The Franklin Templeton Institute’s private markets outlook for 2026 focuses on macro drivers for private equity prospects, with the key themes grouped under three headings: broadening, steepening and weakening. This is overarched by a volatile investment landscape.
Broadening opportunities worldwide are arising from attractive profits growth outside the US and global monetary policy easing, according to the report. Steepening yield curves, meanwhile, will produce a weakening dollar. Emerging-market debt and commodity prices are some of the likely beneficiaries.
Private assets and alternatives will grow relatively more attractive, the report says, as falling cash yields and steeper yield curves drive investors to seek other options. Better valuations and profitability are also likely to make European and emerging-markets equities increasingly attractive versus topped-out US opportunities.
This will be a very different environment from the high points of 2021, a year that the report describes as exhibiting “incredible” demand for private equity. It quotes a 2025 Preqin survey where some 45% of institutional respondents said they were overweight private equity versus about 30% overweight on real estate, private debt and infrastructure.
Unsurprisingly, it recommends secondaries as one highly attractive option for private markets as investors unwind and rearrange those overallocations.
Infrastructure is another favourite. Not traditional transport and logistics but infrastructure supporting digital transformation, decarbonisation, deglobalisation and demographics, such as data centres, fibre optics and cell towers.
Real estate and real estate debt are also favoured. According to the report, commercial real estate is the most attractive private debt opportunity, citing data indicating that approximately $2.6 trillion of real estate debt will need refinancing by 2029.
It also advocates private markets as a buffer against public markets volatility in order to build longer-term portfolio resilience. This comes with a strong recommendation for diversification: across investment stages, earning profiles, vintages, strategies and asset sub-classes.
Some developments certainly bear out the predictions in the report. On January 20, the ICE US Dollar Index fell around 1%, while 30-year Treasury yields spiked to 4.92%, driven by President Donald Trump’s remarks about Greenland. News headlines warned of “Sell America” trades across asset classes.
These developments point up one of the key conclusions from Franklin Templeton Institute. “Volatility has become a defining feature of today’s investment landscape, from geopolitical risks to changing trade policies and social unrest,” the report says. Investors should be prepared.
