Hybrid funds have become increasingly popular as fund managers look for creative ways to provide more flexibility for investors and address issues that can limit traditional open-end and closed-end funds. Although the evergreen nature of hybrid funds can save managers time from having to constantly fundraise, they also present an array of conflicts of interest and complications that need to be weighed and mitigated. The Practising Law Institute hosted a panel on hybrid funds as part of its Advanced Issues in Private Funds 2024 program. The panel was moderated by Cleary Gottlieb partner Maurice R. Gindi, and featured Matthew Jill, partner and GC, private funds and secondaries at Ares Management; Barbara Niederkofler, partner at Akin; and Amelia Stoj, CCO and assistant GC at Foresite Capital. This first article in a two-part series discusses the fundraising benefits and challenges presented by hybrid funds, as well as several types of liquidity mechanisms that managers can wield to meet their investors’ withdrawal needs. The second article will analyze other features and considerations when operating a hybrid fund, including as to investor discussions, operational challenges, management fees, carried interest, clawbacks and conflicts of interest. For additional insights from Niederkofler, see “Eleven Top of Mind Questions and Misconceptions Surrounding the New Marketing Rule” (May 26, 2022); and from Gindi, see “High Level Takeaways and Observations About the Potential Impact of the Final Private Fund Rules” (May 23, 2024).