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Alternatives

Private Credit Leads as Secondaries Discount to 20% Premium

Issue 6Week ending March 22, 202612 sources

WTI crude93.39+3.2%
Gold2,087.50-1.4%
REIT index1,568.18-2.1%
VIX24.06+2.8pts
HFRI composite121.45+0.8%
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Week Ending March 22, 2026

Private Credit Leads as Secondaries Discount to 20% Premium

§ 01

Key takeaways

Strategy

Private credit dominates with 12-14% yields while PE secondaries trade at 20% discount, creating vintage year opportunities for patient capital.

Liquidity

Liquid alts see $2.1B inflows as investors balance illiquidity premium capture with capital call flexibility amid elevated volatility.

Hedging

VIX at 24 signals defensive positioning warranted; alts correlation to equities rises to 0.68, reducing diversification benefit in current regime.

§ 02

Executive summary

Private credit leads alternatives allocation this week as direct lending yields reach 12-14%, attracting $15B in Q1 commitments according to Preqin. PE secondaries trade at 20% discount to NAV, the widest since 2020, creating vintage year opportunities. Canadian pensions led by CPP Investments and OTPP accelerate infrastructure deployment amid energy transition tailwinds.

§ 03

Market data

weekly snapshot

QMR MARKET BRIEF

Market posture

Week ending

Overall postureConstructive

Strategy Expanding · Liquidity Neutral · Hedging Defensive

Snapshot compiled Mar 20, 2026 · source dates vary

StrategyExpanding
LiquidityNeutral
HedgingDefensive

Inputs used

WTI crude$93.39+3.2% 1W
Gold$2,087.5-1.4% 1W
REIT index1,568.18-2.1% 1W
VIX24.06+2.8 pts 1W
HFRI composite121.45+0.8% 1W
§ 04

Strategy

20 points

Private equity

  • Fundraising pace Global PE dry powder at $3.2T with 18% increase in Q1 fundraising activity — Preqin notes 'denominator effect fully reversed as public markets stabilize'
  • Valuations Median buyout entry multiple at 10.8x EV/EBITDA, down from 11.2x in Q4; Hamilton Lane sees 'attractive entry environment for vintage 2026'
  • Canadian activity CPP Investments commits $2.8B to North American buyouts; OTPP launches $5B infrastructure debt platform targeting energy transition
  • Exit environment IPO window strengthens with 31 PE-backed IPOs in Q1 vs 23 in Q4; strategic M&A multiples recovering to 11.5x median
  • Positioning Favor mid-market and secondaries at 20% NAV discount; avoid mega-cap buyout given competition (Cambridge Associates March 2026)

Private credit

  • Yields Direct lending yields at 12-14% vs 8.2% high yield bonds — 380bp premium drives institutional demand with $15B Q1 commitments
  • Default rates Private credit default rate holds at 1.8% vs 3.1% broadly syndicated loans; covenant protection remains strong at 95% coverage
  • Deal terms Average spread over SOFR at L+625bp, up from L+575bp in Q4; OID averaging 98.5 cents on dollar (Ares March 2026)
  • Canadian context CDPQ allocates additional $3B to North American direct lending; Brookfield Credit Partners raises $12B flagship fund
  • Positioning Overweight private credit vs public HY given yield premium and lower default rates; focus on asset-based lending (Apollo March 2026)

Hedge funds

  • L/S equity Long/short equity funds up 0.8% MTD with 65% net long exposure; stock picking drives alpha as correlation breaks down
  • Global macro Macro funds benefit from rate volatility and FX moves — CTAs up 2.3% in March on momentum signals (HFRI March 2026)
  • Event-driven M&A activity rebounds drive event-driven gains; average deal spread tightens to 4.2% from 6.1% in February
  • Dispersion Strategy return dispersion widens to 890bp, highest since 2022 — manager selection critical in current environment
  • Canadian context Canadian pensions maintain 8-12% hedge fund allocation; OTPP adds systematic equity exposure via CTA allocation

