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Alternatives

Secondaries Momentum Builds as Private Credit Spreads Compress Further

Real estate investments and gold both moved higher this week, and the market for selling private business stakes is showing signs of life. It was a calm week overall; nothing here signals trouble, just steady progress.

Issue 20Week ending July 26, 202620 sources

WTI crude84.38+2.1%
Gold3,395.20+0.8%
REIT index1,717.24+1.24%
VIX18.70+0.4pts
HFRI composite6.80+0.3%
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Week Ending July 26, 2026

Secondaries Momentum Builds as Private Credit Spreads Compress Further

§ 01

Key takeaways

Strategy

PE exit windows are reopening and private credit spreads keep compressing, but allocators are rotating toward secondaries and mid-market over mega-cap buyout as the preferred expression of the cycle.

Liquidity

The illiquidity premium has narrowed to decade-low levels in credit, pushing more allocators toward semi-liquid and secondary structures rather than accepting long lock-ups at today's pricing.

Hedging

VIX sits in a normal 15-20 regime and alts-to-equity correlation remains contained, but gold's push above $3,390 signals allocators are still paying up for tail-risk insurance.

§ 02

Executive summary

Alternatives markets enter late July with a constructive but selective tone: REITs gained 1.2% on the week as the Nasdaq US Benchmark REIT index hit 1717.24, while gold's push to $3,395/oz reflects continued tail-risk demand even as the VIX holds a normal 18.7 reading. Private equity exit activity is picking up, with Bain and Hamilton Lane both flagging improving IPO and sponsor-to-sponsor windows, but Preqin data shows $2.3T of global dry powder still overhanging deployment, keeping entry multiples in check. Private credit remains the consensus overweight across Blackstone, Apollo and the Maple 8, though spreads have compressed toward 450-500bps over SOFR, narrowing the premium over public high yield. Actionable takeaway: rotate toward secondaries and mid-market private credit rather than chasing large-cap buyout or duration-heavy real estate at current pricing.

§ 03

Market data

as of July 26, 2026

Market Snapshot

AssetLevelWeekly Change
WTI Oil$84.38+2.1%
Gold$3,395.2+0.8%
REIT Index1,717.24+1.24%
VIX18.7+0.4 pts
HFRI Composite6.8+0.3%

Market Sentiment

Strategy

Expanding

Liquidity

Neutral

Hedging

Neutral

§ 04

Strategy

20 points

Private equity

  • Fundraising pace Global PE dry powder holds near $2.3T; Preqin's July update notes 'deployment pressure building as fund lives mature,' with 2026 vintage funds facing a shorter runway to invest (Preqin, July 2026).
  • Valuations Median US buyout entry multiple sits at 11.4x EV/EBITDA versus a 12.8x 2022 peak; Cambridge Associates calls the mid-market 'the cleanest relative value in PE today' (Cambridge Associates, July 2026).
  • Canadian activity OTPP committed a further $1.1B to natural resources and infrastructure co-investments this quarter, while CPP Investments expanded its secondaries book, citing 'attractive entry pricing versus primary commitments' (OTPP, CPP Investments, July 2026).
  • Exit environment Sponsor-backed IPO filings are up roughly 30% quarter-over-quarter and take-private activity remains elevated; KKR notes 'the exit backlog is starting to clear, but selectively' (KKR Insights, July 2026).
  • Positioning Favor mid-market buyout, GP-led continuation vehicles and secondaries over mega-cap buyout given still-elevated large-cap leverage multiples (Hamilton Lane, July 2026).

Private credit

  • Yields Direct lending all-in yields sit near 10.5-11%, with spreads over SOFR compressing to 450-500bps from 550bps a year ago as competition intensifies (Ares Management, July 2026).
  • Default rates Trailing 12-month direct lending default rate is roughly 2.1%, still below the broadly syndicated loan market's 3.4%, per Apollo's latest credit update (Apollo Insights, July 2026).
  • Deal terms Covenant-lite structures are creeping back into upper-middle-market deals as bank retrenchment eases; Blue Owl flags 'terms loosening at the margin but underwriting discipline intact' (Blue Owl Capital, July 2026).
  • Canadian context CDPQ and PSP continue to scale direct lending platforms alongside Brookfield's credit arm, which closed a $3.5B North American direct lending vehicle this quarter (CDPQ, Brookfield, July 2026).
  • Positioning Maintain overweight to private credit but favor senior/first-lien direct lending over junior tranches as spread compression erodes compensation for subordination risk (Oaktree Capital, July 2026).

