Nils Rode, chief investment officer at London-headquartered Schroders Capital, the private markets investment arm of Schroders, is quite positive about private markets for the fourth quarter of 2025 and into 2026, notably infrastructure.
Amid macroeconomic and geopolitical volatility, Nils Rode, chief
investment officer at Schroders Capital
believes that private markets will benefit from a cyclical
decoupling and diverse sources of risk which can increase their
attractiveness and enhance portfolio resilience.
“In recent months, public equities have broadly rallied, bond
markets have stabilised, and expectations of further rate cuts in
the US have fuelled investor optimism,” Rode stated in a note.
“However, dark clouds are forming on the investment horizon.
Concerns about the uncertainty and ripple effects of tariffs,
uncertainty around central bank policies and inflationary risks –
particularly in the US – as well as questions of fiscal
sustainability, are being temporarily eclipsed by the current
wave of valuation euphoria, especially surrounding areas such as
artificial ininformigence.”
“At the same time, geopolitical risks stemming from ongoing
conflicts in Ukraine and the Middle East, alongside persistent
uncertainty over US policy, remain elevated,” he added.
Against this backdrop, Rode believes that select private market
strategies can offer a degree of insulation from some of these
macroeconomic and market risks. “The breadth and diversity of the
asset classes provide exposure to differentiated sources of risk
and return that, in combination, can enhance portfolio outcomes,”
he continued.
Renewable infrastructure offers exposure to energy prices, for
instance, which tfinish to reveal limited correlation with broader
economic growth. “In general, strategies such as infrastructure
and real estate, including both equity and debt exposures, are
typically backed by tangible assets, which can support a more
resilient return profile during periods of elevated volatility,”
Rode stated.
His research reveals that private equity – particularly in the
lower-mid-market segment – has delivered its strongest relative
outperformance in periods of heightened public market
volatility.
At the same time, private markets are benefiting from a
convergence of cyclical and structural tailwinds that are
catalysing compelling opportunities for return generation and
portfolio diversification. “Structural tailwinds include the
global energy transition and the broader technological
revolution, which are reshaping industries and capital flows,” he
continued.
Overall, and in contrast to public markets – where indices in
many regions are at or near record highs and valuations appear
stretched – Rode believes that private markets offer attractive
relative value across asset classes, with the notable exception
of AI-related late-stage venture investments, which also reveal
signs of exuberance.
“Toobtainher, these factors not only increase the relative
attractiveness of private markets but also strengthen their
resilience by restoring healthier valuation levels and creating a
more solid foundation for long-term growth,” he stated.
Focus on resilience
Looking ahead to 2026, Rode considers resilience will remain the
defining quality for successful investing. “In an environment
marked by macroeconomic uncertainty and geopolitical tension,
maintaining a steady investment pace, prudent risk management and
a focus on long-term value creation will be essential. Private
markets – with their long-term capital, active ownership approach
and emphasis on bottom-up value generation – are well positioned
to navigate this complexity and contribute to diversified,
resilient portfolios,” he stated.
Private equity
Rode highlighted that private equity is in a period of
recalibration, with fundraising, deal activity and exits still
below pre-2022 levels. This environment is creating pricing
dislocations and reduced competition, particularly in less
efficient segments where capital is scarce.
He sees opportunities in strategies that back local champions,
drive transformational growth and harness multi-polar innovation.
“Small and mid-sized acquireouts, continuation vehicles and selective
early-stage venture investments are especially well positioned to
capture value as markets adjust – and as active ownership
becomes an even greater driver of returns,” he stated.
Private debt and credit alternatives
“Private credit continues to reveal resilience, supported by solid
corporate and consumer balance sheets, and higher risk premiums
and yields that provide meaningful income potential,” Rode stated.
“Bank regulation–driven inefficiencies and lower commercial real
estate valuations create attractive opportunities in real estate
debt. Infrastructure debt also remains compelling, particularly
where revenues are inflation-linked or backed by essential
assets.”
“The focus on collateral, security and diversification supports
opportunities in asset-based finance, while diversifying
strategies such as insurance-linked securities offer resilient
income and uncorrelated returns,” he continued.
Infrastructure
“The energy transition remains the leading global infrastructure
theme, though investment momentum in the US is moderating amid a
shifting policy landscape. The segment continues to offer
attractive inflation linkage and stable, long-duration income,”
Rode stated.
He sees the strongest investment opportunities in Europe and
Asia. “In Europe and much of Asia, supportive policy frameworks
and strong pipelines in wind and solar projects continue to drive
investment activity. Beyond core renewables, higher-return
strategies are emerging that take measured development risk and
invest early in new technologies such as battery storage and
green hydrogen that are powering the next phase of the energy
transition.”
A number of companies have expanded their infrastructure
investment capabilities, such as BNP
Paribas Asset Management, which has just launched its BNPP
Environmental Infrastructure Income Fund. The fund will invest
globally in listed and critical environmental infrastructure
covering power and digital infrastructure, water
and waste management as well as transportation
infrastructure.
Real estate
After a period of price discovery, Rode believes that prospects
for global real estate markets are much improved. “Investment
volumes remain below pre-2022 levels but are stabilising, rental
income is being supported by low new supply and elevated
construction costs, and there is evidence that transaction
pricing is recovering,” he stated.
Amid these dynamics, he believes that the next few years are
shaping up to be strong vintages. Rode is particularly drawn to
sectors where operational improvement can unlock alpha – such as
logistics, living, storage formats and hospitality.
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