The changing makeup of the Global Market Portfolio
GMP market value increased to USD 221 trillion, driven primarily by the escalation of the Middle East conflict (late February), which disrupted energy supply and sharply lifted inflation risks, reversed the US dollar depreciation trend and shifted markets from pricing rate cuts to reassessing upside inflation and policy-tightening risks.
As the sum of all holdings from the collective decisions of investors and issuers, as well as suppliers and demanders of capital, the GMP can be seen as a de facto proxy for the investable opportunity available to all investors globally. It also represents the positioning of investors in aggregate and reveals insights into their attitudes and preferences. The GMP could be considered a natural benchmark for investors’ strategic asset allocations—much more diversified and theoretically sound than the iconic 60/40 equity–bond benchmark.
Taking advantage of higher expected returns
2025 extended the 2024 re-rating—marked by a sharp fall in inflation and AI-driven optimism—with broader market participation, stronger relative performance from non US equities, higher volatility, greater sensitivity to policy and geopolitical risks, and a weaker US dollar. The market value of the GMP had reached an all-time high of roughly USD 222 trillion as of end 2025, an increase of 240% from 2005 (Figure 1).
Q1 2026 marked a clear risk off turn after strong gains in 2025, as GMP market value declined to USD 221 trillion, driven primarily by the escalation of the Middle East conflict (late February), which disrupted energy supply and sharply lifted inflation risks. Markets shifted from pricing rate cuts to reassessing upside inflation and policy tightening risks.
As always, investors want to get the most out of their portfolios. Questions related to asset classes that should be considered for the long term, their respective risks and merits, and how to combine them efficiently continue to be top of mind.
Based on our proprietary capital market assumptions, the medium-term expected return for the GMP is 6.3% on USD basis. This largely reflects the higher interest rate environment we have been in since the end of 2021, and the positive expected returns from equity investments.
Particularly interesting is the evolution of the weighting of macro asset classes (Figure 2). In March 2026, the total equity weight was close to 45%. At the peak of the Dot Com bubble in 2000, it had reached an impressive 60%. It has steadily and visibly declined since then, reaching 50% in 2007 and oscillating between 35% and 45% since. Some of the relative declines could be attributed to the development of other alternative asset classes and also the significant issuance of fixed income securities by governments and corporates.
During bear markets and major corrections (2008, 2011 and March 2020), the equity weighting was negatively affected by lower equity prices, and reached the low end of this range. Conversely, and unsurprisingly given their more defensive characteristics, bonds have tended to increase in weight during bear markets, reaching up to 55% during the height of the global financial crisis in December 2008, the eurozone crisis of 2011, and the pandemic in March 2020. As of March 2026, global bonds represented 40% of the GMP, close to the low of the range.
The weight of alternative asset classes has steadily increased, more than doubling to 15% in 2026 from 6% in 2000. This growth reflects stronger investor confidence, the maturation of private equity and private credit, and the strong performance of certain alternative assets.
Details on Q1 composition and asset class performance
In the GMP, equities currently represent the largest asset class, despite some decline in market cap in Q1 2026 and the lower overall weight of equities in the GMP, discussed in the previous section. Sovereign and government-related bonds make the second-largest asset class, with robust issuance driving an increase in bond market cap (Figure 3).
Equities declined in market cap in Q1
In Q1 2026, global equities were volatile as Middle East tensions, higher energy prices, and inflation concerns drove sharp regional divergence. Market capitalization fell to USD 99.3 trillion as at end-Q1 2026 from USD 102.6 trillion as at end-Q4 2025.
US equities outperformed on technology and energy earnings; the UK was broadly steady; Europe lagged on energy shocks and cyclical exposure; Japan gained moderately due to yen weakness and corporate governance reforms. Meanwhile, emerging markets faced the greatest pressure from oil-price risks, outflows, currency volatility, and higher borrowing costs.
Currently, the global equity market value is almost five times its level during the Global Financial Crisis (GFC) in 2008, and 1.5 times its level during the COVID-19 period (Q4 2020). The equity weighting of 45.0% for Q1 2026 (Figure 3) marked a notable decrease from 46.1% in Q4 2025.
Equity issuance revived, but not enough to move market cap
As of end 2025, new issuance represented just 0.8% of total equity market capitalization, a figure that stands as one of the lowest points since 2000, underscoring a persistent trend of subdued issuance. This pattern, notably consistent since 2022, highlights a prolonged period of restrained activity in equity capital markets (Figure 5).
