There is a pitch doing the rounds in Irish financial advice circles at the moment, and it goes something like this. Private markets, once the exclusive playground of pension funds and billionaires, have finally been democratised. You, the reasonably well-off retiree with a decent pension pot, can now buy into the same private equity and private credit opportunities that Harvard’s endowment has enjoyed for decades. Lower minimums. Smoother access. The same game, just with a friendlier door policy.

It sounds brilliant. And that, for argument’s sake, is exactly the point in the story where you should start asking harder questions rather than fewer.

Now, this is not a dig at any one firm. The reality is that the shift towards private markets is happening right across the advice industry, not just in Ireland, and it is being driven by some of the biggest names in global finance. Firms like Blackstone, KKR and Apollo have spent years building fund structures designed to bring private assets to people who do not have €10m and a twelve-year time horizon to spare. Those structures are called evergreen, or semi-liquid, funds, and they are growing at a pace that should get your attention. According to Morningstar, the money in these vehicles roughly doubled in three years, from around $267 billion in 2022 to $534.6 billion by the end of 2025, and it is projected to reach $1.1 trillion by 2029. That is not a niche corner of the market anymore. That is a wave.

Why This Is Happening Now

The genuine draw is real, and I am not going to pretend otherwise. Private equity and private credit have, over long periods, offered return potential and diversification that public markets cannot always match. Fair play to the big managers on one point: they argue, with some justification, that locking ordinary investors out of an entire asset class simply because they cannot commit capital for a decade is unfair. Evergreen funds are their answer to that. They offer periodic windows, usually quarterly or twice yearly, where you can ask to get some of your money back.

The word doing an awful lot of the heavy lifting there is “ask”. More on that shortly.

It is worth understanding why Irish clients are being invited to consider allocations like this at all. Private markets tend to be pitched as the next logical diversifier, once a portfolio is already well built. We have looked before at the appeal and mechanics of private markets and venture capital investing, so the interest is understandable. The real question is whether the wrapper being sold to retail investors delivers the thing they actually need.

What Is Actually Being Sold, in Plain English

Let us strip the jargon out, because that is the whole job here. Informed Decisions exists to translate this stuff, not to add another layer of fog to it.

Private equity means buying a stake in a company that is not listed on any stock exchange. Private credit means lending money directly to a company, stepping into a role the banks traditionally played. Neither of those is new or exotic on its own. What is new is the evergreen wrapper that packages them up for an individual investor.

An evergreen fund is open-ended. A normal private equity fund raises money once, invests it, and eventually winds down. An evergreen fund keeps going. It keeps taking new money in, and it lets investors request redemptions during set windows. That sounds a great deal like selling a share on the stock exchange whenever you fancy. It is not the same thing at all. The manager can, and routinely does, cap or gate those redemption requests if too many people want their money out at once. So the liquidity here is offered. It is not guaranteed. That distinction matters enormously, and it is the one line in the brochure that tends to get the smallest font.

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The Hidden Complexity Underneath the Marketing

Once you get past the pitch, several less comfortable realities emerge. Let me give you four.

First, valuation opacity. These assets do not trade on a public exchange, so nobody sets a price for them every day the way a share price moves on the Dublin or London markets. The fund manager marks the value of the underlying companies themselves, and typically only once a quarter. In a downturn, that means the reported value of your holding can lag the real-world deterioration in those businesses for months. You open your statement, the number has barely moved, and underneath it the actual companies are struggling. It is a bit like checking the car’s fuel gauge a full quarter after the tank ran dry.

Second, the illiquidity mismatch. Redemption gates exist precisely so a manager can say no to a rush of withdrawal requests. That flexibility belongs to the manager, not to you. It was built into the structure from day one, for exactly this scenario.

Third, leverage layered on leverage. A growing number of these funds now use something called NAV-based financing: borrowing against the whole pool of portfolio companies to fund new deals or smooth out cash flow. This is not a fringe concern. In its Barometer research, Coller Capital has found that institutional investors, the professional pension funds and insurers rather than nervous retail savers, have flagged real discomfort about the extra leverage this puts into the system and what it does to transparency. When the professionals are uneasy about the plumbing, that is worth noting.

Fourth, fee complexity. Performance fees. Ongoing management fees that keep being charged whether or not the fund is doing well. Structures that are genuinely harder for an ordinary investor, or even a diligent adviser, to unpick fully, set against something as plain as a low-cost index fund factsheet. Right.

The Zombie Fund Problem

Here is where the theory turns into something you can actually picture.

A zombie fund is a private equity vehicle that cannot sell its remaining companies and cannot raise a fresh pool of capital, but keeps charging management fees to the investors trapped inside it while everyone waits, sometimes for years, to get their money back. The manager still gets paid. The investors do not.

