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Private assets offer one way to diversify away from public markets. This is especially true in a period of fragmentation which challenges large-cap international businesses in particular, whose supply chains and revenue sources are more exposed to geopolitical tensions. Private asset investments offer exposures to mid-market, regionally focused companies.

Parts of the private asset market also stand to gain from the shifts that will play out across the world in 2026. Investing in infrastructure, for instance, offers investors an alternative way to capitalise on the roll-out of secular trends like AI and the energy transition, without having to rely on the frothier parts of those markets. For AI in particular, power availability is the primary constraint on new capacity build-out, and fibre connectivity is proving itself as a backbone of the new tech economy. Getting both up to speed will demand significant investment in the supporting infrastructure.

Private credit is another avenue of diversification, but it’s worth treating the asset class with caution in 2026. Were default rates to rise, it’s important to have robust downside protection and experience in improving a recovery rate or working with stressed assets. It’s also about picking the right segment of the market. We think the mid-market, or selected parts of the lower mid-market, non-cyclical sectors, could perform better. This space is less crowded and there’s less pressure for lenders to deploy capital.

Real estate’s diversification benefits are well known. What’s less well-known is the asset class’s potential to benefit from the next few years’ shifting macro environment. A period of global fragmentation brings with it challenges to companies’ supply chains and logistics set-ups. Many will be looking to improve their resilience ahead of time to ensure they’re well equipped to withstand supply disruptions. It’s helpful that development activity has already peaked, meaning supply should tighten and provide room to raise rents.

Energy supply and sustainability ratings are also becoming more important to occupiers in selecting logistics units in Europe, reflecting the increased competition for power and the prioritisation of energy pricing in overall occupational costs. There is value for owners in renovating existing buildings to improve their sustainability characteristics, deliver better rental growth, and drive capital values.

Vivian Liu

Vivian Liu

Portfolio Manager

Alison Puhar

Alison Puhar