Unlike the US market, where retail-orientated evergreen vehicles have expanded rapidly, Europe’s private debt ecosystem remains dominated by institutional capital and closed-end structures, explained Dzemal Tomic, senior vice president & head of institutional banking at Spuerkeess, in an interview on 6 May 2026. He added that these investors hold approximately 82% of private assets.

Tomic oversees internal and third-party funds with nearly €100bn in assets under management. Around 35% are allocated to private assets, mainly private debt, while 65% are invested in Ucits-like strategies.

“Banks often chose not to distribute or sell these products [to retail] because they did not consider their clients sufficiently sophisticated or professional investors,” he said. Despite the emergence of Eltifs, he said the structural complexities of private assets are “not appropriate for retail investors.”

Emergence of institutional open-end funds

Although open-end funds still represent a small share of the European market—perhaps less than 10%—Tomic highlighted a growing interest in open-end funds among family offices, insurers, and pension funds.

These investors view open-end vehicles as easier to integrate into portfolio allocations because they require less recurring due diligence and eliminate capital calls, simplifying cash management. He also noted that some business owners prefer selling their companies to open-end funds, as this avoids the risk of the business being resold to new owners after a typical seven- to nine-year holding period following the exit from a closed-end fund.

Given their historically better performance, however, Tomic noted that large institutional investors tend to prefer closed-end funds because open-end structures require liquidity buffers that can dilute returns. Investors, he argued, must manage that cash drag either inside or outside the fund. Institutional investors are generally better equipped than retail investors to assess that trade-off.

Why liquidity guardrails matter

Tomic argued that the implementation of redemption limits and gates on business development companies (BDCs) in the US helped funds avoid fire sales and protect the broader industry during periods of stress. Rather than signalling weakness, these liquidity management tools reflect a healthier and more resilient market compared with past crises, such as German real estate fund sell-offs.

Nowadays, liquidity management tools, such as redemption limits (typically set at 5% of the quarterly net asset value (NAV)), are standard features in open-end funds in Europe. While retail investors may react to the imposition of redemption limits or gates with panic, institutional investors generally view these mechanisms as necessary protections that ensure assets are sold at fair values or held to maturity.

“Investors may be incentivised to exit when redemption terms are highly flexible,” Tomic said. He added that this comes with a trade-off. “The greater the cash availability, the lower the potential performance.”

Consequently, general partners (GPs) applying strict guidelines such as long notice periods (up to a year) on redemptions on open-end funds holding highly illiquid assets are viewed positively by institutional investors. This institutional stability acts as an important buffer against the type of snowball effect seen in retail-heavy markets, where investors are tempted to “front run” bad news, especially when their notice period is short.

Private debt better handles redemptions

Tomic noted that open-end private credit funds are more resilient to redemption pressure than private equity, as managers can rely on incoming cash flow rather than selling assets. They can therefore cope more easily with three-month notice periods.

Open-end private equity funds, by contrast, face greater liquidity constraints and may need to consider asset sales more actively. Not surprisingly, he noted that Eltifs trends favour private debt and infrastructure strategies as they are better suited to redemption pressures.