Even so, global equity capital market issuance soared to a four-year high of USD 799 billion (Figure 4). This surge was fueled predominantly by robust follow-on offerings, with the US and China dominating the landscape. Within IPOs, the US accounted for 26% of activity and mainland China for 20%. In follow-on offerings, China led with 30%, while the US contributed 26%. Together, these figures underscore the dominant role of the US and China in global equity capital markets and their influence on capital flows and investor sentiment.
Equity capital markets strengthened in Q1 2026, with issuance rising 28.1% YoY to USD 197.4 billion, the strongest first quarter in five years. The US remained the largest market, accounting for 33% of issuance, while China raised USD 39.2 billion, up 30% YoY and equal to 20% of global equity issuance. Global IPOs increased 25.7% YoY to USD 32.7 billion, with US- and China-domiciled deals contributing 25% and 26%, respectively, underscoring renewed market activity and investor demand.
Bond market cap rose on hefty public supply
As of the end of 2025, the market value of public debt securities surged to an unprecedented USD 88.7 trillion, setting a new global benchmark. However, the Iran conflict triggered a slight pullback, bringing the total down to USD 88.5 trillion by Q1 2026.
Despite this monumental growth, the relative importance of bonds in the broader market declined. By Q1 2026, government bonds commanded a market cap of USD 43.6 trillion, representing just 19.8% of the total, a notable drop from 21.1% in Q1 2025. Meanwhile, investment grade (IG) credit, valued at USD 18.9 trillion, accounted for 8.5% of the market, marking a decrease from 9.1% in the previous year. These shifts reflect a rapidly evolving landscape, where historic highs mask underlying changes in market structure and investor sentiment.
Q1 2026 saw sharp bond market sell-offs driven by persistent inflation concerns and heavy new issuance, though bouts of risk aversion triggered strong rallies and heightened volatility. US Treasury yields swung sharply, first falling on safe-haven demand before rebounding as inflation pressures and expectations for slower rate cuts intensified. UK gilts followed a similar pattern, with long-end yields especially sensitive to domestic inflation and imported energy shocks. In the eurozone, Germany benefited from safe-haven demand, but Bund yields were still pulled higher at times by inflation concerns, heavy issuance, and broader rate volatility. Peripheral markets such as Spain and Italy also saw significant upward pressure on yields, highlighting vulnerabilities under elevated interest rates.
Debt issuance shattered records in 2025, reaching a staggering USD 11.9 trillion, a nearly 15% jump from 2024. This surge spanned every sector, with new issuance representing a formidable 13.4% of total bond market capitalization, the second-highest proportion since 2009. The sheer scale of fresh debt underscores the relentless demand for capital and the pivotal role bonds play in the global financial ecosystem (Figure 7).
Global investment grade corporate debt offerings soared to USD 1.6 trillion in Q1 2026, up 9.1% from Q1 2025, and marking the strongest opening quarter for high-grade corporate debt ever recorded. This milestone represents the third consecutive first quarter in which issuance surpassed USD 1.5 trillion, and accounted for 47.2% of total issuance in Q1. With almost 5,000 new offerings hit the market in Q1 2026, and though this was down 6.3% from a year ago, the sheer volume highlights the sector’s resilience and growing investor appetite for quality credit.
Sovereign debt issuance reached USD 1.3 trillion in Q1 2026, up 9.0% from a year earlier and accounting for 36.2% of total quarterly issuance. The number of new offerings rose to nearly 1,600, a 10.0% year-on-year increase. China led issuance with a 47.2% share, followed by Germany at 6.9%, while the US represented just 1.5%. This trend points to growing government financing needs.
Global high yield debt issuance reached USD 131.7 billion in Q1 2026, a 4.6% increase from Q1 2025. Issuers from the US, Canada, and European countries such as the Netherlands, France, Germany, Italy, and the UK dominated the arena, accounting for an astounding 84.5% of Q1 2026 issuance, an uptick from 82.5% a year ago. This concentration signals the shifting power centers in high-yield markets and the growing role of these economies in driving global risk capital.
International bond offerings hit an all-time high of USD 2.0 trillion in Q1 2026, up 9% from the prior year and underscoring the relentless expansion of global debt markets. Emerging market corporate issuers posted USD 107.2 billion in new debt, down 17% year-over-year, with Saudi Arabia, India, Brazil, and the United Arab Emirates contributing a commanding 48% of activity. These figures illuminate the dynamic shifts and growing complexities within international and emerging market debt landscapes (LSEG, Global Debt Capital Markets Review, Q1 2026).
Private markets are fragmenting
Private markets are becoming more selective and more concentrated. Capital is still available, but it is flowing disproportionately to larger managers, larger funds, and strategies that offer more liquidity or flexibility.
