(Bloomberg) — Private investment funds for individuals have become the fastest-growing source of capital in the $240 billion market for private secondhand stakes, according to a report from Jefferies Financial Group Inc.
Secondaries made up about 40% of the $113 billion of capital raised for vehicles known as evergreen funds, which allow periodic redemptions and are tailored for retail investors and smaller institutional investors rather than larger backers such as pensions, endowments or sovereign wealth funds.
“This firmly establishes secondaries as the greatest beneficiary of retail capital entering the alternatives ecosystem,” Jefferies said in the report published Tuesday.
Secondaries volume overall jumped 48% since 2024 to hit a record. That market has surged in recent years as higher interest rates slowed deals and fundraising for private markets. Meanwhile, alternative asset managers have been racing to tap into potentially trillions of retail dollars up for grabs in an attempt to find a new source of capital as some institutional investors shun new private investments.
The two trends have converged, with the fair market value of secondaries in retail funds exposed to such investments almost tripling since 2023, according to Jefferies. Seven of the 10 largest secondaries buyers are actively investing out of their evergreen vehicles alongside traditional closed-end funds.
Initially, retail funds typically invested in secondaries by snapping up stakes in diversified portfolios sold by fund investors, according to Scott Beckelman, global co-head of secondary advisory at Jefferies.
“The buyers were willing to pay top dollar to get the right portfolios to seed these new funds,” Beckelman said.
Now, these retail strategies are increasingly backing continuation funds, he said. Such vehicles allow private-asset managers to extend the holding period for highly valued assets — or those they can’t sell at their desired price.
In 2025, secondaries transactions led by so-called limited partners — often institutional investors such as pensions or endowments — made up 52% of secondary market activity. These deals were driven by investors’ need to diversify their portfolios, obtain liquidity and manage over-allocations to private equity, according to Jefferies.
Retail funds were a major catalyst for transactions led by private-asset managers, known as general partners, the report found, with individual investors having the potential to fuel growth.
“Even a modest allocation shift in retail could amount to trillions of incremental capital,” Beckelman said.
