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Alternatives

Private Credit Holds Firm as PE Exit Window Slowly Reopens

Markets were calm this week, and private lending investments kept paying strong, steady income with very few problems. The market for cashing out of private company investments is also improving, which is a healthy sign, not a warning sign.

Issue 22Week ending August 9, 202615 sources

WTI crude81.96-2.72%
GoldData unavailable
REIT index1,701.42-0.62%
VIX15.15-1.94pts
HFRI compositeData unavailable
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Week Ending August 9, 2026

Private Credit Holds Firm as PE Exit Window Slowly Reopens

§ 01

Key takeaways

Strategy

PE exit activity is improving and dry powder remains elevated, while private credit continues to deliver a durable yield premium over public alternatives with defaults still contained.

Liquidity

Secondary market discounts have narrowed meaningfully, signaling a normalizing rather than distressed market, though the illiquidity premium still favors patient, drawdown-style capital.

Hedging

A calm VIX near 15 offers a reasonable, lower-cost window to add tail-risk protection before volatility potentially reprices higher into year-end.

§ 02

Executive summary

Alternatives markets were broadly stable this week, with the Nasdaq US Benchmark REIT index at 1,701.42 and the VIX settling near 15.15, comfortably within the normal volatility band. Private equity exit activity is showing early signs of life, with PE-backed IPO volume tracking meaningfully ahead of last year, while private credit continues to hold up as the standout risk-adjusted opportunity, with senior direct lending yields near 10-11% and defaults still contained. Secondary market pricing has firmed to the low-90s percent of NAV, suggesting the market is normalizing rather than signaling stress. Advisors should continue leaning into private credit and infrastructure, use the current calm in volatility to add measured hedges, and watch for capital call pacing as several Maple 8 pensions lean into new commitments to offset allocations that have drifted below policy targets amid strong public equity performance.

§ 03

Market data

weekly snapshot

QMR MARKET BRIEF

Market posture

Week ending

Overall postureConstructive

Strategy Expanding · Liquidity Neutral · Hedging Neutral

Snapshot retrieved Aug 8, 2026, 11:37 a.m. EDT · source dates vary

StrategyExpanding
LiquidityNeutral
HedgingNeutral

Inputs used

WTI crude$81.96-2.72% 1W
GoldData unavailableNo verified feed
REIT index1,701.42-0.62% 1W
VIX15.15-1.94 pts 1W
HFRI compositeData unavailableNo verified feed
§ 04

Strategy

20 points

Private equity

  • Fundraising pace Global PE dry powder remains near record levels at roughly $2.6 trillion, with deployment pace picking up as GPs face growing pressure to return capital to LPs (Goldman Sachs Asset Management, August 2026).
  • Valuations Median US buyout entry multiples sit near 11.0x EV/EBITDA, still below the 2021 peak above 12x, per JPMorgan Asset Management's latest guide to alternatives update.
  • Canadian activity Brookfield closed a new flagship infrastructure vehicle exceeding $30 billion in commitments, while CPP Investments continues rotating toward direct co-investments alongside GP partners (CPP Investments, Q1 FY2027 results).
  • Exit environment PE-backed IPO activity in the US is running roughly 40% ahead of last year's pace through July, with Goldman Sachs Asset Management noting the 'exit backlog is beginning to clear.'
  • Positioning Blackstone continues to favor mid-market buyout and GP-led secondaries over mega-cap deals, citing more attractive entry pricing and shorter expected holding periods (Blackstone, Q2 2026 investor letter).

Private credit

  • Yields Direct lending yields remain attractive at roughly 10-11% for senior secured loans, a premium of 250-350bps over broadly syndicated leveraged loans, per PGIM's private credit update.
  • Default rates Private credit default rates have held near 2.5-3%, modestly below the trailing five-year average, according to Moody's mid-2026 private credit monitor.
  • Deal terms Spreads on new direct lending deals have compressed roughly 25-50bps year to date as new entrants compete for deal flow, per JPMorgan Asset Management.
  • Canadian context CDPQ and PSP Investments continue expanding direct lending books, while Brookfield's credit platform remains one of the largest non-bank lenders active in Canada.
  • Positioning RBC Global Asset Management maintains an overweight to senior direct lending, viewing it as offering the best risk-adjusted carry within the current alternatives opportunity set.

