
While Royal London Asset Management (RLAM) does not currently offer evergreen funds, Will Nicoll, the firm’s Head of Private Assets, believes such structures are poised to shape the future of investment and his firm is actively building a private assets capability.
By allowing periodic rebalancing and some liquidity, such funds have become an increasingly attractive option for investors, he says, especially as private asset investments transition from institutional to wholesale markets.
“When you offer investors some form of liquidity, they increasingly expect it, particularly in the wholesale sector. Evergreen funds provide that flexibility,” Nicoll states.
He notes that these funds allow for a clearer alignment between the asset manager and investors, something often missing in more rigid structures like traditional closed-ended funds.
With the structure becoming more popular among institutional players, Nicoll hints that RLAM could move into the evergreen fund space within the next few years.
Nicoll also sheds light on the market’s overall trend towards private asset expansion.
“Many asset managers, including us, are building out private asset teams. It’s a longer-term process because you need to assemble the right team and carefully select assets,” he explains.
Unlike public markets, where a single fund manager can handle substantial sums, private markets require a different approach due to the intricate process of asset acquisition.
For Royal London Group, evergreen funds align with its mutual structure and allows the organization to diversify offerings for members while attracting third-party investors via the asset manager.
“For mutuals, diversification is vital,” Nicoll said, adding that evergreen funds might initially be more valuable to external investors who demand flexibility for rebalancing and access to illiquid assets.
He mentions that products such as Long-Term Asset Funds (LTAFs) and other regulatory options are being explored, but it’s still early to confirm which specific structures will be pursued.
Nicoll’s view aligns with our survey findings which reveals a strong interest in evergreen structures, particularly among general partners.
According to survey data, nearly half of respondents prefer evergreen funds with a “run-off” option, allowing investors to exit gradually. However, some investors also showed interest in limited liquidity options.
Nicoll emphasizes the importance of asset class distinction, pointing out that “for assets like private debt, limited liquidity is feasible, whereas for something as illiquid as private equity, liquidity poses challenges.”
Despite the apparent benefits, Nicoll acknowledges that setting up such funds is a complex task.
“Right now, structuring and legal regulations are at the forefront,” he admits. Nevertheless, he expresses optimism that regulatory hurdles will ease as the market matures, allowing asset managers to focus more on liquidity and cash management rather than legal intricacies.
Nicoll concludes by emphasising the growing maturity of private markets. “Twenty years ago, private assets were rare among asset managers. Now, it’s a more measured, mature build-out,” he says.
While initially targeting a suite of products tailored to different client needs, Nicoll stressed that RLAM is committed to ensuring their offerings meet client demands effectively.
This interview was first published as part of a major Evergreen Funds Industry Survey, produced as a collaboration between Funds Europe and Citco. The full report may be viewed here.
