The US Federal Reserve Board published an analysis finding that semiliquid funds have become a rapidly growing channel for retail investment in private markets, with total net assets rising from USD 15 billion in 2018 to USD 388 billion in 2025. The expansion has been particularly pronounced in private credit. Private credit accounted for 49.5% of interval fund holdings and 93.4% of non-traded perpetual-life business development company portfolios as of the fourth quarter of 2025. The analysis covers interval funds, tender offer funds and non-traded perpetual-life business development companies, which invest in illiquid assets while offering constrained periodic redemptions. Interval funds generally provide mandatory quarterly repurchases, typically covering 5% of shares, while tender offer fund boards retain discretion over repurchases. Non-traded business development companies commonly cap quarterly repurchases at about 5% of net asset value and may modify or suspend them. Their liquidity positions also differ: short-term liquid assets represented 8.8% of tender offer fund portfolios, 3% for interval funds and 0.2% for non-traded business development companies. The note identifies potential liquidity and financial stability implications as retail participation grows. Elevated redemption requests at several private credit vehicles in early 2026 exceeded repurchase limits, resulting in prorated withdrawals and requests being carried forward. While redemption caps, portfolio cash flows and credit facilities absorbed moderate pressure, their effectiveness during severe, prolonged market-wide stress remains untested. Retail-driven flows, redemption queues and slow or opaque private asset valuations could make private market funding more procyclical and reduce the stability of credit supplied to private companies.

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