Asset Allocation 2026 – Private Equity

Private equity starts 2026 on a cautiously optimistic note following a transitional 2024–2025 period marked by low exits and limited capital. Exit activity has begun to improve, supporting liquidity and reinvestment capacity—yet pressures remain, including longer hold periods, slower distributions, and LPs increasingly focused on liquidity.

The macro backdrop is mixed. While growth is expected to continue at a more moderate pace and recession risk appears low, private equity must operate with a structurally higher cost of capital than in the 2010s. With valuations elevated and the public-to-private gap narrower than normal, the report highlights that future returns will need to come more from earnings growth and operational improvement than from multiple expansion. This environment increases dispersion and makes manager selection and value-creation capabilities more decisive.

Our 2026 positioning reflects this setup: selective exposure to buyouts and growth/venture, with an overweight to secondaries and co-investments. The report also highlights the growing role of evergreen private market vehicles, including their structural advantages (flexible subscriptions/redemptions and more consistent exposure) and the importance of understanding liquidity features such as gates, redemption limits, and valuation lags.

Read the full report: HMC Capital Asset Allocation Report 2026 – Private Equity.

HMC Asset Allocation 2026 series:

Read the first report: HMC Capital Asset Allocation Report 2026 – Real Assets.

Read the second report:  HMC Capital Asset Allocation Report 2026 – Private Debt.

Read the third report: HMC Capital Asset Allocation Report 2026 – Private Equity.

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