Broader availability of alternative investment strategies against the backdrop of higher volatility in public markets gives investors opportunities to leverage registered funds and evergreen structures, notes the Morgan Stanley team.
As traditional stock-bond allocations face new challenges, from market concentration to weakening diversification, the evolving alternative investment opportunities like registered funds and evergreen vehicles are helping investors build more resilient portfolios with exposure to private markets, explains Morgan Stanley, one of the largest and most influential investment banks and wealth management firms globally.
Why investors are turning to alternatives
The public markets landscape has changed considerably. There are roughly one-third fewer public companies than two decades ago, and many of today’s fastest-growing businesses remain private for longer. Nearly 80% of companies generating over $100 million in revenue are now privately held. In the U.S. and Europe, the share is even higher: 87% and 96%, respectively. As a result, investors confined to listed securities may be missing out on significant sources of growth and income.
For instance, Stripe so far remains the largest privately-owned fintech company with a valuation of about $107 billion and over $1.4 trillion in payment volume processed in 2024. Revolut (UK), CRED (India), Mambu (EU), and many other notable fintech entities can not be accessed through public markets as well.
Alternative investments, spanning private equity, private credit, real estate, and infrastructure, offer potential benefits that traditional markets often cannot. They can help diversify portfolios, reduce volatility, and enhance total return potential by providing exposure to assets less correlated with equities and bonds.
Registered funds provide regulated access to private markets
Registered funds, which operate under the U.S. Investment Company Act of 1940, combine the investor protections and transparency of public vehicles with access to institutional-grade strategies. Because they are publicly registered, they can be offered more broadly, even to retail, non-professional investors, often with lower minimums and simpler tax reporting than traditional private partnerships.
Common structures include:
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Tender offer funds, which provide exposure to private markets and allow for periodic redemptions, typically quarterly.
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Interval funds which invest across alternative strategies but offer scheduled liquidity windows and daily pricing.
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Business development companies (BDCs), focused on lending to middle-market businesses with the potential for attractive income through dividend yields.
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Non-traded REITs can deliver stable income and inflation protection from real estate investments, while offering more consistent valuations than public REITs.
Evergreen vehicles offer ongoing, flexible exposure
Many modern registered funds are structured as evergreen vehicles, meaning they have no fixed termination date. Unlike closed-end private funds that liquidate after a set period, evergreen models continually raise and reinvest capital, allowing investors to enter or exit at predefined intervals. This approach supports long-term, continuous exposure to private markets and enables capital recycling, making it easier to stay invested through different market cycles.
Accessibility meets sophistication in new alternative investment strategies
Together, registered and evergreen structures are transforming how investors participate in private markets. They offer improved liquidity, reduced eligibility requirements, and lower entry thresholds (often as little as $25,000 compared with the $250,000 or more typical of institutional funds). Regular pricing, transparent reporting, and simplified tax documentation further enhance accessibility.
This democratization of alternatives mirrors the evolution of exchange-traded funds (ETFs): once niche products, now core investment tools. Similarly, the growth of registered and evergreen vehicles is bringing private-market diversification into mainstream portfolios.
Maintaining discipline through manager selection
Despite improved access, manager quality remains a key determinant of success. Performance dispersion among alternative managers is wide. Thus, top-quartile managers can outperform lower-quartile peers by as much as 12% annually. Careful due diligence and alignment with long-term goals remain essential to harnessing the benefits of these structures.
If you follow these basic rules, registered funds and evergreen vehicles that represent a new generation of alternative investment access — regulated, flexible, and increasingly investor-friendly, can be a good way to enrich your investment portfolio. By combining institutional strategy with modern liquidity features, they allow investors to pursue growth, income, and diversification in a more dynamic and accessible way.
