Perpetual Capital, Liquidity and the Semi-Liquid Fund
Julian R. Sterling
These are the companion files of The Evergreen Fund Handbook by Julian R. Sterling.The book on Amazon →
One Excel workbook that settles an argument the industry has been having without arithmetic, now corrected. Around it, a blank version for your own fund, eleven working documents to print, forty questions that mark themselves, and three cases the book does not work. All free. Nothing is gated behind a sign-up, and no email address is asked for.
Six workbooks, the printable documents and the read-me. Each group below can also be
downloaded on its own. Last revised 22 September 2026.
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Chapter 20 says a closed-ended fund reporting 17 per cent and an evergreen
fund reporting 10 may be delivering identical outcomes, and that comparing them
on committed capital narrows the gap substantially and sometimes reverses it. That is
right, and it is the evergreen manager’s strongest argument. It is also almost
never made with numbers attached.
Here are the numbers. A closed-ended fund at 2.30× reports a
16.99 per cent internal rate of return. Run the same fund
against the investor’s whole commitment — uncalled capital in cash at the
same rate the evergreen sleeve earns — and it delivered
10.42 per cent. Against an evergreen fund netting 8.64, the
gap falls from 8.35 points to 1.78. Four fifths of the apparent
advantage was never an advantage; it was the arithmetic of measuring one fund on the
money it happened to be using and the other on all the money the investor had to set aside.
Solve for the point of indifference and you get the sentence worth carrying out of the
whole exercise. A closed-ended fund advertising 13.25 per cent does not
beat an evergreen fund netting 8.64. It ties with it. Every point below that is
a loss to the evergreen fund, measured on the capital the investor actually committed.
What the sleeve costs. A 20 per cent sleeve earning 4.20 against
a private portfolio earning 12.40 drags 164 basis points a year. Nobody
collects it, it appears in no expense ratio, and it costs more than the management fee. It
is the price of the redemption option, and Chapter 20 is right that it is the figure
investors most want and most rarely receive.
What the share class costs. The same portfolio, on the same day: the
institutional class nets 8.64 per cent and the retail class 7.55. A gap of
109 basis points, and 22 units of terminal wealth on a stake of 100 over
ten years. Note the trap in the fee table — the retail class pays a
smaller performance fee, precisely because it earned less.
What the PME hides. The conventional Kaplan-Schoar public market equivalent
is 1.45×. Computed on committed capital, where the uncalled drag is visible, it is
1.14×. The standard measure overstates by 0.31 turns — a larger
distortion than most of the methodological arguments it gets deployed to settle.
What the volatility hides. A 6.50 per cent standard deviation
computed from appraised NAVs, with a first-order autocorrelation of 0.45, unsmooths to
10.55 per cent. The reported figure understates variability by
nearly two fifths, and every Sharpe ratio built on it is 1.62 times what it should be:
0.683 reported, 0.421 unsmoothed. The first edition of the workbook said 12.96 and
“twice”; its factor squared the autocorrelation where it should not have.
What to try first
Change the cash rate. It moves both sides of the comparison at once — the evergreen
sleeve earns it, and the closed-ended investor’s uncalled capital earns it. Drop it to
one per cent and the committed-capital argument swings hard back toward the closed-ended
fund. Which is exactly what happened to this argument through the 2010s, and why it
is a better argument now than it was then. Worth knowing which way the wind is
blowing before building a pitch on it.
What the arithmetic does not settle
Two caveats, both of which cut against the evergreen fund, and both of which anyone using
this argument will be asked about. A mature allocator does not leave uncalled capital in
cash — distributions from earlier vintages fund later calls, and once a programme is
self-funding the drag largely disappears; the comparison here describes an investor with one
commitment, not a running allocation. And all of it assumes the evergreen fund’s gross
return is the same asset return as the closed-ended fund’s. If the need for liquidity
pushes it toward larger, more intermediated deals, the comparison shifts before any of the
arithmetic begins. Case one below takes the second caveat to a number: to pay 2.30× net,
the appendix’s closed-ended fund must earn about 21.3 per cent gross, not 12.40.
The same model, for your own fund
The workbook with every input emptied. Enter your own fund and the drawdown fund you are compared with; the checks sheet counts what is still missing and tests what holds for any inputs.
Chapter 20 and Appendix K
A blank comparison model
The private portfolio’s gross return, the sleeve and its cash rate, the fees of each share class, the comparator’s calls and distributions, the index for the public market equivalent, and the appraisal series’ volatility and autocorrelation. The file gives the sleeve drag, the class gap, the headline and committed-capital returns, the IRR at which the drawdown fund merely ties, both PMEs and the unsmoothed volatility.
The book’s inputs are listed in a text file inside the archive. Type them back in and the file returns 8.64 and 7.55 per cent, 164 basis points of drag, the tie at 13.25 per cent and an unsmoothed volatility of 10.55 per cent.
Eleven pages to print and use. A4, with margins wide enough for US Letter.
