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A new report points to rising maturation of the field, but also notes the stresses recently in the private credit space.
MSCI, the index provider,
said in its inaugural report on private markets that the
sector is entering a new phase of maturity.
MSCI unveiled its inaugural State of Private Markets
2026 report, which said private markets are maturing, marked
by rising demand for transparency, persistent liquidity
constraints and a growing need to evaluate investments within a
total-portfolio framework.
“The asset class works, but the infrastructure supporting it has
not kept pace with its scale,” Luke Flemmer, head of private
assets at MSCI, said. “Liquidity pressure, uneven confidence in
markets and recent stress in private credit are all rooted in a
structural lack of transparency. Investors need to know what they
own, what those investments are worth and where risk lies to
successfully manage public and private assets together.”
The report noted that stresses in private credit are a worry. It
said that “semi-liquid” structures, such as those offering
periodic redemptions based on manager-reported valuations,
increase scrutiny on how accurate and timely those valuations
are. (Such structures are also called “evergreen.”) There are
more signs of borrower strain, particularly among smaller funds,
the report said.
In private equity, the MSCI report identifies a continued
slowdown in exits and distributions that is contributing to a
more challenging fundraising environment as well as a growing
reliance on secondary markets and continuation vehicles to
generate liquidity. In a more buoyant tack, the report said the
expansion of AI infrastructure is creating “significant
investment opportunities across private markets.”
“From data centres to software and energy systems, AI-related
investments are cutting across asset classes, reinforcing the
need for more granular, integrated analysis of portfolio
exposures,” it said.
There has been a torrent of reports and commentaries about
private markets and “alternative” investment – a category that
includes hedge funds, which aren”t strictly an asset class but a
way to operate in markets.
Last October, a survey by the asset management arm of
Goldman Sachs
found that HNW and ultra-HNW individuals are more
likely to put alternative assets into their portfolios as they
get richer, suggesting that people with rising wealth are more
comfortable about holding illiquid assets.
A poll of 1,000 investors for Goldman
Sachs Asset Management, carried out in July and August last
year, found that 91 per cent of those surveyed who have $20
million or more in wealth hold alternative assets such as private
equity, hedge funds, private credit, forms of real estate and
venture capital. While a fifth of net worth remains in cash
for preservation and flexibility, 80 per cent of individuals with
over $10 million in investable assets use alternatives,
compared with 39 per cent for those with $1 to $5 million,
GSAM said.
“Millennials show greater familiarity and higher allocations to
alternatives. They view public equities as riskier compared to
how older generations view stocks. They are also more motivated
by access to innovation and unique opportunities, which we
believe is signalling a future where alternatives play a central
role in portfolio construction,” GSAM said in in its report,
entitled Opening The Door To Alternatives.
The private markets space has been
roiled by worries of defaults and exposures among private
credit funds although, as this publication has heard, some
players dispute claims
of a systemic problem. There have been several redemptions from
private credit funds in recent weeks, for example.