Partners Group has spent the past decade at the forefront of opening up private markets to a broader investor base. With semi-liquid evergreen strategies and tailored mandates, the Swiss investment group, anchored firmly in Luxembourg, positioned itself early to serve the fast-growing appetite from insurance clients and wealthy individuals.
But inflow numbers the firm posted last week, followed by a sober warning from Morningstar on Monday, suggest that momentum may stall if returns continue to disappoint.
Partners attracted 12 billion dollars in net new assets in the first half of 2025, lifting total assets under management to 174.4 billion dollars. That growth came despite a difficult environment: exits remain sluggish, performance fees are under pressure, and the group has leaned heavily into private credit, an asset class that offers scale but thinner margins.
Evergreens as magnet for inflows
More than two-thirds of the new flows landed in evergreen funds. Once hailed as the scalable solution for private markets access, these semi-liquid structures now face renewed scrutiny. The core promise—that clients could enjoy institutional-grade returns while accepting limited liquidity—is being tested.
Partners’ three largest evergreen private equity programs, which together represent nearly three-quarters of the firm’s semi-liquid AUM, have returned just 7 to 8 percent over the past year, according to Morningstar. That is below the firm’s 11 percent historical average and weaker than the 13 percent that the S&P500 delivered over the same period.
‘Harder sell’
Morningstar’s senior equity analyst Johann Scholtz warned that these “low returns from semi-liquid fund pioneer Partners Group could make private markets a harder sell for advisers.”
“Given the illiquidity of these funds, higher returns would be expected,” he commented. “Exit opportunities remain scarce. While semi-liquid funds show low volatility, their returns are based on firm-calculated NAVs rather than market values.”
Net asset value (NAV)-based pricing helps smooth reported performance, but it also conceals volatility, something investors may be less willing to accept in a market where public equities are outperforming. The firm attributes its recent underperformance to familiar factors: slowing EBITDA growth, falling valuation multiples, and rising financing costs.
Competition heating up
Roberto Cagnati, Partners’ chief risk officer and head portfolio solutions acknowledged that competition is increasing in private markets. “While the market is getting more competitive in both the institutional and private wealth client segments, we believe our long-term track record of managing evergreen funds and single-line approach to mandates sets us apart,” he said in a statement.
Morningstar sees a deeper shift underway. “The historically low-rate environment from 2012 to 2022 likely inflated funding and valuation multiples. That was probably an outlier,” Scholtz added.
Even so, Partners is not changing direction. The firm is sticking to its full-year fundraising target of 22-to-27 billion dollars and continues to expand its product suite, as is clear from its six new private funds registered in Luxembourg during the first half. Management is encouraged by strong early results from newer evergreen launches and a robust investment and exit pipeline across infrastructure, credit, and direct equity, the firm said.
Revenue dip seen for 2024
That confidence will soon be tested by advisers facing harder questions from clients. And it is not just performance pressure. The business model itself is stretching. “We anticipate a 4 percent revenue dip for Partners in fiscal 2024 as subdued exits continue to weigh on performance fees,” Scholtz said. “The pivot to lower-margin private credit adds further pressure, with these funds typically offering reduced performance fees and leaner management fee margins.”
The stakes are high for Luxembourg, too. Partners continues to use the Grand Duchy as the core of its semi-liquid operations, with more than one hundred Reserved Alternative Investment Funds, or Raifs, managed under the local AIFM regime. In 2024, Luxembourg contributed 37 percent of group revenues, demonstrating how central the jurisdiction is to the group’s growth story.
Morningstar remains positive on the stock, at least in relative terms. “Partners remains our preferred pick of the European alternative managers,” Scholtz said. “But we need to see a greater margin of safety open up before we get more excited about it on an absolute basis.”
What Morningstar does like is the firm’s client-centric model, especially the tailored mandates for institutional clients, and its early dominance in the semi-liquid space.
Morningstar on Monday said it maintains a 1,220 Swiss franc per share fair value estimate for Partners Group. In Swiss trading on Monday the firm traded at 1,129 francs, up from last week’s low of 1,063 francs just before the release of its announcement. The shares are still down 9.4 percent on a year-to-date basis.
Among most active Raif issuers in Luxembourg
During the first half of this year, Partners launched six new strategies structured through Luxembourg-domiciled Reserved Alternative Investment Funds (Raifs), according to official Luxembourg data.
This confirms its status as one of the most active users of the Luxembourg Raif structure for private investments funds. Partners also stands out as a firm that uses these Raif structures for as umbrella funds.
Partners registered the following new Luxembourg Raifs in the first half of 2025:
– Partners Group Global Infrastructure VI S.C.A., SICAV-RAIF
– Partners Group Private Credit CV S.C.A., SICAV-RAIF
– Partners Group Direct Infrastructure IV (EUR) A S.C.A., SICAV-RAIF
– Partners Group Infrastructure Secondary (EUR) U SCSp, SICAV-RAIF
– Partners Group Private Equity Lux Feeder Fund (EUR) S.C.A., SICAV-RAIF
– Partners Group Private Equity Fund SCSp, SICAV-RAIF
Partners Group is scheduled to report first-half 2025 earnings on 2 September.