The short answer

Private equity is offered through several structures. Closed-ended funds are the classic form: you commit an amount, the manager draws it over a few years and returns money as companies are sold. Evergreen funds are open-ended: you invest straight away in an existing portfolio, can add money over time and request periodic redemptions, usually around 5% of the fund each quarter. Feeder funds on platforms let individuals access closed-ended funds with lower minimums; secondaries and fund-of-funds add diversification. Classic funds typically charge a management fee around 2% and 20% carried interest above an 8% hurdle; evergreen funds typically charge around 1.25% of net asset value and often a 10% incentive fee for private equity. Fees are designed to reward performance, and returns are reported after fees. Lawrence will help you find the right structure.

Private equity structures at a glance

The main ways to invest, side by side.

Minimums from Charles Schwab (December 2025) and Moonfare; each fund and platform sets its own terms and eligibility rules.

Closed-ended funds: the classic model

Closed-ended funds — sometimes called drawdown funds — are how most private equity has always been done, and how the world's best-known managers raise their flagship funds.

1. Fundraising — investors commit an amount to the fund.
2. Investment period — usually the first few years; the manager "calls" your commitment in stages as it buys companies.
3. Value creation — the manager works with each company to grow it.
4. Harvest — companies are sold and the proceeds distributed to investors.
5. Wind-up — once all companies are sold, the fund closes, often after ten years or more.

The strength of the closed-ended model is focus: the manager knows exactly how much it has to invest and when, and can concentrate on building value without worrying about money flowing in and out. It's the structure behind most of the industry's long-term track record.

Evergreen funds: private equity made easier

Evergreen — or semi-liquid — funds are the fastest-growing part of private markets. Morningstar reports that evergreen funds held more than US$650 billion by June 2026, with private equity evergreen assets up from US$21.8 billion at the end of 2022 to US$107.7 billion. PitchBook expects evergreen assets overall to reach US$1.1 trillion by the end of the decade.

Their appeal is simple:

• Invested immediately — your money joins an existing, diversified portfolio on day one.
• Lower minimums — some evergreen funds start from as little as US$2,500.
• Add over time — many accept regular additional investments.
• Periodic redemptions — usually around 5% of the fund each quarter, giving you a route back to cash.
• Regular valuations — you can see the value of your holding at each dealing date.

In the US, evergreen funds come in several forms — interval funds, which must offer to buy back a set share, usually 5%, each quarter, and tender offer funds, where buy-backs are at the manager's discretion and often used for private equity. Our guide to private market liquidity and lock-up periods explains how redemptions work.

Feeder funds, secondaries and fund-of-funds

Feeder funds

A feeder fund pools money from many individual investors and invests it as a single commitment into a large closed-ended fund. That gives you access to managers whose direct minimums might be millions. On platforms such as Moonfare, feeder minimums usually start at around €100,000, depending on where you live.

Secondaries funds

Secondaries funds buy existing stakes in private equity funds from investors who want to sell. Because the underlying companies are already a few years into their journey, secondaries can offer faster distributions and a view of what's being bought — and sometimes attractive prices.

Fund-of-funds

A fund-of-funds invests in a number of private equity funds, giving instant diversification across managers, strategies and vintages. It adds a layer of fees, but for many investors the breadth is worth it — fund-of-funds commonly charge lower carried interest, often around 15%.

Listed private equity

Shares in listed private equity firms and investment trusts can be bought and sold on a stock exchange any trading day, in any amount. They're a simple way to add private equity exposure with full liquidity.

Where to start

Help choosing the right structure — and better rates when you fund investments or receive distributions.

How private equity fees work

Private equity fees have two parts, designed so the manager is paid mainly for results.

Management fee

A yearly fee to run the fund. In classic closed-ended funds, Cambridge Associates found investment-period fees typically ranged from about 1% to over 2.5% of commitments, with buyout and growth funds most often charging 2% and venture funds 2.5%. Most funds then reduce the fee after the investment period — by lowering the rate or charging only on money actually invested. Evergreen funds typically charge a management fee on net asset value, with Morningstar reporting a median of around 1.25%.

Carried interest

The manager's share of the profits — the "20" in "2 and 20". Cambridge Associates found 20% was the typical rate for nearly three-quarters of funds, with fund-of-funds and private credit often lower at around 15%. Evergreen private equity funds commonly charge a 10% incentive fee, according to Morningstar.

