Semiliquid Private Market Funds Rise to $344B: Morningstar 

The demand for private assets exposure is growing among investors, according to a new report from Morningstar. According to the company’s newly-released The State of Semiliquid Funds report, semiliquid fund assets increased to $344 billion last year, which is an increase of 60% from $215 billion in 2022 — as investors are seeking higher yield returns from private markets. 

Private credit surpassed real estate and infrastructure as the largest semiliquid broad asset class with $188 billion in net assets at the end of last year, up from $75 billion that was reported about two years ago. 

Nontraded business development companies have led the charge in private credit, and semiliquid fund fees are currently three times higher than traditional open-end funds, the credit rating agency stated. 

As more clients are seeking to alter their retirement plans, momentum is growing to bring private markets to those plans, but adoption of the access for investors has been slow due to concerns over liquidity, fees, and transparency, Morningstar said. 

Most semiliquid funds are only available through specific financial advisors and not through brokerage platforms such as Fidelity, Charles Schwab, and Vanguard. 

“Semiliquid funds have quickly become one of the most talked-about corners of the investment universe, yet definitions, data, and transparency have lagged behind the headlines,” Jason Kephart, senior principal of multi-asset strategy ratings at Morningstar, said. “Our report shows that while these funds promise greater access and returns, they also bring steep fees, heavy use of leverage, and liquidity limits that investors must carefully evaluate.”