Schroders Capital Issued Private Markets Outlook
The firm identified small-cap buyouts as a key strategy amid uneven global market conditions and geopolitical pressures.
Updated on Oct. 13, 2026 in Investing
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Schroders Capital released its fourth-quarter 2026 private markets outlook report, noting that current market allocations remain challenging due to persistent inflation and geopolitical tensions. The firm advocates for prioritizing small and mid-market buyouts over large-cap segments to navigate the current environment.
Why it matters
The report highlights how investors are shifting away from traditional financial engineering, instead focusing on operational improvements to generate returns. This reflects a broader pivot in asset management necessitated by equity markets dominated by only a few technology and AI firms.
Secondary transaction volumes reached a record in the first half of 2026, while private equity deal and exit counts fell to their lowest levels since the third quarter of 2021.
The players
Schroders Capital
Schroders Capital is a global investment manager focused on private markets including private equity, real estate, and infrastructure.
The details
Investors are increasingly turning to asset-based finance and infrastructure debt to manage risks associated with the AI investment boom and global volatility. Furthermore, the report forecasts that investment in transmission and distribution infrastructure is expected to triple by 2035.
Timeline
Q3 2021 was the last time deal and exit counts were as low as current levels.
H1 2026 saw record-breaking secondary transaction volumes.
Q2 2026 marked a period where private equity fundraising improved.
2035 is the projected year for a tripling in transmission and distribution investment.
Market Dynamics
This outlook reflects a necessary adaptation to an environment where listed equity markets are dominated by a handful of technology and AI-related companies. By moving toward private markets, firms are attempting to decouple from the high concentration risks currently found in public indices.
Retail and institutional investors may need to reconsider their portfolio reliance on tech-heavy equities in favor of infrastructure debt or asset-based finance. These shifts require careful adjustment of long-term savings goals and risk assessments to match the firm's projected market cycles.
The takeaway
The firm suggests that current conditions favor active management through operational improvements rather than relying on market-wide trends. Investors should look toward diversified assets to mitigate risks posed by persistent inflation and sector-specific concentration.
Further reading
For more information on navigating volatile conditions, see our Investing section.
Source note: This article includes information reported by Fund Selector Asia.
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