Transaction fee offsets

When managers earn fees from the companies they buy, most share those with investors by reducing the management fee. In Cambridge Associates' data, 93% of funds offset such fees 100% against the management fee.

The waterfall: you get paid first

The "distribution waterfall" sets out the order in which money from sold companies is paid out. In the most common, investor-friendly structure — the whole-fund or "European" waterfall — it works like this:

1. Return of capital — investors get back all the money they've put in.
2. Preferred return — investors then receive a minimum return, most commonly 8% a year, before the manager shares any profit.
3. Catch-up — the manager then receives a larger share until it has caught up to its agreed share of total profits.
4. Split — remaining profits are shared, typically 80% to investors and 20% to the manager.

Whole-fund waterfalls remain the norm — only 22% of funds in Cambridge Associates' data used a deal-by-deal structure. And nearly all funds include a clawback: if the manager has been paid more carry than it's entitled to by the end of the fund, it must give the excess back. Only 2% of funds reviewed lacked one.

The waterfall in numbers

Here's a simplified example of how a whole-fund waterfall shares the profits. Say you invest US$100,000 and, after five years, your share of the fund has grown to US$200,000 — a profit of US$100,000.

1. Your capital first — you receive your US$100,000 back.
2. Your preferred return — you then receive an 8% a year return, compounded over five years: about US$46,900.
3. The manager's catch-up — with a 100% catch-up, the manager receives the next profits until it has 20% of the total profit so far.
4. The split — everything after that is shared 80/20.

The result: of the US$100,000 profit, you keep US$80,000 and the manager receives US$20,000 — so you get back US$180,000 on your US$100,000. And if the fund had made less than the 8% preferred return, the manager would have received no carried interest at all. That's why the structure is described as aligning the manager's interests with yours.

Simplified illustration that ignores management fees, timing of cash flows and fund expenses.

Typical fees by structure

A guide to the fees you're likely to see.

Sources: Cambridge Associates (August 2024, 2022 data) for closed-ended funds; Morningstar (2026) for evergreen funds. Platform and feeder fees may be added. Each fund sets its own terms.

Judging funds after fees

The good news about private equity fees is that performance is almost always reported net of fees — after management fees and carried interest have been taken. Benchmarks such as Cambridge Associates' indices are calculated the same way. So when you compare managers, you're comparing what investors actually received.

Evergreen funds report a total expense ratio too. Morningstar found evergreen funds' average net expense ratio was over 3% a year in March 2026, reflecting management fees, incentive fees and the costs of underlying funds. That's higher than a passive index fund — which is why it's important to compare evergreen funds on their returns after costs, and to choose managers with strong, consistent track records.

Ways investors pay less

• Fee step-downs — most closed-ended funds reduce their management fee after the investment period, or charge only on money actually invested.
• Transaction fee offsets — 93% of funds in Cambridge Associates' data pass these back to investors in full.
• Co-investments — investing directly alongside a fund in a single company often carries lower or no fees.
• Secondaries — buying stakes from other investors can sometimes be done at attractive prices.
• Listed private equity — shares can be bought for just dealing costs, though the companies have their own charges.
• Early-investor and size discounts — some funds offer lower fees to early or larger investors.

Why the private markets are growing so fast

The rise of new structures reflects a bigger shift. According to Charles Schwab, the number of US public companies has fallen by nearly half over two decades, to around 3,500, while companies controlled by private equity have risen nearly six-fold, to about 11,500. Global private markets held US$18.7 trillion of assets in 2024 and are expected to exceed US$24 trillion by the end of the decade. As more of the economy is owned privately, investors who want broad exposure to growing companies are increasingly looking to private markets — and fund structures have evolved to let them in.

Choosing the right structure for you

An evergreen fund may suit you if

• You want to be invested straight away without managing capital calls.
• You'd like to add money over time.
• You value periodic access to your money.
• You're new to private equity and want a diversified starting point.

A closed-ended or feeder fund may suit you if

• You want access to a specific top-tier manager.
• You can commit for ten years or more.
• You're comfortable managing capital calls as they arrive.
• You're building a long-term private equity programme across vintages.

Many investors combine both: an evergreen fund as a core holding, with feeder or secondaries commitments added over time.

Managing capital calls

In a closed-ended or feeder fund, you don't hand over your whole commitment on day one. Instead, the manager sends capital calls — requests for part of your commitment — as it makes investments, usually with a couple of weeks' notice. Meanwhile, the rest of your commitment can stay invested elsewhere.

