Private markets in 2026 are being shaped by three converging forces: artificial intelligence, interest rate uncertainty, political tensions and persistent illiquidity challenges. These forces aren鈥檛 new, but the way they are interacting is creating a more complex operating environment than most managers anticipated heading into the year. The firms navigating it most effectively are building strategies around conditions as they exist.
UK, US and Policy Volatility
The macroeconomic environment on both sides of the Atlantic is characterized by credibility questions as much as by data. In the UK, inflation has proven more stubborn than the Bank of England anticipated. Following its most recent rate cut December 2025, the Bank has held rates steady amid renewed inflationary pressures from global energy and fuel costs. The pace and extent of easing remain uncertain. That uncertainty is feeding into discount rates, asset valuations and the calculus of when to transact.
In the US, the picture is complicated by political pressure on monetary policy. Tension between the executive branch and the Federal Reserve has introduced a new variable into rate expectations, making it harder for markets to determine pricing. The concern is not whether rates move in a particular direction, but whether the institutional credibility that underpins long-term investment confidence remains intact. For private markets participants with multi-year investment horizons, that question carries real weight.
Fed Independence and Market Discipline
Central bank independence has long been a foundational assumption of institutional investment. When that assumption is tested, the effects ripple well beyond interest rate forecasts. Investors operating across jurisdictions are watching carefully, and the implications for dollar-denominated assets and cross-border capital allocation are already visible in shifting flows. Most of that reallocation is moving to Europe, not because its own macro picture is without complexity, but because its policy institutions are currently projecting greater predictability. In a market where conviction is scarce, investors reward predictability.
AI's Distortion of Investment Data
AI is reshaping private markets operations in transformative ways, but it is also introducing a distortion that deserves careful attention. The scale of capital flowing into AI infrastructure, including data centers, power generation and semiconductor capacity, is significant enough to be affecting broader investment data in ways that are difficult to isolate from broader investment trends. Deal activity, valuation trends and sector performance figures that include AI-related assets can paint a misleading picture of conditions across the rest of the market.
For managers and allocators, headline data now requires more scrutiny than it once did. A robust deal environment in technology does not necessarily reflect conditions in business services, healthcare or industrials. Separating AI-driven signals from the underlying trend across diversified portfolios is becoming an important analytical discipline. That scrutiny extends to AI adoption itself. In our recent survey, conducted in partnership with Private Equity Wire, 46% of managers report that AI currently supports basic tasks in their secondaries operations, while 28% say it is informing decision making and 7% indicated that it sometimes is used in decision making. Only 18% say AI plays no role at all, which is a shift from the 54% who said the same in 2025. The long-term transformation case for AI remains compelling, and firms treating it as embedded infrastructure rather than a cyclical theme are likely to be better positioned as the technology matures and its productivity effects become more broadly measurable.
Fundraising Headwinds Continue
Fundraising remains challenging for many private market managers. Capital committed during the investment surge from 2019 to 2022 has not yet been returned to investors at a pace that would support significant new commitments. Until distributions increase, many LPs are likely to remain cautious about committing additional capital.
That caution is creating the biggest challenges for managers without established investor relationships or a clear track record of performance. Mid-market managers with strong results and well-defined strategies are faring better, attracting interest from allocators who are becoming more selective and increasingly questioning whether the largest funds can continue to deliver superior returns. As a result, the gap between managers that are raising capital successfully and those that are struggling remains wide.
The secondaries market has provided an important source of liquidity in this environment, with activity reaching record levels for three consecutive years. Our survey explores that growth in detail, examining how the expansion of the secondaries market is reshaping deal structures, capital flows and LP behavior in private markets.
Why 2026 Rewards Strategic Patience
The instinct in a difficult fundraising and deal environment is to act, whether by lowering prices, broadening mandates or accelerating timelines in pursuit of activity. The evidence from the current market suggests that instinct is worth resisting. The assets transacting successfully are those where preparation has been prioritized over speed. The managers raising capital are those with a coherent story, operational credibility and the patience to engage allocators on their own timeline. Strategic patience is not passivity. Firms that use this period to improve their data, sharpen their equity stories and refine their exit plans will be better positioned to act when market conditions improve.
Precision is the New Optimism
The honest characterization of private markets sentiment in 2026 is neither optimistic nor pessimistic. It is precise. Managers that understand which assets are ready, which markets offer attractive opportunities and where capital is available are finding ways to move forward despite a challenging environment.
AI, interest rates and illiquidity remain important constraints, but they are also exposing differences in preparedness. Firms with strong data, clear strategies and operational discipline are navigating the environment more effectively than those still waiting for conditions to improve. For those managers, the opportunity set is broader than it may initially appear.
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