Private equity in 2026: how it’s performing, and why it can be a great addition to a portfolio
Private equity gets overcomplicated in the way people talk about it. In plain terms, it’s investing in businesses that are not listed on the stock market, usually with the goal of improving them and selling them later at a higher value.
Public equities are more like owning a slice of a company and watching the market decide what it’s worth day to day. Private equity is closer to owning a bigger stake and having a real plan to build value over time. That difference is the main reason it can earn its place in a portfolio.
So how is private equity actually performing?
One of the clearest institutional benchmarks is the Cambridge Associates US Private Equity Index, which tracks fund-level private equity performance net of fees. In their First Half 2025 commentary, Cambridge reported that US private equity returned 3.9% in the first half of 2025, with growth equity ahead of buyouts over that period.
That’s the short-term picture. It has not been a straight line up recently, and that’s normal in a higher-rate world where valuations are more sensitive and exits can take longer. What matters is what happens when you zoom out. Over longer periods, the same benchmark commentary shows private equity has historically delivered strong annualised returns over multi-year horizons.
At the activity level, deal-making has also looked healthier than people think. KPMG reported global private equity investment of about $537.1bn in Q3 2025, and around $1.5tn across the first three quarters of 2025, with deal value supported by a focus on larger, higher-quality transactions.
Why private equity can be a great addition to your portfolio?
Most people like the idea of private equity for one reason, even if they don’t say it like this: it can add a different return engine to your portfolio.
Here are the big reasons it tends to make sense for the right investor.
It can add a different driver of returns than public markets
Public markets move on sentiment, flows, headlines, and interest-rate expectations. Private equity returns are more linked to what’s happening inside the business: revenue growth, margin improvement, operational efficiency, better pricing, better leadership, smarter capital allocation. It’s not detached from the economy, but the levers are different.
It can improve diversification
Private equity portfolios don’t look like stock market indices. They can lean into different sectors, different company sizes, and different parts of the economy. Cambridge’s commentary also shows meaningful differences in sector weights versus public benchmarks, which is one reason it can behave differently over time.
A long time horizon can work in your favour
Yes, private equity is illiquid. You can’t sell it tomorrow. But that illiquidity is also what allows managers to make long-term decisions without being forced to optimise for the next quarter.
This is also where the concept of an illiquidity premium comes from: investors often expect to be compensated for tying capital up for longer. The idea is widely discussed across institutional and asset manager research.
It can sit nicely alongside private credit
A lot of sophisticated portfolios pair private equity with private credit. Equity gives you upside and business growth exposure. Credit gives you contractual income and a higher position in the capital structure. Together, it can create a more balanced private markets allocation.
The honest trade-offs
Private equity isn’t magic and it isn’t for money you might need next year. The main trade-offs are simple:
It’s long-term. Capital is typically committed for years.
Cash flows can be uneven. There are capital calls and distributions, and the timing is not predictable.
Results vary a lot between managers. This is not an asset class where “average is fine” if you care about outcomes.
Pricing is updated less frequently than public markets, so it can look smoother, but that does not mean risk disappears.
How this connects to what we do at Hampton Gate Wealth?
This is where Hampton Gate Wealth fits in.
We don’t manage assets and we don’t provide investment advice. What we do is make targeted introductions to third-party private market providers and opportunities for qualified investors, and we keep the process clean and professional.
In private equity specifically, that usually means helping clients access the right managers and strategies for their objectives, filtering out noise, and getting them into the right conversations faster.
A simple test for whether private equity belongs in your portfolio
Private equity tends to make more sense if you can say yes to most of these:
You can commit capital for 7 to 10 years without needing quick liquidity
You are comfortable with uneven cash flows
You want exposure beyond public markets
You want a return profile that is driven more by business outcomes than daily market mood
