Mega-funds still dominate the fundraising arena, but their lead is shrinking, according to newly published data from PitchBook.
US PE funds sized between $1 billion and $5 billion raised $83.3 billion in the first three quarters of 2026, or around 40% of the total, according to PitchBook’s latest US PE Middle Market Report. This is up from 32.1% in 2025.
With $95.5 billion raised, mega-funds—pools of $5 billion or larger—accounted for 46.3% in the year to Sept. 30, down from 50% last year.
Upper-middle-market funds also have the momentum. With a quarter of the year to go, these funds have already raised nearly all of their 2025 total. By contrast, mega-funds raised just 71% of what they collected in all of 2025.
The shift in capital formation tracks a widening performance gap between middle-market and mega-buyout funds in recent years. Funds of $1 billion to $5 billion have delivered more upside, generally outperforming from the top decile down to the median, while mega-funds have offered lower volatility and stronger downside protection.
Among 2021-vintage vehicles, top-decile funds of $1 billion to $5 billion posted a 21.1% IRR, compared with 13.9% for top-decile mega-funds, according to PitchBook data.
Middle-market managers can often buy at lower multiples, which gives them more room to expand margins, noted Taylor Criswell, a senior quantitative research analyst at PitchBook.
Larger managers, by definition, have a more limited pool of viable investments. Competition for those assets pushes up purchase prices, requiring buyers to take on more debt to finance them.
Higher prices and more leverage “don’t necessarily sink a deal, but they make it much harder to get that headline-grabbing return,” Criswell said.
PE managers with funds of $6 billion or larger are buying companies at a median EBITDA margin of 23.3%, more than 230 basis points above the median entry margin for middle-market deals, according to PitchBook’s Q3 2026 Diminishing Returns to Scale.
The largest cohort of funds for StepStone, whose data is used in the report, starts at $6 billion.
Middle-market funds overall raised $108.6 billion in the first nine months, putting 2026 on pace to be the segment’s third-best fundraising year.
However, smaller managers in this segment have not shared in the gains. The average middle-market fund grew to more than $1 billion this year, from $800 million in 2025, suggesting capital is concentrating on larger funds.
This article originally appeared on PitchBook News