The ever-expanding, sometimes rocky world of investments beyond stocks, bonds and cash took center stage at the Beverly Hilton last week as wealth advisers and asset managers descended on Beverly Hills for the fifth annual CAIS Alternative Investment Summit.
Over the course of four days, fund managers from some of the world’s largest private capital firms presented on portfolio construction and investing trends to audiences of financial advisers. The panels, in large part, served to rebuild confidence in private equity and private credit. They also advertised some of the hottest investment theses of the moment, including the digital infrastructure “picks and shovels” behind the AI buildout and professional sports.
Lending to and investing in privately held companies has gone mainstream, with Securities and Exchange Commission data showing U.S. private funds reached $29.6 trillion in gross assets in the final three months of 2025, up 18% from the previous year. But recently, concerns over loan quality, exposure to the AI-threatened software sector and liquidity mismatches have thrown somewhat of a wet blanket on private markets investing.
Fund managers at the CAIS conference took it upon themselves to set the record straight on the worries floating around the sector.
In a Tuesday talk, Alisa Wood, a partner at New York-based Kohlberg Kravis Roberts & Co., outlined the four biggest myths about the state of private equity: “One, performance in private equity is dead. Two, there are no exits. Three, it’s impossible for capital to work. And four, the public markets are the end all be all, and you actually don’t need privates in your asset allocation anymore.”
Private equity has gotten a bad rap because of the widening chasm between top managers and those who’ve struggled to deliver returns or exit portfolio companies bought at overestimated valuations, Wood said. The roughly 32,000 private equity-backed companies without an exit in sight are a “pig in a pipe,” she said – the pipe, for the most part, being the bottom arm of the K-shaped manager space that has seen elite, large-scale players thrive as smaller or middle-market funds face growing strain.
“If you have discipline, you’re doing just fine,” Wood said. “If you bought companies and paid too much, you have a moment where you’ve either got to run out the clock to try to grow into the valuation, or you’re going to run into maturity issues in your capital structures.”
Concentration risk a concern
Many of the companies investors rushed into in 2021 and 2022 sold software-as-a-service, a business that markets soured on as generative AI proliferated in the years that followed. Though software is now rebounding as companies pivot their pricing models and build moats that protect them from AI replacement, it seems the ordeal taught investors a lesson in concentration risk.
Avoiding a repeat of the frenzy-turned-disappointment means treading lightly on investing in AI, said Harvey Schwartz, chief executive of Washington D.C.-based The Carlyle Group Inc., in a Wednesday fireside chat.
“When you see this much capital moving this quickly, you have to question how you’re doing it. Where do you sit in the capital structure? What are the terms? You just have to be thoughtful about it when competition to deploy capital is high,” Schwartz said.
The companies behind the break-neck development of data centers powering AI models and cloud services have certainly borrowed prolifically from both bank and non-bank lenders.
One of the most active investors in the data center space has been New York City-based alternative asset manager Blue Owl Capital, which faced scrutiny and steady investor withdrawals from its heavy exposure to software.
Blue Owl acquired data center-focused investment platform IPI Partners in early 2025 and, shortly thereafter, formed a $27 billion joint venture with Meta to finance and build the massive Hyperion AI data center campus in Louisiana. Going 80% in on one of the largest data centers ever developed is a big swing, but the firm has projected confidence that its bet on tangible, durable assets will pay off.
In a Wednesday talk, Patrick Lawler, portfolio manager and head of core acquisitions on Blue Owl’s digital infrastructure team, said his team manages risk by vetting for high-quality tenants, long-term leases and location in tier 1 or tier 2 markets.
“Digital infrastructure becomes very compelling because of what’s not changing,” Lawler said. “In a world where there’s so many things that are moving, pinning yourself to what you know will be consistent in the future is just a very prudent way of evaluating investment.”
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