Hedge funds

  • L/S equity Long/short equity strategies posted modest gains in July as dispersion between winners and losers widened, supporting stock-picking alpha, per Goldman Sachs prime brokerage commentary.
  • Global macro Global macro managers had a mixed month as rate and currency views diverged across desks, with Bridgewater noting policy uncertainty is 'creating both risk and opportunity' across regions.
  • Systematic/CTA Trend-following CTA strategies have cooled after a strong first half, as choppier price action in rates and commodities reduced trend persistence.
  • Dispersion Return dispersion across hedge fund strategies remains elevated, reinforcing manager selection as the primary driver of net-of-fee outperformance this year.
  • Canadian context OMERS and HOOPP continue running hedge fund allocations primarily through absolute-return and macro sleeves designed to diversify away from equity beta.

Real assets

  • REITs The Nasdaq US Benchmark REIT index closed near 1,701.42, up modestly on the week, with dividend yields still running favorably against Treasury yields on a spread basis.
  • Private real estate Private real estate valuations appear to be stabilizing after two years of cap rate expansion, with PGIM Real Estate noting 'the repricing cycle is largely complete for core assets.'
  • Infrastructure Digital infrastructure and power-related capex continue to draw capital, with Brookfield citing data center and grid investment as its fastest-growing infrastructure sub-sector.
  • Commodities WTI crude settled near $81.96/bbl, little changed on the week, as OPEC+ supply discipline offsets softer demand signals.
  • Canadian context Brookfield Infrastructure and Canadian REITs remain a key access point for Maple 8 pensions seeking inflation-linked real asset exposure, per OMERS' latest real assets commentary.
§ 05

Liquidity

10 points

Access

  • Liquid alts Flows into US interval funds and non-traded BDCs remain positive, though the pace has slowed from the record inflows seen in 2024-2025, per Franklin Templeton's alternatives flow tracker.
  • Semi-liquid Tender-offer and evergreen structures continue to launch across private credit and secondaries, with new wealth-channel products from BlackRock and Blackstone.
  • Illiquidity premium The illiquidity premium for drawdown-style private equity funds is estimated at roughly 200-300bps over comparable liquid exposures, though it has compressed slightly as secondary discounts narrow.
  • Canadian landscape Canada's NI 81-102 alternative fund framework continues to support growth in liquid alts AUM, with Mackenzie Investments and CI Global Asset Management both expanding liquid alt shelf offerings.
  • Positioning Wellington Management favors semi-liquid vehicles for credit and secondaries exposure, balancing periodic liquidity needs against the benefits of a more patient capital base.

Secondaries

  • Pricing Secondary market pricing for buyout fund interests has improved to roughly 90-93% of NAV, narrowing from the low-80s seen in 2023, according to Blackstone's secondaries update.
  • Volume Global secondary market transaction volume is tracking toward another record year, with GP-led continuation vehicles now representing close to half of total volume.
  • GP-led vs LP-led GP-led deals continue gaining share as sponsors use continuation vehicles to hold trophy assets longer while offering existing LPs a liquidity option.
  • Notable deals Brookfield and Goldman Sachs Asset Management both closed sizable continuation vehicles in the past two weeks, underscoring continued institutional demand for secondaries exposure.
  • Positioning Narrowing discounts suggest the secondaries market is normalizing rather than signaling distress, though dispersion between top-quartile and lower-quality funds remains wide.
§ 06

Hedging

10 points

Volatility

  • VIX regime The VIX closed near 15.15, within the 'normal' 15-20 band, reflecting relatively calm equity market conditions heading into late summer.
  • Alts correlation Correlation between listed alternatives, including REITs and infrastructure equities, and broad public equities has ticked up modestly, reducing near-term diversification benefits.
  • Gold hedge Institutional commentary continues to flag gold as a preferred tail-risk hedge amid persistent geopolitical and fiscal uncertainty, though this report does not carry a verified spot price this week.
  • Energy hedge Commodity exposure, including energy, continues to be cited by UBS as a useful inflation hedge within a diversified alternatives sleeve, even as near-term oil prices stay range-bound.
  • Institutional view Wellington Management notes the current low-vol regime is a 'reasonable window to add tail-risk protection at a discount' rather than waiting for volatility to reprice higher.

