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Evergreen Funds. Evergreen Funds. Evergreen Funds.
In case you didn’t get the memo, everyone seems to be talking about and launching evergreen funds.
The megafund managers—and the usual chorus of industry pundits—have decided evergreen funds are the answer to everything that ails your clients. The structure of the future. A new era in alternative investment access and innovation.
In my view, most of what’s being marketed as innovation is just a new way to provide liquidity to large institutional investors while collecting fees from a new type of investor. Your clients.
The structure is meant to make illiquid, private investments palatable to you. But wrapping illiquidity in the language of “democratization” doesn’t make it less illiquid.
Under the hood, it’s still an illiquid portfolio wrapped in the promise of liquidity, with the kind of redemption mechanics that only really work if nobody uses them. Because what usually happens when there’s a market shock is that everyone runs for the doors, and then the gates slam shut. So much for liquidity.
On top of that, the economics are built to serve the manager—layered fees, performance hurdles, and catch-up provisions that ensure they get paid handsomely long before your clients see a dime of real outperformance.
But tell us something useful, Dan. This just sounds like venting.
Okay, here is a link to an article we wrote last year analyzing the fees of one type of evergreen fund. I am more than happy to share the spreadsheet I used and/or to help you with your fee analysis when you’re conducting due diligence on these funds. Just give me a shout.
Best,
Dan
We started hosting online Q&A Sessions in April to give prospective investors an opportunity to ask any & all questions related to our latest fund and the Morningstar PitchBook US Buyout Replication Index.
Date & Time: Jun 4, 2025 10:00 AM in Pacific Time (US and Canada)
Description: Office hours for prospective investors to meet Third Wire’s CEO, Dan Harms, and PitchBook’s Lead Quantitative Research Analyst, Andrew Akers, CFA to ask questions about the Morningstar PitchBook US Buyout Replication Index and Third Wire Asset Management’s latest fund, the USBRIF.
Here’s how it works:
1. Register for the live Q&A session.
2. Watch the 15-minute recorded fund walkthrough sometime before the session. Video link is sent with Registration Confirmation.
3. Join the Q&A to meet them and ask questions directly, or just listen in.
Alternative Talking Points
We review the latest monthly reports and industry analyses across the private markets, boiling them down into a few easily digestible points to share with your clients. Contact us if you’d like more depth.
Hedge Funds: Mixed performance in April as managers navigated historic intra-month reversals in risk sentiment.
➕ Equity Hedge strategies led the way. The HFRI Equity Hedge (Total) Index gained +0.7%, with strong showings in Healthcare (+2.0%), Technology (+1.7%), and Market Neutral strategies (+1.4%). Funds benefited from a sharp end-of-month recovery after tariff-driven selloffs earlier in April.
➕ Long Volatility is having a moment. The newly launched HFRI Long Volatility Index gained +1.6% in its first month, with institutional allocators reportedly showing strong interest in tail-risk and option-based hedging strategies. Expect more attention here if market swings continue.
➕ Macro strategies posted sharp declines. The HFRI Macro (Total) Index fell -2.7%, led by losses in Commodity (-4.8%) and CTA/Systematic Diversified (-4.0%) strategies. Only discretionary thematic macro managers were up on the month (+1.4%).
➕ Event-Driven and Relative Value strategies were mixed. The HFRI Event-Driven Index fell -0.4%, with activists down -3.6% but special situations and merger arb strategies in positive territory. Relative Value fell -0.9%, dragged by volatility strategies (-4.2%) despite modest gains in arbitrage.
➕ Dispersion widened again. Top-decile hedge funds returned +7.2% in April, while the bottom decile lost -10.2%, bringing 12-month top/bottom dispersion to 53.5%. This environment continues to favor manager selection and multi-manager platforms.
Private Equity: Exits remain slow, fundraising softening, and valuation pressure is building.