This is not a worry dreamt up to sound dramatic. Coller Capital’s Global Private Capital Barometer surveyed 108 institutional investors managing more than $2 trillion between them. Its research has found that roughly 48% of limited partners already hold what they consider zombie funds within their private equity portfolios, and in the most recent edition, 54% expect that number to grow over the next two years, up sharply from the 28% who expected growth in earlier survey data. Separately, PwC has estimated that private equity firms globally are sitting on roughly $1 trillion in unsold assets, with nearly a third of the $3 trillion the industry manages now held for more than five years. That is well beyond the cycle investors were promised when they signed up.

Sit with that for a moment. These are institutional investors with dedicated teams of analysts, lawyers on retainer, and direct lines into the fund managers themselves, and they are still struggling to get their money out. If that is the experience of the most sophisticated capital on earth, what happens to an ordinary retail investor several steps further from the negotiating table, holding units in an evergreen fund through an advisory platform, hoping the quarterly redemption window opens in their favour?

Why This Should Worry Retirees More Than Most

Regulators have started saying the quiet part out loud. The European Central Bank’s Financial Stability Review from May 2026 concluded that euro area financial institutions currently have limited direct exposure to private credit, so on its own it is unlikely to cause systemic instability right now. But the same report went further than that comfortable headline. It warned that insurance companies and pension funds in particular could face material second-round losses in an adverse scenario, and it drew an explicit comparison between the scale of the private credit market today and the American subprime mortgage market before 2008. Chatham House, in July 2026, made a similar point: private credit is now larger in nominal terms than all the subprime mortgages that were outstanding in 2007, and opinion remains genuinely split on how contained the risk really is.

To be fair to the sceptics of the sceptics, this is not identical to 2008. Fund-level leverage is generally lower, and there is no equivalent of the tangled mortgage-backed securitisation chains that brought the system down last time. We are not going to pretend otherwise, because exaggerating the comparison would cost us more credibility than it would gain us readers. But structurally different is not the same thing as safe. Every financial crisis has taught the same lesson in a different costume: the crack tends to appear exactly where nobody was required to disclose it. Right now, that description fits private credit and equity valuations rather well.

The Informed Decisions View

We think the tulip mania comparison, uncomfortable as it sounds, is closer to the mark than the industry would like. Tulip mania was not irrational because seventeenth-century Dutch investors misunderstood tulips. It was irrational because nobody could agree what a bulb was actually worth, new buyers kept arriving after the early money had already taken its profit, and there was no way to sell in a hurry once everybody tried at the same time. Swap the tulip bulb for a private credit fund’s self-reported net asset value, and the mechanism is unnervingly similar. At least with the tulips you got a nice flower out of it.

Here is our honest read of where things stand. Institutional investors, whose entire job is understanding this asset class, are increasingly stuck in funds they cannot exit. And that is happening before the wave of retail capital now being invited in through evergreen structures has been tested by a proper downturn, or by everyone trying to head for the door at once. Is a collapse coming? Who knows. Nobody, us included, has the information to say that with any confidence. And that is precisely the point. When the information you would need to rule out a serious problem does not even exist, that uncertainty on its own should disqualify money that is meant to fund somebody’s retirement income.

This matters even more for anyone drawing down an ARF. From age 61, Revenue’s imputed distribution rules require you to draw at least 4% of your ARF each year. That rises to 5% from age 71, and to 6% where your combined ARFs and vested PRSAs reach €2m. It applies whether markets are up or down, and whether you want the income or not. So that is a hard, annual demand for cash, and a quarterly redemption window that might say no is the exact opposite of what you need to meet it. An illiquid asset colliding with a mandatory withdrawal rule: that is some dose. Understanding how much you can sustainably draw from an ARF is demanding enough without adding a layer of assets you cannot sell on demand. The same tension applies to anyone managing a fund near the Standard Fund Threshold, which stands at €2.2m in 2026.

Our advice to clients has not changed, and this whole episode is exactly why. Transparent, liquid, low-cost index investing is not the boring option people sometimes assume it to be. As we have argued before, indexing still wins for long-term investors and pension holders, for reasons that have nothing to do with fashion. It is the option where you can always find out what you actually own, and you can always get your money when you actually need it. And ultimately, in retirement, those two things are not nice extras. They are the entire point of the exercise.

So if a private markets allocation is ever put in front of you, ask three questions before you sign anything. How exactly is this valued, and by whom? When can I genuinely get my money out, not in theory but in practice? And what happens to my capital if the manager cannot sell the underlying assets when a redemption window opens? If the answers come back vague, hedged, or wrapped in more marketing language than substance, that vagueness is your answer.

I hope this helps.

Paddy Delaney QFA RPA APA