Reflections on the 2026 Alternatives Investment Conference
Building an Alternatives Portfolio
Farshid Asl, global head, strategic and quantitative asset allocation, Wealth Management Investment Strategy Group (ISG), Goldman Sachs, shared strategies for incorporating alternative investments into an overall portfolio strategy. In its model portfolios, ISG allocates between 10% and 30% to alternatives, although the exact allocation will always be based on an individual’s needs, goals, risk, and time horizon. According to Asl, achieving a target portfolio allocation of 20% to 30% to private assets that is diversified across vintage years can take 6 to 10 years—with secondaries offering opportunities to accelerate this timeline.
Manager selection is key to maximizing growth potential, given the wide dispersion in returns between top and bottom quartile managers. It's also important to have a commitment plan and strategy for optimally parking capital in anticipation of capital calls. In addition, Asl noted that alternatives can be a source of diversification in an investor’s portfolio. “When you invest in both private equity and public equity, you are actually investing across a company’s full life cycle. If you are investing only in public equity, you are only investing in the second half of life,” he said.
The Private Market Landscape
Private Equity: Steadier Markets
We seem to be entering a more supportive M&A environment. Valuations seem to be recalibrating and we’re in a fairer, steadier market, according to Dean Mihas, co-CEO and managing director of GTCR.
Private Credit: Navigating Unique Market Dynamics
Today’s market dynamics are creating a unique and favorable environment for private credit. Victor Khosla, founder and chief investment officer, SVP, noted that high-yield default rates have hovered around 6%, a trend he believes will continue as amended and extended credit structures begin to mature. As companies look to restructure maturing debt, this provides opportunities for restructurings as well as for private credit to provide creative and bespoke lending solutions.
Speakers highlighted trends in direct and opportunistic lending. “We find there are areas where it’s possible to create real alpha in direct lending through origination, underwriting discipline, relationships, and scale,” said James Reynolds, global co-head, Private Credit, Asset Management, Goldman Sachs. He also noted differences between global markets. “The US market over the past six years has been influenced by the advent of business development companies and a lot of retail flows, allowing direct lending to speak for bigger financing sizes, but putting a bit of pressure on pricing and capital structures. That phenomenon doesn't exist to the same extent in Europe and certainly doesn't exist in Asia,” he said.
Khosla said the pipeline for opportunistic credit “has exploded over the course of the last couple of years, particularly the last three, four months.” To take advantage of that pipeline, you need to be more than just a “paper investor,” you need to source deals directly and be able to add value in the “the business or leasing of the airplane you have taken over.” For Khosla, having the resources to deliver this type of investing has helped drive consistent returns over the past decades and reduced correlation of performance to rate cycles.
Secondaries: Unlocking Liquidity & Value
The secondaries market has seen record-breaking volumes, exceeding $200 billion in 2025 and continuing its growth trajectory into 2026. This growth has been driven by an expansion in primary private capital, the rise of continuation vehicles, and an uptick in distributions from big allocators like pension plans, sovereign wealth funds, and endowments.
Secondaries are benefitting from current trends. The market is seeing “dramatic and desperately needed liquidity,” said Hans Swildens, founder and CEO, Industry Ventures, stemming from new artificial intelligence businesses and established companies that never received liquidity.
Hedge Funds: Finding Returns in a Constructive Environment
Collectively, hedge funds have returned about 9.4% since 2020 through June 2025, compared to 6.6% for a basic 60/40 portfolio.1 Brian Friedman, head of co-investment and senior portfolio manager, Brevan Howard, shared his firm’s strategies for generating returns for clients. On the macro environment, they have a positive outlook for equity valuations due to easy financial conditions and continued demand driven by: 1) governments of large developed market economies running significant deficits; 2) inflation staying well above target for five years while central banks globally have cut rates to levels consistent with neutral; and 3) the capital-intensive build out of the AI ecosystem.
In the fixed income market, low volatility has meant “there’s not a lot of alpha to be gained,” said Friedman. Instead, he is deploying hedging strategies against potential selloffs through positions that will benefit if the yield curve steepens. Shorting the dollar is a similar hedge in the currency market for a case where geopolitical shifts cause investors to lose faith in the US.
In the commodities market, Friedman noted there has been heavy demand from the trillions of dollars invested by governments and major companies to fund reshoring supply chains, manufacturing, defense, AI innovations, and infrastructure build out. According to Friedman, there has been a “prolonged period where you had no investment into supply or capacity of [commodities], and now you have a major step up in the demand for them, and it will take years to generate the supply.”
1.
Proprietary estimates compiled by the Prime Insights & Analytics team based
on data available through Goldman Sachs Marquee Connect, With Intelligence/HFM,
eVestment, and other data reported to the Goldman Sachs Capital Introduction
team. Past performance does not predict future returns. Returns
may increase or decrease as a result of currency fluctuations.
Alternative investments are suitable only for sophisticated investors for whom
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