November 6, 2026 · 6 min read
Continuation Fund vs Evergreen Fund: Key Differences Explained
One structure gives a few companies more time and existing investors one exit choice. The other runs with no end date and limited exits.
- Private equity & funds
Continuation fund vs evergreen fund is a question of time. A continuation fund is a new vehicle a manager sets up to keep one or a few companies from an old fund longer. It has a fixed end. An evergreen fund has no end date. It takes new money over time and lets investors leave at set intervals.
If you are in an old fund, a continuation fund gives you a choice: take cash now or roll into the new vehicle. If you want ongoing private-market exposure with some liquidity, an evergreen fund is the structure built for that. Its exits are limited and can be cut back.
20 days
Business days ILPA says investors should get, at least, to decide whether to sell or roll
68%
Share of continuation funds that held a single company in H1 2026
82 of 100
Top sponsors by assets that have used a continuation fund
5–25%
Share of its stock a US interval fund must offer to buy back at each set interval
Continuation Fund vs Evergreen Fund: What Is the Main Difference?
The table compares them on what each is, who uses it, how money comes in and out, legal and tax treatment, risk, liquidity and a typical example.
A continuation fund extends the life of a few companies. An evergreen fund has no end date at all
As of November 2026 · ILPA Continuation Vehicle Guidance (10.2026); 17 CFR 270.23c-3; 17 CFR 240.13e-4; 26 U.S.C. §741; IRS Form 1099-DIV instructions (01.2024). Examples in the last row are illustrative.
How a Continuation Fund Works
A private equity fund usually has a fixed life. When it ends, its companies must be sold. If the manager wants to keep a company longer, it can set up a continuation fund. The new vehicle buys the company from the old fund. Secondary buyers put up the cash that pays the investors who leave. The deal is a GP-led secondary, led by the general partner (GP), the firm that runs the fund.
ILPA, a trade body for fund investors, updated its guidance in October 2026 (ILPA, 2026). It says investors should get at least 20 clear business days to decide. Investors who roll should face no overall increase in fees or carry. Their carry should not be paid out early. The price should be tested by a competitive auction, supported by a fairness opinion or similar.
Most continuation funds hold a single company. Jefferies counts 68% in the first half of 2026. That concentration is the main risk for anyone who rolls.
How an Evergreen Fund Works
An evergreen fund keeps going. It takes in money from new investors and buys new assets with it and with proceeds from sales. It does not call capital in stages. ILPA notes that its call and distribution template, built for closed-end funds, may not fit open-ended ones (ILPA, 2025).
In the US, many evergreen private-market funds are registered closed-end funds. They are closed-end because investors cannot redeem on demand (15 U.S.C. 80a-5). An interval fund must offer to buy back 5% to 25% of its shares every three, six or twelve months (Rule 23c-3). A tender offer fund buys back shares when its board decides. Each offer stays open at least 20 business days and is prorated if oversubscribed (Rule 13e-4).
Private evergreen funds for qualified investors set their own exit terms. They often cap how much can leave in each period. For how registered funds compare, see BDC vs interval fund.
Tax Treatment Compared
In a continuation fund deal, selling is a sale of your stake in a partnership. Under US rules, the gain is generally a capital gain, with some exceptions (26 U.S.C. §741). Rolling is meant to keep your position. ILPA says rolling investors should keep substantially equivalent tax attributes. Whether a roll triggers tax depends on how the deal is built, so read the election pack.
An evergreen fund depends on its form. A registered fund usually pays dividends and capital gain distributions, reported on Form 1099-DIV (IRS). A private evergreen fund set up as a partnership sends a Schedule K-1 each year. Selling shares back to the fund is a sale, so it can produce a capital gain or loss.
General Information, Not Tax Advice
These are US federal rules in outline. The tax result of a roll, a buyback or a redemption depends on the structure and on your own facts. Rules differ by country. Take the documents to a qualified adviser.
Which Is Better for Investors or Employees?
They answer different needs. A continuation fund solves a problem for an existing fund and its investors. An evergreen fund is a way to invest from the start. For employees of the manager, a continuation fund can pay out carry, the manager’s share of profit, earlier. ILPA lists this among the reasons managers give, and asks that much of it be rolled into the new vehicle. See carried interest.
Continuation Fund
- For
- It gives existing investors a choice of cash now or more time in a company the manager still backs. The price is tested by outside buyers.
- Against
- The manager sets terms for both sides. Rolling concentrates your money in one or a few companies. The decision window can be short.
Verdict: a continuation fund suits an investor who knows the company and trusts the price process. ILPA notes that when investors cannot study the assets in time, many end up choosing to sell.
Evergreen Fund
- For
- You invest at once, with no calls, and keep a diversified portfolio. Regular buybacks give some liquidity.
- Against
- Buybacks are limited and can be prorated. You buy and sell at NAV, which the manager estimates. Fees run for as long as you stay.
Verdict: an evergreen fund suits an investor who wants long-term private-market exposure without managing calls. Treat its liquidity as partial, and read the buyback terms before you invest.
A continuation fund gives one company more time and existing investors one exit choice. An evergreen fund gives ongoing access with limited, periodic exits.
