Both institutional and private wealth investors have increased their allocations to private market assets, seeking to capture the return and diversification benefits these investments can offer. Understanding the principal means of accessing private markets—evergreen funds and traditional drawdown funds—is essential to achieving an investor’s goals. Each structure can provide certain benefits, and we believe a wide range of investors may find that combining the two is the optimal approach. Both types of vehicles can be evaluated based on their return profiles, liquidity, flexibility and operational profiles.

MOCC as a common return measure

Most investments are measured by their total return over a specified period. Evergreen funds can be appropriately measured on that basis and fairly compared with stocks, bonds, ETFs, mutual funds and traditional assets that have simple cash flow profiles.

Drawdown funds are often evaluated by their internal rate of return or IRR, a money-weighted measure well-suited for investments with irregular cash flows that may vary significantly across different investments.

When comparing the performance of these two types of funds, the multiple on committed capital or MOCC can be used. The MOCC is an effective metric that measures the return on the capital committed by investors and offers a clear indication of the return generated on the total capital committed, regardless of the actual timing of inflows or outflows.

Figure 1 demonstrates the IRR evergreen and drawdown funds would need to achieve to provide the same MOCC. An evergreen fund would need to generate a return of only 9% to reach an MOCC of 2.4x, while a drawdown fund would require a 14% IRR. This comparison underscores the benefits of keeping capital at work. However, evergreen funds investing in the same assets would not generate as high an IRR as drawdown funds because they typically have some form of liquidity buffer, which drags down returns.

FIGURE 1: COMPARABLE IRR TO ACHIEVE THE SAME MOCC
Investment multiple (MOCC) 2.2x 2.4x 2.7x 2.9x 3.2x 3.4x 3.7x 4.1x 4.4x 4.8x 5.2x
Evergreen strategy 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18%
Traditional closed-end fund (uncalled capital in SOFR) 14% 16% 19% 21% 23% 24% 26% 29% 30% 32% 34%
Traditional closed-end fund (uncalled capital in MSCI World) 7% 10% 13% 15% 18% 20% 22% 24% 27% 29% 31%

For illustrative purposes only. Not intended to represent any specific fund or investment.
Source: StepStone Group, as of May 2026.
Note: Model assumptions are intended to compare performance between open-end and closed-end funds for a $1 commitment to hit an “x” multiple over 10 years. Evergreen structure: Assumes all capital is deployed and fully invested on day one. Distributions received at the time of redeeming shares. Ten-year hold period. Closed-end drawdown structure: Fund capital is called and deployed over a 10-year period and not fully invested on day one. Assumes all uncalled capital is invested in a 50/50 split of public equities (MSCI World) and money market funds (cash yield based on 1M SOFR). Note that IRR for closed-end funds may vary depending on the timing of capital calls, particularly owing to the high volatility of equities. Results may vary by private market asset class. For example, the IRR required for a drawdown fund to achieve the same MOCC as an evergreen fund in private debt is most likely higher, as the average capital called is typically lower than in the above example.

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