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Navigating Private Markets in Mid-2026: Opportunities for Discerning Capital
For our high-net-worth individuals, private markets have evolved from a complementary allocation in our portfolios into a core pillar of resilient, growth-oriented portfolios. As of mid-2026, these markets—spanning private equity, private credit, infrastructure, and real estate—are generally characterized by measured recovery, structural demand, and heightened selectivity. Global private market assets under management hover near $20 trillion and are projected to expand toward $26–27 trillion by 2030, albeit at a more mature pace than the explosive growth of the prior decade. For investors with the liquidity tolerance and time horizon to participate, the environment rewards thoughtful positioning over broad exposure.
Let’s Make a Deal
Dealmaking has shown solid momentum. U.S. private markets alone deployed a record volume in late 2025, supported by lower short-term rates, a resilient economy, and easing policy uncertainty in some regions. Yet the recovery remains uneven. Capital concentration is pronounced: a small number of large managers control a significant share of assets, and fundraising has bifurcated, with proven performers raising capital more readily while others face longer timelines. Exits, long a pain point, are gradually improving through a mix of traditional sales, corporate M&A, continuation vehicles, and secondaries, though distributions still lag historical norms in many segments.
A Shift in the Private Markets Landscape
Private equity sits at the center of this dynamic. After several subdued years, activity rebounded in 2025 with stronger buyout values and exit activity, particularly in larger transactions. Heading into the second half of 2026, the focus has shifted toward operational value creation rather than financial engineering alone. Mid-market and lower-middle-market strategies often present more attractive entry valuations and less leverage than mega-buyouts. Secondaries and co-investments have gained prominence as tools for liquidity management and portfolio construction, allowing investors to access seasoned assets or reduce fees. AI is a double-edged theme: it disrupts certain software holdings while creating opportunities in companies enabling or applying the technology. Manager selection and sector discipline matter more than ever.
Private Credit is Publicly Stressed
Private credit markets are undergoing their first meaningful stress test in 2026. Headline default rates remain moderate, but fully loaded measures—including payment-in-kind (PIK) toggles, maturity extensions, and liability management exercises—have climbed toward 5–6%, according to Fitch and other trackers. Software and SaaS borrowers face particular pressure from AI disruption, while earlier high-profile cases (such as Tricolor and First Brands) highlighted underwriting weaknesses.
Semi-liquid and evergreen vehicles, including many BDCs, have seen elevated redemption requests that frequently exceed quarterly caps, forcing gates or delayed payouts. Public BDCs trade at notable discounts to NAV amid valuation concerns. Deal activity has slowed in competitive large-cap segments, and spreads have compressed.
Overall, the stress appears more selective and sentiment-driven than systemic so far, concentrating in weaker credits and certain structures while stronger managers and mid-market opportunities continue to attract capital. We continue to be very cautious in the PC space, and are not recommending it to clients for now.
The Big Build-Out is Here
Infrastructure stands out as one of the clearest structural opportunities. The AI buildout, combined with electrification, data center expansion, and energy security needs, is driving unprecedented demand for power generation, transmission, storage, and digital infrastructure. Global data center spending is expected to reach trillions over the coming years, with hyper-scalers committing substantial capital. Scarcity of power, land, and permitting creates attractive economics for well-positioned assets with long-term contracted revenues. Demographic shifts and the energy transition further expand the opportunity set.
A Bounce in Real Estate
Commercial real estate has exited its prolonged correction and is advancing along a gradual recovery path. Fundamentals now dominate over easy financial conditions. Industrial, logistics, multifamily, and select specialty sectors generally look more resilient than traditional office, where remote-work dynamics and AI-related shifts continue to create headwinds. Direct ownership or high-quality private real estate funds can still offer income and portfolio diversification, provided underwriting emphasizes location, tenant quality, and realistic occupancy assumptions.
How to Access the Private Markets
For HNWIs, several practical considerations shape participation. Evergreen and semi-liquid vehicles have expanded access, though recent redemption activity in some credit-focused products underscores the importance of understanding liquidity terms. Direct investments, co-investments alongside institutional managers, and carefully chosen funds can enhance alignment and fee efficiency. Tax efficiency, estate planning integration, and correlation benefits with public markets remain key decision factors.
Conclusion: Private Markets Aren’t A Layup Anymore
Risks persist. Geopolitical uncertainty, potential energy price volatility, elevated valuations in certain AI-adjacent pockets, and slower-than-hoped distributions require patience and rigorous due diligence. Capital concentration among large managers raises questions about capacity and future deployment discipline. Returns across private strategies are expected to be more moderate than the extraordinary decade that preceded 2022, placing a premium on underwriting skill and alignment of interests.
In this environment, private markets are less about chasing the next headline return and more about constructing durable portfolios. For sophisticated investors, that disciplined approach remains the most reliable path forward.
