Select Dividend '10 Surprises for 2026': #3 Private Market Bubble

Post-COVID private capital is still working its way into the market.

Relative to public markets, private markets tend to be very expensive sources of return, offering limited liquidity and extended lockups. Yet, private markets have raised > $9T since 2020 while delivering middling returns. Amazingly, over the past several years, limited partners have faced more capital calls than cash distributions in aggregate. Leading into the pandemic and especially in its more immediate aftermath, there was a massive boom in private markets fundraising activity that has slowed down. However, there is still a huge amount of dry powder, suggesting general partners can't clear deals as quickly as they can raise capital.

Source: Pitchbook as of 9/30/25. Includes all global private capital raised. Past performance is no guarantee of future results. https://pitchbook.com/news/reports/q3-2025-global-private-market-fundraising-report.

Calling all Capital

U.S. venture capital historically returned more cash to LPs than it called each year, but that trend has flipped as contributions have exceeded distributions since 2022. On a yield basis (the distribution as a % of NAV), payouts have fallen from the mid-teens to low single digits over the last 2-3 years. Are we just at a cyclical low or is this really a function of too much capital in the private markets? We would argue the latter, suggesting that private market investors are paying too much for private investments and forward returns are going to be poor as a result.

Source: Cambridge Associates as of 8/4/25. Past performance is no guarantee of future results. https://www.cambridgeassociates.com/insight/us-pe-vc-benchmark-commentary-calendar-year-2024/.

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