Private markets have been organized around one dominant structure since the 1970s and 1980s. Understanding what that structure does — and what it costs the investor — is the necessary starting point for understanding why the evergreen wrapper emerged and what it solves.
The Drawdown Structure
What is a drawdown structure?
A drawdown fund is a closed-end limited partnership with a finite life, typically ten years plus extensions. Investors commit capital at the outset but do not fund it immediately. The manager calls capital over an investment period as it identifies individual investments, deploys it into portfolio companies or loans, and returns proceeds through distributions as those positions are realized. Because the cash flows are irregular — capital moves out in calls and back in distributions on no fixed schedule — the internal rate of return is the native performance measure, and the early-year “J-curve,” in which reported returns are negative while fees are paid and value is not yet realized, is a feature of the structure rather than a signal about the manager.
The drawdown model persisted because it is internally coherent. The fund life matches the asset life. The manager calls capital only when it has a use, keeping committed-but-uncalled capital out of the fund and avoiding diluting returns with idle cash. The limited-partner and general-partner governance framework is well understood by institutional allocators who have used it for decades.
That coherence comes at a cost borne by the investor, not the fund. The limited partner must manage capital calls on the fund’s timetable, hold committed capital in lower-returning liquid assets while it waits to be called — the investor-side version of cash drag — tolerate multi-year lockups, absorb operational overhead, and receive a Schedule K-1 for tax reporting. For an institution with a dedicated private-markets team, this is routine. For an advisory firm building private-market exposure across many client portfolios, it is friction.
The Evergreen Response
What has changed?
The evergreen, or perpetual, vehicle inverts several of these mechanics. It is continuously offered rather than raised once and closed. Subscriptions are accepted at net asset value on a recurring basis, and investors gain immediate exposure to a seasoned, diversified portfolio rather than committing to a blind pool that ramps up over several years. The vehicle has no fixed end date; income and realizations are reinvested; and liquidity comes through periodic repurchases rather than the fund’s natural wind-down. Tax reporting is typically delivered on a Form 1099 rather than a Schedule K-1.
Source: Preqin (2024); Blue Owl Private Wealth; StepStone Group (2026).
Open-ended structures are not new in every asset class — they have existed in real estate for decades, and the registered interval-fund framework has been available since 1993. What is new is extending the continuously offered wrapper across private equity and private credit, with minimums designed for individual investors and at scale. The largest listed alternatives managers have aligned their growth with perpetual capital because the private wealth channel represents the next major source of asset growth for the industry. The structure is as much about distributing innovation as it is about portfolio construction.
Source: Institute for Private Capital (Brown, 2025); Rule 23c-3 under the Investment Company Act of 1940 (adopted 1993); Preqin (2024).