New Ratings Reveal Challenges for Semiliquid Funds

Our latest round of Morningstar Medalist Ratings for semiliquid, or evergreen, funds spanned a range of providers, like Blackstone, Carlyle, and Cliffwater, and strategies, including private equity offerings, but found none worthy of a Bronze, Silver, or Gold rating, which would have signaled our conviction that they could post superior returns over a full market cycle. After dissecting each fund’s strengths and weaknesses, Morningstar analysts awarded one Negative and six Neutral ratings. Read the full fund reports here or on each fund’s quote page on Morningstar.com. These new ratings add to those Morningstar issued in September.

Semiliquid Funds’ Challenges

The semiliquid fund universe remains relatively young and untested. Many private credit funds in this class of ratings weren’t around when credit spreads last blew out in early 2020, and none of them predated June 2018. Indeed, Blackstone Private Multi-Asset Credit & Income and Wellington Global Multi-Strategy—the newest of the bunch—launched in 2025 and 2024, respectively.

Different valuation practices further muddy the waters, making it hard to pin down the risks for investors. The private equity funds in this set of ratings were thrown into the frying pan in 2022 but ended the year in the black (in Cascade Private Capital’s case, up 12%), while the Morningstar US Market Index, which tracks public stocks, dropped 18%.

Funds in the same asset class can also post divergent returns. The chart below shows how different approaches to pricing holdings can affect performance. In 2020, Carlyle Tactical Private Credit lost 17% versus Cliffwater Corporate Lending’s 4% decline.

While valuations are opaque, fees’ impact has been clear. Morningstar research, corroborated repeatedly by others, has shown that fees are the best predictor of future success. Fees hinder these semiliquid funds. Though many of them fall in the cheapest third of their semiliquid asset class peers, their average adjusted fee eclipsed 3%--much higher than the average actively managed mutual fund and exchange-traded fund’s 1%. That sets a higher bar for success, making it harder to have high conviction that these funds will beat peers over the long term. Carlyle Tactical Private Credit’s fee, for instance, looks too steep for success.

Complexity also raises the bar for semiliquid fund adoption, and not just in their portfolios. Investors typically pay performance fees with catch-up provisions that can feel like another management fee, given their high likelihood of hitting investor returns.

Green Shoots for Semiliquid Funds

Despite drawbacks, Morningstar analysts were impressed with Blackstone’s and Carlyle’s portfolio management teams and Bow River’s and Cliffwater Direct Lending’s investment processes.

Blackstone Private Multi-Asset Credit and Income—Above Average People Rating

This strategy, launched in May 2025, may be new, but its comanagers, Michael Zawadzki, Dan Oneglia, and Eugene Lee, are private credit veterans who can run it well. Zawadzki started in the industry in 2002 and by July 2006 joined the credit-focused alternative asset shop GSO Capital Partners, which Blackstone acquired in March 2008. He became global CIO of what is now Blackstone Credit and Insurance, where he oversees more than 110 Blackstone business CIOs, including Oneglia. Oneglia and Lee, whose work history dates to 2010 at Goldman Sachs, collaborate closely here. That seasoning, and Blackstone’s more than 500 credit and real estate debt investment professionals, bolsters our conviction.

Carlyle Tactical Private Credit—Above Average People Rating

An experienced lead manager runs this strategy with the support of a large investment team. Brian Marcus has been the lead manager here since the fund’s 2018 inception. As Carlyle’s head of cross-platform investing, Marcus has a bird’s-eye view of the firm’s credit research and origination pipeline, an advantage for this strategy that tries to exploit the firm’s global credit capabilities. Carlyle manages more than $200 billion in public and credit assets and has large and experienced teams of investors to analyze both. It has more than 200 investment professionals across sectors, including direct lending, liquid credit, opportunistic credit, and asset-backed finance.

Bow River Capital Evergreen—Above Average Process Rating

This strategy’s thoughtful asset allocation and portfolio construction complement prudent liquidity management. This strategy’s strategic asset allocation allows it to invest across the private equity maturity spectrum and in many individual companies. It also provides diversification across industries, vintage year, sponsors, transaction and strategy types, and company size.

Bow River’s investment committee meets weekly to identify and vet the most attractive investment opportunities that it sources from both internal networks and institutional partners. The committee assesses general partner quality, asset fundamentals, value creation strategies, and industry trends before approving investments and determining deal size. Bow River tries to reduce liquidity mismatches inherent in private equity interval funds. Notably, the fund distinguishes itself by offering two discretionary redemptions each year, supplementing its two mandatory redemption windows.

Cliffwater Corporate Lending—Above Average Process Rating

Cliffwater positions this strategy as an index fund-style experience, with a diversified portfolio of assets sourced from more than two dozen private credit originators, including Carlyle, Crescent, KKR, and Silver Point Capital. The managers start with the Cliffwater Direct Lending Index but aim to beat it by selecting higher-quality partners and avoiding troubled loans. Position sizes are modest, which lessens the impact of any one bad loan. The fund offers systematic exposure to an asset class devoid of passive options.

As of November 2025, the fund has grown more than $30 billion in assets, which has its advantages. Some of its third-party arrangements provide Cliffwater with significant control over cash flow, making it easier for it to meet quarterly redemptions than competitors that invest mostly in drawdown funds. Its robust liability management group also supports the fund’s liquidity and lowers its cost of leverage, which it uses only moderately. The fund’s model, however, means it’s never the lead lender, so it has little influence over how much money it can recover when a borrower becomes distressed.

What’s Next for Morningstar’s Semiliquid Fund Medalist Ratings

Expect more semiliquid fund ratings in 2026, including tender-offer funds, nontraded business development companies, and nontraded REITs. Morningstar chooses funds to cover based on investment merit and investor demand, while also striving to rate and analyze enough options in each Morningstar Category to help investors and advisors sort through the choices.

We’ll release future ratings individually; investor subscribers will be able to find them on Morningstar.com fund pages. They’ll also be in Morningstar Direct, Direct Advisory Suite, and semiliquid fund data feeds. Those with access to Morningstar Direct can view interval funds with Morningstar Medalist Ratings.

Setting Semiliquid Funds’ Bogy

Benchmarking semiliquid funds is a challenge. We’re trying to help by adding new Morningstar Categories, including private equity, venture capital, general private debt, direct lending, and private multi-asset. These groups allow better apples-to-apples comparisons between peers, including in this batch of ratings.

Morningstar and PitchBook will use those categories as the basis for a new Morningstar PitchBook US Evergreen Fund Index family that will provide an objective way to measure what semiliquid, or evergreen, funds offer relative to the public market and each other.