Real assets

  • REITs Public REITs down 2.1% weekly on rate concerns; REIT dividend yield at 4.2% vs 4.1% 10-year Treasury provides minimal spread
  • Private real estate NCREIF cap rates average 5.8%, up 20bp quarterly; industrial and data center sectors outperform with sub-5% cap rates
  • Infrastructure Energy transition capex drives deal flow — $47B in renewable infrastructure transactions Q1 2026 vs $31B Q1 2025
  • Commodities WTI crude up 3.2% to $93.39 on supply concerns; gold retreats 1.4% to $2,087 as real yields rise with rate volatility
  • Canadian context Brookfield Infrastructure deploys $2.1B in North American renewables; Canadian REITs underperform on BoC hawkish tilt
§ 05

Liquidity

10 points

Access

  • Liquid alts Interval funds attract $2.1B inflows in March — 40% into private credit strategies seeking daily NAV with quarterly liquidity
  • Semi-liquid Tender offer funds launch accelerates with 12 new vehicles Q1; average tender frequency moves to monthly from quarterly
  • Illiquidity premium Private markets trade at 15-20% premium to liquid equivalents — highest since 2020 creates opportunity for patient capital
  • Canadian landscape NI 81-102 alternative fund adoption reaches $18B AUM; RBC GAM and Mackenzie lead Canadian liquid alts distribution
  • Positioning Blend liquid and illiquid — use interval funds for capital call management while capturing illiquidity premium in core holdings

Secondaries

  • Pricing PE secondaries average 80 cents on NAV dollar — 20% discount widest since 2020; vintage 2020-2022 funds trade at steeper discounts
  • Volume Secondary transaction volume up 35% Q1 2026 to $28B driven by LP portfolio rebalancing and capital needs
  • GP-led vs LP-led GP-led transactions comprise 65% of volume as managers extend fund lives and provide liquidity to LPs
  • Notable deals Blackstone completes $3.2B GP-led for 2019 vintage buyout fund; CPP Investments active buyer in infrastructure secondaries
  • Positioning Attractive entry point for secondaries given pricing dislocation — focus on 2020-2022 vintages trading at 75-85 cents (Hamilton Lane)
§ 06

Hedging

10 points

Volatility

  • VIX regime VIX at 24.06 in elevated territory (20-30 range) — expect continued equity volatility amid rate uncertainty and geopolitical tensions
  • Alts correlation 30-day alternatives-to-equity correlation rises to 0.68 from 0.52 — reducing diversification benefit in current volatility regime
  • Gold hedge Gold at $2,087 after 1.4% weekly decline — rising real yields pressure traditional hedge but maintains tail risk value
  • Energy hedge WTI crude strength to $93.39 provides inflation hedge — energy infrastructure benefits from commodity price support
  • Institutional view Cambridge Associates recommends defensive positioning with 20% cash buffer for opportunistic deployment when volatility peaks

Tactical

  • Cash buffer Maintain 15-20% liquid allocation for capital calls and opportunistic secondaries deployment — elevated volatility creates dislocations
  • Vintage diversification Avoid concentration in single vintage years — 2026 vintage appears attractive but spread commitments across 24-month window
  • Rebalancing Public equity rally pushes alternatives below target — consider rebalancing into secondaries at attractive pricing
  • Tail risk Private credit vulnerable to credit cycle turn; real estate sensitive to rate spikes; maintain geographic and strategy diversification
  • Positioning Defensive tilt with credit overweight, secondaries opportunism, and cash flexibility for market dislocations (Mercer March 2026)
§ 07

Institutional views

12 institutions

Institutional Perspectives

CPP Investments

allocator
bullish
Preferred: Infrastructure, Private credit, Secondaries
Avoid: Public REITs
Key Call: Deployed $2.8B in North American buyouts and infrastructure — sees 'generational opportunity in energy transition'

OTPP

allocator
neutral
Preferred: Infrastructure debt, CTA hedge funds
Avoid: Mega-cap buyout
Key Call: Launches $5B infrastructure debt platform targeting 10-12% returns in energy transition financing

CDPQ

allocator
bullish
Preferred: Direct lending, Infrastructure equity
Avoid: Traditional real estate
Key Call: Allocates $3B additional to North American direct lending — targets 13-15% net returns

