2026 Private Market Outlook

Executive Summary

2025 looked much like 2024, with narrow technology leadership, centered largely on AI, driving most of the gains in the public markets. Volatility was most notable in Q1, with the current administration creating brief but recurring disruptions throughout the year. Strong US equity performance was underpinned by a reduction in uncertainty across both geopolitical and inflation fronts, supported by a more accommodative monetary backdrop following three rate cuts late in the year. Interestingly, despite strong absolute returns, the US market lagged many of its developed‑market peers and select emerging markets.

As we translate these public market dynamics into private markets, many of the same themes are shaping private investment activity. AI’s dominance has fueled substantial investment and value creation across venture capital and infrastructure. Meanwhile, improving market clarity and falling rates appear to be constructive tailwinds for both real estate and buyout opportunities.

Private markets seem to be on firmer footing in 2026, but the landscape remains uneven. While there are many reasons to be optimistic, we believe that optimism should be balanced with a thoughtful, disciplined approach as market dynamics continue to evolve. We provide a summary of our sectoral views below but a more granular analysis of each sector can be found in our expanded insights for those seekingi it.

Key Highlights

Buyout

• Activity improved in the second half of 2025, though the recovery was uneven. Deal flow strengthened but skewed toward larger transactions, resulting in a more modest rebound in the lower end of the market. Sector leadership was concentrated in technology, healthcare, and industrials, reinforcing their continued importance within the buyout ecosystem. Fundraising remained characterized by a smaller number of larger fundraises, which contributed to relatively attractive pricing conditions, particularly for mid‑market strategies.
   
• Looking to 2026, we expect add‑ons and structured growth equity to play an increasingly significant role, supported by the lower interest‑rate environment established in late 2025. Our preference continues to lean toward managers with strong operating capabilities who are not overly reliant on multiple expansion to drive returns. We maintain a focus on middle‑market managers, where we see both a greater selection set and the potential for more asymmetrical return profiles.

Venture Capital

• Venture Capital entered 2025 with expectations of a rebound in IPO activity and deal volume, and on the surface, those expectations materialized. Deal volume approached record territory, just shy of the 2021 liquidity surge. However, this momentum remained uneven, with a disproportionate share of activity tied to AI and established leaders. IPO performance, while improved, was mixed: several high‑profile listings were effectively down rounds, and post‑IPO trading proved choppy.
   
• As we look to 2026, we are encouraged by the rising role of secondaries in venture, which appear to be emerging as a structural liquidity mechanism within what has historically been a highly cyclical exit environment. Our focus remains on gaining access to top‑tier, capacity‑constrained managers across the venture lifecycle, while balancing exposure to AI‑driven opportunities with non‑AI segments that may offer more attractive pricing due to lower competition and fund flows.

Secondaries

• Building on 2025, secondaries fundraising remained robust, again led by a concentrated group of managers raising increasingly large funds. Dry powder levels stayed balanced as record deal flow absorbed much of the capital. GP‑led transactions continued to represent roughly half of all activity, underscoring the dual importance of liquidity for both LPs and GPs. Pricing continued to tighten, with the most favorable dynamics observed in large‑cap North American buyouts and high‑quality venture and growth assets. Evergreen vehicles remained highly competitive due to their lower cost of capital compared with traditional closed‑end structures.
   
• Looking into 2026, we remain constructive on secondaries but somewhat more cautious than the broader market. We are encouraged by the expansion of opportunities beyond traditional buyout and growth strategies. We expect to continue emphasizing access to high‑quality core secondary managers, favoring access advantages in the middle‑market and strong underwriting and structuring in the large‑cap segment. We maintain an opportunistic stance toward non‑core secondaries, particularly in areas like venture, where liquidity constraints and cyclical exit patterns may create pockets of value.

Private Credit / Special Situations

• Private credit was one of the most prominently discussed asset classes in 2025, with non‑traded BDC and direct‑lending strategies dominating retail product shelves. While selective opportunities remain attractive, today’s yield environment has made the overall risk‑reward trade‑off less compelling given the illiquidity premium required. Distressed opportunities show early signs of potential, but their timing and scale remain uncertain, making them challenging to underwrite and offer with conviction.
   
• Heading into 2026, we expect our positioning to tilt toward special situations and non‑direct‑lending credit strategies. We prefer this portion of portfolios as they rely less on credit spread dynamics and instead emphasize diversification first, with income as a secondary objective.

Private Real Assets

• Real assets remain one of the most bifurcated areas within private markets. Real estate and energy continued to face headwinds in 2025 due to elevated borrowing costs and geopolitical uncertainty. In contrast, infrastructure experienced one of the strongest fundraising environments across private markets, and AI‑linked commodities strategies drew increased interest. Within real estate specifically, dispersion widened meaningfully, with industrial and healthcare sectors up double digits in 2025 compared to the broader FTSE NAREIT North American REIT Index’s more modest 4 percent return.
   
• As we move into 2026, we favor a highly opportunistic approach, with an emphasis on entry economics and themes such as positive leverage and AI optionality. Our goal is to capture the diversifying characteristics of real assets while remaining mindful of the structural gaps within the opportunity set.

Click to read the entire report: Market Insights - Private Markets Insights: 2026 Outlook

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