19 March 2026
After more than a decade of rapid expansion, private markets may be approaching a critical inflection point. A recent article published by the CFA Institute argues that the current tensions in private credit and broader private markets are not merely cyclical, but structural in nature.
The analysis highlights how years of abundant capital have led to significant amounts of investment being “trapped” in private markets, where liquidity is inherently limited. This dynamic is now being tested as investors seek redemptions and some funds respond by gating withdrawals - an early signal that liquidity assumptions may not hold under stress.
At the core of the issue is the evolution of so-called semi-liquid structures, which have grown in popularity by offering periodic liquidity to investors while investing in fundamentally illiquid assets. While these vehicles have been presented as innovative solutions, the article suggests that they function effectively only under favorable market conditions. When liquidity tightens, their structural constraints become more visible.
Recent developments in private credit markets illustrate this tension. According to the analysis, the pressure on redemptions and the responses by large asset managers point to a broader rebalancing underway - one that could expose vulnerabilities built up during years of strong inflows and low interest rates. 
The article frames the current moment through a well-known quote from former Citigroup CEO Chuck Prince: “When the music stops, in terms of liquidity, things will be complicated.” In the context of private markets, this metaphor captures the shift from an environment characterized by continuous capital inflows and rising valuations to one where liquidity becomes a binding constraint.
For investment professionals, the implications are significant. Private markets have become an increasingly important component of institutional portfolios, often justified by diversification benefits and the potential for enhanced returns. However, the analysis suggests that investors must reassess assumptions around liquidity, valuation stability and exit opportunities.
A key takeaway is the importance of understanding liquidity mismatches - situations where the liquidity offered to investors does not align with the underlying assets. In periods of stress, these mismatches can amplify risks, forcing managers to impose restrictions or adjust valuations in ways that may not have been fully anticipated.
For members of CFA Society Italy, the message is clear: private markets require a more rigorous approach to due diligence and portfolio construction, particularly as the macroeconomic environment evolves. As interest rates remain higher and capital flows become more selective, the conditions that supported the rapid growth of private markets over the past decade may no longer be in place.
Ultimately, the article suggests that the current phase is less about short-term volatility and more about a structural adjustment. As liquidity becomes scarcer and market discipline returns, both investors and managers will need to adapt to a more demanding environment - one in which the assumptions of the past are increasingly being tested against the realities of today’s market conditions.