According to CNBC, Goldman Sachs’ Marc Nachmann is warning about “deployment pressure” from the explosion of evergreen funds in private markets. These funds, specifically structured for wealthy individuals seeking liquidity, require managers to spend incoming capital immediately rather than waiting for optimal opportunities. Nachmann, who runs asset and wealth management for Goldman, expressed concern that this dynamic could lead managers to do “deals that are not as good of a return” simply because they have money to deploy. He revealed that he deliberately avoids setting deployment targets for his team to prevent this pressure. The rapid growth of evergreen funds means this isn’t just a niche problem—it’s becoming a systemic issue that could ultimately limit returns across private credit markets.
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<h2 id="the-gift-card-problem“>The Gift Card Problem
Here’s the thing about evergreen funds: they work completely differently from traditional private funds. Think of traditional funds like a gift card you can spend whenever you want—maybe you wait for a sale. But evergreen funds? That gift card starts losing value every day it’s not used. So managers are basically incentivized to buy something, anything, as soon as money comes in. And with wealthy individuals pouring into these structures, that’s a lot of gift cards needing immediate spending.
Why This Matters Now
This wouldn’t be such a big deal if evergreen funds were just a small part of the market. But they’re exploding in popularity, which means we’re getting to the point where too many managers are all trying to spend too much money at the same time. What happens when everyone’s shopping with expiring gift cards? Prices go up and quality goes down. Nachmann thinks this will create differentiation similar to a “credit cycle”—some managers will maintain discipline while others chase deals just to deploy capital. The question is, how many will resist the pressure?
Goldman’s Approach
What’s interesting is that Goldman, which has its own G-Series suite of open-ended funds, seems to be taking a cautious stance. Nachmann specifically said he doesn’t give his team deployment targets because “the last thing I want is anybody feeling like they have to deploy for any reason.” That’s a pretty telling admission from someone running one of the world’s largest alternative investment platforms. Basically, they’re acknowledging the problem exists and trying to wall themselves off from it.
The Bigger Picture
So where does this leave us? At best, this deployment pressure puts a ceiling on future returns across private credit. At worst? Well, when you combine immediate spending requirements with market downturns or economic stress, things could get ugly fast. The irony is that these funds were created to give wealthy individuals more liquidity and access to private markets. But if the structure itself creates systemic risk and lower returns, are they really solving the problem or just creating new ones? It’s a classic case of good intentions meeting market reality.
