May 19, 2026

This article was originally published by Peachtree Group.

Executive Summary

As liquidity assumptions are tested across private markets, fund structure is emerging as a critical driver of investment outcomes. In this conversation, Aneet Deshpande, CIO of Clearstead, explains how institutional allocators weigh evergreen versus drawdown vehicles across strategies, and what that means for liquidity planning, governance, and alignment in today’s cycle.

You’re operating in a market where liquidity can no longer be taken at face value. Across private credit and real estate, the conversation has shifted from yield, defaults, and spread compression to something more fundamental, namely, whether the structure can hold when investor behavior and market cycles collide.

In Peachtree Group’s Peachtree Point of View conversation, Greg Friedman sat down with Aneet Deshpande, CIO of Clearstead, to unpack how institutional allocators evaluate fund structures today. The discussion offers a clear lens for anyone allocating private credit or commercial real estate on how experienced capital allocators separate signals from noise in an environment defined by rapid innovation and growing complexity.

Not Mispricing Credit, Misunderstanding Liquidity One of the most important distinctions from the conversation is that today’s tension in private markets is not being driven by deteriorating asset quality. Instead, it is being driven by a mismatch between liquidity expectations and reality.

As Aneet notes, you can have a fundamentally healthy portfolio and still find yourself under pressure: “You could have a healthy portfolio and be on the front page of a paper.” That dynamic is playing out most visibly in evergreen and interval fund structures, particularly in private credit, where vehicles often offer periodic liquidity while the underlying assets remain inherently illiquid.

When redemption demand increases, managers may have to gate withdrawals or sell assets at unfavorable times. From an allocator’s perspective, the key question is not whether liquidity exists, but how that liquidity behaves under stress.

Structure Isn’t a Wrapper – It’s a Risk Factor

A common market framing is to evaluate investments first by asset class and second by structure. Institutional allocators often reverse that order.

Aneet makes clear that evergreen vehicles are not inherently flawed. They can offer advantages such as continuous deployment and compounding. But their success depends heavily on factors that are often overlooked: investor base composition, asset‑gathering incentives, and behavioral dynamics.

“Are gates a feature or a bug? We think of them as a feature because it protects investors.” Gates are not a structural failure; they are a mechanism to preserve value when liquidity becomes constrained. The challenge is that many investors and advisors see them differently. That disconnect between expectation and reality is where risk begins to emerge.

For allocators, this means underwriting not only the portfolio but also the structure itself, because capital flows in and out of a vehicle can shape outcomes as much as the underlying investments.

Why Drawdown Structures Still Dominate for Institutions

Despite the growth of evergreen vehicles, Aneet notes that many institutional allocators still favor traditional drawdown structures. The reason is straightforward and comes down to alignment. “We just keep coming back to drawdown as more appropriate for private investments.”

Drawdown funds create a clearer match between assets and liabilities. Capital is committed, deployed, and returned within a defined framework, reducing the risk that investor behavior will disrupt the strategy. It also simplifies underwriting, because in a drawdown structure, the investor base is more stable and predictable, while in evergreen vehicles, the investor base itself becomes a variable to manage.

This does not mean evergreen structures will disappear. It means their use will become more selective, particularly in asset classes where liquidity assumptions are harder to manage.

The Hidden Trade‑Off Behind “Democratization” Over the past several years, the industry has made significant strides in expanding access to private markets. Interval funds, non‑traded REITs, and Business Development Companies (BDCs) have made it easier for a broader range of investors to participate. But ease of access introduces new risks.

Operational simplicity, such as tickerized products, reduces friction and allows advisors to allocate across large client bases more efficiently. Yet that same efficiency can mask complexity. “Is that democratization or access? Is that coming with some unintended consequences? And we think the answer is yes.”

Those unintended consequences often show up in investor behavior. Studies consistently show that timing decisions can materially impact returns. When liquidity is introduced, even partially, it creates optionality, and optionality changes behavior. For allocators, this means evaluating not just how a product is built, but how it is likely to be used.

Reframing Alternatives by Function, Not Labels

Another important point is how portfolios are constructed. Rather than viewing investments through the lens of “alternatives” versus “traditional,” Aneet emphasizes functional roles. “We look at the world through the lenses of growth assets, diversifying assets, and income and liquidity assets.”

This framework removes the noise around labels and focuses on what each investment is meant to achieve in a portfolio. Private credit and public credit may sit in different liquidity buckets, but they often serve similar income objectives. The same is true for public and private equity on the growth side. For investors, this reframing shifts the conversation from access to purpose.

Where Allocators Are Looking Today

When asked how he would allocate fresh capital in today’s market, Aneet highlighted an area that has received less attention relative to corporate credit: commercial real estate credit. While capital has flowed heavily into asset‑based lending and corporate direct lending, commercial real estate credit has been comparatively overlooked, even as the sector works through valuation resets and a higher‑for‑longer rate environment.

This creates a more defensive entry point with attractive yield characteristics and reflects a broader theme that opportunities tend to emerge where attention is limited and capital is constrained.

What This Means for You

If you are evaluating private market investments today, the takeaway is clear that you need to look beyond the asset to the structure, investor behavior, and alignment behind it.

Liquidity, in particular, should be viewed with a healthy degree of skepticism. As Greg Friedman noted during the conversation, “It’s really just an illusion of liquidity. It’s not true liquidity.” Understanding that distinction can fundamentally change how you allocate capital.

In this part of the cycle, discipline is not just about what you invest in. It is about how you access it.

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