2026 ASSET BASED FINANCE OUTLOOK

2026 is shaping up to be another dynamic year for asset based finance (ABF) markets, as record public issuance, generally resilient credit fundamentals, the disruptive force of AI, and policy dynamics converge to reshape risk and opportunity. Despite isolated idiosyncratic shocks, ABF market fundamentals proved resilient in 2025. Credit performance has remained stable across most sectors (See Exhibit 1), investor demand stayed strong, and spreads tightened into year-end.

With these supportive dynamics, asset based finance markets delivered solid performance in 2025, with commercial real estate debt, consumer debt, and residential mortgages outperforming Investment Grade corporates and Treasuries. Even so, the emergence of headline-grabbing frauds and governance lapses in certain private ABF sectors has reinforced the ongoing importance of careful manager selection.

For investors, maintaining exposure to ABF markets can provide several discrete benefits, not only given their potential to generate attractive risk-adjusted returns but also provide valuable diversification to credit and multi-asset portfolios more broadly. But picking the right manager—one with deep experience, strong diligence practices, and a clear focus on fundamentals—has never been more important to help mitigate risk and ensure asset-based allocations deliver as intended.

We’ve always believed that having a deep understanding of the fundamentals across all the ABF markets where we invest isn’t just important, it’s core to our role as investors. That’s why we put this outlook together each year: to share what we’re seeing, highlight risks and opportunities, and hopefully help cut through the noise.

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