How Semiliquid Funds are Driving Access to Private Assets 

October 14, 2025

A recent report projects that assets under management in alternative investments will reach $29.2 trillion by 2029, a 74% increase since 2016. As interest in private markets continues to grow, the investor base is expanding, and fund providers are developing innovative solutions to meet diverse needs. Semiliquid funds have emerged as one such solution, offering periodic redemption opportunities that provide more flexibility than traditional closed-end funds while allowing managers to hold less liquid assets in their portfolios.

Defining Semiliquid Funds 

Semiliquid funds are investment vehicles that restrict how and when investors can withdraw capital. Instead of daily redemptions like mutual funds or intraday liquidity like exchange-traded funds (ETFs), these funds typically permit withdrawals on a quarterly or semiannual basis, sometimes with limits on the amount that can be redeemed. 

These restrictions are not incidental—they are fundamental to the fund design. By controlling outflows, managers can invest in assets that may require longer holding periods, such as private loans, real estate, or private equity. In effect, semiliquid structures align investor liquidity with the liquidity profile of the underlying investments¹. 

The Rise of Semiliquid Structures 

The category of semiliquid funds includes four main structures: 

• Interval funds – Allow redemptions at set intervals, typically quarterly, with caps. 
• Tender-offer funds – Permit repurchases at the manager’s discretion, often with multi-year holding periods. 
• Nontraded REITs – Focus on real estate investments¹, providing exposure to commercial properties and developments. 
• Nontraded business development companies (BDCs) – Provide financing to small and mid-sized businesses that may not have access to traditional lending markets. 

Each structure has a distinct history. For example, the U.S. Securities and Exchange Commission first introduced interval funds in 1992, around the same time as the earliest ETFs. While ETFs gained broad adoption, interval funds remained a niche product until the early 2000s, when they began to be used for bank-loan strategies. 

Why Liquidity Design Matters 

Illiquid assets often cannot be sold quickly without affecting their price. For traditional open-end mutual funds, which must be able to meet daily redemption requests, holding too many illiquid securities can create significant risks. Instances in the past—such as the closures of certain mutual funds heavily invested in illiquid assets—demonstrate the challenges of liquidity mismatches. 

Semiliquid funds are intended to mitigate this risk by offering a more balanced liquidity profile. Investors accept less frequent withdrawal opportunities in exchange for exposure to assets that are otherwise difficult to access in a traditional mutual fund or ETF. 

Growth in Private Market Access 

The 2010s and 2020s have marked a turning point in the adoption of semiliquid structures. Large nontraded REITs and private credit funds have grown to tens of billions of dollars in assets. Interval funds, in particular, have become popular among asset managers because they provide a familiar format for advisors and investors—complete with tickers, regulatory filings, and tax reporting—while still enabling investment¹ in less liquid markets. 

For example: 

• Private Credit: Interval funds have become a primary vehicle for direct lending strategies, where funds lend to nonpublic, midsize companies. 
• Real Estate: Nontraded REITs continue to be used for diversified property investments¹. 
• Private Equity and Venture Capital: These strategies are more commonly paired with tender-offer funds, which provide greater flexibility in managing longer holding periods. 

Public vs. Private, Liquid vs. Illiquid 

One of the most important considerations when evaluating semiliquid funds is that the line between “public” and “private” or “liquid” and “illiquid” is not always clear. 

• Certain public securities—such as small-cap equities or structured credit instruments—may trade infrequently, making them effectively illiquid. 
• Some private assets, such as broadly syndicated bank loans, can be relatively liquid due to a large, active investor base. 
• Restrictions such as post-IPO lockups or the possession of material nonpublic information can create circumstances where an asset is simultaneously public yet functionally illiquid. 

This nuance underscores the importance of understanding not only a fund’s structure but also the nature of the assets it holds. 

Key Considerations for Investors 

Semiliquid funds are designed to expand investor access to private markets while managing liquidity risk. However, they may not be appropriate for all investors. Important considerations include: 

• Liquidity Needs – Investors should match their time horizon to the redemption terms of the fund. 
• Underlying Assets – Understanding what types of investments¹ the fund holds is critical to assessing risk. 
• Risk and Return Profile – Private assets may offer attractive potential returns but can carry unique risks, including valuation uncertainty and limited transparency. 
• Diversification – Semiliquid funds can complement traditional portfolios, but they should be considered within the context of overall asset allocation. 

Conclusion 

Semiliquid funds represent a growing area of investment innovation, bridging the gap between daily-liquid vehicles and fully illiquid private investments¹. Their structured approach to liquidity makes them well-suited to hold private credit, real estate, and private equity, among other strategies. 

As these funds become more widely available, both advisors and investors should approach them with an informed perspective—understanding not only the opportunities they present but also the responsibilities that come with investing in less liquid markets. 

In an environment where private assets are increasingly part of mainstream portfolios, semiliquid funds may play an important role in broadening access—while reminding investors of the importance of aligning investment¹ choices with liquidity needs and long-term goals. 

Disclaimer: Private banking services offered through First Western Trust Bank, Member FDIC 

1. Investment products and services are Not FDIC Insured, Not guaranteed by the Bank, May Lose Value 

This content is for informational purposes only and does not constitute legal or tax advice. Please consult your legal or tax advisor for specific guidance tailored to your situation. First Western Trust Bank cannot provide tax advice. Please consult your tax advisor for guidance on how the information contained within may apply to your specific situation.