Semiliquid Funds Soar to $600B as Private Credit Loses Steam: Morningstar

Assets in semiliquid funds have surged to a record $600 billion, more than doubling their total value since 2022. This rapid expansion is being primarily driven by the venture capital and private equity sectors, which are gaining momentum even as private credit begins to slow down. The trend underscores a significant shift in how investors access private markets, highlighting the growing importance of these vehicles within the alternative investment landscape.

According to a report from Morningstar, semiliquid fund assets have reached a significant milestone of $600 billion. This figure represents a dramatic increase in market share, as the total assets held in these structures have more than doubled since 2022. The surge indicates a robust appetite for alternative investment vehicles that offer a middle ground between fully liquid public securities and the traditional long-term lockups associated with private market placements.

The growth in this sector is being fueled specifically by venture capital and private equity strategies. While private credit has historically been a major driver of interest in the semiliquid space, the latest data suggests that this segment is starting to lose steam. In its place, private equity and venture capital have emerged as the primary engines of growth, reflecting a shift in investor sentiment and capital allocation toward these high-growth asset classes.

As the market for semiliquid funds continues to expand, industry experts emphasize that the value of accessing private markets is contingent upon a thorough understanding of fund management. Morningstar notes that investors must be able to navigate the complexities of these portfolios to truly benefit from the exposure. For the private equity and venture capital sectors, the continued rise of these funds represents a broadening of the investor base and a significant evolution in how private market opportunities are packaged for advisors and their clients.