Investors & Managers

Private Investors Pull Back from Private Credit, Shifting Toward Private Equity and Infrastructure

Backy Smith June 7, 2026 2 minutes read

Private Investors Pull Back from Private Credit, Shifting Toward Private Equity and Infrastructure

Private wealth investors have significantly reduced their exposure to private credit over the past year, redirecting capital toward private equity and infrastructure, according to new data from iCapital.

In its latest Alternatives Decoded report for June 2026, the alternative investment platform revealed that allocations to private credit on its platform fell sharply from 41% of total fund flows in the first quarter of 2025 to just 18% in the first quarter of 2026.

The decline comes even as asset managers continue to promote private credit as a stable, income-generating asset class. Much of the capital pulled from private credit appears to have flowed into private equity, which saw its share of fund flows surge from 35% to 51% over the same period.

“Private wealth clients shifted away from private credit and into private equity, infrastructure and hedge funds in late 2025 and early 2026,” iCapital researchers wrote. “Growth and inflation-protected strategies (infrastructure) are the clear share gainers on the iCapital platform.”

Within the private credit sector itself, investor preferences also shifted noticeably. Allocations to distressed and opportunistic strategies dropped dramatically from 17% in 2023 to just 3% in 2025. Meanwhile, direct lending now dominates the space, accounting for 89% of private credit allocations last year.

Allocations to real assets saw a modest increase, rising from 13% at the start of 2025 to 17% in the first quarter of 2026. Infrastructure emerged as a standout performer within this category, with its share climbing to 58% in early 2026. In contrast, real estate allocations declined from 53% to 41% over the same period.

The report also highlighted a structural shift in how investors are accessing alternatives. At the end of 2025, open-end and closed-end fund structures were nearly evenly split on iCapital’s platform (43% open-end vs. 42% closed-end). This represents a notable change from two years earlier, when closed-end vehicles made up 50% of funds compared to 34% for open-end structures.

The data underscores growing caution among private wealth investors toward certain segments of private credit amid a complex macroeconomic environment, while highlighting strong demand for private equity and inflation-resilient infrastructure assets.

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