Future Standard's New Fund: A Liquid Bet on the Illiquid Middle Market

PHILADELPHIA, PA – November 24, 2025

In a strategic move that reflects a seismic shift in alternative asset management, the $86 billion global manager Future Standard has launched the FS Mid Market Private Equity Fund (FS MPE). The announcement of a new fund is standard fare, but the structure and strategy behind FS MPE signal a much deeper play: a calculated attempt to solve the private equity industry's oldest paradox—how to capture its outsized returns without the decade-long capital lockups. By combining a semi-liquid structure, a sharp focus on the resilient middle market, and a strategic European domicile, Future Standard isn't just launching a product; it's placing a significant bet on the future architecture of private wealth.

The 'Semi-Liquid' Revolution

The core innovation of the FS MPE fund is its semi-liquid, or evergreen, structure. Unlike traditional closed-end funds that lock up investor capital for ten years or more, this model offers periodic, albeit limited, opportunities for investors to redeem their shares, typically on a quarterly basis. To facilitate this, managers hold a portion of the portfolio in more liquid assets and actively manage a blend of primary, secondary, and co-investments to generate cash flow.

This structure is the industry's answer to surging demand from the private wealth channel—high-net-worth individuals and family offices seeking the diversification and return potential of private equity without the prohibitive illiquidity. The market for these vehicles is exploding, with net assets in U.S. evergreen private equity funds soaring past $380 billion in 2024. Future Standard is entering a competitive field, with giants like Blackstone, KKR, and Partners Group already operating similar funds. The challenge for any manager in this space is twofold: maintaining enough liquidity to meet redemptions without creating a cash drag that erodes returns, and managing valuations of illiquid underlying assets on a frequent basis.

While this “democratization” of private equity is a powerful narrative, the liquidity is not guaranteed. These funds universally employ gates, which cap redemptions at a certain percentage of the fund’s net asset value (NAV), typically 5% per quarter. In a market panic, investors rushing for the exits could find themselves locked in anyway. The structure is a compromise, offering a semblance of liquidity in exchange for access to an asset class that has historically been the exclusive domain of large institutions.

The Enduring Allure of the Middle Market

If the semi-liquid structure is the how, the fund’s investment focus is the why. FS MPE will target the middle markets of the U.S. and Europe, a segment that Future Standard's Co-President and CIO, Mike Kelly, describes as offering a "broad, less competitive opportunity set with flexible exit routes." This isn't just marketing rhetoric; it’s backed by decades of performance data.

Historically, middle-market private equity has been a powerhouse of value creation. Over the past 25 years, U.S. middle-market buyout funds have delivered an average net Internal Rate of Return (IRR) of around 22%, significantly outperforming the 14% average from their large-cap counterparts. The story is similar for the Multiple on Invested Capital (MOIC), where the middle market has achieved an average of 3.2x, compared to 2.4x for large-cap deals.

This outperformance stems from the segment’s unique characteristics. It is vast, encompassing companies that are large enough to be stable but small enough to have significant runways for operational improvement and growth. Competition for deals is less fierce than in the billion-dollar-plus buyout space, allowing for more disciplined entry valuations. As Nicolas von der Schulenburg, Co-Head of the European Investment team at Future Standard, noted, "The middle market remains an engine of growth, but its real potential lies in areas others often overlook." By focusing on a mix of secondary purchases of existing fund stakes, co-investments alongside trusted sponsors, and primary fund commitments, FS MPE aims to build a diversified portfolio from day one. The fund launches with a seed portfolio of over $200 million across 30 funds, giving initial investors immediate exposure to this strategy.

Luxembourg's Strategic Pull and an Anchor of Stability

The fund's operational architecture is just as strategic as its investment thesis. Domiciling the fund in Luxembourg as a Reserved Alternative Investment Fund (RAIF) is a deliberate choice. The RAIF structure offers speed to market, as it does not require prior approval from Luxembourg's financial regulator, the CSSF, relying instead on the authorization of its fund manager. This framework, combined with Europe's 'passporting' rules, provides a powerful and efficient vehicle for attracting capital from sophisticated investors across the continent and beyond.

Perhaps the most significant validator of the strategy is the fund's anchor investor, COPRÉ. A Swiss collective pension foundation with over CHF 7 billion in assets, COPRÉ is a sophisticated, long-term institutional investor. Its decision to anchor FS MPE provides a critical stamp of approval and a stable capital base. COPRÉ has been a successful investor in private equity since 2015, allocating over 5% of its portfolio to the asset class, which was one of its best-performing categories even during the market downturn of 2022. For a stability-focused pension fund, this anchor investment signals strong conviction in both Future Standard's capabilities and the specific semi-liquid, middle-market strategy.

By launching with a significant, diversified seed portfolio and the backing of a major institution, Future Standard mitigates some of the early risks of a new fund launch. It presents a mature proposition from its inception, aiming to leverage its 30-year track record to navigate a market that, while promising, is becoming increasingly crowded. The success of FS MPE will ultimately rest on its ability to execute this complex balancing act—delivering the alpha of private markets while managing the liquidity expectations of a new class of investor.