Private Markets Perspectives 2H 2026: Capitalizing on Concentration, Liquidity and AI

Top-Quartile PE Managers Have Outpaced a Highly Concentrated S&P 500 Index

Horizon Returns for Publicly Traded Indices Vs. Private Equity

Source: Private equity data from MSCI (formerly Burgiss). Represents median horizon IRR and top quartile return for Global Private Equity as of Q2 2026, which is the latest available. Public market data sourced from Bloomberg as of Q2 2026. “Global Private Equity” includes buyout, growth and venture. MSCI ACWI Index returns shown in USD.

Past performance is no guarantee of future results. Indexes are unmanaged and are not available for direct investment.

For illustrative purposes only. The benchmark performance is presented for illustrative purposes only to show general trends in the market for the relevant periods shown. The investment objectives and strategies of the benchmarks may be different than the investment objectives and strategies of a particular private fund, and may have different risk and reward profiles. A variety of factors may cause this comparison to be an inaccurate benchmark for any particular type of fund and the benchmarks do not necessarily represent the actual investment strategy of a fund. It should not be assumed that any correlations to the benchmark based on historical returns would persist in the future.

Top-quartile private equity managers have outperformed global public markets over the 5-, 10- and 20-year periods.

A four-year rally in U.S. public equities has made the comparison harder for PE as a whole: median PE returns trail the S&P 500 Index over the 5- and 10-year periods. Much of that gap reflects concentration in the index; over the past five years, the S&P 500 Index returned 11.8% annualized, 4.7 percentage points above the 7.1% return of its equal-weighted index. We believe PE can complement public equity allocations, and that manager selection remains critical to investment outcomes.

Public Markets Are Concentrating as the Private Universe Grows

S&P 500 Index Concentration by Weight¹

Increasing Number of PE-Owned Companies vs. Public Companies²

¹ Source: Neuberger and FactSet as of October 31, 2026.

² Source: PitchBook and World Federation of Exchanges as of Q3 2026.

For illustrative and discussion purposes only.

The S&P 500 Index has become increasingly concentrated: The top 10 constituents, predominantly AI-related, now account for 37% of the index and drove ~55% of its return year-to-date.¹

The universe of publicly listed U.S. companies is also shrinking. Since 2000, the number of U.S. public companies has fallen from roughly 8,000 to 5,500, while PE-owned companies have grown from less than 2,000 to more than 13,500. We believe private markets therefore give investors a broader opportunity set and less dependence on the return of a handful of mega-cap stocks.

Private Markets Are Capturing More Value, With PE Forecast to Return More Than Public Equity

Shareholder Value Created Since Inception¹

The IPO Window Has Reopened for Select Issuers, but Most Exits Still Happen Outside Public Markets

IPO Share of Global PE- and VC-Backed Exits (% of Total)

Source: PitchBook as of October 26, 2026. IPO exit value reflects pre-money IPO value.

Note: The securities mentioned are for illustrative purposes only. Nothing herein constitutes investment advice or a recommendation to buy, sell or hold a security. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable.

SpaceX's IPO in June, which raised $86 billion at a valuation of $1.8 trillion, was the largest in history, a sign that public investors have an appetite for innovative private companies and a positive signal for private markets broadly. Under current conditions, we believe the window is open for select issuers: so far in 2026, IPOs have made up 9% of PE- and VC-backed exits by count but 59% of exit value. Of note, an IPO is not an immediate liquidity event for existing investors due to lock-ups. We expect most private companies to keep relying on exits outside the public market.

PE Exits Globally Continue to Recover, and Secondaries Have Become a Consistent Source of Liquidity

Global Private Equity-Backed Exits

Global GP-Led Secondary Transaction Volumes ($B)

Source: Left: PitchBook as of Q3 2026. Right: Jefferies as of Q2 2026.

Note: The data for Q4 2025 and Q1-Q3 2026 is estimated.

We believe exit activity has been stronger than negative headlines suggest. In 2025, more than 4,000 companies exited at a combined value of $1.4 trillion, and estimated year-to-date totals through the third quarter of 2026 point to a similar pace.

Still, a large backlog of aging portfolio companies remains. GP-led secondaries have become a growing source of liquidity and continue to gain share, reaching a record $115 billion in 2025 as managers seek to extend ownership of high-conviction assets and return capital to LPs. We expect exit activity to continue to rise, and GP-led secondaries will play a growing role in broader portfolio construction.

Exit Uplift Has Stayed Positive Through Every Market Cycle

Median Uplift Over Carrying Value 2 Quarters Prior to the Signing Date for an Exit

Source: Neuberger portfolio analytics and reporting as of Q3 2026.

Note: Excludes partial sales, write-offs, minority sell-downs, IPOs, buybacks, recapitalizations and debt repayment. The exits included in this universe represent approximately two-thirds of all buyout exit types in our proprietary database as of Q3 2026. The analysis includes ~1,250 full exits, and the uplift is represented by the return at exit compared to two quarters prior.

We analyzed full exits where we have direct access to the underlying data, a proprietary universe that covers about two-thirds of the buyout exits in our database.

We found that the exit uplift, the difference between an asset's sale price and its recent carrying value, has been positive in every period. The size of the uplift has fluctuated: ~30% pre-2020, peaking around 40% in 2020–2021, and narrowing since.

We believe this indicates that private equity marks are closer to expected exit values than they were in prior periods.

Software R&D and Operations Account for Almost 80% of AI Mentions in PE Portfolio Company Reports

Functions in Which AI Is Being Used, Based on % of Mentions in Portfolio Company Reports

Software R&D Use Cases

Operations Use Cases

Source: NBAA analysis of ~1,500 GP quarterly reports. Total may not sum to 100% due to rounding.

Note: Analysis includes companies discussed in a GP report with at least one AI mention (~2,750 total mentions). Coverage is not adoption: a company with no mention may still use AI.

Our analysis of GP quarterly reports finds that, among portfolio companies, software development is the most common AI use case, at 47% of mentions, followed by operations at 30%. Within software R&D, 71% of mentions describe AI built into products; within operations, 55% discuss use cases to improve general efficiency. Meanwhile, the executive suite accounts for only 2% of mentions, which suggests that companies are using AI mainly for products and routine work, rarely for leadership decisions. Thus far, we believe AI is helping create value primarily by enhancing product development and boosting operating efficiency.

More PE-backed Portfolio Companies Are Reporting AI Use

Change in Share of Portfolio Companies Reporting AI Use in GP Quarterly Reports, by Sector (Percentage Points, Q2 2026 vs. Q2 2025)

Source: NBAA analysis of ~1,500 GP quarterly reports covering ~7,000 portfolio companies in seven sectors (excludes Energy, Materials, Utilities and Real Estate).

Note: Analysis includes companies discussed in a GP report with at least one AI mention (~2,750 total mentions). Coverage is not adoption: a company with no mention may still use AI.

We believe AI is shifting from a differentiator to a baseline expectation: PE portfolio companies are now expected to present specific AI use cases, from operational efficiency to deeper, more actionable analytics.

Our analysis shows that the share of portfolio companies reported as using AI, whether internally, in their products or for other purposes, rose in every sector between Q2 2025 and Q2 2026. Information Technology portfolio companies had the highest rate of AI mentions and the largest increase (+10 points), while Consumer Staples portfolio companies had the lowest rate and the smallest increase (+3 points). We believe PE sponsors still have considerable opportunity to create value by encouraging and aiding AI deployment across their portfolios.