Semiliquid Funds Close In on $600 Billion as Investors Pile into Private Markets

Clients have long watched from behind the velvet rope as Wall Street’s VIPs got access to private funds. Now they’re finding themselves on the guest lists. 

Semiliquid funds offer access to illiquid assets with the potential for high returns without requiring investors to lock up their cash for years (typically with quarterly withdrawals that are capped at 5% of the fund’s value). Investors seem to think it’s worth it: These funds are nearing $600 billion in net assets as of the end of March, more than double the amount at the end of 2022, according to a new report from Morningstar. But what’s got investors interested in semiliquid funds has changed dramatically in just around 12 months. 

“Last year when we were doing this, it was really a private credit story,” Jason Kephart, senior principal of multi-asset strategy ratings at Morningstar, said during the research firm’s investment conference last week. “But now we’re starting to see a lot more interest in private equity and venture capital.” 

VC, PE Take Over 

While private credit funds drove much of the recent growth, investors took a step back this year as worries that artificial intelligence will disrupt software companies spurred redemption requests across private markets. Instead, they’ve turned their attention to semiliquid venture capital funds due to excitement around SpaceX, Anthropic and OpenAI: 

• The VC category garnered net inflows of roughly $8 billion over the 12 months ending March 2026, a significant jump from almost zero during the 12 months ending March 2024, according to the report. 
• Meanwhile, net inflows for the private equity category increased to around $14.5 billion from $6 billion two years ago. 

Anthropic and OpenAI are expected to follow SpaceX’s successful debut with IPOs of their own as early as this fall. Jack Shannon, principal of equity strategies at Morningstar, said he’ll be watching for “what’s the next thing that these venture funds are going to try to sell people on” once all those companies are public.

“There are not that many household names once you get past those three, and these venture funds kind of need an anchor name to sell the product to people,” Shannon said. “Is this flow trend going to reverse? If I had to put my money on it, I would say it will definitely slow.” 

Uneven Bars. Morningstar rated 19 semiliquid funds over the last year and only four earned a bronze (Apollo Diversified Credit, Blackstone Private Credit and Pimco Flexible Municipal Income) or silver (Pimco Flexible Credit Income) rating, which reflects the research firm’s view that “beating public market indexes is a high bar given high fees and cash balances.”

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