➕ Continuation funds keep growing. GP-led secondaries accounted for 19 exits in Q1—not because they’re optimal, but because other exit paths remain blocked. Source: PitchBook
➕ PE exits dropped to a two-year low in Q1—and April was even worse. Just $489 million across 12 deals. With the IPO market frozen and buyer/seller expectations still miles apart, managers are increasingly leaning on secondaries to create liquidity. Sources: S&P Global, Economic Times
➕ Big deals are still getting done. The share of $1B+ transactions hit 37% in Q1—up from 31% last year. It’s not a seller’s market, but it’s not a fire sale either. Fewer deals. Higher quality. Bigger checks. Sources: Ropes & Gray, CookMA
➕ IPOs are basically off the table. Just 18 private equity-backed IPOs closed globally in Q1—lowest in at least five years. With valuation gaps still wide, most GPs are holding or turning to alternative exit routes. Source: S&P Global
➕ The SEC wants to help expand access to private markets. On May 19, Chair Paul Atkins directed the agency to revisit rules limiting closed-end funds’ exposure to private assets. Combined with new bills in Congress to redefine “accredited investor,” the industry is watching closely. Sources: Pensions & Investments, WealthManagement.com
Private Credit: Yields remain elevated, but investors should pay closer attention to how risk is being reported—and where it may be accumulating.
➕ Default rates remain stable—for now. Q1 defaults fell to 2.42%, led by distressed exchanges in healthcare and media. While encouraging on the surface, nearly 30% of borrowers still report interest coverage ratios below 1.0—suggesting stress may be deferred, not resolved. Source: Proskauer
➕ Payment-in-kind income is rising. More borrowers are using PIK structures to preserve liquidity, which can inflate yields without improving actual credit quality. Advisors should look closely at what’s being paid—and how. Source: FDIC
➕ Regulatory scrutiny is increasing on valuations. The SEC has signaled closer attention to how private credit managers value assets, disclose assumptions, and manage interest-rate sensitivity. We see this as a positive step. Source: National Law Review
➕ Fee drag is meaningful. Average net returns were 8.44% last quarter, but gross fees—including management, carry, and fund expenses—are often above 3%, with top-quartile funds charging more. Cost efficiency matters. Source: Larry Swedroe
Commercial Real Estate: Green shoots are emerging, but refinancing risk and valuation transparency remain front of mind.
➕ April deal volume hit a six-month high. Major CRE transactions rebounded, led by multifamily and industrial. Even office saw selective activity, with 18 notable trades—mostly well-leased, high-credit assets. Source: LightBox
➕ Industrial and multifamily cap rates compressed in Q1. Cushman & Wakefield reported average industrial cap rates at 6.29%, with Class A assets in high-demand markets ranging from 4.5% to 6.5%. CBRE also noted continued compression in core multifamily assets. Sources: CREDaily, CBRE via YieldPro
➕ Multifamily fundamentals show mixed signals. NCREIF reported 1.43% NOI growth in Q1—the first positive quarter since early 2022—but national occupancy fell to 94.4%, its lowest in over a decade. Trepp also noted a 113 bps spike in multifamily delinquencies in April. Sources: NCREIF, Multihousing News, Trepp
➕ Office distress keeps rising. Vacancy hit 19.9% nationally. Special servicing rates are over 16%, with valuations down 50% from 2021 peaks in some markets. Lease roll risk and muted construction point to more pain ahead. Sources: CommercialEdge, Trepp
➕ Refinancing risk is real. A wave of maturing CRE loans is colliding with tighter underwriting and higher costs. Multifamily spreads are down, but refinancing remains most challenging in office and hospitality. Source: CBIZ
➕ Private NAV valuations lag public markets. Public REITs are down -2.1% YTD while private REITs report modest gains. The gap reflects valuation stickiness and timing—not necessarily fundamentals. Source: Chilton Capital
Artificial Intelligence: AI adoption is accelerating across sectors
➕ Financial advisors are no longer just watching from the sidelines. A global survey by the Financial Planning Standards Board found two in three advisors are already using AI or plan to implement it this year. Top use cases include onboarding, risk profiling, and client communications. Source: CPA Practice Advisor
➕ New AI tools are launching across the advisor tech stack. Raymond James rolled out a proprietary AI-powered search tool. Wealthbox introduced AI-generated meeting notes. SmartsAI debuted Wealth 3.0, featuring automated rebalancing, risk control, and goal-based customization. These are practical features, not science projects. Sources: Financial Advisor IQ, Kitces, GlobeNewswire
➕ Real-world use cases are already here. AI models with expanded reasoning and context are cutting contract review times by 40%, enabling earnings call pattern detection in Bloomberg terminals, and supporting hypothesis generation across research papers in pharma. These aren’t experiments—they’re quietly being adopted. Don’t sleep on this. Source: AI21 Labs
➕ Long context windows aren’t just longer—they’re more efficient. Models like GPT-4.1 and Gemini 2.5 use hierarchical attention, token clustering, and speculative execution to preserve coherence across multi-thousand-token inputs. That’s a game-changer for due diligence and document-heavy workflows, for example. Sources: OpenAI, Cloud Google
Worth your time
Our monthly recommendation of books, articles, research, and announcements we found interesting, important, or just plain entertaining enough to share. Sometimes, we’ll have a lot—other times, not so much. The objective is to share things that might be useful or interesting for your clients, not filler.
