The case for interval funds and other semi-liquid vehicles is straightforward: access to private markets without a ten-year lockup, and the appeal of periodic liquidity. It's a compelling pitch. It is also incomplete.
This isn't a critique of the structures. Expanding access to private markets is a benefit, but the feature most often cited as the primary selling point of these structures - liquidity - warrants a closer look.
We often hear that semi-liquid funds are "liquid until they aren't." Recent headlines have given that phrase new relevance but those episodes, while instructive, are not the focus here. The more useful question is how liquidity functions in normal conditions, and whether the liquidity advantage over traditional drawdown structures is as wide as pitches often imply.
The Liquidity Structure
Much of the discussion centers on accessing liquidity down the road. Less attention is paid to the front end.
At subscription, capital is fully deployed. No capital calls. That simplicity is a feature. But from that point forward, access to your capital is governed by scheduled repurchase programs shared across all investors at the fund level rather than controlled by the investor. That distinction matters more than most people realize at the time they invest.
The terminology reflects the structure. Interval funds must offer repurchases at least quarterly, generally at 5% of NAV per quarter, subject to fund policy and regulatory minimums. Repurchases can be pro-rated if demand exceeds the offer. Many funds also restrict early repurchases during an initial period after launch. Tender offer funds operate at the discretion of the board or manager. They have the option, but not the obligation, to offer liquidity. There is no minimum required liquidity level. Offers can vary in size and timing and can be reduced or suspended depending on conditions. Many tender offer funds also impose an initial restriction period, typically up to 12 months, before repurchases begin.
One structure has a floor. The other has a discretionary dial.
The Round Trip: Longer Than It Looks
Assume a $1 million commitment under normal market conditions and a subsequent desire for full redemption. For interval funds, after any initial restriction period, often up to one year, liquidity runs at roughly 5-10% of NAV per quarter. At the lower end, assuming no proration, a full redemption can take approximately six years. Tender offer funds are more variable. At higher and more consistent repurchase levels, a full redemption could occur in roughly two years. At lower or less consistent levels, that timeline can stretch toward the same multi-year range. In practice, across both structures, a reasonable range for full liquidity is approximately two to six years, depending on fund policy and aggregate investor demand. Importantly, that outcome is determined at the fund level rather than by the investor.
Context from Drawdown Structures
It is worth noting that many semi-liquid private equity funds carry meaningful exposure to secondary strategies, making a traditional LP-led secondaries fund a natural and relevant comparison. In a traditional LP-led secondaries fund, capital is deployed over time and returned through realizations as assets are sold. On a $1 million commitment to a well-structured LP-led secondaries fund, roughly 50-60% of that commitment typically leaves the investor's account in cash, with the remaining 40-50% offset by early distributions from seasoned assets already in the portfolio. A drawdown fund that reaches 1x DPI by year six or seven will have returned in cash the full amount of capital called.
The comparison isn't about superiority. It's about structure. Semi-liquid vehicles deploy capital fully at inception and return it through periodic repurchase windows. Drawdown structures deploy over time and return capital via realizations. They are different tools with different cash flow profiles, and particularly in the case of secondaries-heavy semi-liquid funds, the gap between those profiles is often far narrower than most investors think.
Our Point of View
Semi-liquid funds are a genuine innovation. No capital calls, simplified structure, periodic liquidity windows. But liquidity is not a binary feature. It exists on a spectrum, and the structure of that liquidity matters. In normal conditions, a full redemption from a semi-liquid fund can often take two to six years, governed at the fund level rather than by individual investor decision. That is not a flaw but rather how the structure is designed to work.
When the structures are laid out clearly, the distance between semi-liquid and drawdown, even under normal conditions, is not as wide as the labels may suggest. Investors who understand that going in are better positioned than those who discover it on the way out.