What to Check Before You Roll or Subscribe
If you face a continuation fund election, check four things. How the price was tested. What fees and carry the new vehicle charges. How long you have to decide. What happens if you do nothing.
If you consider an evergreen fund, check how often it buys back shares and how much. Check how NAV is set and what happens when requests exceed the limit. How continuation funds fit the wider secondary market is covered in continuation fund vs secondaries. The investor and manager roles are compared in general partner vs limited partner.
Common Mistakes
- Treating a continuation fund as open-endedIt has a fixed life. Your next exit is the sale of the company.
- Ignoring the default optionMany elections treat silence as a choice. Find out which one.
- Reading evergreen as liquidBuybacks are capped. In a rush to exit, you may get only part of your request.
- Comparing NAV with a sale priceNAV is the manager’s estimate. A continuation fund price is set by bids.
The Terms This Page Uses
- Continuation fund
- A new vehicle, run by the same manager, that buys one or more companies from an older fund. Also called a continuation vehicle.
- Evergreen fund
- A fund with no end date that takes new money over time and offers periodic exits.
- GP-led secondary
- A deal in which the fund manager moves assets into a new vehicle and lets investors sell or roll.
- Roll
- To keep your stake by moving it into the continuation fund in place of taking cash.
- Interval fund
- A registered closed-end fund that must offer buybacks of 5% to 25% of its shares at set intervals.
- Tender offer fund
- A registered closed-end fund whose board decides when to offer to buy back shares.
- Fairness opinion
- An independent firm’s view on whether a transaction price is fair.
What People Ask About Continuation and Evergreen Funds
No. A continuation fund has a fixed life and holds the companies it bought from the old fund until they are sold. An evergreen fund has no end date and keeps buying new assets.
No. Each investor chooses to sell for cash or roll. ILPA Principles say investors who roll should be able to keep their existing economic terms, a status quo option.
Usually not. Exits come on set dates and are capped. A US interval fund must offer to buy back 5% to 25% of its shares at each interval, and requests above that are prorated.
Yes, if its strategy allows secondaries. A continuation fund needs new buyers, and evergreen secondary funds can be among them. Check the fund’s documents for its strategy.
Where the Rules on This Page Come From
Rules and figures were last checked on November 6, 2026. Fund rules and tax rules are US federal rules. ILPA guidance is an industry standard without the force of law. Market figures are Jefferies estimates based on its own data. Examples are illustrative.
- 01Institutional Limited Partners Association10.2026Continuation Vehicles: Advancing Alignment Through Best Practices — single and multi-asset CVs, 20 clear business days, fee and carry terms for rolling LPs, fairness opinion, tax attributes
- 02Institutional Limited Partners Association06.2019ILPA Principles 3.0 — status quo option for rolling LPs
- 03Institutional Limited Partners Association09.2025Capital Call & Distribution Template Guidance — built for closed-end funds, may not fit open-ended funds
- 04Jefferies07.2026Global Secondary Market Review — single-asset CVs 68% of CVs, 82 of top 100 sponsors have used a CV
- 05Cornell LII · 15 U.S.C. 80a-5Current lawOpen-end company issues redeemable securities, closed-end is any other
- 06Cornell LII · 17 CFR 270.23c-3Current ruleInterval funds: buybacks every 3, 6 or 12 months, 5% to 25% of shares
- 07Cornell LII · 17 CFR 240.13e-4Current ruleIssuer tender offers incl. closed-end funds: open 20 business days, pro rata when oversubscribed
- 08Cornell LII · 26 U.S.C. §741Current lawSale of a partnership interest treated as sale of a capital asset, subject to §751
- 09Internal Revenue Service01.2024Instructions for Form 1099-DIV — dividends and capital gain distributions, RIC references
This page explains how a market works. It is not investment advice, not a recommendation of any security, strategy or company, and not an offer to sell or a solicitation to buy anything. Private companies may never list or be acquired, positions in them can be illiquid for years, and the entire amount invested can be lost. Figures are accurate as of the dates shown and change. Requirements for investor status, and the tax treatment of a private holding, differ by jurisdiction — the jurisdiction is named wherever this page discusses either. Prepared by the AXEVIL Capital research team. Tax rules described here are United States federal rules unless another jurisdiction is named; they change every year and depend on your own facts. Nothing here is tax advice — take your documents to a qualified adviser.
What closed on the private market in the past two weeks
The rounds that priced, the tender offers that opened and the listings that filed — with the structure of each deal and the date on every figure. Written by the team that reads the paperwork.
Where to go from here
Private markets & secondariesWhat Are Private Equity Secondaries? Definition and ExamplesSecondary-market private equity explained: how fund investors sell stakes early, how continuation funds work, how stakes are priced and 2026 market volumes.
Private equity & fundsWhat Is a Tender Offer Fund? Definition, How It Works and ExamplesTender offer funds are unlisted funds that buy back shares only when their board makes an offer. How buybacks work and how they differ from interval funds.
Private equity & fundsContinuation Fund vs Private Equity Secondaries: Key DifferencesSecondaries vs continuation funds: the market for existing fund stakes and one deal type in it, led by the manager. Pricing, rules, tax and 2026 volumes.