Chapters 4, 6, 9 to 11, 13, 14, 16, 18, 19, 21 · Appendices A to H
Eleven working documents
The Appendix A product design decision sheet, a reason on every row. The liquidity plan, quarter by quarter, base and stressed, from each of the four sources. The sleeve sized three ways, with its composition and the facility treated as a bridge. The Appendix B stress test with its three outputs and the gap to the gate. The monthly board dashboard. Valuation governance, where the mark is the price. The redemption processing runbook for an oversubscribed quarter. The investor letter for the quarter the cap binds. The allocation record. The operational due diligence question set. And the five fair-treatment numbers with the total cost, class by class.
A workbook that marks itself. Answer in the yellow cells; the marking fills in as you go.
All parts of the book
Forty questions on the book
Seven on the structure, eight on the engineering of the sleeve and the gate, seven on fairness, tools and leverage, six on allocation through operations and the board, six on assessment, performance, what goes wrong and Appendix K, and six on the three cases below. Numbers are marked to a tolerance, multiple choice to the letter, and the score sheet counts your errors part by part: that is your revision list.
Nothing is hidden. The marking sheet holds every answer, every tolerance, and the reason for each answer.
New material, not a restatement. Three situations the chapters name and never take to a number. Each case is one workbook: the note is the first sheet, the model is the rest, and a checks sheet closes it. Type your own figures in and every finding recomputes.
Chapter 20 and Appendix K · Case one
The same asset
Appendix K’s own caveat, priced. Put a plain drawdown fund, 1.5 per cent a year and 20 per cent carry, around the evergreen fund’s own 12.40 per cent asset: it headlines 8.90 per cent and delivers 6.52 on the whole commitment. The evergreen fund wins by 2.12 points in the institutional class and 1.03 in the retail class. To pay the appendix’s 2.30× net, the drawdown fund needs about 21.3 per cent gross: the appendix compared two assets, not two wrappers.
Chapter 22 · Case two
The quarter that does not add up
Brookvale’s first difficult quarter, checked before it is extended. Its figures describe three different funds: the payment implies a NAV of €2,380 million, the levy €3,000 million, the fall in the sleeve about €1,027 million. At a NAV of €1.2 billion the fund pays €60 million without touching the sleeve, which ends three quarters at 21.6 per cent. If none of the amortisation is free, the sleeve carries everything and falls to 7.7 per cent after the second quarter, through its floor: the quarter the chapter should have modelled.
Chapters 4, 11 and 18 · Appendix B · Case three
Four quarters at the cap
The gap between the reverse stress level and the gate, the metric the book calls the most informative a board can see, computed for two funds. In the severe case, credit supports 4.9 per cent a quarter and buyout 3.2, against a 5 per cent cap: gaps of -0.1 and -1.8 points. At the cap for four severe quarters, the buyout fund falls through its floor in the third. The credit fund’s cap has no margin for its assumptions being wrong; the buyout fund must choose its answer in advance.
twenty-seven controls, each stating its own verdict
Every figure is illustrative, as everything in the book is. What is not illustrative is the
shape of the result, which holds for any plausible set of inputs. The workbook was verified
by headless recalculation rather than by trusting the formulas as written; all twenty-seven
checks pass.
Opening the file
The workbook opens in Microsoft Excel, LibreOffice Calc, Google Sheets and Numbers. It uses
no macros and no add-ins, so nothing needs to be enabled or trusted. If your spreadsheet
asks to update links on opening, decline — there are none.
What changed, and when
22 Sep 2026
The book’s workbook corrected: the unsmoothing factor is √(1+ρ)/√(1−ρ), 1.6237 at an autocorrelation of 0.45, so the unsmoothed volatility is 10.55 per cent, not 12.96, and the Sharpe ratio falls to 0.421, not 0.343; the tie multiple on the committed-capital sheet is now a formula. Added: a blank version, eleven working documents, forty questions that mark themselves and three new cases. The workbook can now also be downloaded on its own.
Articles on this book
9 of the calculations in this workbook, worked out in full.
All articles.
Is an evergreen fund's distribution yield its return?No. Total return is distributions plus the NAV change. An illustrative 5.5 per cent yield is 58.2 per cent covered by income, with 27.3 per cent paid from capital.
How does swing pricing work in a semi-liquid fund?The dealing price moves by the cost of the flow. Redemptions of 5% met at a 5% discount dilute stayers 27.7 bp; a 95.00 swung price leaves NAV unchanged.
The other books with companion files. The full list of titles is on the
author page.
How to Read a Commercial LeaseThe three refinements chapter 19 names and never performs, and the renewal rate below which the mark-to-market is worth nothing.
How to Read a Real Estate Loan AgreementThe cure ratio in closed form, the four-point window in which the cheap cure works, and the cure sized to the wrong threshold.
The CBAM Compliance HandbookWhat 2027 really costs, how big the buffer should be, and the term the surrender formula counts twice.
