Key Takeaways
- • Franklin Templeton Institute's 2026 Private Markets Outlook names private equity secondaries, commercial real estate debt, real estate, and infrastructure as its highest-conviction opportunities for the year ahead.
- • The firm argues secondaries offer liquidity to institutions still in need of it as exits pick up, with LP-led and GP-led transaction opportunities growing.
- • Franklin Templeton views direct lending spreads as compressed after most private credit flows went into direct lending, favoring asset-based finance and CRE debt instead, citing a 'wall of debt' scheduled for refinancing.
- • Real estate valuations have fallen sharply from their 2021 peak, with many properties trading below replacement cost; multi-family, industrial warehouse, and necessity retail are favored over office.
- • The firm expects greater dispersion of returns, making manager selection critical, and sees a valuation gap between capital deployed today and 2020-2023 vintages.
Summary
Franklin Templeton Institute released its 2026 Private Markets Outlook, identifying attractive opportunities across private markets as demand for private market solutions grows. Tony Davidow, Senior Alternatives Strategist at the Franklin Templeton Institute, said the firm sees compelling opportunities in 2026 and beyond, while acknowledging that some sectors may face headwinds. The firm's highest-conviction picks are private equity secondaries, commercial real estate debt, real estate, and infrastructure.
In private equity, the firm notes that exits have begun to pick up, but many institutions still need liquidity and some have established formal secondary programs. Franklin Templeton sees growing opportunities in both LP-led and GP-led transactions, and says secondaries can shorten the J-curve and time to distribution while providing diversification across vintage, manager, geography, and industry.
In private credit, the outlook says most global flows have gone into direct lending, compressing spreads and raising concerns. The firm sees more attractive opportunities in asset-based finance and commercial real estate debt, and calls CRE debt one of the most compelling opportunities given the substantial wall of debt scheduled for refinancing in the years ahead.
Real estate valuations have fallen sharply from their 2021 peak, driven by sustained headwinds and uncertainty in the office sector, with many properties now available below replacement cost. Franklin Templeton believes multi-family, industrial warehouse, necessity retail, and other sectors present compelling opportunities despite persistent office concerns. Infrastructure is described as an emerging opportunity, with thematic preferences for digital infrastructure (data centers, fiber, cell towers), decarbonization, deglobalization, and demographics.
Overall, the institute expects manager selection to be critical, anticipating wider dispersion of returns, and sees a significant difference in valuation and negotiation dynamics for capital deployed today compared with 2020-2023 vintages. Dave Donahoo, Head of Americas, Wealth Management Alternatives, said the firm has expanded its presence across EMEA, APAC, LatAm, and Canada and broadened its product shelf and distribution resources. Franklin Resources (NYSE: BEN) issued the release through Business Wire.
In private equity, the firm notes that exits have begun to pick up, but many institutions still need liquidity and some have established formal secondary programs. Franklin Templeton sees growing opportunities in both LP-led and GP-led transactions, and says secondaries can shorten the J-curve and time to distribution while providing diversification across vintage, manager, geography, and industry.
In private credit, the outlook says most global flows have gone into direct lending, compressing spreads and raising concerns. The firm sees more attractive opportunities in asset-based finance and commercial real estate debt, and calls CRE debt one of the most compelling opportunities given the substantial wall of debt scheduled for refinancing in the years ahead.
Real estate valuations have fallen sharply from their 2021 peak, driven by sustained headwinds and uncertainty in the office sector, with many properties now available below replacement cost. Franklin Templeton believes multi-family, industrial warehouse, necessity retail, and other sectors present compelling opportunities despite persistent office concerns. Infrastructure is described as an emerging opportunity, with thematic preferences for digital infrastructure (data centers, fiber, cell towers), decarbonization, deglobalization, and demographics.
Overall, the institute expects manager selection to be critical, anticipating wider dispersion of returns, and sees a significant difference in valuation and negotiation dynamics for capital deployed today compared with 2020-2023 vintages. Dave Donahoo, Head of Americas, Wealth Management Alternatives, said the firm has expanded its presence across EMEA, APAC, LatAm, and Canada and broadened its product shelf and distribution resources. Franklin Resources (NYSE: BEN) issued the release through Business Wire.
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