Brookfield Asset Management

manager
bullish
Preferred: Infrastructure, Real estate debt, Renewable energy
Avoid: Public equities
Key Call: Raises $12B credit fund and deploys $2.1B in renewables — expects infrastructure to outperform public markets by 400-500bp

Apollo Global Management

manager
bullish
Preferred: Asset-based lending, Insurance solutions
Avoid: High yield bonds
Key Call: Private credit yields at 12-14% vs 8% public credit — 'best risk-adjusted opportunity in 15 years'

Cambridge Associates

consultant
neutral
Preferred: Secondaries, Mid-market PE
Avoid: Large-cap buyout
Key Call: Recommends 20% cash buffer and secondaries opportunism — vintage 2026 'attractive but not compelling'

Preqin

consultant
bullish
Preferred: Private credit, Infrastructure
Avoid: Venture capital
Key Call: Private credit sees $15B Q1 commitments — 'denominator effect reversal drives renewed allocation'

Hamilton Lane

consultant
bullish
Preferred: Secondaries, Co-investments
Avoid: Public REITs
Key Call: PE secondaries at 20% NAV discount create 'vintage year opportunities for patient capital'

Ares Management

manager
bullish
Preferred: Direct lending, Infrastructure debt
Avoid: Broadly syndicated loans
Key Call: Direct lending spreads widen to L+625bp with 98.5 OID — credit quality remains strong with 1.8% default rate

Blackstone

manager
neutral
Preferred: Private credit, Data centers
Avoid: Office real estate
Key Call: Completes $3.2B GP-led transaction — provides LP liquidity while extending high-performing asset hold periods

RBC Global Asset Management

manager
neutral
Preferred: Liquid alternatives, Canadian REITs
Avoid: US REITs
Key Call: Canadian liquid alts reach $18B AUM under NI 81-102 — blend of access and daily liquidity drives adoption

Mercer

consultant
bearish
Preferred: Defensive alternatives, Cash
Avoid: Rate-sensitive real estate
Key Call: VIX at 24 warrants defensive positioning — maintain liquidity for opportunistic deployment when dislocations emerge
§ 08

Portfolio implications

Portfolio Implications

Conservative

  • Strategy focus: 60% private credit, 25% infrastructure, 15% liquid alts — emphasize yield and capital preservation
  • Vehicle preference: Interval funds and tender offers for daily/monthly liquidity with institutional-quality exposure
  • Hedging: Maintain 20% cash buffer for capital calls; avoid rate-sensitive real estate in rising rate environment
  • Canadian: Follow Maple 8 lead into infrastructure debt and direct lending — OTPP and CDPQ models provide blueprint

Balanced

  • Strategy mix: 30% private credit, 25% PE (including secondaries), 25% infrastructure, 20% hedge funds for diversification
  • Vehicle mix: 60% illiquid for premium capture, 40% liquid for flexibility — use interval funds for capital call management
  • Hedging: Moderate defensive positioning with gold exposure and systematic CTA strategies for volatility protection
  • Canadian: Blend Canadian liquid alts (NI 81-102) with global PE/credit exposure through Canadian pension co-investment opportunities

Growth

  • Strategy tilt: 40% PE (emphasize secondaries at 20% discount), 30% growth equity, 20% infrastructure equity, 10% venture credit
  • Vehicle preference: Drawdown funds for illiquidity premium capture — accept longer lock-ups for 300-500bp return enhancement
  • Hedging: Tactical volatility exposure through CTA strategies; use current elevated VIX for opportunistic option strategies
  • Canadian: Access global growth through Canadian pension platforms — CPP Investments and Brookfield provide scale and expertise
§ 09

Key dates

5 events

Key Dates Ahead

DateEventRelevance
March 25FOMC Meeting Minutes ReleaseRate path clarity affects private credit spreads and real estate valuations
March 27NCREIF Q4 2025 Index ReleasePrivate real estate performance and cap rate trends
March 28EIA Weekly Petroleum StatusOil inventory data impacts energy infrastructure and commodity strategies
April 1Q1 Capital Call DeadlinesMajor PE and infrastructure funds call committed capital
April 3SuperReturn International ConferencePE industry outlook and deal pipeline visibility
§ 10

Sources

12 sources

Sources & References