ENPRIVATE CREDIT & INVESTOR LIQUIDITY · OCTOBER 15, 2026
Fed Research Highlights Rapid Growth and Liquidity Limits in Semiliquid Funds
Federal Reserve researchers report that assets in major semiliquid retail fund structures rose from $15 billion in 2018 to $388 billion in 2025, while redemption rights remain periodic and constrained.
What the October 14 research found
Source publication date: October 14, 2026. A Federal Reserve FEDS Note examines interval funds, tender-offer funds, and non-traded perpetual-life business development companies. The authors report that combined net assets in these structures increased from about $15 billion in 2018 to $388 billion in 2025. FEDS Notes reflect staff research and analysis, not investment advice or a policy decision.
- 01Assets rose from $15B in 2018
- 02Redemptions are periodic and capped
- 03Private credit is a major exposure
Access to private markets does not mean daily liquidity
The studied vehicles invest in comparatively illiquid assets while offering periodic repurchases. Interval funds generally make scheduled offers, often quarterly, but typically for a limited portion of shares. Tender-offer fund boards retain discretion over timing and size, while non-traded BDC repurchase programs commonly use caps and may be changed or suspended. A redemption request can therefore be prorated or delayed even when the underlying fund remains solvent.
Private credit is central to the growth
The researchers found private credit represented nearly half of interval-fund holdings in their sample and loans represented 93.4% of non-traded BDC portfolios. They also described important differences in leverage, valuation frequency, portfolio constraints, and investor access across the structures. Retail flows can make private-market funding more sensitive to investor sentiment and may influence the availability of credit to operating companies over time.
Practical investor and borrower takeaway
Before investing, review the prospectus and reports for repurchase timing and caps, proration history, leverage, fees, valuation governance, asset concentration, conflicts, and circumstances allowing a suspension. Do not commit cash needed for taxes, debt service, project equity, payroll, or near-term reserves. Borrowers considering private credit should evaluate the lender or fund’s capital source, draw certainty, covenants, prepayment, assignment, maturity, and refinancing risk rather than assuming capital will remain equally available in every market environment.
Investors should match redemption limits, leverage, valuation methods, fees, and portfolio concentration to their real liquidity needs, while borrowers should recognize that fund flows can affect private-credit capacity through the cycle.
Discuss a financing need →This independent summary is based on the cited source and is provided for general educational purposes only. Terms and program requirements may change.