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The six ways private assets are actually sold
The asset is one decision. The wrapper around it is a second, and it governs your minimum, your eligibility, your reporting, and — above all — how and when you can get out. Most disappointment in private markets is a wrapper surprise, not an asset surprise.
Two investors can buy the same underlying private companies and have completely different experiences, because one bought a ten-year drawdown fund and the other bought a vehicle that offers quarterly redemptions subject to a cap. Read the wrapper first.
1. The drawdown fund
The classic closed-end private fund. You sign a capital commitment, the manager calls the money over several years as it finds investments, and returns come back as realisations occur. Life is typically ten years with extensions. You cannot redeem; your only early exit is selling your interest on the secondary market, usually at a discount and with the manager’s consent.
- Liquidity mechanism: none by design; exit via secondary sale or realisation.
- Cash behaviour: unpredictable calls, then distributions — the J-curve.
- Typical eligibility: accredited investor, often qualified purchaser.
2. The evergreen fund
Open-ended and continuously offered, with no fixed termination date. Capital is usually fully invested on entry rather than called over time, and the fund offers periodic liquidity out of its own cash flow, new subscriptions, and a liquid sleeve. Simpler to hold. The trade is that you are buying at a periodically struck net asset value rather than negotiating an entry price.
- Liquidity mechanism: periodic repurchases, subject to caps and manager discretion.
- Cash behaviour: fully funded at entry; no capital calls.
- Watch for: the difference between the redemption you are offered and the redemption you are guaranteed.
3. The interval fund
A registered closed-end fund that commits, in its own charter, to repurchase a stated percentage of shares at set intervals — commonly 5% per quarter. Registration brings audited financials, a prospectus, and daily or periodic NAV. The repurchase promise is real and it is also capped: in a quarter when redemption requests exceed the cap, requests are pro-rated and you receive part of what you asked for.
- Liquidity mechanism: contractual periodic repurchase offers, pro-rated when oversubscribed.
- Eligibility: frequently open beyond accredited investors, subject to the fund’s own terms.
- Watch for: what happened to the repurchase cap the last time markets fell.
4. The tender-offer fund
Similar in spirit to an interval fund but without the charter obligation. The board may conduct repurchase tenders, typically quarterly, and may decline to. The flexibility that protects the portfolio in a stressed market is the same flexibility that leaves you holding when you wanted out.
- Liquidity is discretionary, not contractual — this is the single most misread feature in the category.
- Read the repurchase history, not the repurchase policy.
5. The business development company (BDC)
A regulated vehicle built to lend to smaller United States companies, the most common retail-accessible route into private credit. Listed BDCs trade on an exchange and can trade at a discount or premium to NAV. Non-traded BDCs do not, and offer periodic share repurchases instead. Both are typically leveraged, which amplifies results in both directions.
- Liquidity mechanism: exchange trading (listed) or periodic repurchase (non-traded).
- Watch for: leverage, non-accrual loans, and whether distributions are covered by net investment income.
6. The SPV or syndicate
A single-purpose vehicle formed to hold one position — a stake in one company, one building, one loan. Minimums are usually the lowest in the category and the exposure is the most concentrated. There is no diversification and no manager discretion to save a bad entry: the outcome is the outcome of one asset.
- Liquidity mechanism: none until the underlying asset is realised.
- Watch for: layered fees between the SPV and the underlying fund, and who controls the exit.
Reading any wrapper in four questions
1. Is liquidity contractual, discretionary, or absent? 2. If it exists, what is the cap, and what happens when requests exceed it? 3. Is my capital called over time or invested at once? 4. How many fee layers sit between my dollar and the asset? Four answers, in writing, before you commit.
Where custody comes in
Each wrapper produces a different record to hold and a different valuation to report — a commitment and a schedule of calls, a periodically struck NAV, a share count, or a single membership interest. That is why the structure is a custody question and not only an investment question. Positions land at Investor Services, and what arrives differs by wrapper.
Check the exit terms → Glossary
Structure descriptions are general and simplified. Terms vary by offering, and the governing documents control. Always read the prospectus or offering memorandum.
Educational only. InvestNow is a demonstration platform. This page is general information, not investment, legal, or tax advice, and not an offer or solicitation of any security. Private-market investments are speculative, illiquid, and can lose their entire value. Consult a qualified professional about your circumstances.