Private Equity Evergreens–NAV Squeezing, Secondaries, Fee Alignment | with the AltView
•February 19, 2026
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Why It Matters
Without clearer benchmarking and fee alignment, institutional investors risk overpaying for private‑equity products that deliver little or no excess return, undermining pension and insurance fund performance.
Key Takeaways
- •Private equity returns often match public market performance.
- •Illiquidity premium rarely justifies lower returns in evergreen funds.
- •Lack of accountability leads to opaque manager performance reporting.
- •Fund-of-funds median underperforms S&P 500 over long horizon.
- •Fee structures and NAV squeezing distort true investor outcomes.
Summary
The conversation between host Funshack and Tim McGillin of The AltView centers on the growing scrutiny of private‑equity evergreen vehicles, NAV‑squeezing tactics, secondary‑market dynamics, and fee alignment. McGillin, a former equity‑research analyst turned investment consultant, argues that the industry’s long‑held belief in superior private‑equity returns is increasingly unsupported by data, prompting a more skeptical, evidence‑based lens.
McGillin cites Gary Gensler’s 2021 remarks and the work of French academic Ludovic Falipou, which show that typical private‑equity funds have delivered returns comparable to, or even below, public‑market benchmarks. He notes that median fund‑of‑funds have underperformed the S&P 500 from the 1980s through 2018, and that the industry’s historic 2‑4 % illiquidity‑premium expectation is eroding as recent vintages lag public equities. The discussion also highlights the difficulty of benchmarking private‑equity performance and the risk of relying on IRR‑centric metrics.
Key examples include the claim that a 3 % excess return is needed to justify illiquidity and leverage, the observation that the worst 25 % of private‑equity funds drag overall results, and concerns that plan sponsors may retain poorly performing funds to avoid litigation. McGillin stresses that intermediaries value liquidity for reporting purposes, while end investors care primarily about final pension outcomes.
The implications are clear: institutional fiduciaries must demand transparent performance measurement, tighter fee structures, and stronger accountability from managers. Evergreen structures and secondary‑market strategies should be evaluated against realistic benchmarks, and the purported illiquidity premium should be scrutinized to ensure it truly compensates investors rather than inflating manager fees.
Original Description
Are private equity evergreen funds structurally misaligned, or simply misunderstood?
In this episode of Private Markets Podcast, Fund Shack www.fund-shack.com, Ross Butler debates Tim McGlinn (The AltView) on whether secondaries-focused evergreen vehicles create hidden valuation distortions and long-term return risks for investors.
This discussion examines NAV-based reporting, secondary discounts, fee mechanics and the future experience of capital entering semi-liquid private equity structures.
What’s covered in this episode
🔹Do private equity returns justify illiquidity and leverage?
🔹What is “NAV squeezing” in evergreen secondaries funds?
🔹How GP valuations interact with secondary market pricing
🔹Why NAV-based performance fees change alignment incentives
🔹The “average dollar” problem in rapidly scaling evergreen vehicles
🔹Accountability gaps in institutional manager selection
What’s the core concern with evergreen private equity?
Tim argues that some secondaries-focused evergreen funds may generate early “performance” by purchasing assets at discounts to GP-reported NAV and marking them up immediately.
If incentives are based on reported NAV rather than realised cash outcomes, this can:
🔹Accelerate fee crystallisation
🔹Inflate early track records
🔹Shift risk to later investors as inflows slow
Ross pushes back, arguing that:
🔹Private market valuation is not equivalent to liquid price discovery
🔹GP control and information rights matter
🔹Long-term realised outcomes, not short-term marks, determine legitimacy
The debate centres on whether the structure creates a temporary accounting effect or a structural transfer of value over time.
How do fee structures differ from traditional drawdown funds?
Classic private equity funds:
🔹Pay carry on realised gains
🔹Use hurdle rates (often historically ~8%)
🔹Align incentives with cash exits
Many evergreen structures:
🔹Charge management fees on NAV
🔹May have low or zero hurdles
🔹Can calculate performance fees on unrealised gains
The episode examines whether this represents modernisation, or dilution of alignment.
Why does this matter for LPs and wealth platforms?
🔹Evergreen funds are increasingly marketed to:
🔹Private wealth channels
🔹Defined contribution schemes
🔹Retail-adjacent structures
With billions flowing into these vehicles, small structural changes can materially affect long-term outcomes.
The episode argues that independent scrutiny remains thin relative to capital inflows.
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Timestamps
00:00 – Introduction: Why debate evergreen private equity now?
00:53 – Tim McGlinn’s background and The AltView thesis
04:26 – Do private equity returns truly outperform public markets?
08:21 – Illiquidity premium, leverage and benchmarking debates
19:26 – What are evergreen funds and why is capital flooding in?
20:50 – “NAV squeezing”: secondaries discounts and instant mark-ups
25:27 – GP valuation vs secondary market price discovery
33:47 – NAV-based fees and performance crystallisation
36:45 – The hurdle rate debate in evergreen structures
46:18 – The “average dollar” return problem
49:20 – Liquidity promises vs long-term economics
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About the Guest
Tim McGlinn
Former equity research analyst and investment consultant.
Author of The AltView, a Substack focused on critical analysis of alternative investment structures and performance reporting.
Substack: thealtview.substack.com
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About the Host
Ross Butler
Founder and Host of Private Markets Podcast, Fund Shack
Independent commentator on private markets, former financial journalist, and adviser to industry bodies including Invest Europe and the BVCA.
🌐 www.fund-shack.com
📲 CONNECT on LinkedIn https://www.linkedin.com/in/rossbutler1/
📘 Order Ross Butler’s book
👉 Invest Like a Barbarian: Share in the spoils of the Private Markets revolution
#investlikeabarbarian
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Who should watch?
🔹Institutional LPs
🔹Private wealth platforms
🔹Asset allocators
🔹Investment consultants
🔹Private equity professionals evaluating evergreen structures
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