Hedge funds

  • L/S equity Long/short equity strategies are up an estimated 8.1% year-to-date through June, with dispersion between top- and bottom-quartile managers near 900bps (HFR data cited via Preqin, July 2026).
  • Global macro Macro funds are up roughly 5.4% YTD as rate divergence between the Fed and other G10 central banks creates tactical opportunities; Wellington notes 'macro alpha improving with policy divergence' (Wellington Insights, July 2026).
  • Systematic/CTA Trend-following strategies are roughly flat to slightly negative YTD (-1.2%) as choppy commodity and rates trends whipsaw model signals (HFR data, July 2026).
  • Dispersion Strategy dispersion remains elevated, reinforcing manager-selection over beta exposure; Mercer flags 'fee compression pressure building even as top-quartile managers justify cost' (Mercer Insights, July 2026).
  • Canadian context CPP Investments continues to favor multi-strategy platforms over single-strategy funds for capital efficiency and liquidity terms (CPP Investments, July 2026).

Real assets

  • REITs The Nasdaq US Benchmark REIT index rose 1.2% to 1717.24 this week, with dividend yields averaging roughly 4.3% versus the 10-year Treasury near 4.4%, a near-parity spread not seen since 2023 (FRED, S&P Global, July 2026).
  • Private real estate NCREIF ODCE preliminary Q2 data shows total returns turning modestly positive after seven quarters of decline, with cap rates stabilizing near 6.0-6.3% in core sectors (NCREIF, Greenstreet, July 2026).
  • Infrastructure Digital infrastructure and power/data-center capex remains the dominant theme; Brookfield closed additional commitments to its energy transition strategy, citing 'structural demand from AI-driven power needs' (Brookfield Insights, July 2026).
  • Commodities WTI crude rose 2.1% to $84.38/bbl on supply tightness, while gold gained 0.8% to $3,395/oz as investors continue using bullion as a portfolio hedge (FRED, World Gold Council, July 2026).
  • Canadian context Brookfield Infrastructure Partners and Canadian REITs are seeing renewed interest as bond-proxy yields compress; BCI increased its real assets allocation target modestly this quarter (BCI, July 2026).
§ 05

Liquidity

10 points

Access

  • Liquid alts Interval fund and non-traded BDC flows remain positive, with roughly $4.8B of net inflows into liquid alt structures in Q2 2026 per Morningstar-sourced data cited by Franklin Templeton (Franklin Templeton, July 2026).
  • Semi-liquid Tender-offer real estate and credit funds continue to see modest oversubscription in credit but persistent gating discussions in non-traded real estate as redemption queues normalize (Nuveen Insights, July 2026).
  • Illiquidity premium The illiquidity premium in direct lending has compressed to roughly 150-200bps over liquid credit, the narrowest since 2021, per Cambridge Associates' latest allocator survey (Cambridge Associates, July 2026).
  • Canadian landscape Canada's NI 81-102 liquid alts market continues to grow, with Mackenzie and CI GAM both expanding liquid alt lineups targeting retail/RIA-style advisors (Mackenzie Investments, CI Global Asset Management, July 2026).
  • Positioning With the illiquidity premium narrow, favor semi-liquid vehicles for new commitments while maintaining existing drawdown fund exposure for vintage diversification (Hamilton Lane, July 2026).

Secondaries

  • Pricing PE secondaries are trading at an average 92% of NAV, the tightest discount since 2019, while real estate secondaries remain wider at 78-82% of NAV (Preqin, July 2026).
  • Volume Global secondary market volume is tracking toward a record $180B+ for 2026, up roughly 15% year-over-year, per PitchBook's Q2 secondaries update (PitchBook, July 2026).
  • GP-led vs LP-led GP-led continuation vehicles now represent about 55% of secondary volume, with LPs increasingly using secondaries for portfolio rebalancing rather than distress sales (Hamilton Lane, July 2026).
  • Notable deals KKR closed a $2.6B continuation vehicle for a healthcare services portfolio company this month, one of the largest GP-led deals of 2026 (KKR Insights, July 2026).
  • Positioning Secondary pricing strength argues for selective LP-led buying in real estate (wider discounts) while treating PE secondaries as a liquidity tool rather than a deep-value trade (Cambridge Associates, July 2026).
§ 06

