As evergreen private equity structures continue expanding across private credit, infrastructure, real estate, and private equity, advisors face an important question: how do different liquidity structures impact effective investor duration?
Omnigence Asset Management’s latest whitepaper compares three common evergreen fund structures using a Macaulay Duration framework:
- -Continuous yield structures
- -Hold-period with redemption structures
- -NAV growth structures
The analysis finds that despite meaningful differences in redemption mechanics, lockup periods, and distribution policies, all three structures produced similar effective durations of approximately 4.4 to 4.6 years.
The paper also highlights several key trade-offs:
- -Yield distributions pull cash flows forward and shorten effective duration.
- -Faster capital redemption reduces long-term compounding potential.
- -Continuous yield structures generated the highest modeled terminal total return because more capital remained invested for longer.
- -Traditional closed-end private equity funds typically produce materially longer effective durations than evergreen structures.
The research argues that evergreen structure selection should be driven primarily by investor cash flow objectives, liquidity planning, and compounding preferences rather than redemption frequency alone.