Private markets are becoming the new core allocation

As private markets continue to blur the once-rigid lines between “traditional” and “alternative” investing, financial advisors are rethinking how they construct portfolios heading into 2026. Few have had a closer view of that evolution than Brendan McCurdy, managing director and global head of investment strategy at Ares Wealth Management Solutions, who says the industry’s vocabulary hasn’t kept up with its behavior.

In a year when “alternatives” became a catchall term, McCurdy argues the real story is the steady, methodical integration of private equity, private credit, and real assets into core asset allocations — and the growing demand among advisors for education and tools that help them deploy those strategies with precision. InvestmentNews caught up with McCurdy during Schwab IMPACT 2025 to learn more about his perspective.

This Q&A has been edited for brevity and clarity.

InvestmentNews: The term "alternatives" seems to have taken a life of its own in 2025. What are your reflections on the year, and what do you think 2026 holds for the investment class?  

Brendan McCurdy: I generally use “private markets” over “alternatives” unless it’s being used to describe crypto currency and trading strategies like hedge funds or CTAs.

Equity is equity. Debt is debt. Whether it trades on an exchange or not does not make it “alternative” — in fact, many companies these days move in and out of the public and private markets on a regular basis.

As far as private markets in 2026, I expect continued growth as advisors methodically work private markets further into their asset allocations strategy.  

How has the financial advisor and RIA community’s understanding of private markets evolved in recent years? How has Ares’ focus on advisor education evolved? 

McCurdy: It has come a long way.

For the small portion of FAs (RIA or otherwise) who were using private markets, they were doing it largely on a deal-by-deal basis. This was generally through 10-year lock-up drawdown funds and representing a small portion of their portfolio, which they treated as a separate bucket. Increasingly, FAs integrate private equity into their equity allocation and private debt into their debt/fixed income allocations. So, if they were running a 60/40, they still have a 60/40.

Today, some of those 60 and 40 are private markets. And increasingly they get that private markets exposure through semi-liquid evergreen funds that can provide greater control as an allocator to get to their target weights and stay there as the strategy warrants.  

At Ares, our focus on advisor education has been unwavering the past four years — with a global team called "Investment Strategy" that focuses purely on advisor education and resourcing. This takes the form of written pieces, live events and continuing education webinars, and portfolio analysis tools, where we collaborate with advisors that want to dive deeper into private markets allocation and stress test their clients’ portfolios. Advisors have expressed their appreciation for these efforts, particularly as we seek to answer everyday questions head-on and continue developing our individualized approach on portfolio construction support.  

What market forces and trends will be on your radar next year, particularly with respect to private credit?  

McCurdy: I would watch a few trends:  

1. The “decade of private infrastructure” is just heating up, particularly in electricity generation, digital, and communications. We see a continued supply-demand imbalance in favor of investors.  
2. Real estate has returned to relevance and continues its recovery. We have seen institutional investors reallocate meaningfully this year, and we’re trying to educate FAs in this opportunity while we think the recovery is still under way.  
3. With respect to private credit specifically, I expect further performance differentiation between more experienced and scaled managers and newer entrants with less robust diligence and portfolio management capabilities, with the top performers likely continuing to deliver stronger yield on a steady borrower base and loans.   

How are you thinking about the opportunity in real assets – including industrial real estate and infrastructure – as part of an investor’s allocation?  

McCurdy: In our hypothetical in-house model portfolios, private equity typically lives in more aggressive portfolios, and private credit is usually weighted more heavily for income-focused investors. However, the historically strong risk-adjusted returns of real assets, combined with their diversification potential and inflation hedging, find them heavily weighted in portfolios across the risk spectrum.  

For instance, in our hypothetical in-house model portfolios private real estate takes as much as 12% of the most aggressive portfolio growing slightly across the spectrum to a 14% allocation in our most conservative portfolio. Private infrastructure is 15% of our most aggressive portfolio and decreases slightly across the spectrum to 11% of our most conservative model. Those weights are of a total portfolio, including both public and private markets.  

What role do you think the digital era and AI will play going forward?  

Regarding what we call the “New Economy” — the interconnectedness driven by new technologies like AI and cloud-based services that all require material increases in data processing — we expect it to have a profound impact on private market investing.

In particular, we see opportunities to build the real estate and infrastructure backbone of electricity generation, communications, and data infrastructure required by society.