After a four-year gap, deals from alternative asset managers overtook those from fund investors looking to exit stakes. These single-asset continuation vehicles enable managers to transfer a valuable or illiquid holding into a new fund, thereby raising capital, and they have become the most common deal structure, according to Evercore.
This growth builds on a multi-year trend: secondary market volumes have risen for three straight years, with 2026 on track to set a new annual record. The shift toward manager-led transactions, particularly single-asset continuation funds, has accelerated as firms seek to hold onto high-performing assets while providing liquidity to their limited partners.
These vehicles carry higher risk due to concentration in a single asset, but Evercore notes they often fetch a premium over multi-asset continuation funds. The majority of manager-led deals are continuation funds.
Private equity comprised roughly two-thirds of those deals, with infrastructure at 16% and credit at 11%.
The secondary market for private assets expanded rapidly in recent years, driven initially by the mid-2022 interest rate hikes that hampered deal activity and pushed both fund backers and managers to seek alternative liquidity sources.
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Evercore maintains that secondaries remain essential irrespective of exit prospects, noting that continuation funds let managers hold onto their best bets while stake sales enable investors to adjust portfolios or generate cash.
One notable shift: software continuation funds dropped sharply. They made up only 10 percent of total secondary volume in the first half of 2026, down from 18 percent a year earlier. This decline reflected worries among investors that AI could disrupt major software companies.
Nigel Dawn, who leads Evercore's private capital advisory group, said, "What stands out is that the growth is structural rather than cyclical across all sides of the market."
Continuation funds have become a crucial tool for asset managers. When a traditional fund nears its end, the manager can create a new vehicle to keep its best investments rather than selling them off. This strategy gained traction as the low-interest-rate era ended.
Managers stuck with strong companies that couldn't be sold at fair prices, so they used continuation funds to extend their hold and capture future growth. The $121 billion figure reflects this trend, with managers leading the charge instead of following sellers.
The second half of 2026 is expected to keep the momentum going. Evercore predicts the full year will set another record. But demand for software assets is starting to come back selectively.
Ryan Rohloff, a senior managing director at Evercore's private capital advisory unit, commented: "As we enter the second half, however, we are beginning to see demand return selectively for software assets where AI is viewed as a meaningful tailwind. The next phase of activity is likely to be defined not by a broad-based rebound, but by strong demand for differentiated assets."
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