Northern Trust Asset Management (NYSE:NTRS) forecasts strong private market prospects driven by AI strength and innovation over the next decade, the firm reported in its Capital Market Assumptions (CMA) 2026 Edition on Friday.
Private markets are expected to outperform public markets, with a projected 10.2% annualized return for private equity, and venture capital – this will be driven primarily by innovation.
Meanwhile, private credit is expected to return 8.2% annualized and may benefit from “shifting rates and tech trends, supporting AI and private firms.”
“Although we expect lower rates to compress yields to some extent, we believe private credit deployment will increase in conjunction with the expected pickup in M&A activity,” the report continued.
Northern Trust Asset Management global co-chief investment officer Anwiti Bahuguna said: “AI continues to demonstrate potential to transform productivity and labor markets, helping to offset the challenges of an aging workforce. Private markets should also benefit from this trend, as AI will likely drive private equity deals and private credit fuels the buildout of AI infrastructure.”
Three Long-Term Trends For The Markets And Global Economy:
- Rising innovation and declining demographics: AI automation and robotics will transform the labor market, helping to offset the aging population, but will likely cause layoffs.
- The global shift to self-reliance: caused by geopolitical tensions, this shift may “slow growth and boost inflation, but also foster local innovation and new alliances. High U.S. tariffs are leading to renewed interest in regional trade agreements and efforts to reduce internal barriers, ” the report noted.
- Debts and deficits loom large: increased debt and budget deficits in the government, coupled with increased spending, have had a negative impact on global growth. “While AI may aid the U.S., some nations could struggle as high debt dampens innovation and limits policy options,” the CMA report stated.
“We believe prioritizing risk-aware growth in portfolios can capture the upside of increased innovation, while mitigating downside risks from demographic and fiscal pressures,” said Northern Trust Asset Management global co-Chief Investment Officer Christian Roth.
Other Asset Class Predictions For The Next 10 Years:
In equities, Northern Trust expects to see the following average annualized returns over the next 10 years. The United States will see about 6.8 percent growth from technology-driven productivity, Japan will see about 7.3 percent growth due to equities from economic and market catalysts, and Australian stocks will see about 7.7 percent growth from bank strength and natural resources.
In fixed income, long-term investors will see increased performance, with 5 percent for U.S. investment-grade bonds and 4.6 percent for Treasurys. European, U.K. and Japanese bonds will see “decent income with low volatility.”
In real assets, AI will drive demand, we will see increased returns in global infrastructure (6.7 percent), natural resources (6.4 percent) and global real estate (6.2 percent).
The CMA is an annual report of long-term average annualized return expectations, and informs Northern Trust’s investment decisions and strategic asset allocation recommendations.
As of Sept. 30, 2025, Northern Trust has $1.4 trillion in assets under management.
Photo: Shutterstock
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