1. Europe gets ready for AIFMD II
In April 2026, the EU’s revised Alternative Investment Fund Managers Directive (AIFMD II) will come into force, creating a harmonized regulatory framework for loan origination funds.
Notable highlights include a ban on so-called ‘originate to distribute’ strategies and the introduction of risk retention requirements and concentration limits. AIFMD II also tightens up the rules around AIF delegation, reporting, and conflicts of interest. With most member states eschewing gold-plating, AIFMD II is expected to make it easier for AIFs to distribute across the EU.
On delegation, the new rules raise the bar in Luxembourg and Ireland in terms of management company requirements and, in particular, what tasks must be conducted ‘in state’ rather than delegated to third countries.
2. Semi-liquid funds – the competition intensifies
Although semi-liquid fund launch activity has been fairly buoyant recently, capital raising is becoming harder amid an increasing proliferation of products, with new market entrants facing the biggest squeeze.
As the market becomes more saturated, it is clear that successful product launches may require seed funding from institutions, including private banks. This is easier said than done – most institutions are oriented towards established managers, while others will only invest once a General Partner (GP) has achieved scale. But seed money often comes with strings attached. In exchange for incurring the added risk, early-stage investors may expect a discount or fee holiday.
3. Limited Partners (LPs)s double down on the secondary market
Fundraising across private equity and credit strategies may be slowing, but demand in the secondary market remains strong.
According to US investment bank Jefferies, global secondary market volumes hit a new high of $103 billion in H1 2025, eclipsing the previous record of $68 billion in H1 20241. With the drop off in IPOs and M&A transactions, the number of exits has fallen, as have LP distributions, which is prompting investors to seek out better liquidity and diversification in the secondary market.
4. Multi-asset products continue to thrive
Multi-asset products are still highly sought after by investors, amidst the rising geopolitical uncertainty, stretched US equity valuations and stubborn inflation.
There has been a noticeable uptick in the number of multi-strategy platforms, aimed at providing optionality to investors, which is often a pre-requisite when distributing to wealth channels.
Expect multi-asset products to thrive in 2026.
5. Nimbleness is the key to success in private markets
Choppy geopolitical and macro headwinds, together with the resultant slowdown in LP distributions, have meant that most private markets managers view the outlook for 2026 with a blend of realism and optimism. According to S&P, 364 private equity funds came to market in 2025, down from 392 in 2024.2 However, this shift allows space for new opportunities to open up in other strategies such as private credit and ‘secondaries.’
Amidst some challenging fundraising conditions, GPs are trying to keep launch costs as low as possible by streamlining their operations, often by outsourcing non-core processes to third-parties.
Strategic partnerships with traditional asset managers are also being leveraged by private market firms, as they look for cost-effective ways to distribute products to retail and private wealth investors. Examples here include PGIM’s collaboration with Partners Group; Goldman Sachs Asset Management and T. Rowe Price; and Trade Republic’s partnership with Apollo and EQT.
6. Education should be a strategic priority in 2026
As alternative asset managers continue to tap into wealth channels to raise capital, they need to think more carefully about how they educate distributors and intermediaries about their products.
Alternative investment strategies are often diverse and complex in nature, while product features such as so-called soft-locks, tend to be non-standardized and manual, creating friction during the distribution process. The problem is further compounded by the EU’s fragmented regulatory landscape and local market idiosyncrasies around product distribution.
7. Expect greater scrutiny of valuations
With growing scrutiny on valuations both from regulators and investors, managers need to gear up for greater transparency and control of in-house valuation policies and procedures.
While the responsibility of private asset valuations lies with the GPs, this can be an opaque process and can vary depending on the manager. In one recent example, the loans of an e-commerce company were valued at 65 cents on the dollar by a group of asset managers, whereas others put them at 84 cents3.
Some investors question the efficacy of in-house valuations. Growing demand in some quarters for daily NAVs on private market assets is prompting more GPs to reach out to external valuers.
