In recent years, the so-called democratization of private investments has garnered significant investor interest. New funds, often referred to as evergreen, semiliquid, or interval funds, offer a way for individual investors to gain access to private credit, infrastructure, and real estate, which have historically been reserved for the wealthy.

The popularity of interval funds has "skyrocketed over the last several years," says Andrew Goldberg, managing director of Cornerstone Alternatives, a Greenville, S.C.-based RIA, on Barron's Advisor's The Way Forward podcast. "It's grown north of 600% from 2020 to 2025, and a lot of that is from the wealth channel."

Interval funds are in some ways similar to mutual funds in that they pool money from investors and use it to buy illiquid private assets such as private credit, private equity, and venture capital. But unlike mutual funds, which permit investors to sell daily, interval funds usually may be redeemed at their net asset value only quarterly. Even then, redemptions may be restricted if a lot of investors try to sell in the same quarter.

Since last year, bad loans have resulted in negative headlines, complicating matters for managers of these funds. In many cases, private credit investors are running for the exits, attempting to pull out their money all at once and prompting funds to cap client redemptions.

That might sound like a reason to avoid these funds now. Goldberg, however, maintains that periods of instability and some high-profile defaults are isolated exceptions rather than evidence of systemic failure within the broader private credit universe.

"There has been some pretty bad press around the private credit versions of these interval funds, which has led to a major problem, not in the underlying economics necessarily, but how investors in those funds are behaving," says Goldberg. "We include advisors in that bucket as well."

Some caution seems warranted. "Because the space is so new, it really hasn't been broadly tested in a down credit cycle," says Goldberg. "And what advisors and other allocators do when faced with that pressure is sort of uncertain."

Goldberg argues that investors, long accustomed to the daily liquidity of traditional investments, often aren't prepared for what limited liquidity might look like. To prevent this, he says, advisors need to better manage client expectations. This involves better educating clients before placing them into these investments, and underscoring that private investments require longer holding periods than traditional assets.

While private credit is showing increasing signs of stress with loan defaults recently reaching their highest level since 2021, last month saw the launch of three new private-asset funds, including from Vanguard and T. Rowe Price.