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Staying Focused on the Long Term in Private Markets

May 7, 2026

By Joan Solotar

A moment like the present – when the noise is loud and sentiment shifts quickly – tends to pull investors back to revisit why they allocate to private markets in the first place, and what roles these investments play in a portfolio through cycles.

May 7, 2026

By Joan Solotar

Private credit is the focus in the headlines, and we think its core characteristics are still intact: contractual income and a record of outperforming comparable public credit, particularly when delivered conservatively in the hands of skilled and experienced managers. [ 1 ] Periods of market stress often test confidence, but they rarely change longer-term expected outcomes.

As with any form of lending, we believe private credit portfolios will experience some level of defaults over time, normalizing as investments mature and move through the credit cycle. This is expected. What matters is how portfolios are constructed, how much leverage is employed, who the borrowers are and how the lenders manage through challenges. From that perspective, we believe recent rhetoric overstates the potential impact on returns relative to historical experience.

A simple thought experiment helps put this in context. Assume a highly adverse scenario – a 10% default rate, which is worse than experienced during the global financial crisis. Couple that with a loss recovery rate of just 50%, and assume the losses occur over the next 3 years. Even in this extreme scenario, our analysis suggests a well-managed portfolio with modest leverage and strong loan-to-value discipline is expected to experience only a few points of annual return impact. [ 2 ] There are other factors to consider of course, such as credit spreads, which can widen and cause mark-to-market value reductions as well. But the analysis belies the doom and gloom often written. Interestingly, Backstone has continued to see large institutional investors allocating to private credit throughout the recent noise. [ 3 ]

Recent market conversations have surfaced a number of pervasive myths or misconceptions that I think are worth addressing. One very important misperception is that private credit lacks transparency. In practice, the fund structures used by many individual investors are regulated entities with monthly portfolio reporting offering greater transparency than is typically available from traditional bank loan books. Another myth is that stress in private credit could resemble the global financial crisis. But we believe today’s environment bears little resemblance to 2007. Importantly, direct lending is 30 times less levered than banks were in that period. [ 4 ] A third myth is that individual investor outflows from private credit create a systemic risk. In reality, individuals today represent less than a quarter of private credit. [ 5 ]

In short, headline sentiment and fundamentals have temporarily diverged.

More broadly, we believe the structural advantages of private markets remain intact. Private investments are designed with long duration capital and liquidity management tools intended to help avoid forced selling during periods of market stress. [ 6 ] Historically, the ability to resist selling into negative sentiment and having greater control over exit timing have been an important contributor to long term performance.

Joan Solotar, Global Head of Private Wealth Solutions

“Private credit’s core characteristics are intact: contractual income and a record of outperforming comparable public credit, particularly when delivered conservatively in the hands of skilled and experienced managers.”

Joan Solotar

This helps explain why institutional investors such as pension funds, endowments, and sovereign wealth funds have built significant allocations to private markets over time. In many cases, these investors allocate roughly a third of their portfolios to private assets. [ 7 ] By comparison, individuals today typically allocate in the low single digits if they allocate at all, and in retirement accounts the number is typically zero. [ 8 ] We see this gap as a long runway for continued adoption.

Our conversations with financial advisors around the world emphasize how private investments in companies, real estate, infrastructure and credit can complement traditional stocks and bonds. These investments can offer access to additional sources of return, contractual income streams, and assets tied directly to real economic activity, all of which can play a meaningful role in diversified, long-term portfolios. [ 9 ]

Blackstone Private Wealth is the leading provider of private market solutions for individual investors. [ 10 ] Our role is to not only to deliver investment solutions but to help advisors and their clients understand what they own, why they own it and how it behaves – especially during uncertain periods. Our scale and long history of investing provide real-time perspectives across markets, cycles and geographies. We believe education, transparency and support are inseparable from the investment results we aim to deliver.

Looking ahead, we expect continued innovation in how private markets are accessed. We believe broader availability, expanding global participation, and more thoughtful integration into retirement portfolios all represent important next chapters.

While market cycles will continue to fluctuate, the objective is constant: building resilient portfolios that can potentially generate income, pursue long term growth, and avoid making permanent decisions based on temporary noise.

