Due to the combined impact of high stock valuations and the elevated cost of financing, we remain neutral on how we’re allocating risk within our alternatives portfolio. Looking ahead to 2026, we’re favoring private debt, real assets, and hedged strategies versus private equity. Here are key takeaways from each asset class. (Read the complete Alternative opportunities 2026 outlook.)
We’re overweight direct lending as we believe all-in yields remain attractive for senior positioning, especially in the core middle market. Significant private equity dry powder and a backlog of exits point to a continuation of improved deal activity. We’re also overweight real estate credit, given high levels of current income potential and a recovering real estate equity market.
|
Overall |
Valuations |
Fundamentals |
Secular trend |
|---|---|---|---|---|
Direct lending |
Overweight |
Neutral |
Neutral |
Attractive |
Real asset credit |
Overweight |
Attractive |
Neutral |
Attractive |
Alternative credit |
Overweight |
Neutral |
Neutral |
Attractive |
We remain underweight private equity. Beneath the surface, we’re beginning to normalize our views on leveraged buyouts versus growth strategies. The reopening of capital markets and aging of dry powder led to a rapid deployment of PE capital in the second half of 2025.
|
Overall |
Valuations |
Fundamentals |
Secular trend |
|---|---|---|---|---|
Private equity |
Underweight |
Unattractive |
Neutral |
Neutral |
We’re slightly increasing our exposure to real estate as our conviction that valuations have bottomed is beginning to firm. We’re convinced that the recovery in the real estate equity market is well underway. Challenges such as tight cap rates and potential weakness in certain sectors persist, however.
|
Overall |
Valuations |
Fundamentals |
Secular trend |
|---|---|---|---|---|
Real estate |
Overweight |
Attractive |
Neutral |
Neutral |
Infrastructure |
Overweight |
Unattractive |
Attractive |
Attractive |
Hedge funds with lower betas to market risk may be a valuable alternative within a portfolio, in our view. We continue to find hedge funds attractive; however, it’s moderating as capital markets activity picks up and the outlook for stock markets improves.
|
Overall |
Valuations |
Fundamentals |
Secular trend |
|---|---|---|---|---|
Event-driven and arbitrage |
Overweight |
Neutral |
Neutral |
Attractive |
Systematic trend |
Overweight |
Neutral |
Neutral |
Attractive |
(Read the complete Alternative opportunities 2026 outlook.)
Our scale, combined with the breadth and depth of our offerings, means we have the flexibility to meet your needs as markets evolve.
Solana is a high-performance blockchain infrastructure platform designed for scalability, fast transaction processing, low fees, and smart contract support.
Its history of attractive long-term return potential and income potential reinforces private real estate's place in today's portfolios.
Easing of lending standards is expected to boost commercial real estate (CRE) loan originations and broaden opportunities within CRE equity and credit.
Important information
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Dry powder refers to liquid assets or cash reserves that can be quickly accessed for investments or emergencies.
Cap rates indicates the rate of return that is expected to be generated on a real estate investment property.
Information is provided as of Feb. 23, 2026, and sourced from Invesco unless otherwise noted.
Arbitrage is the strategy of taking advantage of price differences in different markets for the same asset
Beta measures a stock's price volatility relative to the overall market. It is an important factor for investors to check when they want to choose a stock that matches their tolerance for risk.
A spread in finance is the difference between two related values, such as prices, rates, or yields.
Alternative products typically hold more non-traditional investments and employ more complex trading strategies, including hedging and leveraging through derivatives, short selling, and opportunistic strategies that change with market conditions. Investors considering alternatives should be aware of their unique characteristics and additional risks from the strategies they use. Like all investments, performance will fluctuate. You can lose money.
Event-driven strategies refer to an investment strategy in which an institutional investor attempts to profit from a stock mispricing that may occur during or after a corporate event.
Trend following strategy is an investment or trading approach that aims to profit by identifying and riding sustained price trends in various markets
Investments in real estate-related instruments may be affected by economic, legal, or environmental factors that affect property values, rents, or occupancies of real estate. Real estate companies, including REITs or similar structures, tend to be small- and mid-cap companies, and their shares may be more volatile and less liquid.
The opinions referenced above are those of the author as of Feb. 23, 2026. These comments should not be construed as recommendations, but as an illustration of broader themes. Forward-looking statements are not guarantees of future results. They involve risks, uncertainties, and assumptions; there can be no assurance that actual results will not differ materially from expectations.
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