Private Markets PerformanceThirty-one of the thirty-three figures chapter 19 publishes reproduce exactly — and the two that do not are named rather than quietly adopted.
The Private Equity Fund Controller PlaybookThe book defines IRR, DPI, RVPI and TVPI, tells you to update them at the exit, and prints not one value. Computed: a 1.833× deal inside a fund at 0.892 TVPI.
The Private Credit InvestorThe two coverage ratios are not measured on the same thing: the erosion is 47.7 per cent, not the 28.7 the headline implies.
The Distressed Debt InvestorWhere the fulcrum security actually breaks, and what an 80-cent recovery is worth once composition and time are priced.
The Real Estate Debt InvestorThe margin against the return on capital, the floor priced, and what prepayment protection buys.
The Fund Finance ProfessionalChapter 8 builds the reported-to-eligible NAV bridge; chapter 9 computes every ratio without it. Two points at every state — and what a subscription line does to the IRR.
Office Real EstateA six per cent yield that returns 3.2 per cent once the re-letting cycle is paid for, and the headline-to-net-effective rent arithmetic.
Real Estate FinanceFour people look at one building and reach four numbers; the lender is whole only above 105,109,489, twelve per cent below today’s value rather than forty.
Retail Real EstateThe occupancy cost of every unit in a centre, the sixteen per cent of the rent roll no tenant can sustain, and the right-size-convert-or-hold decision priced.
Sale and LeasebackA €179.5 million transaction end to end, with rent cover measured on the entity that actually signs the lease.
Self-Storage Real EstateThe cohort engine behind a 590-unit store, and the rate increase on existing customers priced against the move-outs it causes.
Financial Risk ManagementA fund inside every limit that cannot meet a redemption — and the number that decides it is the one with no currency attached.
Business ValuationThree advisers land 26.8 per cent apart on one company, and the whole gap turns out to be 1.96 points of perpetual growth.
Quantitative FinanceThree models agree to a quarter of one per cent about a number that one unobservable input moves a hundred and three times as much.
Asset ManagementFour people quote four returns for one mandate, all correct and 2.7017 points apart — forty-eight times the manager’s net skill.
Alternative InvestmentsA manager reports 13.29 per cent and the endowment earns 6.26 — both correct, and only a third of the advertised advantage arrives.
Credit AnalysisFour defensible EBITDAs on one borrower give leverage from 3.19x to 6.47x — and the add-back argument is fifty times the covenant headroom.
Venture CapitalOne company out of twenty-eight returns 56.7 per cent of the fund, and half the capital goes in after the decision — at half the return.
Machine Learning for FinanceFive people quote the accuracy of one credit model, all five are right, and the number that decides how much money it makes is none of them.
Commercial Real Estate InvestingThe equity earned 8.6647 per cent and the investor received exactly 8.0000 — the preferred return, and nothing above it.
Mergers and AcquisitionsThe board paper says the deal creates 13,436,667 of value. The arithmetic says it destroys 17,530,855. Nobody is lying.
DerivativesThe treasury report says the hedge cost 1,233,698. That is the interest differential, not a cost.
Treasury ManagementFive cash balances for one company, all correct and 145,600,000 apart — and the revolver that is two-thirds of the liquidity leaves at a revenue fall of 8.4127 per cent.
Financial Planning and AnalysisRevenue 3.0190 per cent above budget and operating profit 16.3209 per cent below it, in the same quarter, with every figure correctly stated.
Energy TradingA position report that is 91.7031 per cent hedged and correctly computed, on a book that is short 2,542,000 MWh — and a margin call of 198,400,000 the next morning.
Construction Cost ControlA contract sum of 26,301,102 became a final account of 29,153,363 on the building that was drawn — and 85.8 per cent of what was lost was knowable on the day it was signed.
Trade FinanceSix routes to payment on one 4,200,000 export order cost between 178,040 and 223,268, a spread worth 14.8 per cent of the margin, and a day of buyer credit costs 1,031.76.
Cost AccountingOne factory costed twice on the same 13,440,000 of overhead, and 4,053,091 moves between four product families.
Pricing StrategyA list price of 148.00, a pocket price of 112.51, and the nine deductions in between — with what one point of price is actually worth.
Contract ManagementA bid 5.50 a unit cheaper, signed on paper worth 9.81 a unit more — and 94.68 per cent of it was knowable on the day of signature.
Capital MarketsFour defensible readings of one bond, the cost of an issue under each convention, and the placement discount computed at a constant discount.
Financial RegulationThree ratios pass and the fourth is in breach by 1,956.0 million: the output floor, the liquidity buffer after encumbrance, and the loan split.
Bank ManagementFour defensible readings of one balance sheet, the deposit beta measured two ways, and the liquidity that lasts 3.9 days.
The Real Estate WorkoutFour ways out of one broken loan, discounted to today, and the 58.7 cents at which a payoff beats enforcement.
Go beyond the companion files
The Evergreen Fund Handbook develops the complete framework behind these models, with the assumptions, trade-offs and worked examples tied together.
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