Schroders’ Investment Outlook for 2026
28 NOV, 2025
By Johanna Kyrklund
Johanna Kyrklund, Chief Investment Officer (CIO) of the Schroders Group, and Nils Rode, Chief Investment Officer of Schroders Capital, the Group’s private markets division, have identified the investment risks and opportunities emerging for 2026.
Johanna Kyrklund:
As we approach 2026, there is significant concern about equity market valuations, and comparisons are being drawn with the dot-com bubble. But if we look closely at market valuations, we believe that equities remain supported by the fact that bond yields are behaving well, inflation is stable for now, and central banks are likely to ease monetary policy a bit further. In the medium term, I am concerned about rising levels of public debt and the possibility of accelerating inflation, which could push discount rates higher, but in the next six months this risk is low. We also see a low risk of recession in the United States: although the labour market is weakening, unemployment remains low and household balance sheets are in good shape.
Therefore, at the market level, we continue to see positive returns in equities. For example, we still see potential in hyperscalers to generate revenue. In short, we continue to see opportunities. It is important not to lose sight of equity-specific risk, but the key is to take this risk deliberately, supported by detailed fundamental analysis, and not merely by a stock’s weight in an index.
We are looking for opportunities to diversify. Not everything has revolved around AI. The year 2025 has demonstrated the benefits of geographic diversification, and value stocks have performed well outside the United States. Emerging market debt offers better dynamics and higher real yields than developed market debt. In addition, there are opportunities to generate income by diversifying investments, such as insurance-linked securities and infrastructure debt.
Therefore, for 2026, we see a low risk of recession, expect contained bond yields and a boost in corporate earnings, which leads us to maintain a positive outlook.
Nils Rode:
Consistency has become the key word for investors in an era marked by persistent uncertainty. The apparent calm in today’s markets hides a complex backdrop. Inflation remains persistent, fiscal pressures are rising, and geopolitical conflicts continue to test global stability. Periods like this challenge investors to look beyond the short term and instead focus on the sustainability of returns and bottom-up value creation. In this context, private markets can be considered a key area where cyclical and structural forces align to create opportunities.
Private markets are currently in a different phase of the cycle. Fundraising, deal activity, and exits have generally declined in recent years, prompting a reset in valuations across asset classes and segments. This cyclical decoupling creates a healthier environment for new investments—supporting attractive entry prices and higher return potential. Meanwhile, existing portfolios have been largely insulated thanks to the focus on fundamentals and a solid, albeit volatile, macroeconomic backdrop. At the same time, structural trends continue to drive value creation. The global energy transition, the reshoring of supply chains, and ongoing digital transformation continue to support long-term growth.
Not all private-market strategies are positioned to respond in the same way to this environment. Strong return opportunities arise where there is a combination of market inefficiency, disruption, differentiated risk, and support from tangible assets. Examples include small buyouts or continuation investments in private equity, specialised financing and real-asset-backed debt within private credit, energy-transition infrastructure, or certain types of real estate.
As we approach 2026, the most successful investors will be those able to combine consistency with selectivity. Private markets—with their long-term capital and active involvement—are not immune to uncertainty, but they are well-positioned to help build diversified and resilient portfolios.