Global private equity remains under pressure, though market size has continued to grow. As of Q1 2026, the asset class was estimated at around USD 10.7 trillion, up roughly 10.4% from its Q1 2025 level. Private equity now represents an estimated 4.8% of the GMP, down from its 5.9% peak in 2022 and 5.0% in Q1 2025, but still above pre-pandemic levels. Buyouts remain the dominant strategy, accounting for 42.2% of total private equity AuM.
The clearest sign of strain is in fundraising, which is stabilizing but becoming more concentrated among fewer managers. North America continues to lead, while Europe and APAC lag, and longer timelines are widening the gap between stronger platforms and weaker peers. The same pattern is also visible in deal activity. Larger buyouts are still clearing, but overall value has edged lower and financing conditions continue to weigh on transactions, particularly in North America.
The main bottleneck, however, remains exits. Volumes and values have weakened, IPO windows remain narrow, and realizations are concentrated in a handful of large transactions rather than a broad-based reopening. This keeps liquidity tight, constrains LP capital recycling and leaves the market dependent on a more meaningful reopening of exit channels.
Secondaries are benefiting from the demand for flexibility
Focus has shifted toward a less familiar segment: secondaries. Over the past three years, the market has expanded materially, with global capital raised for private equity secondaries averaging USD 80.5 billion a year, well above prior periods, excluding 2020.
In Q1 2026, secondaries funds raised USD 30 billion. That was more than one-third of their total fundraising for 2025 and lifted their share of private equity fundraising to 19% for the quarter.
Scale is driving the secondaries market. In Q1 2026, nearly 78% of secondaries funds closed above target, while the strategy represented just 3% of fund count but 12% of targeted capital . In a slow-exit market, investors are turning to secondaries for portfolio rebalancing, pricing flexibility and stronger risk-adjusted return potential.
A stronger private equity cycle depends on exits reopening. Until liquidity improves, fundraising and deal activity will remain constrained. Secondaries should continue to attract capital, while traditional buyouts need better pricing alignment and clearer exit routes before growth can recover.
Private debt growth is slowing as investors look for resilience
Private debt’s momentum has slowed after a period of strong growth. As of end Q1 2026, global private debt is estimated to reach USD 1.8 trillion, broadly unchanged from Q1 2025. The asset class is estimated to represent 0.8% of the GMP as of Q1 2026, down from 1.0% in Q1 2025 but still well above its 0.3% share in 2006.
Direct lending remains the core strategy, accounting for about 50% total AUM, followed by credit special situations at 16.3%.
This slower growth reflects a tougher backdrop. Rate uncertainty, AI-driven market shifts and geopolitical risk have made investors more cautious, while demand has shifted toward more liquid structures. By early 2026, growing concerns over private credit performance had reinforced investors’ focus on resilience across full credit cycles, disciplined underwriting and stronger risk management.
Fundraising is weaker, but capital is becoming more selective
In Q1 2026, private credit funds raised just USD 23 billion, sharply below the USD 72 billion raised in Q1 2025. Direct lending still attracted the most capital, followed by mezzanine.
However, weaker fundraising does not suggest capital has exited the market; rather, it is shifting toward stronger platforms. By March 2026, more than 15% of funds in market were targeting over USD 1 billion, indicating that larger, established managers can still secure commitments despite tougher conditions (source: Preqin. 2026. Private Credit Q1 2026).
Dislocation is creating targeted opportunities. That selectivity is also creating opportunity. Secondaries, special situations and distressed debt are better placed to benefit from forced selling, lower valuations and rising redemptions from evergreen funds. Closed-end funds remain relevant because they are insulated from redemption pressure and can target specific vintages.
Gold rose while real estate remained weak
As of the end of March 2026, gold accounted for 6.1% of the GMP, the highest level in our records of 20 years, and a sharp increase compared to the 4.5 % level of Q1 2025. While being affected by the Iran conflict, its total value went up by more than 50% since Q1 2025, to USD 13.5 trillion, which is its all-time high. Gold’s current weighting now is much higher compared to the 3.8% level seen in 2011–12, when central banks were very active in quantitative easing and asset purchase programs in the aftermath of the global financial crisis and the beginning of the eurozone crisis.
Real estate’s market value totaled USD 7.1 billion as of end-March 2026, remaining 11% lower than its pre-pandemic December 2019 level. Real estate was estimated to account for 3.2% of the GMP as of end-March 2026, which is the second lowest proportion since early 2000s (after December 2025 of 2.9%).