What is a Secondaries Fund in Private Markets?

A secondaries fund is a private markets vehicle that buys existing investor interests in other private funds or single-asset SPVs from sellers seeking liquidity, rather than committing to a primary fundraise. Secondaries funds typically acquire pre-existing limited partnership stakes (investor-led transactions) or back continuation vehicles spun out by general partners (GP-led transactions), giving original investors a route to exit while letting buyers access seasoned portfolios at known valuations.

The segment has emerged as the fastest-growing area of private markets. Global secondary market volumes reached an estimated $233 billion in 2025, up 53% from $152 billion the year before, according to Lazard's 2025 Secondary Market Report. As more investors face liquidity pressure across private equity and private credit allocations, demand for secondaries capacity continues to expand.

This guide explains how secondaries funds work, the main transaction types, why fund administration for secondaries is uniquely complex, and how modern technology is changing the way managers calculate NAVs and report to investors.

How Secondaries Funds Work

A primary fund commits capital to companies or assets directly. A secondaries fund commits capital to acquiring positions that already exist. The underlying assets — operating companies, real estate properties, private credit loans, or fund interests — are already owned and have a track record of cash flows and valuations.

This changes the entire investment proposition. Buyers can underwrite based on existing portfolio data rather than blind-pool risk. They benefit from compressed J-curves, since distributions often begin shortly after acquisition. Sellers get liquidity from positions that would otherwise remain locked up for the remaining fund life.

The Two Main Types of Secondaries Transactions

Investor-Led Secondaries

In an investor-led transaction, an investor sells its existing interest in a primary fund to a secondaries buyer. The buyer steps into the investor's position for the remaining life of the fund, receiving future distributions and assuming any remaining capital commitments.

Investor-led deals accounted for roughly half of total secondary market volume in 2025, per Lazard. Sellers are typically pension funds, endowments, insurers, or family offices rebalancing portfolios, managing liquidity events, or exiting underperforming relationships.

GP-Led Secondaries and Continuation Funds

In a GP-led transaction, the general partner of a primary fund initiates a secondary process — typically by spinning one or more high-conviction assets out of an ageing fund into a new continuation vehicle. Existing investors can either roll their interest into the continuation fund or take liquidity at a negotiated price.

Continuation funds dominated the GP-led market in 2025, representing approximately 86% of GP-led volume according to Lazard. They allow managers to hold prized assets for longer than the original fund permits, while still delivering liquidity to investors who want to exit.

Single-Asset and Multi-Asset Continuation Vehicles

Continuation vehicles are further classified by composition. Single-asset continuation funds hold one investment — usually a portfolio company the GP believes has more value to create. Multi-asset continuation funds hold a small number of seasoned investments. Both structures require the secondaries manager to underwrite, monitor, and value each underlying position with the same rigour as a primary investor.

Why Secondaries Is the Fastest-Growing Segment of Private Markets

Several structural shifts have driven secondaries to record volumes. Conventional exit channels — IPOs and trade sales — slowed materially through 2023 and 2024, leaving GPs with seasoned portfolios and no obvious liquidity path. Investors became over-allocated to private markets as denominator effects reduced public market values, creating motivated sellers. As private credit grew, so did demand for liquidity solutions in that asset class — Evercore reported that private credit secondaries volume nearly doubled to $20 billion in 2025.

For fund managers running these vehicles, scale brings operational complexity that primary fund infrastructure was never designed to handle. For wider context on the segment, see our analysis of technology's role in the evolution of the secondary market.

The Operational Challenge: Servicing Secondaries Funds

Servicing a secondaries fund has a lot in common with servicing a fund of funds. The capital flows look familiar — the fund makes capital calls to its investors, deploys into a portfolio of underlying interests, receives distributions, and reports performance back. What makes secondaries materially harder than primary funds is the dependence on data that lives outside the manager's own systems.

A secondaries manager owns positions in dozens or hundreds of underlying funds and SPVs. Each of those underlying GPs runs its own reporting cycle, uses its own templates, and shares data through its own investor portal. Critical inputs — EBITDA, debt levels, valuation marks, loan servicing tapes for credit positions, capital account balances — arrive as PDFs, spreadsheets, or other unstructured documents.

The secondaries fund's accounting team has to extract this data manually, normalise it into a consistent structure, then use it to calculate fair-value NAVs across the portfolio. The work is high-stakes, repetitive, and almost entirely manual. Any inconsistency or error flows directly into investor reporting.

Why NAV Accuracy Has Become a Board-Level Concern

Sophisticated LPs are scrutinising NAV methodology more closely than ever, particularly in private credit where liquidity stress in the US has exposed weaknesses in valuation practices. Investors increasingly expect to see how a NAV was constructed: which underlying data was used, when it was received, how it was validated, and what assumptions were applied to roll-forward stale marks.

For secondaries managers, this scrutiny lands squarely on the operational backbone. A trusted, automated, auditable NAV calculation process is rapidly becoming a baseline expectation, not a differentiator.

How Technology Is Changing Secondaries Fund Administration

Modern fund administration platforms are starting to address the data extraction and aggregation problem directly. AI-powered tools can read PDFs and worksheets shared by underlying GPs, extract key financial metrics, and write that data into a structured registry where it can be used for NAV calculations and analysis.

Caruso's AI-powered fund admin tools are designed for exactly this kind of workflow. The Fund Admin Agent extracts financial data from PDFs and unstructured documents, normalises it into a consistent schema, and feeds it into the fund accounting workflows and reporting layer. For a secondaries manager monitoring fifty or a hundred underlying positions, this turns days of manual extraction work into a process that runs in minutes with a documented audit trail.

The benefit is not only speed:

• Auditability: Every extraction is logged with the source document, the field that was extracted, and any human review applied. NAV calculations can be traced back through every input, satisfying LP requests for methodology transparency.
• Consistency: Underlying data is normalised into a single schema, so portfolio-level analytics and NAV roll-ups use the same definitions across every position.
• Scalability: A platform handles fifty positions or five hundred with the same workflow. Headcount stops being the constraint on how many underlying funds a secondaries manager can monitor.

For managers running both primary and secondaries strategies, having one platform that handles unit registry, capital calls, distributions, and underlying-investment data extraction in a single source of truth removes the spreadsheet sprawl that defines most secondaries operations today. This is the operational backbone of AI-native fund administration.

Conclusion

Secondaries funds are reshaping private markets, with deal volumes growing at a pace no other segment can match. The operational model that worked for primary funds was never built for vehicles that depend on data flowing in from dozens of external GPs. Managers who automate underlying data extraction and build trusted, auditable NAV processes will be in a stronger position as LP scrutiny intensifies. To see how Caruso supports secondaries, book a demo.