We are grateful for your continued partnership and the trust you place in Blackstone. As always, we remain committed to providing institutional quality solutions, clear insights and practical guidance to help you and your clients invest with confidence.

Joan Solotar, Global Head of Private Wealth Solutions

“Private credit’s core characteristics are intact: contractual income and a record of outperforming comparable public credit, particularly when delivered conservatively in the hands of skilled and experienced managers.”

Joan Solotar

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Past performance does not predict future returns. There can be no assurance that any Blackstone fund or investment will achieve its objectives or avoid substantial losses.  Any investment involves a high degree of risk and you may not get back the amount originally invested. There is no guarantee the trends depicted herein will continue or will not reverse. Diversification does not ensure a profit or protect against losses. Investing involves risk, including loss of capital.

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Trends. There can be no assurances that any of the trends described herein will continue or will not reverse. Past events and trends do not imply, predict or guarantee, and are not necessarily indicative of, future events or results.

Morningstar, Cliffwater. As of December 31, 2025. Based on comparison of the following indices: Cliffwater Direct Lending Index for Direct Lending, Bloomberg US Corporate High Yield for US High Yield, Bloomberg US Aggregate Bond Index for US Investment Grade Bonds, Morningstar LSTA US Leveraged Loan Index for US Leveraged Loans, Bloomberg U.S. Intermediate Treasury Index for Treasuries, Bloomberg U.S. Treasury Bill 1-3 Month Index for 1-3 Month T-Bill. Past performance does not predict future returns.
Blackstone estimates, as of April 30, 2026. This example is hypothetical in nature, is not a guarantee of future performance and is presented for illustrative purposes only. Actual events and conditions may differ materially from the assumptions used to establish these figures and there is no guarantee that the assumptions will be applicable to the fund’s investments.
“No fear of ‘cockroaches’? Private credit funds raise billions as investors look past warnings,” CNBC, January 19, 2026.
Financial Markets Regulation, GAO report, published July 2009 and Blackstone Credit & Insurance views for typical direct lending vehicle.
Allocations to private credit by investor type in 2024, published in “Financing the Economy 2025,” Alternative Credit Council, AIMA and Houlihan Lokey.
Illiquidity and Variable Valuation. There is no organized secondary market for investors’ interests in private investments and none is expected to develop. Further, the valuation of private investments will be difficult, may be based on imperfect information, and is subject to inherent uncertainties. The resulting values may differ from values that would have been determined had a ready market existed for such investments, from values placed on such investments by other investors, and from prices at which such investments may ultimately be sold.
Preqin, “Fundraising from US Pensions: A Guide to Raising Capital,” 2024; UBS, “Global Family Office Report,” 2024; National Association of College and University Business Officers, “2023 NACUBO-TIAA Study of Endowments,” 2023, latest publicly available.
Preqin, “Fundraising from US Pensions: A Guide to Raising Capital,” 2024; UBS, “Global Family Office Report,” 2024; National Association of College and University Business Officers, “2023 NACUBO-TIAA Study of Endowments,” 2023. DC Plan AUM, ICI, 2025. Private Markets Exposure, NASRA Public Funds Survey, 2024, and The Council of Economic Advisors, 2024.
Diversification does not ensure a profit or protect against losses.
Blackstone data as of December 31, 2025. Market data sourced from public filings and fund websites, as of December 31, 2025, and is latest available for the peer set. Based on Blackstone’s analysis of publicly available data of the total net asset value (NAV) of alternative investment firms that offer solutions for individual (non-institutional) investors to invest in private equity, real estate, infrastructure, and private credit through U.S.-domiciled semi-liquid, perpetual private market funds (including non-traded REITs and non-traded BDCs). Blackstone’s analysis compares the total NAV as of December 31, 2025 for Blackstone’s non-traded REIT, non-traded BDC products, infrastructure and private equity vehicles for individual investors, to the total NAV as of December 31, 2025 of comparable products offered by alternative investment firms. This selection of alternative investment firms for comparison may not be representative of all in the category or sector. Private placement REIT and BDC products have been excluded from the dataset. Investing involves risks, including loss of capital.

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