The lower middle market’s performance advantage widened to 220 bps over the past year from 40 bps over the prior three years.
authors
Christopher Bole
Christopher Bole
Vice President, Financial Writer
Annualized loan performance by market segment
Chart comparing annualized upper- and lower middle market loan performance from 1H22 to 1H25 and for the trailing year ended June 30, 2026.
Source: Cliffwater, as of June 30, 2026.
  • Direct loan returns have moderated over the past year, reflecting lower base rates and tighter spreads.
  • Yet performance has not moderated evenly across the asset class. The impact has been greatest in the upper middle market, where competition and capital concentration are highest.
  • Lower middle market performance has been more resilient, outperforming the upper middle market by 220 basis points (bps) over the trailing year, compared with just 40 bps over the prior three years.1
  • Lower middle market loans may offer attractive alpha potential as private credit performance becomes increasingly differentiated by market segment.

This week’s chart is drawn from Mapping the Markets: Q3 2026, a quarterly chartbook from Future Standard’s Investment Research team showcasing the most important charts shaping the investment landscape. Refer to it for more charts and insights across public and private markets.

contributing authors
Christopher Bole
Christopher Bole
Vice President, Financial Writer
footnotes + disclosures
  1. Cliffwater, as of June 30, 2026.

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