Top 10 Private Market Trends for 2026 and Beyond

Private markets have undergone profound change over the past five years, moving through distinct phases that have reshaped the investment landscape. Initially, the ultra-low interest rate environment fueled unprecedented growth, characterized by widespread institutional adoption and a general sense of optimism as investments seemed to yield desired outcomes with relative ease. This was followed by the frenzied activity of 2020–2021, when abundant capital chased a limited number of deals, pushing valuations higher and intensifying competition. In 2022, shifting economic conditions abruptly halted momentum—a slowdown whose effects are still evident today.

As we look ahead, the next five years are likely to be just as transformative. Institutional investors are rethinking how to build more flexibility into their portfolios of illiquid assets. After years of fluctuation, advisors and retail investors now appear poised to embrace new private market investment vehicles. The reset in the exit environment has created challenges for private equity and venture capital, but it has also driven innovation in secondaries. Meanwhile, private debt is expanding into new areas, blurring the lines between public and private credit. Commercial real estate investing has also undergone a significant transformation, with seismic shifts redefining the core opportunity set.

We detail some of the top trends that we believe will define private markets in 2026 and shape their trajectory in the years to come.

Institutional investing has traditionally been defined by patient capital—allocations made with the expectation that returns may take years, even decades, to materialize. Private assets have long embodied this approach, but in recent years that patience has been tested.

Three years after the 2022 market drawdown, half of institutions report that the denominator effect still influences their allocation decisions. Roughly 45% say they are overweight private equity, while about 30% report overweight positions in real estate, private debt, and infrastructure.¹

A look at DPI for US private equity buyout funds underscores the pressure. More recent vintages (2018 -2022) are delivering distributions at roughly half their historical averages --well below what LPs have grown accustomed to. We believe DPI will take time to recover and may not return to the levels seen between 2006 and 2014 for quite some time. As a result, LPs now rank DPI nearly on par with IRR and TVPI/MOIC as a measure of fund performance.

The elevation of DPI as a core performance metric signals a structural rebalancing of allocator priorities --one likely to persist through 2026 and beyond. As private markets mature, LPs will need to rethink pacing, liquidity reserves, and strategy mix to ensure portfolios remain resilient even if exit environments lag historical averages for years.

With a renewed emphasis on returning capital to investors, we expect shifts in both manager selection and asset class preferences. For private equity and venture managers, this will favor portfolios built around companies that have a realistic and clear path to exit. From a sub-asset class perceptive, income-generating strategies and those with shorter J-curves are likely to gain share, benefitting areas such as alternative and private credit, yield-producing real assets, and private equity secondaries.

Source: McKinsey LP Survey, 1/31/2025. 

Evergreen private asset funds are not new—more than 300 have launched since 2019—but the current environment is primed for wider adoption among non-institutional investors. Wealth managers are poised to add them to client portfolios, and legislators appear open to allowing private assets in employer-sponsored retirement accounts. PitchBook estimates global evergreen AUM at $2.7 trillion, projected to reach $4.4 trillion by 2029, with wealth-focused evergreen funds growing at 20% annually to $1 trillion.

For institutional investors, the question is whether a broader investor base and new vehicles could make private markets more vulnerable to liquidity crunches. We believe the risk is limited. Even with rapid growth, wealth-focused evergreen funds are expected to be only about 5% the size of drawdown funds over the next five years. Managers have also designed their funds with protections such as larger cash holdings, gated redemptions, liquidity credit lines, and 15–30% allocations to underlying holdings with more liquidity but similar performance.

Additionally, tapping the $12.6 trillion in defined contribution assets poses challenges given plan sponsors’ caution toward high-cost, higher-risk products and the operational complexity of managing illiquid private assets in a 401(k) structure.² However, integrating private assets into target date funds (TDFs) could accelerate adoption, as participant contributions would automatically shift into diversified portfolios that included allocations to private assets. This approach could alleviate liquidity concerns by allowing TDF managers to source liquidity from other, more liquid holdings in the case of redemptions—reducing “run on the bank” concerns.

