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By Stephanie Atnas, Director of Fund Administration, Luxembourg at GP Fund Solutions and co-head of the LPEA Fund Administration Committee
And Jennifer Forges, Audit Partner at PwC and member the LPEA Fund Administration Committee
Over the past few years, one trend has quietly reshaped the investment landscape: the rise of semi-liquid funds.
Semi liquid funds are typically evergreen or open-ended alternative funds offering periodic redemption windows, subject to gates and notice periods, while investing predominantly in illiquid private market assets.
These vehicles are designed to bridge two worlds — offering investors access to private market opportunities with the flexibility of periodic liquidity. In doing so, they have opened the door for broader participation in alternatives, from institutional investors to qualified investors and even to quasi-retail investors seeking diversification and yield, bringing new complexity and risk for administrators, and managers.
The Promise — and Pressure — of Semi-Liquid Funds
In a market where fundraising has become more challenging, the semi-liquid funds provide an alternative route for capital raising for asset managers. Moreover, the rise of semi-liquid funds also means a more stable capital base, continuous fundraising rather than episodic capital calls, and then, greater flexibility in capital deployment.
Semi-liquid funds are often described as “the best of both worlds” as they aim to deliver higher potential returns from illiquid assets while offering periodic redemption windows. They blend liquid assets that can be traded or redeemed periodically with illiquid holdings —private equity, real estate, private credit — that drive performance and offer a greater diversification for investors. But in times of market stress, if too many investors try to redeem, liquidity windows can freeze, and managers may need to impose gates or suspend withdrawals.
Yet this hybrid design introduces new operational challenges that traditional alternative fund administration models were not built to handle. These challenges oblige administrators to rethink their alternative offering, update compliance checklists, and train employees to manage this new type of fund.
At their core, these vehicles combine the daily oversight and reporting expectations of open-ended funds with the valuation, cash flow, and governance complexity of private market. That is an entirely new paradigm for administrators.
The Challenges We are All Facing
As administrators, we sit at the intersection of product design, investor expectations, and regulatory accountability. And when it comes to semi-liquid funds, that intersection is getting busier.
Here is what we are grappling with:
🔹 Valuation Complexity – Managing two different valuation cadences — frequent and liquid observable market prices for public assets, periodic and illiquid valuation model for private ones — creates timing gaps, pricing mismatches, and heightened audit scrutiny.
🔹 Liquidity Management – Predicting redemption activity, maintaining cash buffers, and coordinating capital calls are now mission-critical functions. Investors expect smooth liquidity, even in turbulent markets. Liquidity stress testing and scenario modelling are now essential to anticipate redemption spikes and avoid forced asset sales during market stress.
🔹 Technology Gaps – Most legacy systems were built for one world or the other — hedge funds or private equity — not both. Integrating data across custodians, GPs, and valuation agents requires hybrid technology and automation. And administrators who fail to invest in hybrid platforms may struggle to remain competitive in the future.
🔹 Regulatory Pressure –Regulatory frameworks such as U.S. interval fund rules and Europe’s ELTIF 2.0 are raising the bar for transparency, especially as these products reach retail investors. Administrators must upgrade and adhere to new regulations to ensure — and be able to prove — that liquidity controls, valuation processes, and investor reporting are robust and fully auditable. Administrators must prove that liquidity, valuation, and investor communications are robust and auditable.
🔹 Evolving Investor Expectations – As semi-liquid structures reach a wider investor base, including quasi-retail investors, the standard for digital reporting, onboarding, and communication is higher than ever.
🔹 Investor Education – Many investors underestimate liquidity gates and redemption limits, requiring clear communication and onboarding.
🔹 Cost Implications – Operational complexity, hyper personalization and technology upgrades increase administration costs, impacting margins of the administrators.
Where We Go from Here
The good news? These challenges also present enormous opportunity.
Forward-looking administrators are already adapting — not by tweaking old processes, but by rethinking their entire operating model.
✅ Hybrid infrastructure that supports both open- and closed-end features.
✅ Automated valuation pipelines and API connectivity for private market data.
✅ Predictive liquidity management tools powered by analytics.
✅ Investor experience platforms that provide transparency and control.
✅ RegTech integration to streamline compliance and reduce reporting burdens.
As administrators we see semi-liquid funds as more than a product innovation — they are a catalyst for industry evolution. They challenge us to elevate data quality, modernize systems, streamline the process, and deliver deeper insight to managers and investors alike.
The Bigger Picture
Semi-liquid funds are here to stay. They reflect a structural shift in how investors want to engage with private markets — more access, more flexibility, more transparency, more liquidity.
For fund administrators, this is a defining moment. Those who adapt will not just keep pace; they will become indispensable partners to asset managers shaping the next generation of investment products.
Because in the end, the rise of semi-liquid funds is not just about liquidity — it is about agility. And agility is exactly what will separate tomorrow’s leading administrators from yesterdays.
Final Thought:
The future of fund administration lies in bridging the gap between liquidity and innovation. Semi-liquid funds are simply the proving ground.