Hedging

10 points

Volatility

  • VIX regime VIX closed at 18.70, up 0.4 points on the week, a normal (15-20) regime that has held for most of Q2/Q3 2026 (CBOE, July 2026).
  • Alts correlation Correlation of listed alternatives (REITs, listed infra) to the S&P 500 remains near 0.55-0.60, modestly below the 0.65-0.70 seen during 2023's rate-shock period (S&P Global, July 2026).
  • Gold hedge Gold's rise to $3,395/oz (+0.8% weekly) keeps bullion as the preferred tail hedge; World Gold Council data shows central bank buying remains a structural tailwind (World Gold Council, July 2026).
  • Energy hedge WTI's move to $84.38/bbl (+2.1%) reinforces energy's role as an inflation hedge within diversified real asset sleeves (FRED, July 2026).
  • Institutional view Goldman Sachs Asset Management notes 'cross-asset correlation remains contained, preserving the diversification case for real assets and macro strategies' (GSAM Insights, July 2026).

Tactical

  • Cash buffer Maintain 8-12% of committed private capital in cash or short-duration liquid instruments to meet capital calls without disrupting public market allocations (Mercer, July 2026).
  • Vintage diversification With 2026 entry multiples improving versus 2022 peaks, allocators are encouraged to layer commitments across 2025-2027 vintages rather than concentrate in a single year (Cambridge Associates, July 2026).
  • Rebalancing Strong public equity and REIT performance has pushed several institutional alts allocations 100-150bps below target, prompting rebalancing flows into private credit and secondaries (Callan, July 2026).
  • Tail risk A rate spike would pressure floating-rate private credit borrowers' coverage ratios, while a liquidity freeze would widen secondary discounts most acutely in real estate and infrastructure funds (Oaktree Capital, July 2026).
  • Positioning Favor senior credit and inflation-linked real assets for downside protection; keep dry powder ready to opportunistically buy secondaries if discounts widen (Apollo Insights, July 2026).
§ 07

Institutional views

13 institutions

Institutional Perspectives

Brookfield Asset Management

manager
bullish
Preferred: Infrastructure, Energy transition credit
Avoid: Long-duration core office real estate
Key Call: Scaled energy transition and data-center power commitments, citing structural AI-driven demand for infrastructure capital.

Blackstone

manager
bullish
Preferred: Private credit, Real estate secondaries
Avoid: Mega-cap buyout at peak leverage
Key Call: Increased allocation to real estate secondaries as pricing stabilizes off the 2024-2025 trough.

KKR

manager
neutral
Preferred: GP-led continuation vehicles, Infrastructure
Avoid: Broadly syndicated leveraged loans
Key Call: Closed a $2.6B continuation vehicle, reinforcing GP-led secondaries as a core 2026 growth strategy.

Apollo Global Management

manager
bullish
Preferred: Direct lending, Asset-based finance
Avoid: Junior/subordinated credit tranches
Key Call: Reiterated overweight to senior direct lending as spread compression makes subordinated risk less attractive.

CPP Investments

allocator
neutral
Preferred: Secondaries, Infrastructure, Multi-strategy hedge funds
Avoid: Single-strategy trend-following CTAs
Key Call: Expanded secondaries book, citing attractive entry pricing relative to primary fund commitments.

Ontario Teachers' (OTPP)

allocator
bullish
Preferred: Natural resources, Infrastructure co-investment
Avoid: Core office real estate
Key Call: Committed an additional $1.1B to natural resources and infrastructure co-investments this quarter.

CDPQ (La Caisse)

allocator
neutral
Preferred: Direct lending, Infrastructure
Avoid: Long-duration fixed office assets
Key Call: Scaling direct lending platform in North America alongside continued infrastructure deployment.

EQT Partners

manager
neutral
Preferred: Mid-market buyout, Infrastructure
Avoid: Large-cap take-privates at current multiples
Key Call: Maintains cautious stance on large-cap entry multiples while favoring mid-market platform build-ups.

Cambridge Associates

consultant
neutral
Preferred: Mid-market PE, LP-led real estate secondaries
Avoid: Mega-cap buyout
Key Call: Calls mid-market PE 'the cleanest relative value' as entry multiples compress toward 11.4x EV/EBITDA.

