Industry Insights: The Rise of Semi-Liquid Funds

Semi-liquid private asset funds have experienced significant growth in recent years. Among other reasons, they appeal to investors eager for investment opportunities that offer attractive returns and significant diversification benefits while offering liquidity and accessibility.

According to Morningstar, assets in funds that offer limited liquidity and exposure to private assets were about $344 billion at the end of 2024. That was up 60% from $215 billion at the end of 2022.

Furthermore, according to StateStreet, significant flows into semi-liquid retail-style funds over the next two years are expected. These more liquid funds are expected to make private market strategies more accessible to a wider range of investors.

Meeting the Liquidity Challenge

One of the biggest issues facing private asset funds is liquidity, given the nature of the assets held. Funds adopting private market strategies have historically used closed-ended structures. That limits their ability to be marketed to most retail investors or those with shorter investment horizons.

Semi-liquid funds offer much more possibility. Typical structures for these funds include:

• evergreen funds

• interval funds

• non-traded business development companies (BDCs)

• non-traded real estate investment trusts (REITs) in the US

• European long-term investment funds (ELTIFs) in the EU

• long-term asset funds (LTAFs) in the UK.

Each structure serves a distinct purpose in balancing access and liquidity for private market investments. Among these, interval funds have emerged as the dominant format in 2025. They are attracting the most assets due to their predictable redemption features, and their suitability for both retail and institutional investors. However, they require valuations to be carried out at a greater frequency to enable interval redemption liquidity.

This is likely only the beginning of a significant growth market for the private asset funds industry. Growth catalysts discussed in more detail below include:

• the reinvigoration of the ELTIF regulation

• tokenisation

• the expected uptick in retail investor market participation because of the EU’s Savings and Investment Union (SIU).

The Irish funds industry must capitalise on this opportunity. The Central Bank of Ireland (CBI) is acting with initiative to revamp the Irish alternative investment fund (AIF) market through its Consultation Paper 162 (CP162) on the AIF Rulebook. This will introduce positive changes making it more feasible to establish semi-liquid funds in Ireland.

ELTIF Launches Speed Up

The European Union introduced the ELTIF structure in 2015. It did so to create an investment fund structure capable of accessing private markets while offering increased liquidity to attract a broader range of investors.

Since the ELTIF 2.0 Directive was implemented in 2024, fund launches have accelerated significantly. In August 2025, 223 ELTIFs were authorised across the EU. These included 19 domiciled in Ireland, where none existed before ELTIF 2.0.

According to a Scope analysis, 24% of ELTIFs authorised by the end of 2024 had adopted evergreen structures. Furthermore, all Irish ELTIFs currently authorised are engaged in private debt or credit strategies.

Tokenisation on the Rise

Tokenisation is one of the most significant ongoing developments in the global funds industry. PwC forecasts that assets under management in tokenised investment funds (including mutual funds and alternatives) will increase from US$40 billion in 2023 to more than US$317 billion by 2028.

The enhanced liquidity benefits that come with both the tokenisation of the fund and its underlying assets should drive this growth. Tokenisation can significantly benefit private asset funds by improving secondary market distribution and the ability to give illiquid assets increased liquidity, respectively.

Savings and Investment Union

EU citizens hold significant wealth in deposit accounts, which generate very little returns for savers. The SIU seeks to unlock wealth sitting in EU bank accounts to spur innovation and growth throughout the region.

The initial ambitions for the SIU may lean toward more traditional, liquid assets typically found in UCITS products. Including private asset options, however, could meaningfully enhance portfolio diversification for EU citizens.

Plenty of people would likely choose these options if they could. In the Schroders 2025 US Retirement Survey, 45% of retirement plan participants indicated they would invest in private equity and private debt if given access. Among those, 51% would allocate less than 10%, and 36% would allocate between 10–15% of their retirement assets to private markets.

Pensions Shift to Private Assets

Across the EU, insurance companies and pension funds are increasingly allocating to private markets as part of a broader shift toward diversification and long-term yield enhancement.

According to the Pensions Europe 2024 report, euro area pension funds have steadily increased exposure to private equity and venture capital, particularly in response to low interest rates and inflationary pressures.

In Ireland, the launch of the My Future Fund under the auto-enrolment pension scheme in January 2026 is a timely opportunity to give people the option to diversify and include private assets in their pension portfolios. Given the long-term nature of pension savings, private assets align well with retirement goals as they are typically accessed through closed-end structures.

AIFMD II

The rise of semi-liquid funds has also coincided with the EU’s introduction of AIFMD II. From early 2026, it imposes multiple requirements upon funds to manage liquidity. Open-ended UCITS and AIFs must select at least two liquidity management tools (LMTs) and analyse their suitability of the LMT for the fund.

According to the Alternative Investment Managers Association (AIMA), the number of private credit funds offering some form of investor liquidity has risen in 2025 compared to 2023.

In parallel, AIFMD II introduces enhanced requirements for open-ended loan-origination AIFs. These include:

• detailed liquidity management policies

• redemption procedures

• stress testing

• ongoing monitoring obligations to ensure robust oversight and investor protection.

How Ireland Can Lead in Semi-Liquid Funds

With its evolving regulatory landscape and the launch of My Future Fund, Ireland is well-positioned to lead in this space. By embracing innovation, expanding access and cultivating expertise, the Irish funds industry can play a central role in shaping the future of private asset investing across Europe.

The EU Commission has urged Member States to create Savings and Investment Accounts (SIA) frameworks within a year. Minister Donohoe will publish a roadmap early next year to simplify tax rules and support retail investment, potentially including ELTIFs, echoing the UK’s move to allow LTAFs in ISAs.

1. Understand the scale of change

The rapid expansion of semi-liquid private asset funds marks a pivotal evolution in how both institutional and retail investors access private markets. With structures such as interval funds, ELTIFs and evergreen formats gaining traction, the industry is poised to democratise private asset investing. Realising the full potential of this growth will require targeted investment and government support to overcome several key challenges.

2. Design for retail investors

One of the most pressing challenges is the lack of robust distribution channels to reach retail investors. Despite growing appetite, many people don’t know about or can’t access private market strategies due to limited advisor education, regulatory constraints and outdated infrastructure.

This gap must be addressed to ensure the benefits of diversification and long-term returns are not confined to institutional portfolios.

3. Invest in talent and trust

Finally, success hinges on talent. The industry must invest in professionals who not only understand the complexities of private markets but who can also educate and engage the wider public. Building trust and understanding around semi-liquid structures is critical to fostering long-term participation.