Aberdeen comments on the prospects for private markets in 2026, looking at the macro – a view framed by rates, tariffs and inflation – and focussed on four key areas.
2025 was another high-profile year for Private Markets. A vintage year for deal flow coincided with continued Government appetite to channel pensions money into private markets, as minds continue to focus on the all-important issue of democratisation.
Aberdeen recently published research which suggests that a diversified private markets portfolio – spanning private equity, venture capital, real estate, infrastructure, natural resources, and private credit – would have outperformed a traditional 60/40 portfolio by nearly 100 percentage points between 2007 and 2025, with a total return of 370% compared to 268% for a traditional 60/40 portfolio.
But crucially, those sorts of returns would have relied on an equally weighted basket of private market assets. And those returns are in the past. So, what is the Aberdeen private markets outlook as we head into 2026?
Aberdeen Investments Private Markets Solutions team believes diversification within sub sectors is essential.
Set against a backdrop of lingering tariff risk, still above-target inflation in many economies, and rate cuts but within the context of a ‘higher for longer’ regime, Aberdeen believes structural and fundamental factors have aligned to create unique global conditions for private market investors heading into 2026.
Macro backdrop
Global markets face a cooling growth backdrop rather than recession, with US labour weakness contrasting with resilient activity.
Trade tensions have eased, but lingering tariff and policy risks keep volatility elevated, while inflation remains above target in many economies. The US Federal Reserve cut rates again in December, but there is substantial uncertainty about the course of rates into 2026 amid leadership change.
Meanwhile, with inflation stable near 2%, the European Central Bank is set to keep rates on hold for an extended period. Such policy divergence and structural shifts will create selective opportunities and risks for investors.
Infrastructure
The Aberdeen Private Markets Solutions team House View is positive on global infrastructure, particularly transport, utilities, renewable energy, specialised and social infrastructure.
Fundraising in the sector has gained momentum as robust valuations persist, with growing interest in core-plus strategies which give investors opportunity to gain exposure to digital infrastructure and energy transition assets.
These strategies tend to have a slightly higher return profile and have offered more predictable income streams. This reallocation towards assets with stronger growth prospects and resilience may signal a broader recalibration of valuations, reflecting investors’ higher return requirements in a more selective market environment.
Aberdeen forecasts a five-year internal rate of return (IRR) of 9-11% for core infrastructure strategies, and 12-15% for core-plus strategies.
Real estate
Aberdeen’s private markets team is broadly positive across real estate, with spreads versus short-dated government bonds remaining attractive and reinforcing selective investment opportunities. Low supply of future-fit assets continues to underpin modest real rental growth, though risks both upside and downside remain elevated.
Real estate is entering recovery with modest momentum and healthy fundamentals, though geopolitical and economic risks add uncertainty. Looser monetary policy supports a gradual improvement in returns, with long-term performance expected to favour core thematic sectors and high-quality assets amid the growing polarisation of return within sectors of real estate.
UK real estate delivered strong performance in Q3 2025, though investment volumes fell 13% YoY due to limited supply. US growth has slowed under tariff-driven inflation, but the outlook for apartments and data centres is improving.
Europe shows steady gains (6.2% annualised in June), supported by lower interest rates, while the recovery in APAC real estate recovery is mixed, with Australia and data centres in Singapore and Japan positioned for strength.
Within real estate, Aberdeen is positive on the hotel/leisure, residential, logistics and specialised sectors, targeting a 6-8% five-year IRR for core strategies and 10-15% five-year IRR for value-add strategies.
Private credit
Aberdeen’s Private Markets Solutions team is positive on certain sectors within global private credit, in particular the IT, healthcare and business services sectors, but is neutral on others, and negative in the consumer sector given persistent inflation and a weak labour market.
Regulation change and tighter bank lending has created strong demand for private credit, particularly in Europe where direct lending has seen a significant uptick. Sentiment remains strong given structural shifts like bank disintermediation and attractive buy-and-build strategies. However, the focus is on smaller deals targeting the lower mid-market to preserve returns, where spreads have held up better.
In the US, deal activity remains subdued as the ripple effects of tariff shocks and market volatility continue to weigh on transactions. Though underlying demand is robust as banks continue to retrench, providing opportunities for investors, particularly in special situations or opportunistic lending.
Aberdeen forecasts a five-year yield-to-maturity return target of around 8-12% for direct lending strategies, and around 6-8% for investment grade private credit strategies over the same period.
Private equity
Aberdeen has a positive but cautious outlook on private equity, with preferences for IT and healthcare, and a neutral view on the consumer sector, noting lingering macroeconomic risks.
With lower borrowing costs and improved market clarity, private equity deal activity rebounded strongly across the U.S. and Europe in Q3 2025 with deal values and volumes up from 2024 signalling renewed confidence and positioning 2025 as one of the strongest years in recent history.
Valuations have recovered from 2023 lows, with buyout EV/EBITDA multiples at 12x, near the 2024 peak and above historical norms. This is reflective of improved financing conditions and higher-quality deal flow.
For buyout strategies, Aberdeen forecasts a five-year IRR target of around 10-12%, with a target of around 12-15% for venture capital strategies.
While macro uncertainties such as inflation and tariffs remain, easing credit conditions support a cautiously optimistic outlook for continued momentum into 2026.
Dr Lulu Wang, Head of Private Markets Portfolio Research and Strategy, Private Market Solutions at Aberdeen Investments, adds: “As global growth cools and policy divergence reshapes capital flows, private markets stand out as a cornerstone for resilient portfolios, but a balanced approach is key. For example, in private credit, Aberdeen’s Private Markets Solutions team focus on smaller deals targeting the lower mid-market to preserve returns, where spreads have held up better.
“There are opportunities across private markets for investors seeking direct access to long-term themes and selective dislocation plays. This helps position investors to capture value and adds resilience to portfolios.”
