Hybrid funds provide investors access to illiquid assets via traditional closed-end drawdown structures, while simultaneously offering flexible subscription and redemption opportunities akin to open-end funds. Seemingly a panacea as the best of both worlds between the two fund structures, the popularity of hybrid funds is impeded by the substantial operational challenges they present for managers and the difficult liquidity issues that can arise. The complications compound when investors take advantage of the redemption provisions to exit a hybrid fund, as that creates a bifurcation as to the non-redeeming investors in a way that introduces myriad potential conflicts of interest. The obvious appeal of hybrid funds, and the multitude of complexities they pose, were discussed at a PLI program that featured Cleary Gottlieb partner Maurice R. Gindi; Daniel J. Blumenthal, GC at Bayview Asset Management; Matthew Jill, GC at Ares Management Corporation; and James Sullivan, associate GC at Viking Global Investors LP. This article synthesizes their insights. See “Emerging Industry Trends Include Rise of Evergreen Structures, Tax Complications and Private Credit Funds” (Jan. 9, 2025).