A simple approach is to keep the uncalled part of your commitment in something liquid — cash, short-term deposits, or even structured notes that are likely to pay out over a similar period. For expats, capital calls are often in US dollars or euros, so having a currency plan ready makes each call easy to meet.

Fund structures for expats in Thailand

Expats in Thailand usually access private equity through international platforms, evergreen funds or advisers, in US dollars or euros. Eligibility depends on each fund or platform's own rules — for example, Moonfare accepts certified high-net-worth and sophisticated investors in the UK and accredited investors in Singapore. Some investors hold private markets exposure within international accounts or offshore structures alongside their other investments. Our guide to offshore investment structures explains the options, and our guide to private equity for eligible international investors covers who can invest.

Questions to ask about any fund

1. What are the manager's past funds' returns after fees, and over which years?
2. How is the management fee charged — on commitments, invested capital or NAV — and does it step down?
3. What is the carry or incentive fee, and what hurdle must be met first?
4. Is the waterfall whole-fund, and is there a clawback?
5. What other costs are there — fund expenses, platform fees, underlying fund fees?
6. For evergreen funds, how do redemptions work — how often, how much and what if requests exceed the limit?
7. How is the portfolio valued, and how often?
8. How does this fund fit alongside the rest of my investments?

Lawrence goes through these questions with clients for any fund they're considering. Our guide to valuation and due diligence in private investments covers how professionals assess managers.

Private equity alongside structured notes

Private equity and structured notes complement each other well. Private equity is a long-term growth engine; structured notes offer defined returns and regular payouts — today paying up to 13.56% a year on US dollar autocalls and 9.72–9.85% a year of quarterly income on Phoenix notes. Many investors use notes to provide income and liquidity while their private equity builds value over the long term — and use note payouts to meet private equity capital calls as they arrive. Our guide to structured notes explains how they work.

What to look for in the documents

• Structure and term — evergreen or closed-ended, and how long it runs.
• Management fee — rate, basis (commitments or NAV) and any step-down.
• Carried interest or incentive fee — rate and when it's paid.
• Hurdle and catch-up — the preferred return and how the manager catches up.
• Waterfall — whole-fund or deal-by-deal, and the clawback.
• Redemption terms — for evergreen funds, how often and how much.
• Other costs — fund expenses, platform fees and underlying fund fees.
• Reporting — how often valuations and updates are provided.

Top tips

• Start with an evergreen fund if you're new to private equity.
• Compare returns after fees, not fees alone.
• Look for an 8% hurdle, whole-fund waterfall and clawback.
• Choose experienced managers with long track records.
• Build across vintages over several years.
• Keep uncalled commitments liquid.
• Plan your currency for calls and distributions.
• Invest through someone you trust.

Three real-world examples

These are illustrations, not real clients.

James, 50 — an evergreen start

James wanted private equity without managing capital calls. He invested in an evergreen fund that put his money to work immediately, and adds to it each year from his bonus.

Lisa, 57 — a top-tier manager

Lisa committed €100,000 to a buyout fund through a platform's feeder vehicle, keeping the uncalled part in liquid investments and meeting capital calls through Vita Capital.

Paul and Sue — a balanced mix

Paul and Sue combine an evergreen private equity fund for growth with structured notes paying quarterly income, and a cash reserve in baht.

Your fund structure checklist

1. Confirm your eligibility.
2. Choose evergreen, feeder, secondaries or listed.
3. Check the management fee and its basis.
4. Check the carry, hurdle and catch-up.
5. Confirm a whole-fund waterfall and clawback.
6. Understand redemptions or distributions.
7. Plan capital calls and currency.
8. Talk to Lawrence about the structures open to you.

Investing safely online

Only invest through established platforms, managers and advisers, confirm capital call bank details directly with the fund before sending money, and use a private, protected connection when you log in to investment platforms on hotel, café or condo Wi-Fi.

How we researched this guide

This guide draws on Cambridge Associates' "Private Investment Fund Terms: Fees and Distribution Waterfall" (August 2024, 2018–2022 data); Morningstar's "The rise of evergreen funds" (August 2026, updated October 2026); Charles Schwab's "What to know about evergreen alts funds" (December 2025); and Moonfare's investor guidance. Checked 14 October 2026. Private equity is a long-term investment, usually available only to eligible investors; values can fall as well as rise and access to your money is limited. This guide is general information, not personal financial advice.