A regular briefing for the alternative asset management industry.
Private capital – traditionally the disruptor of the finance world – has been disrupted. The last few years have tested the resilience and adaptability of alternative asset managers. Following a long period of steady growth, fundraising and dealmaking have been tough. According to PEI Group data, aggregate capital raised by private equity funds fell 17% to $735 billion in 2025 – the lowest full year total since 2020.
That turbulence is not yet over – 2026 will be another bumpy ride, driven in no small part by a Trump administration increasingly prepared to assert its authority in business and international affairs.
But the industry that emerges from this disruption will have significantly changed.
A key shift is more flexibility in investment strategies. That includes a big pivot on defence, and GPs looking at insurance platforms. We have seen innovation in deal and liquidity structures. Indeed, even if 2026 sees the exit backlog unblock, secondary transaction and continuation vehicle activity is unlikely to diminish.
In parallel, the diversification of the private capital investor base – so called "retailisation" – continues to gain significant traction globally. Driven in part by these themes, consolidation is also continuing apace.
As the industry changes, so does the legal, tax and regulatory environment. Some changes are a symptom of the industry's growth and maturity, while others are intended to nurture an industry that is increasingly seen by governments as a "partner for growth".
Each year, we publish a preview of upcoming changes for GPs and LPs. This year, in Insights '26, our specialists give their views on the six standout items, with links to more detailed analysis for those that want it.
So what are the 2026 headlines?
In the EU, there is a welcome move to lighten the regulatory load. Recently agreed changes to the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CS3D) will reduce their scope significantly, now biting only on larger businesses. The EU also wants to liberalise its securitisation regime – a measure that has the potential to be a powerful shot in the arm for European private credit strategies – and harmonise trade reporting, which will be welcomed by private markets firms subject to overlapping reporting regimes.
And even AIFMD II, which is definitely not all good news, contains some key simplifications for alternative asset managers – particularly around marketing notifications to local regulators, and restrictions on the ability of regulators to gold-plate the rules.
Similarly in the UK, there are promising indications that the government is listening to the industry. Some rough edges have been smoothed from revenue raising policies. "Pro-growth" changes look set to be made to a number of regulatory regimes ranging from UK AIFMD and client categorisation rules to national security deal notification and merger controls.
