Key Takeaways
- • Mercer's Alternatives specialists are hosting a comprehensive session on May 20, 2026, focused on secondaries and co-investments as core strategies within volatile private markets and hedge fund environments.
- • Secondary investments and co-investments can mitigate the J-curve effect—the initial negative returns typical of early-stage private equity funds—while potentially unlocking higher risk-adjusted returns and reducing blind pool risk through greater visibility into underlying assets.
- • Secondaries market fundraising is projected to remain robust in 2026, with estimates ranging from $130–$145 billion (Campbell Lutyens) to $200+ billion (Evercore) expected to be raised over the next 12 months, driven by specialized funds and evergreen capital across private credit, infrastructure, and structured investments.
- • Secondary investments offer institutional investors enhanced diversification, specificity, and control over asset exposures compared to traditional blind pool commitments, making them increasingly attractive in environments characterized by interest rate volatility and public-private market convergence.
Summary
Mercer is positioning secondaries and co-investments as essential components of alternative investment portfolios in 2026, particularly as volatility persists across private markets and hedge fund strategies. The firm's May 20 webinar aims to provide institutional investors, family offices, and alternative asset managers with actionable strategies for navigating secondaries—a market segment that has evolved from a niche corner of private equity into a major liquidity and return-optimization vehicle.
The appeal of secondaries lies in their structural advantages. Unlike traditional blind pool commitments, secondary investments provide investors with visibility into underlying assets and mature portfolio companies, allowing for informed decision-making and greater control over exposures. More strategically, secondaries mitigate the J-curve effect, a fundamental challenge in private equity where early capital deployment often generates negative or flat returns before portfolio companies mature and generate gains. By acquiring established positions, secondary investors begin with a portfolio already further along its value creation timeline, potentially accelerating realized returns.
Co-investments—direct commitments alongside general partners into specific portfolio companies—offer complementary benefits by allowing investors to participate in high-conviction deals with reduced fees and greater transparency. Together, these strategies provide diversification across deal vintages and market cycles, a critical advantage given that interest rate volatility continues to reshape the private markets landscape.
Industry forecasts underscore robust demand for secondaries in 2026. Campbell Lutyens projects $130–$145 billion in secondaries fundraising, while Evercore estimates $200+ billion will be raised over the next 12 months. This growth reflects not only institutional capital seeking liquidity and returns but also the expansion of specialized secondaries funds and evergreen capital vehicles investing across private credit, infrastructure, and structured assets—segments historically underrepresented in traditional secondary strategies.
For sophisticated investors navigating volatile conditions, secondaries and co-investments represent a strategic shift toward actively managed, adaptable alternatives that offer greater control and visibility than conventional private equity commitments.
The appeal of secondaries lies in their structural advantages. Unlike traditional blind pool commitments, secondary investments provide investors with visibility into underlying assets and mature portfolio companies, allowing for informed decision-making and greater control over exposures. More strategically, secondaries mitigate the J-curve effect, a fundamental challenge in private equity where early capital deployment often generates negative or flat returns before portfolio companies mature and generate gains. By acquiring established positions, secondary investors begin with a portfolio already further along its value creation timeline, potentially accelerating realized returns.
Co-investments—direct commitments alongside general partners into specific portfolio companies—offer complementary benefits by allowing investors to participate in high-conviction deals with reduced fees and greater transparency. Together, these strategies provide diversification across deal vintages and market cycles, a critical advantage given that interest rate volatility continues to reshape the private markets landscape.
Industry forecasts underscore robust demand for secondaries in 2026. Campbell Lutyens projects $130–$145 billion in secondaries fundraising, while Evercore estimates $200+ billion will be raised over the next 12 months. This growth reflects not only institutional capital seeking liquidity and returns but also the expansion of specialized secondaries funds and evergreen capital vehicles investing across private credit, infrastructure, and structured assets—segments historically underrepresented in traditional secondary strategies.
For sophisticated investors navigating volatile conditions, secondaries and co-investments represent a strategic shift toward actively managed, adaptable alternatives that offer greater control and visibility than conventional private equity commitments.
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