While private markets continue to make waves in retirement plans and long-term investment trends, semiliquid funds are gaining market share as well, but lag in defined contribution plan adoption. According to Morningstar’s report, “The State of Semiliquid Funds 2026,” semiliquid fund assets grew to $596 billion in March—more than double the $267 billion in total assets they held in 2022.
The three largest providers of semiliquid funds as of March 2026 were Blackstone, Cliffwater and Blue Owl. Blackstone held $120 billion in semiliquid fund assets and 20% market share, as well as the two best-selling semiliquid funds of the past year: Blackstone Private Credit and Blackstone Private Equity.
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Growing Assets, But Not in 401(k)s
Much of the recent market growth for semiliquid funds has been driven by the wealth management channel, rather than retirement plans. Jason Kephart, co-author of the report and senior principal of multi-asset strategy ratings at Morningstar, says 99.9% of the growth measured by Morningstar came from wealth management.
One reason adoption remains limited within DC plans, according to Kephart, is hesitancy among plan sponsors as they await the final investment selection rule from the Department of Labor, along with concerns about liquidity and cost.
Even though 401(k) plans are mostly not investing in semiliquid fund assets, Anne Lester, former head of retirement solutions for J.P. Morgan Asset Management and co-founder of the Aspen Leadership Forum on Retirement Savings, says overall market growth signals a positive opportunity for plan participants.
“I think it’s terrific that the 401(k) industry and the defined contribution industry are now talking much more actively about making sure that 401(k) investors get the same opportunity for robust, diversified returns,” says Lester. “I think it’s a very positive thing, and [investing in semiliquid funds] has to be done by a fiduciary who understands all of the potential challenges that private investing brings.”
Rather than being offered as stand-alone options, semiliquid funds are expected to enter DC plans through packaged solutions such as collective investment trusts, managed accounts or target-date funds, according to the report.
Within these structures, liquidity is often managed at an additional layer. For example, Kephart says CITs may hold a small percentage of cash—typically 5% to 10%—to facilitate daily participant transactions, even if the underlying private assets are less liquid. As a result, he says, participants are unlikely to interact directly with liquidity constraints.
“At [the end of the] quarter, they’ll be able to rebalance to get the cash back to the right amount,” says Kephart. “A lot of the private market CITs right now are only going to be available through a managed account, so an individual wouldn’t be able to pick one on their own.”
Understanding Semiliquid Fund Structures
Semiliquid funds are a wide category of investments, including interval funds, tender-offer funds, business development companies, real estate investment trusts and unlisted REITs that are not on public exchanges. These funds have varying periodic liquidities, ranging from daily to monthly.
Participants, and even some advisers, may feel intimidated by the complexity of semiliquid funds. According to Morningstar’s 2026 Investor Perspective survey, only 16% of advisers reported being very familiar with semiliquid fund structures.
Kephart says part of that education gap may be due to inconsistent communication from asset managers. “A lot of that’s up to how the alternative asset managers are selling these things to advisers and whether or not they’re really clearly communicating,” he says.
While transparency into portfolio holdings and risks is critical, Lester says advisers’ communication with participants should be focused on the basics of the products, since too much detail can confuse participants rather than inform.
“I don’t know that we’re helping people when we throw out a 12- or 15-page detailed list,” Lester says. “I don’t read them when I make investments, and I know what I’m doing.”
Costs also remain a sticking point. Semiliquid funds are generally more expensive than traditional mutual funds, raising questions about whether investors are receiving sufficient value.
“They’re obviously much more expensive,” Kephart says, but that could change with increased adoption by the DC market. “We’ll see some pressure on fees just given how low–cost everything already is in 401(k) plans. … You’re going to see some cost pressure in the future, but I don’t think we’re there yet.”
Morningstar Investment Management, a subsidiary of Morningstar Inc., is a provider of semiliquid funds, but none of its funds were mentioned in the report.
