CAIA's Bowman wants 'semi-liquid' retired from evergreen pitches

CAIA Association chief executive John L. Bowman wants the industry to retire the phrase “semi-liquid,” arguing it misstates the redemption limits built into evergreen funds. In an Oct. 27 post, “Evergreen Postcards From the Edge,” he restates the headline recommendation of CAIA's report “The Window Narrows: Evergreen Funds and the Choice Before the Industry.”

For advisors, the shift from “semi-liquid” to “evergreen” changes client documents, not the underlying redemption terms. A Zurich private bank and a Hong Kong-based GP have both barred “semi-liquid” from their materials, Bowman writes, and now use “evergreen” instead. The actual liquidity terms remain in the offering document and quarterly repurchase terms; the word “evergreen” does not tell a client how often repurchases are offered or what share of the fund can be redeemed in a quarter.

Bowman's argument is that “semi” carries a cultural meaning of regular, reliable, half the time, which misstates what the embedded liquidity mechanisms are for. Limiting redemptions, he writes, is a positive feature of a structure that holds illiquid companies, assets and loans: managing cash flows keeps a manager from forced selling at a discount. Terminology, he adds, is often the only element of the pitch deck that survives into advisor communication.

“Evergreen” is not the fix, in his view. It works as a general category label for product innovation, he writes, but not as a description of the structure's core identity in a client conversation. “Frankly, it comes across as a suboptimal anesthetic versus a solution,” Bowman writes.

CAIA has put its own weight behind the vocabulary work. The report has been followed by a microcredential on CAIA's CAIA.nxt platform, according to the post, and the association has also run an advisor-facing essay on liquid alternatives — one this month argued they are easier to justify than to hold, as Alternatives previously reported. In place of both labels, Bowman wants a term that describes what the structure actually does.