Fresh capital flowing into the space may also bring positive developments to current private market participants. The entrance of wealth assets can provide deeper liquidity pools which is a net benefit to LPs with existing allocations. Over time, this capital could expand the secondary market, create greater fee competition, and potentially revitalize slower segments such as private equity, venture capital and commercial real estate.
 

Source: PitchBook. 2029 Private Market Horizons Report. Forecasts were generated on April 14, 2025.

The secondary market hit record highs in the first half of 2025 with $103 billion in transactions—up 50% from 2024—putting it on track to exceed $200 billion by year-end.³ With record transaction volumes, a diversifying seller base, and an expanding opportunity set, the secondary market has entered a new era of growth and complexity.

The structural opportunity is significant. Global private equity NAV now exceeds $3.8 trillion amid steady capital deployment, yet more than half of portfolio companies have been held for more than four years and distribution yields are persistently low as traditional exits remain muted. Yale University’s multi-billion-dollar portfolio sale at 90%+ of NAV highlights how the market can now absorb mega-transactions and signals that some of the largest and most sophisticated institutions are starting to actively reshape their private allocations to meet their current and long-term objectives.⁴

The underlying dynamic is clear: It took more than a decade to build this massive inventory of unrealized NAV, and it won't unwind overnight. In our view, unrealized NAV will grow materially in the next five years, and distribution yields are unlikely to approach prior averages without significant improvement in the exit environment.

The surge in secondary market activity reflects more than just a cyclical response to muted exits. It represents a structural rebalancing of private markets, with secondaries becoming a the primary mechanism for liquidity and portfolio management. As the overhang gradually clears, we see a multi-year window where the buyside will have negotiating power to obtain high-quality portfolios at attractive discounts. LPs should view secondaries not only as an opportunistic release valve but as a strategic allocation that will be integral to managing private portfolios through 2026 and beyond.
 

Source: Lexington Partner estimates, Burgiss Manager Universe. Global Private Equity for Burgiss includes Generalist, VC, Expansion Capital and Buyout. Distribution rate is calculated as annual distributions divided by prior year NAV. 2025-2028E hypothetical NAV grows at 6% CAGR. 2025-2028E includes hypothetical distribution rate growing at ~1% per year to reach 17% in 2029. There can be no assurance that historical trends will continue, or that projections and assumptions will prove to be accurate.

The rapid expansion of private credit into new areas of lending is beginning to blur the boundaries between public and private credit markets. Similar investor bases and structural shifts in lending now allow issuers to move fluidly between the two, choosing whichever market offers the best financing solution at a given moment. This convergence gives issuers greater flexibility in managing their capital structures and investors more avenues for building diversified portfolios.

In our view, credit is best understood as a spectrum defined by multiple dimensions—such as credit risk, collateralization, liquidity, etc.—rather than discrete silos. As the asset class becomes more complex and diversified, it has become increasingly difficult for investors to capture the full opportunity set through standalone allocations.

This convergence also has major implications for long-term asset owners. CIOs should take a holistic view of both credit markets, evaluating public–private correlations, conducting liquidity stress testing, and adjusting or eliminating restrictive strategic asset allocation silos to accommodate the wider spectrum of credit exposures.

We believe managers with capabilities across the liquidity spectrum are well-positioned to deliver innovative structures—including hybrid funds and semi-liquid credit vehicles—that combine public and private exposures in a single portfolio. Multi-asset credit strategies can simplify access to the full credit landscape while accounting for cross-market correlations.

Ultimately, the ability to operate seamlessly across the public-private continuum may become a source of structural advantage for investors and a key value-add for managers that can deliver more comprehensive credit solutions.

Source: PitchBook, LCD Credit Analysis, as of 6/30/2025.