Tactical

  • Cash buffer Advisors managing capital call schedules should maintain a liquidity buffer of roughly 15-20% of committed but undrawn private capital to avoid forced asset sales, a guideline echoed by JPMorgan Asset Management.
  • Vintage diversification With entry multiples still below 2021 peaks, JPMorgan Asset Management encourages continued vintage-year diversification rather than pausing commitments to wait for a further reset.
  • Rebalancing A resilient public equity market has pushed some institutional alts allocations below long-term policy targets, prompting allocators such as PSP Investments to lean into private credit and infrastructure commitments.
  • Tail risk A sharp rate spike or renewed credit stress would pressure highly levered private credit borrowers first, while illiquid real estate and mega-cap buyout valuations remain most exposed to a demand shock.
  • Positioning BlackRock recommends pairing illiquid growth exposure with liquid, lower-correlation hedges such as macro or trend strategies to manage portfolio-level drawdown risk.
§ 07

Institutional views

12 institutions

Institutional Perspectives

Blackstone

manager
bullish
Preferred: Mid-market buyout, GP-led secondaries
Avoid: Mega-cap buyout at peak pricing
Key Call: Continues favoring mid-market buyout and GP-led secondaries over mega-cap deals given more attractive entry pricing (Q2 2026 letter).

Goldman Sachs Asset Management

manager
bullish
Preferred: Secondaries, Private credit
Avoid: Long-duration illiquid real estate
Key Call: Upgraded exit environment commentary, noting PE-backed IPO volume is running roughly 40% ahead of last year.

JPMorgan Asset Management

manager
neutral
Preferred: Direct lending, Infrastructure
Avoid: Broadly syndicated leveraged loans
Key Call: Recommends continued vintage-year diversification into private credit rather than pausing commitments.

BlackRock

manager
neutral
Preferred: Infrastructure, Macro/trend hedges
Avoid: Unhedged illiquid growth-only sleeves
Key Call: Recommends pairing illiquid growth exposure with liquid, lower-correlation hedges to manage drawdown risk.

PGIM

manager
bullish
Preferred: Senior direct lending, Core real estate
Avoid: Non-core opportunistic real estate
Key Call: Sees the real estate repricing cycle as largely complete for core assets, supporting fresh capital deployment.

CPP Investments

allocator
neutral
Preferred: Direct co-investment, Infrastructure
Avoid: Fund-of-funds structures
Key Call: Continues rotating toward direct co-investments alongside GP partners per Q1 FY2027 results.

OTPP

allocator
neutral
Preferred: Secondaries, Private credit
Avoid: Mega-cap buyout
Key Call: Maintains measured pace of new commitments while prioritizing secondaries for liquidity management.

RBC Global Asset Management

manager
bullish
Preferred: Senior direct lending, Liquid alts
Avoid: Long-duration illiquid credit
Key Call: Initiates overweight recommendation on senior direct lending within Canadian liquid alts sleeves.

Brookfield

manager
bullish
Preferred: Infrastructure, Digital infrastructure/power
Avoid: Non-core opportunistic real estate
Key Call: Closed a new flagship infrastructure fund above $30 billion, its largest to date, with a focus on data centers and grid investment.

UBS

manager
neutral
Preferred: Commodities, Real assets
Avoid: Unhedged rate-sensitive credit
Key Call: Continues to cite energy and broader commodity exposure as a useful inflation hedge within diversified alternatives sleeves.

Wellington Management

manager
neutral
Preferred: Semi-liquid credit, Tail-risk hedges
Avoid: Fully illiquid single-strategy exposure
Key Call: Views the current low-vol regime as a reasonable window to add tail-risk protection at a discount.

PSP Investments

allocator
bullish
Preferred: Private credit, Infrastructure
Avoid: Mega-cap buyout
Key Call: Leaning overweight private credit and infrastructure to offset overall alts allocation drifting below policy target.
§ 08

Portfolio implications

Portfolio Implications

Conservative

  • Strategy focus: Emphasize private credit and core real assets over private equity, prioritizing current income and inflation linkage.
  • Vehicle preference: Favor liquid alts and interval funds for access, limiting exposure to long-duration drawdown structures.
  • Hedging: Maintain a larger cash and liquidity buffer, and consider modest tail-risk hedges given VIX near the low end of its normal range.
  • Canadian: Use Maple 8 real asset and credit exposure as a benchmark, accessing similar strategies through Canadian liquid alts under NI 81-102.

