Why redemption gates exist.

An evergreen fund promises periodic liquidity, not unlimited liquidity. The redemption gate is what makes that promise possible.

The cap is a percentage of NAV, not a promise

Most evergreen funds cap redemptions at typically 5 percent of NAV per quarter, with a 30-to-90-day notice period built in on top. That number isn't arbitrary. It's sized to what the fund's liquidity sleeve — its cash, undrawn credit facility, and shorter-duration holdings — can pay out without forcing a sale of the private assets that make up the rest of the portfolio.

When demand exceeds the cap

If redemption requests exceed the cap, the excess isn't denied. It's prorated and carried into the next redemption window. If the next quarter's demand is also elevated, the carryover adds to it. The queue doesn't clear on a timer. It clears when demand drops back under the cap, and not before.

When the gate gives way to suspension

Most fund documents go further than a cap: they give the manager the right to halt redemptions entirely under extreme conditions — a market dislocation, a distressed holding, a liquidity event severe enough that even prorated fulfillment would mean selling good assets at bad prices. Suspension protects the remaining investors from forced asset sales at distressed prices. It stops early redeemers from cashing out at a NAV that hasn't yet caught up to reality, while the investors who stay are left holding a portfolio of whatever got sold in a hurry to pay them.

Without a redemption gate, semi-liquid private funds wouldn't work.