Australian private lending paid more than twice the return of cash in the 2026 financial year, and almost no manager missed, while a handful of late-stage venture capital funds produced the year’s highest returns on the back of one-off listings including SpaceX, according to a new review of the private markets sector by FinCap across FY26.
FinCap’s review covers 221 funds in its verified universe, each checked against its own offer documents. Of those, 167 had a return period covering at least 10 of the 12 months of FY26.
Real estate credit, the largest sub class in the market, delivered a median return of 8.8 per cent, against 3.86 per cent from cash over the same 12 months. Of the 104 lending funds in the review, 96 beat the cash return over the year. The three highest-returning funds in the market – all late-stage venture capital strategies – averaged a return of 31.5 per cent.
Ben Davis, head of portfolio and investment solutions at FinCap, says the year rewarded “discipline in one asset class and punished its absence almost everywhere else.
“An investor in Australian private credit earned a median around 8.5 per cent, with half of all funds landing within about 2 per cent of each other,” he says.
“An investor in Australian private equity earned anywhere between a loss of 57.4 per cent and a gain of 12.8 per cent, depending entirely on which fund they held. The year rewarded credit allocations and punished casual manager selection everywhere else. It also rewarded a small number of funds holding private companies that became publicly priced before June 30.”
The key findings are:
FY26 was an Australian credit year
Of the 104 lending funds in the review, 96 beat cash, only one posted a negative return, and spreads were the tightest in the market. Real estate credit is the largest sub-class, with 51 funds recording a median return of 8.8 per cent; Australian corporate and diversified credit follows, at 8.5 per cent. Cash returned 3.86 per cent, so domestic private lending paid more than twice cash and almost no manager missed. The consistency is the finding: the middle half of corporate credit funds sits inside a band of 1.6 per cent, against 13.4 per cent for Australian private equity – more than eight times as wide.
Late stage venture, and the SpaceX effect
Late-stage global venture produced the year’s highest returns, on three funds: StepStone Private Venture and Growth, up 41.7 per cent; Wunala Capital Emerging Opportunities, up 30.3 per cent; and Potentum Partners Global Access, up 22.4 per cent. Hamilton Lane’s newest fund returned 23.2 per cent over six months. The driver was specific and dateable: private positions – 2 – became publicly priced before June 30, SpaceX among them. That is a revaluation of what was already owned, not an income stream, and three funds is a thin base for a headline.
Global credit’s shortfall was a valuation event, not a credit event
Global private credit returned a median 5.5 per cent against 8.5 per cent at home, and the natural reading is that global lending earns less. That is not what happened. Those loan books produced a coupon near 9 per cent, with defaults flat. What cost them was a quarterly mark to fair value, struck in the quarter that AI fears repriced software lending, now around a fifth of global direct lending.
Inside global private equity, structure sorted the outcomes
Seventeen funds recorded a median return of 6 per cent. The three discount-capture secondaries specialists took the top three places outright, returning from 10.7 per cent to 18.1 per cent. Co-investment-heavy evergreens clustered from a loss of 2.2 per cent to a gain of 7.6 per cent, carrying primary marks with no day-one uplift. Primary funds were the widest of all, from a loss of 4.6 per cent to a gain of 15.9 per cent. Geography explained little; structure explained most of it.
Structure is risk, in both directions
The worst return in the review, a loss of 57.4 per cent, was one concentrated position inside a vehicle sold as diversified. The second-best return, 30.3 per cent, was also one concentrated position, marked above six times cost. Same structural feature, opposite outcome. Every negative property return sits offshore rather than at home and hedged versus unhedged classes of one strategy differed by 3.7 per cent.
The six highest returns in the market
One year to June 30, 2026
Davis says this report brings forth various implications for investment portfolios.
“Australian private credit earned its allocation, and its consistency is the point. Medians of 8.5 per cent and 8.8 per cent across corporate and property lending, with the middle half of funds inside bands of 2 per cent, against a cash return of 3.86 per cent,” he says.
“The discipline that matters in credit is not chasing the top of the range. It is verifying seniority, security, arrears treatment and liquidity terms, because the tight pack hides real differences in what funds hold and how they would behave under stress. Consistency is the headline. Valuation is the coming test. A tight band of reported returns is only as reliable as the marks underneath it, and in a lending book the mark is a judgement about whether a loan will be repaid in full. FY26’s figures were struck in a year of benign defaults. They have not yet been tested by a credit cycle, and the regulator has already found that the sector does not define arrears, impairment or default consistently enough for two funds’ numbers to mean the same thing.
“This is where FinCap will be concentrating its work through FY27: on valuation governance in private credit specifically – who strikes the mark, who reviews it, what independence sits behind it, and what a fund does when a loan stops performing. A manager who can answer those four questions in writing is a different proposition from one who points at a return.”
“Know where the return came from. The middle half of property-credit funds sits inside a band of 1.8 per cent, and three of 51 failed to beat cash,” Davis says. “Corporate credit is tighter again, at 1.6 per cent, with two of 30 below. Australian private equity spans 13.4 per cent through its middle half, and four funds in six finished below the cash rate. Three different engines produced FY26’s numbers, and they carry different expectations. Interest accrual is repeatable and converges, that is why credit funds cluster. Valuation movement is not repeatable in either direction, and it is why the equity classes spread. Purchase price discount capture, the engine under the best secondaries results, is real but front-loaded, and dilutes as a fund scales.
“A return of 20 per cent built on discount capture in a fund’s first two years and a return of 20 per cent built on operating businesses growing are not the same asset, and they should not carry the same forward expectation.”
“In credit, global exposure cost roughly 3 per cent at the median against the domestic alternative, mostly through a quarterly mark to fair value that domestic funds were not subject to,” Davis says.
“What it buys in exchange is diversification away from a single, concentrated domestic economy, and a valuation regime that signals sooner when something has moved. In equity, both the deepest opportunity set and the year’s best returns were offshore: the best Australian fund returned 12.8 per cent compared with 18.1 per cent for the best global secondaries fund and 41.7 per cent for the best venture fund. Currency mattered too, though less than last year’s figures implied: on the two strategies offering both classes, the unhedged version gave up 2.1 per cent and 3.7 per cent respectively. Treat the hedge as a portfolio decision in its own right.
“Structure is risk. The year’s worst outcomes were failures of fund construction as much as of investment judgement,” Davis says. “Concentration inside vehicles sold as diversified, currency class selection, and redemption facilities investors could not actually use. Redemption terms, gating, gearing and concentration deserve the same diligence as the return target.”
“And decide deliberately whether the portfolio carries pre-IPO AI exposure.
“This is the live allocation question coming out of FY26, and most portfolios currently answer it by accident,” Davis says. “Three Australian funds delivered returns of 22 per cent to 42 per cent because they held private companies that became publicly priced before June 30. The pipeline behind that is real: OpenAI and Anthropic both filed confidentially in June 2026, and Anthropic raised privately in late May at a reported valuation of US$965 billion.”
