At the beginning of the year, the savants at JP Morgan Wealth Management offered their thoughts on three themes driving alternatives in 2026: The next phase of artificial intelligence (AI); the quest for portfolio durability; and the evolving liquidity of private markets.

As we approach the home stretch of the year, all three seem to be well-founded, but with the benefit that hindsight brings, some added nuance: AI’s dual-faceted nature of being both an investment opportunity and a source of disruption has become more pronounced; investors have become increasingly selective about where they are willing to take private market risks; and secondary markets have moved further towards the center of the alternatives industry. 

AI moves beyond technology

Until recently, much of the investment discussion around AI centered on the companies developing the technology; venture capital funds put more than $250bn, more than half of all VC investments last year, into AI companies.  

As the year has progressed, however, the conversation has broadened considerably.

The AI buildout is creating demand for the physical infrastructure required to support it, particularly power, data centers, transmission infrastructure and other forms of real assets. This was one of the areas J.P. Morgan highlighted in January, arguing that constraints around power, energy and other resources could become limiting factors for further AI expansion.

Private infrastructure investors are particularly well positioned to participate here because the capital requirements associated with AI extend well beyond the technology companies themselves; it’s almost as if J.P.Morgan foresaw NVIDIA’s remarkable deal with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR to “establish independent financing platforms designed to mobilize over $500 billion of third-party capital to support the buildout of AI infrastructure over time”.

At the same time, the implications of AI have continued to spread into existing alternative investment sectors. Private equity firms are assessing how AI could alter their competitive position, cost structures and growth prospects of portfolio companies, while equity hedge funds in particular have been able to exploit significant dispersion between companies perceived to be AI beneficiaries and those facing disruption (or not).

The bottom line is that for alternative investment fund managers, the question is increasingly not simply whether to invest in AI, but how AI changes the value of businesses, infrastructure and assets across the portfolio, for better or worse. 

Selectivity replaces the search for exposure

The second major theme identified by J.P. Morgan has been less about allocating to alternatives in general and more about identifying which of them deserve investor’s capital.

It’s important to point out here that J.P. Morgan’s paper is focused on the wealth management cohort, which has been increasingly turning to alternatives in recent years (institutions, of course, have been allocating heavily for decades).

The firm favoured core private equity, infrastructure, hedge funds and selected areas of credit as potential sources of differentiated returns but cautioned that “Careful manager selection will be critical across the board as dispersion widens.”

The first half of the year shows how difficult that task is. US private equity exits in the second quarter were down almost half, for example. While there are potential reasons – valuations of software portfolio companies during the Covid-19 pandemic being, with the benefit of hindsight, too high, has led to a price divergence between what other sponsors are prepared to pay and what portco owners want to sell at. We would not be surprised to see more continuation vehicles raised in the next 12-18 months as buyout firms look to hold onto assets they consider to be undervalued by the broader market.

And manager selection in private credit and its almost bewildering array of sub-categories has again come to front of mind for investors. The asset class has become an important source of corporate financing, but the rapid growth of the market has also brought greater scrutiny of underwriting standards, portfolio quality, liquidity and the relationship between private credit and the wider financial system.

“Portfolio durability” seems to be less about finding assets that are less correlated with public markets and more about finding managers and strategies capable of navigating a market in which the dispersion between winners and losers is becoming increasingly significant (and will likely continue to do so, thanks, or no thanks, to AI). 

Private-market liquidity becomes structural

If there is one area in which the first half of 2026 has arguably exceeded expectations, it is the development of private-market liquidity.

J.P. Morgan identified the growing importance of evergreen funds, continuation vehicles and secondary markets at the beginning of the year. It noted that approximately 20% of alternative assets under supervision in its private bank were already held in evergreen vehicles, while continuation vehicles represented nearly 20% of global private equity exits.

Since then, the secondary market has continued to break records.

Campbell Lutyens 1H 2026 Secondary Market Flash Report estimates that private-market secondary transaction volume reached $120bn in the first half of 2026, putting the market on course for another record year. Lazard's estimate is even higher, putting first-half secondary volume at approximately $124 billion, up 28% year-on-year.  

That secondaries have continued to grow in recent years suggests that this corner of the private markets industry is not a tactical asset allocation designed to capture alpha from a difficult exit environment but an asset allocation sleeve in its own right. As funds age, investors need more ways to rebalance portfolios, realise value and manage exposure and continuation vehicles, LP-led transactions, GP-led solutions and evergreen structures are therefore becoming an increasingly permanent part of the private markets architecture, particularly in wealth management, where investors prefer the optionality that open-ended structures offer.

AI is still likely to dominate

You just can’t ignore it. While the exit environment for private equity might be tough at the moment, and private credit might be enduring some teething troubles, while we don’t know the future, cyclicality is a thing, and we have seen this movie before, to a certain extent.

But we haven’t seen the AI one. It’s like we’re in a decade-long Netflix show and we’ve only just finished season one. Some will win, and some will lose, but a year from now, whether it’s us writing a ‘year so far’ article or someone else, we doubt AI will be far from the conversation. 

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