Decoding Evergreen Funds: Inside the Methodology Behind Sekond’s Liquidity-Risk Ratings
Our Sekond Ratings highlight the relative liquidity-risk of Evergreen funds, giving wealth advisors and their clients a clear compass in private markets.
Eligibility requirements
To receive a rating, a fund must be registered in the United States with the Securities and Exchange Commission ("SEC") as a "Closed-End Fund," "Interval Fund," "Business Development Company" or "Emerging Growth Company" and must primarily invest in illiquid funds or assets. The fund must have reported data for at least 12 months as of the most recent quarter-end date.
Rating methodology
The Sekond Rating methodology is based on public data reported to the SEC and in the Private Market Genome. We anticipate that data availability will change over time. Therefore, we will seek to continuously improve our rating. T
The Liquidity-Risk rating evaluates the risk that liquidity will become restricted in the fund. We determine risk by evaluating how fund cash flows stress the fund's ability to meet liquidity requirements using four factors:
The ratio of fund cash outflows relative to the maximum redemption cap calculated against NAV
The trend over time of fund cash outflows
The ratio of fund cash outflows relative to fund cash inflows
The ratio of fund cash outflows relative to short-term holdings and cash equivalents available to the fund
Fund cash outflows represent the net asset value of shares redeemed or repurchased, including exchanges. Fund cash inflows represent the net asset value of shares sold including exchanges but excluding reinvestment of dividends and distributions.
For each factor, a score of 1-4 is assigned where (1) represents the lowest stress factor and four (4) the highest stress factor. Factor scores are then summed, so each fund receives a score of a minimum of four (4) and a maximum of sixteen (16). We designate a liquidity risk rating in accordance with the following score-to-rating table:
A - 4-6
B - 7-9
C - 10-12
D - 13-16
Data review process
Sekond collects data from multiple sources and we provide transparent source references for all data points in the Sekond Ratings. We do not independently verify data with fund managers, but rely solely on publicly available information.
Sekond Ratings bridge the information gap in private markets by delivering clear, comparable fund assessments based on rigorous analysis of public data. Our dual-component rating system empowers wealth advisors to evaluate both performance and liquidity-risk, providing the clarity needed to navigate the evolving landscape of Evergreen fund investing.
Contact us
Reach out to Sekond's research team with questions or to learn more about our Ratings at research@sekond.co.
Boston, June 29, 2025
Legal Disclaimer
Sekond Ratings are opinions as of the date shown and are provided for informational purposes only. They do not constitute investment advice, an offer, or a solicitation to buy or sell any security or financial product. Past performance is not a guarantee of future results.
This post may contain “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such statements are based on current expectations and assumptions and involve risks and uncertainties that could cause actual results to differ materially. Sekond undertakes no obligation to update any forward-looking statements.
All data are obtained from sources believed to be reliable, but Sekond makes no representation or warranty, express or implied, as to their accuracy, completeness, or timeliness.