Hamilton Lane

consultant
bullish
Preferred: Secondaries, Semi-liquid vehicles
Avoid: New illiquid drawdown commitments at narrow illiquidity premium
Key Call: Recommends favoring semi-liquid access vehicles given the illiquidity premium has narrowed to 150-200bps.

Preqin

consultant
neutral
Preferred: Secondaries, Private credit
Avoid: Late-stage venture
Key Call: Flags $2.3T of global dry powder and record secondary volume approaching $180B for 2026.

Mercer

consultant
neutral
Preferred: Multi-strategy hedge funds, Private credit
Avoid: High-fee single-strategy CTAs
Key Call: Warns of fee compression pressure even as top-quartile hedge fund managers continue to justify costs.

Ares Management

manager
bullish
Preferred: Direct lending, Asset-based finance
Avoid: Cov-lite upper-middle-market loans
Key Call: Notes spread compression to 450-500bps over SOFR but maintains overweight to senior direct lending.
§ 08

Portfolio implications

Portfolio Implications

Conservative

  • Strategy focus: Emphasize senior private credit and core-plus real assets over PE and hedge funds to limit downside and illiquidity risk (Oaktree Capital).
  • Vehicle preference: Prioritize liquid alts and interval funds for real estate and credit exposure to preserve redemption flexibility.
  • Hedging: Hold an 8-10% cash buffer and maintain gold/real asset exposure as a tail-risk hedge given VIX's normal but not low regime.
  • Canadian: Benchmark alternatives allocation near 15-20%, consistent with conservative Maple 8-style targets, using Canadian liquid alt funds (Mackenzie, CI GAM) for access.

Balanced

  • Strategy mix: Diversify across mid-market PE, direct lending, infrastructure and multi-strategy hedge funds to capture dispersion across strategies.
  • Vehicle mix: Blend semi-liquid tender-offer funds with select drawdown commitments to balance liquidity needs against illiquidity premium capture.
  • Hedging: Maintain moderate tail-risk hedges via gold and macro strategies while keeping correlation to public equities near current 0.55-0.60 levels.
  • Canadian: Target 20-25% alternatives allocation, in line with mid-range Maple 8 benchmarks, accessing infrastructure and credit via Canadian bank and pension-aligned platforms.

Growth

  • Strategy tilt: Overweight PE secondaries and GP-led continuation vehicles, supplemented with opportunistic real estate secondaries given wider 78-82% NAV discounts.
  • Vehicle preference: Favor longer lock-up drawdown funds and continuation vehicles to capture the remaining illiquidity premium in real assets.
  • Hedging: Use tactical volatility and macro strategy exposure to manage drawdown risk during periods of PE deployment.
  • Canadian: Emulate CPP Investments/OTPP-style global diversification, allocating 30%+ to alternatives with heavy infrastructure and natural resources tilts.
§ 09For the conversation, not the committee

Client talk track

Real estate investments and gold both moved higher this week, and the market for selling private business stakes is showing signs of life. It was a calm week overall; nothing here signals trouble, just steady progress.

Is my private credit investment still a good idea?

It remains a favored area among large investors, though the extra return it pays over safer bonds has narrowed a bit.

Why does gold keep going up?

Investors are still paying up for insurance against surprises, even though the overall market looks calm right now.

Should I be putting new money into private equity now?

Exit opportunities are improving, but there's still a lot of investor cash waiting on the sidelines keeping prices in check.

Bottom lineNothing urgent changed this week, but it's a good time to revisit how new money is being placed. The conversation worth having is whether to favor secondary private-equity deals and mid-sized private lending over big buyout funds or long-lockup real estate, given today's pricing and available exit windows.

§ 10

Key dates

6 events

Key Dates Ahead

DateEventRelevance
July 29-30FOMC MeetingRate decision will directly affect private credit floating-rate spreads and REIT valuation discount rates.
July 31Brookfield Asset Management Q2 EarningsKey read-through on infrastructure fundraising pace and energy transition deployment.
August 1US Employment ReportLabor market data will influence rate expectations feeding into private credit and REIT cap rate assumptions.
August 5EIA Short-Term Energy OutlookUpdated oil/gas forecasts affect real asset and commodity-linked alts positioning.
August 12CPP Investments Quarterly UpdateSignal on continued secondaries and infrastructure deployment pace from Canada's largest pension.
September 8-10SuperReturn Private Credit ConferenceKey venue for direct lending spread and covenant trend updates ahead of Q3 fundraising.
§ 11

Sources

20 sources

Sources & References