Balanced

  • Strategy mix: Diversify across private credit, infrastructure, secondaries, and selective mid-market PE rather than concentrating in any single strategy.
  • Vehicle mix: Blend semi-liquid tender-offer structures with a measured allocation to illiquid drawdown funds to manage overall portfolio liquidity.
  • Hedging: Apply a moderate tail-risk hedging approach, using the current calm VIX environment to add protection at a reasonable cost.
  • Canadian: Leverage growing Canadian liquid alts shelf offerings from RBC GAM and Mackenzie alongside direct exposure to Brookfield-managed vehicles.

Growth

  • Strategy tilt: Overweight mid-market PE and GP-led secondaries, capitalizing on improving exit conditions and narrowing NAV discounts.
  • Vehicle preference: Favor longer lock-up drawdown funds to capture the illiquidity premium, which remains near 200-300bps over liquid comparables.
  • Hedging: Take a tactical approach to volatility positioning, adding protection selectively rather than maintaining a static hedge.
  • Canadian: Pursue global diversification through alternatives, using Brookfield and other Canadian-domiciled global platforms for cross-border exposure.
§ 09For the conversation, not the committee

Client talk track

Markets were calm this week, and private lending investments kept paying strong, steady income with very few problems. The market for cashing out of private company investments is also improving, which is a healthy sign, not a warning sign.

Should I be worried about market ups and downs right now?

No, volatility is unusually calm right now, which is actually a good time to consider low-cost protection.

Is my private credit investment still doing okay?

Yes, private credit is still paying strong income and very few borrowers are running into trouble.

I have private equity money tied up, will I be able to get it back eventually?

The market for selling those stakes is improving and pricing is normalizing, which is a healthy sign rather than a red flag.

Bottom lineThe conversation this week is about staying steady, not making changes. Clients in private credit have a good reason to stay put given the income and low defaults, and clients with private equity locked up can be reassured the exit market is quietly improving. The calm volatility environment is also worth discussing as a window for reasonably priced protection.

§ 10

Key dates

5 events

Key Dates Ahead

DateEventRelevance
Aug 13EIA Weekly Petroleum Status ReportUpdated US crude inventory data will shape near-term direction for WTI and energy-linked real asset strategies.
Aug 14US CPI ReleaseInflation surprise could shift rate expectations, affecting private credit spreads and REIT valuations.
Aug 19OPEC+ Monthly MeetingSupply decisions will influence oil price direction and commodity hedging effectiveness for real asset portfolios.
Aug 20-23Jackson Hole Economic SymposiumFed commentary on the policy path will be a key driver for private credit spreads and real estate cap rate expectations.
Aug 25Continued BDC and REIT Q2 earnings reportsUpdated NAV and portfolio quality data will inform private credit and public real asset positioning.
§ 11

Sources

15 sources

Sources & References

  • Blackstone
    Q2 2026 Investor Letter and Secondaries Market Update
    August 2026
  • Brookfield
    Infrastructure Fund Close and Digital Infrastructure Outlook
    August 2026
  • Goldman Sachs Asset Management
    Mid-2026 Alternatives Outlook
    August 2026
  • JPMorgan Asset Management
    Guide to Alternatives, August 2026 Update
    August 2026
  • BlackRock
    BlackRock Investment Institute: Alternatives and Risk Management
    August 2026
  • PGIM
    Private Credit Update and Real Estate Repricing Commentary
    July 2026
  • RBC Global Asset Management
    Liquid Alternatives and Direct Lending Positioning
    August 2026
  • CPP Investments
    Q1 FY2027 Results
    August 2026
  • OTPP
    Mid-Year Portfolio Update
    July 2026
  • UBS
    Wealth Management Alternatives and Commodities Outlook
    August 2026
  • Wellington Management
    Volatility Regime and Tail-Risk Hedging Note
    August 2026
  • Moody's
    Mid-2026 Private Credit Monitor
    July 2026
  • PSP Investments
    Portfolio Allocation Commentary
    August 2026
  • Franklin Templeton
    Alternatives Flow Tracker
    August 2026
  • S&P Global
    Listed Alternatives and Public Equity Correlation Data
    August 2026