Semiliquid funds expanded from $15 billion in net assets in 2018 to $388 billion in 2025, according to a Federal Reserve staff note published October 14. The research by Logan George and Chaehee Shin examined how retail investors access private credit and other illiquid assets through funds with periodic redemptions.

Semiliquid funds bridge retail and private markets

The Fed researchers studied interval funds, tender offer funds and non-traded perpetual-life business development companies. These closed-end structures can hold larger allocations to illiquid investments than conventional open-end mutual funds.

Interval funds and tender offer funds typically offer shares continuously at net asset value. However, they permit withdrawals only through scheduled repurchases rather than providing the daily redemptions available from mutual funds and exchange-traded funds.

That difference affects how investors assess pricing and liquidity. The bid-ask spread guide explains trading costs in listed securities, but semiliquid vehicles rely mainly on periodic NAV-based transactions instead of continuous exchange trading.

Semiliquid funds carry concentrated private credit exposure

Interval funds held 49.5% of their portfolios in private credit at the end of 2025, up from roughly 20% near the start of the study period. Tender offer funds allocated 13.4%, while non-traded BDCs held 93.4% of their portfolios in loans.

The study’s sample covered 136 interval funds, 71 tender offer funds and 52 non-traded BDCs. Average net assets were $882 million, $876 million and $3.1 billion, respectively.

These structures can give individuals exposure to companies that do not trade publicly. The shift complements policy discussions about broader capital access, including the October 27 SEC IPO modernization review.

Redemption limits create a liquidity tradeoff

Most interval funds and non-traded BDCs offer quarterly repurchases, often capped near 5% of outstanding shares or NAV. Tender offer fund boards have broader discretion over the timing and size of offers.

The Fed note warned that redemption requests can exceed these limits, creating queues and prorated withdrawals. Several large private-credit vehicles faced that pattern in early 2026, while private real estate funds experienced similar pressure from 2022 through 2024.

Investors should distinguish a fund’s periodic redemption feature from guaranteed liquidity. They should also compare valuation assumptions carefully because private assets lack continuous market prices. Public-company valuation measures such as the price-to-sales ratio use observable market prices, while private-fund NAVs depend more heavily on manager models and judgment.

Featured image: Financial analysis by Towfiqu barbhuiya via Unsplash.

Elsy Kanana is a financial and cryptocurrency journalist at FusionMarketNews, covering digital assets, blockchain technology, financial markets, and emerging fintech trends. Her reporting focuses on market movements, regulatory developments, and on-chain analytics, delivering clear, data-driven insights to readers worldwide.