Making Sense of Private Equity Fund Structures: Single vs Multi-Manager, Closed vs Open-Ended

Making Sense of Private Equity Fund Structures

Private equity has evolved. What used to be a relatively uniform asset class—10-year closed-end funds, single manager, high minimums—is now a diverse ecosystem of structures, strategies, and liquidity profiles. If you're trying to make sense of how to allocate capital into PE today, it's no longer just a question of which manager, but also what kind of vehicle.

The two most important distinctions to understand?

Single-manager vs multi-manager, and closed-end vs open-ended.

Let's unpack them.

Single-Manager vs Multi-Manager: Control vs Diversification

At the heart of private equity investing is the relationship with the manager (GP). A single-manager fund means you're placing a focused bet on one GP's strategy, team, and deal sourcing. This is the traditional model, where you're backing a specific firm to execute a particular investment thesis—buyouts, growth equity, secondaries, etc.

On the other hand, multi-manager funds (or fund-of-funds) spread capital across multiple underlying managers. These can be structured to provide access to different strategies, geographies, or vintage years.

Why choose one over the other?

Single-manager funds offer greater transparency, often lower fees, and the ability to curate your portfolio around specific convictions. But they require due diligence and carry concentration risk.

Multi-manager structures simplify access and offer built-in diversification—but come with an extra layer of fees and less control over individual manager selection.

Closed-End vs Open-Ended: Liquidity and Lifecycle

The second major axis to consider is fund structure—specifically, whether a vehicle is closed-end or open-ended.

Closed-end funds are the traditional PE format. You commit capital upfront, it's called down over time, and distributions occur as investments mature—typically over 10–12 years. These funds have a clear beginning, middle, and end, with defined vintage-year exposure.

Open-ended funds (also called evergreen funds) operate differently. You can subscribe and redeem at intervals, subject to liquidity constraints and lockups. These vehicles are constantly investing and harvesting, which helps smooth capital deployment and potentially reduces the impact of vintage-year timing.

Key tradeoffs:

Closed-end funds offer strong alignment, clear return measurement (IRR to a defined end), and discipline in efficient capital deployment. But they come with illiquidity and the serious challenge of managing "idle cash" for investors.

Open-ended funds offer more flexibility and continuity. They can be easier to manage from a portfolio construction standpoint. As they cannot be as efficient as closed-end structures, they will inherently realize lower returns than their closed-end counterparts.

Each of the 4 Possible Combinations Serves a Different Role

Closed-end single-manager funds

Ideal for targeted exposure, and will be dominant in the next decade still due to their role for institutional investors. For HNWs, this class is less popular due to high commitment, lack of diversification, and inability to invest 100% of the capital immediately (resulting in the "idle cash" problem).

Closed-end multi-manager funds

The traditional "fund of funds", which give primarily individual / HNW investors diversified exposure, but with the remaining challenge of managing idle cash and illiquidity.

Open-end single-manager platforms

Have been developed to provide, often reasonably diversified, private markets exposure to HNW investors with low barriers to access, based on the capabilities and deal flow of a single fund manager. Numerous of these offerings have been developed in the last decade in the USA (through the so called '40 Act / interval funds and business development companies / BDCs) as well as in Europe (often through the different structure options offered by the authorities in Luxembourg).

Open-ended multi-manager platforms

Aim to be one-stop private market allocations, providing diversified access to private markets, a degree of liquidity, and low entry barriers. Similar to closed-end "fund of funds", these structures may be more expensive due to fee layering.