Flow-of-Funds: Private wealth clients shifted away from private credit and into private equity, infrastructure and hedge funds in late 2025 and early 2026. Growth and inflation-protected strategies (infrastructure) are the clear share gainers on the iCapital platform, while evergreen funds now represent 43% of platform assets.
Private Credit at a Crossroads: AUM growth has slowed and BDC redemption activity accelerated in late 2025, with net outflows in Q1 2026. However, credit quality remains in-check and institutions see the recent dislocation as an attractive entry point.
Hedge Fund Renaissance: The industry saw $116B in net inflows in 2025 — the most since 2007 — bringing total AUM to a record $5.4T. Over half of allocators plan to increase hedge fund exposure in 2026.
Private Equity Exit Overhang: The PE backlog has reached record highs at 13,300+ companies, with 60% held over four years. Exit valuation spreads have compressed and the industry is navigating a fragile exit path. Vintage valuation risk is the primary concern and could weigh on performance.
AI & Infrastructure Buildout: Hyperscaler capex is forecast at $3.3T over five years, and data center electricity use is expected to substantially increase — a dominant infrastructure theme.
