In the 2010s, private equity returns were largely driven by multiple expansion and financial leverage — both of which are likely to be structurally impaired going forward. The 2026–2035 decade requires a return architecture to be built on several pillars: income yield (contractual coupons, regulated returns, rental income), real earnings and cash flow growth (operational value creation, sector tailwinds), and selective illiquidity and complexity premia over liquid equivalents.
Key takeaways
- For private and alternative assets, the new regime highlighted throughout our 2026 CMA has two critical implications: first, higher nominal discount rates structurally cap valuation multiples, compressing the gains from the multiple expansion that defined the previous decades; and second, income and operational value creation remain at the driving seat of return generation.
- Headline returns remain attractive versus liquid counterparts, but illiquidity and complexity premia are less generous than a decade ago, raising the bar for manager selection and vintage discipline.
- Starting from this year, we have decided to harmonise the returns of private and alternative assets moving them to a net of fees standard to make them comparable with liquid assets.
You can now read the full whitepaper at the link below
