Five Questions to Consider as Evergreen Strategies Proliferate

Evergreen manager selection

1. Strong and continuous deal flow

Evergreen funds must keep deploying capital, so a manager’s ability to source investments on an ongoing basis is important.

In our view, deal origination should be predictable and repeatable across sectors, geographies and market cycles.

Potential points to consider

• Can the manager source sufficiently broad deals for an evergreen strategy, even in downturns?
• Does the manager directly control the underlying investments, or does a third party manage performance?
• Does the manager have experience successfully exiting investments through different market cycles?

2. Specialist team with hands-on experience

In our view, managing an evergreen strategy requires hands‑on experience with running perpetual capital across market cycles.

A good sign could be that a team that has actively managed deployment, redemptions, valuations, and liquidity as one integrated system, with a practical understanding of how they affect each other.

Potential points to consider

• Can the team show they’ve run evergreen or perpetual strategies through market cycles?
• Is there a dedicated, stable team with a clear mandate within the firm?
• What are the processes for deployment, redemptions, valuation and liquidity, and are they stress‑tested?

3. The investor’s interests come first

Evergreen strategies may provide the same deal access as that available to large institutional clients.

When the manager co‑invests alongside clients, this may support alignment of interests between the manager and its clients.

Potential points to consider

• Is the evergreen strategy investing in the same deals as large institutional clients?
• What are the selection criteria for co-investments?
• Has there been steady growth with a sufficiently diversified investor base?

4. Governance designed for stressed markets

In our view, the structure must stand up under pressure, not only in calm markets.

That means a consistent valuation policy, independent oversight and risk controls that have been stress‑tested – to help ensure fair pricing, orderly redemptions and transparent treatment for all investors.

Governance should include a dedicated Investment Committee whose members have no conflicting external roles.

Potential points to consider

• Is the valuation policy documented, consistently applied and regularly reviewed?
• Are stress tests, liquidity and concentration limits, and contingency triggers defined and practised?
• Can the manager quickly obtain accurate information on portfolio risks and directly oversee underlying investments during market shocks?

5. Economics the investor can understand

Fees should be simple, transparent and efficient.

A single, clearly explained fee layer could preserve long‑term compounding and makes net returns easier to understand. Eligible investors may consider reviewing clear illustrations of net returns after fees.

Potential points to consider

• Is there a clearly explained fee layer, and can charges be easily reconciled?
• How are underlying fees handled and disclosed?

At EQT, "Better Never Ends" is more than a tagline – it drives how we source deals, steward companies and manage opportunities.

That’s why we strive to put clients at the heart of our investment approach, with the aim of building the appropriate strategies for the right audiences and providing clarity, expertise and education throughout the journey.