After years of growth, private markets are on the verge of transforming, as investors demand greater transparency into investments once accepted as opaque by nature, according to a new report from MSCI.
The market data and index provider’s inaugural report, The State of Private Markets 2026, outlines several key trends in the market, including stresses building in private credit from higher interest rates; private credit’s role in the AI buildout; increasingly long exit timelines for private equity; and the rise of evergreen funds.
But a major theme across the report, which is based on U.S. and global data, is how demands for transparency are increasing — from both more recent entrants into the market, including high-net-worth and retail investors, and from sophisticated institutional investors.
“With rapid growth in recent years has come a commensurate rise in expectations for transparency, data quality and the kind of rigorous, timely insight into holdings and exposures that sophisticated allocators now apply across their entire portfolio,” Luke Flemmer, head of private assets at MSCI wrote in the report’s preface. “These are demands that private markets were not historically built to meet.”
The report notes that limited partners (LPs) are pushing for more detailed and timely insights into fund holdings in order to “independently assess credit quality, concentration risk or emerging stress within their portfolios,” and not have to rely on public market proxies as benchmarks for private asset performance.
“LPs want clearer, data-driven ways to compare risk and return across listed and unlisted assets, supported by emerging frameworks, benchmarks and analytics that enable them to see their total portfolio clearly,” says the report.
On the retail side, transparency over valuation practices has come into focus as capital has flowed into semi-liquid evergreen structures.
Once a niche structure, evergreen funds grew more than 30% in the year ending Sept. 30, 2025, and now total US$500 billion in assets. Annual flows into the funds rose 10-fold between 2020 and 2025, from US$10 billion to an estimated US$100 billion.
That growth has been driven by a shift in investor makeup, with wealthy individuals and smaller institutions stepping in as big institutional investors have pulled back. Retail investors now account for about one-fifth of evergreen funds’ AUM, according to the report.
But increased redemption requests and emerging liquidity stresses in recent months have led some semi-liquid private credit funds to gate redemptions.
“For wealth investors, a new set of investment tools are now accessible, with risks that they may not fully appreciate,” the report said. “And, as has happened in early 2026, their expectations shaped by the daily liquidity of listed investments will inevitably collide with redemption gates.”
In Canada, redemption gates have mostly affected real estate funds.
Investor redemptions are typically offered quarterly in semi-liquid funds, subject to limits, and surges in redemption requests can lead fund managers to temporarily halt redemptions.
The rise of semi-liquid funds has “allowed investor flows to be more reactive,” the report notes, and introduced volatility into a “historically staid corner of private markets.”
Valuations and liquidity
The report makes clear, however, that the issue isn’t just a misalignment of investors’ and managers’ expectations around liquidity. Real concerns have also emerged about “the integrity of valuations, the gap between expected and realized liquidity in semi-liquid structures and exposure concentrations that largely went undetected until dislocations in public markets made them difficult to ignore,” it continues.
“As these realities suggest, the infrastructure supporting private markets has not kept pace with the quantum of capital flowing into them.”
Valuation practices, which vary by fund manager, were less of an issue for traditional private markets investors, the report notes.
“A biased NAV may surprise LPs, but it does not affect the profit or loss they make on their investment,” the report said. However, investors in semi-liquid funds may have more riding on valuations.
“Investors can (and do) transact at manager-reported valuations. With increasing redemption requests in semi-liquid funds, the credibility and timeliness of these valuations have become critical,” it added.
While the report says that data, standards, methodologies and technology are “falling into place for a revolution in transparency in private markets,” it will require continued pressure from investors, and a commitment to openness from managers.