➕ Private Markets, Public Access: Institutional Investor. Our friends at Morningstar Indexes and PitchBook published a short piece on how benchmarking is quietly reshaping access to private markets. If your clients are being pitched private equity exposure, this is a helpful reminder that how you benchmark matters just as much as what you invest in.
➕Part 4: What’s Running on Our T4 Now That it Doesn’t Overheat (T4 GPU Inference in Action): Pure Math AI. Our friends at Pure Math AI have been working on a few new projects. One includes installing their own NVIDIA T4 GPU (instead of spinning one up in the cloud) to preprocess documents for a Retrieval Augmented Generation (RAG) system their building. Tldr: Helps you understand when owning the hardware and running AI projects in-house rather than in the cloud, makes sense. Particularly from a cost and data security perspective.
➕PE dealmakers say temporary tariff reprieve is not a green light: PitchBook. A recent 90-day pause in tariffs, while perceived by some as a significant trade breakthrough, isn’t sufficient to reignite private equity dealmaking. Dealmakers remain cautious, emphasizing that the temporary relief doesn’t alleviate underlying market uncertainties.
➕Where the Richest Families Are Shifting Their Investments Now: Barron’s. Shifting to growth sectors in big, publicly traded markets as they reduce the amount of cash they hold. How about a fund targeting growth-oriented publicly-traded small and mid-cap companies that also checks the box for increasing allocations to private equity? Just saying 🙂
Disclosure:
This newsletter is for informational purposes only and does not constitute investment advice. All investments, including those in equity, debt, and alternative assets, carry certain risks, notably potential liquidity and transparency issues associated with many private investments. These risks should be considered in the context of an individual investor’s objectives and risk tolerance.
The views expressed are those of Third Wire as of the date of publication and are subject to change. The information has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed.
Past performance is not indicative of future results. Investors are advised to consult with qualified financial, legal, or tax advisors before making any investment decisions. Third Wire does not accept liability for any loss or damage arising from the use of this newsletter.
By subscribing to this newsletter, you agree and acknowledge that Third Wire is not liable for any decisions made based on the information provided herein.
1. The Morningstar Indexes are the exclusive property of Morningstar, Inc. Morningstar, Inc., its affiliates and subsidiaries, its direct and indirect information providers, and any other third party involved in, or related to, compiling, computing, or creating any Morningstar Index (collectively, “Morningstar Parties”) do not guarantee the accuracy, completeness, and/or timeliness of the Morningstar Indexes or any data included therein and shall have no liability for any errors, omissions, or interruptions therein. None of the Morningstar Parties make any representation or warranty, express or implied, as to the results to be obtained from the use of the Morningstar Indexes or any data included therein.
The Fund seeks to replicate certain characteristics of private equity buyout strategies but may not achieve the same results. Past performance is not indicative of future results. Investments are subject to risk, including loss of principal. Investments in public equities may involve significant risks, including market volatility, economic uncertainty, and potential deviations from the Fund’s intended strategy. There is no guarantee that the Fund will achieve its investment objectives.
The Fund is a private offering and is not registered under the Investment Company Act of 1940 or the Securities Act of 1933. As such, it is not subject to the same regulatory requirements as registered investment vehicles. Fees and expenses associated with the Fund may impact overall performance. Investors should review the private placement memorandum for a detailed description of fees and costs.
This document is for informational purposes only and may be shared with the general public under Rule 506(c). Any offer to invest is made exclusively through the Fund’s private placement memorandum or other authorized offering documents and is available only to verified accredited investors. Verification of accredited investor status is required prior to any investment.
The Index uses advanced AI methodologies, including Long Short-Term Memory (LSTM) neural networks, to guide security selection and leverage adjustments. The effectiveness of these methodologies is not guaranteed and may be impacted by unforeseen factors or market conditions.
This document may contain forward-looking statements regarding the Fund’s strategy or expected performance. These statements are subject to risks and uncertainties that could cause actual results to differ materially.
