A surge in AI investment, expanding private credit markets and persistent liquidity constraints are creating structural shifts in private markets
Private markets are entering a period of structural change that could reshape investing over the next five years, driven by artificial intelligence, expanding private credit markets and rising opportunities in secondaries, according to a new annual report from Hamilton Lane.
The firm’s 2026 Market Overview argues that global markets are entering a phase of uncertainty and transformation that will require investors and advisors to rethink traditional portfolio construction and pay closer attention to manager selection and market structure.
“We are at a critical moment for global investing, as geopolitical fragmentation, tariff tensions, shifting monetary conditions and rapid technological disruption – especially artificial intelligence – set the stage for increasing volatility,” said Mario Giannini, executive co-chairman at Hamilton Lane and author of the report. “This Pandora's box that has been opened cannot be shut, and we expect profound changes ahead as these factors play out. Investment success will depend on the ability to adapt to new vehicles, liquidity models and market dynamics.”
For advisors and retail investors expanding allocations to private markets, the report highlights several trends that could shape returns in the coming decade.
AI becomes the dominant investment driver
AI is now the single most powerful force shaping capital flows and investment performance across markets, the report argues. Public equity indexes are increasingly dominated by a small cluster of AI-focused companies, while private markets offer broader access to the technology ecosystem.
That concentration presents both opportunity and risk for investors.
Public portfolios today are heavily dependent on the performance of a handful of large technology companies tied to AI infrastructure and large language models. If those companies continue delivering growth, markets could see further gains. But if that narrative falters, the impact could be widespread.
Private markets, particularly venture capital, offer exposure to a wider set of AI opportunities including applications, infrastructure and enabling technologies. Venture capital has already seen a surge of AI activity, with more than half of global venture deal value tied to AI-related investments as of late 2025.
Hamilton Lane argues that this broader exposure may make private markets an important complement to public portfolios that are increasingly concentrated in a small group of tech companies.
Secondaries market gaining momentum
Another area drawing growing attention from institutional investors and wealth managers is the secondary market for private assets.
The report describes strong underlying demand for both general partner-led and limited partner-led secondary transactions. These deals allow investors to buy or sell existing private market positions rather than committing capital to new funds.
Several structural factors are driving the trend, including slower exit activity in private equity and investors looking to rebalance portfolios or shed non-core manager relationships.
Supply of secondary opportunities currently exceeds available capital, which can create attractive pricing for buyers and faster capital deployment. The market still represents only about 2% of the overall private markets asset base, leaving considerable room for growth.
For advisors building private markets exposure for clients, the secondary market may provide a more flexible entry point into an otherwise illiquid asset class.
Private credit’s ‘silver age’
Private credit continues to stand out as one of the most resilient segments of private markets.
Hamilton Lane describes the current environment as a “silver age” for private credit, rejecting the idea that the asset class is experiencing a bubble.
Structural shifts in global lending markets have fueled its expansion as banks pulled back from certain types of lending. The firm says these forces have strengthened during the current credit cycle rather than weakened.
Private credit has outperformed its public benchmark every year for the past 24 years and has beaten public credit markets by several hundred basis points over the past decade.
The asset class may also prove more resilient during downturns than broadly syndicated loans or traditional bank lending, the report notes.
Performance trends and diversification
Private markets have lagged public equities in recent years, largely due to an unusually strong rally in public stocks driven by a small number of technology giants.
The key question going forward is whether that concentrated leadership will persist.
Historically, private equity has outperformed public equities across many market cycles and can serve as an important diversification tool, particularly when public markets become highly concentrated.
Infrastructure and private credit have been the standout performers in more recent years, according to the report.
Evergreen fund structures — increasingly popular among wealth platforms and financial advisors — have also shown encouraging results. Data cited in the report suggests evergreen private equity and secondary funds have outperformed comparable closed-end vehicles over one- and three-year periods, though the market remains relatively young and performance can be volatile.
Liquidity challenges persist
Despite strong underlying performance, liquidity remains a concern across private markets.
While 2025 recorded the second-largest year ever for total distributions to investors, the pace of exits in private equity and real assets remains relatively subdued because of cautious deal markets and slower IPO activity.
Longer holding periods and slower capital return cycles have forced investors to reconsider pacing strategies and portfolio construction.
At the same time, valuation concerns tied to investments made during the 2021–2022 boom persist. According to the report, valuation multiples on many unrealized deals have increased during their holding periods, raising questions among some investors. However, Hamilton Lane argues that valuations remain broadly consistent with underlying fundamentals and trends in public markets.
Implications for advisors
For financial advisors incorporating private markets into client portfolios, the report suggests several takeaways.
First, private markets are becoming increasingly mainstream and require more sophisticated data tools and operational infrastructure. Second, diversification across strategies — including venture capital, credit and secondaries — may be critical as the investment landscape evolves.
Finally, geographic allocation remains important. Hamilton Lane suggests investors should overweight US assets across portfolios, reflecting the country’s continued leadership in technology and capital markets.
The broader message of the report is that markets are entering a period of rapid change driven by technology, geopolitics and evolving financial structures.
For investors, that means uncertainty — but also opportunity.
As Giannini put it, the future may be difficult to predict, but adaptation will determine success. “Investment success will depend on the ability to adapt to new vehicles, liquidity models and market dynamics.”
