Europe remains a continent of savers rather than investors. Roughly 40% of EU household financial assets are still held in bank deposits—compared with just 16% in the United States—highlighting Europeans’ long-standing preference for safety and liquidity over market participation. This conservative mindset limits the continent’s exposure to alternatives and semi-liquid funds, despite growing appetite for diversification and long-term value creation.

Fewer than one in five EU citizens demonstrate a high level of financial understanding. But this is only the start of the issue. For Fund administrators, choosing the right software to calculate NAVs and generate frequent regulatory reports has proved complex, especially for illiquid or exotic assets.

Structural barriers also persist. The cost of building and maintaining compliant semi-liquid structures is significant, effectively limiting participation to the largest or best-capitalized managers. The Real Estate slowdown of 2023/24 across Europe created opportunities for Institutional lenders to provide liquidity but this tended to exclude smaller or emerging firms, leaving market share concentrated among established players.

As a result, investor behavior in the retail space continues to be shaped more by brand reputation than by fund performance or liquidity profile. Well-known managers benefit from trust and familiarity, while lesser-known providers—even those offering competitive or innovative products—face steep challenges breaking through.

Technology, often cited as the great equalizer, has yet to deliver on its promise. Most distributors lack integrated tech infrastructure to process semi-liquid funds efficiently. In many cases, order routing remains fragmented and manual, with some transactions still submitted by PDF rather than through automated systems. The much-hyped liquidity offered by tokenisation is still to materialise. As Norman Finster, EY Luxembourg Partner in Alternative Investments has said ‘’With almost two years of ELTIF 2.0 being in force it’s time to take a step back and look at the lessons learned. That also largely includes Fund Operations.”

A common misconception is that banks distribute semi-liquid funds through nominee accounts similar to UCITS structures. In practice, distribution remains far more complex and fragmented, with little standardization in processing or investor onboarding.

Meanwhile, the United States is poised for a potentially transformational shift. The recent opening of 401(k) defined-contribution plans to alternative assets could unlock an estimated US$550-600 billion in new assets under management. Whether this marks a tipping point for democratizing private markets—or merely another opportunity captured by the largest players—will depend on how effectively technology and education evolve on both sides of the Atlantic.