{"id":21760,"date":"2026-02-20T16:25:22","date_gmt":"2026-02-20T16:25:22","guid":{"rendered":"https:\/\/assetphysics.com\/?p=21760"},"modified":"2026-02-20T16:25:22","modified_gmt":"2026-02-20T16:25:22","slug":"carving-a-path-in-private-markets","status":"publish","type":"post","link":"https:\/\/assetphysics.com\/de\/carving-a-path-in-private-markets\/","title":{"rendered":"Carving a path in private markets"},"content":{"rendered":"\n\n\n\t<section class=\"snk-section snk-section_xs\" >\n\t\t<div class=\"container container-xs\">\n\n\t\t\t\n\n\t\t\t\n\t\t\t\t<div class=\"row snk-textColumns\">\n\t\t\t\t\t\n\t\t\t\t\t\t<div class=\"col col-12 snk-textColumn\">\n\t\t\t\t\t\t\t<div class=\"snk-textBlock\">\n\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<h3>By Lushan Sun &#038; Miriam Uebel<\/h3>\n\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<h3>With 2026 well underway, we look at the key themes we see shaping private markets in the months ahead.<\/h3>\n\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\n\t\t\t\t\t\t<div class=\"col col-12 snk-textColumn\">\n\t\t\t\t\t\t\t<div class=\"snk-textBlock\">\n\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<p>We recently sat down as a research team to talk over key theme within private markets as part of the\u00a0<a href=\"https:\/\/blog.landg.com\/categories\/investment-strategy\/podcast-private-markets--carving-a-path\/\" target=\"_blank\" rel=\"noopener\">L&amp;G Talks Asset Management<\/a>\u00a0series.<\/p>\n<p>Discussion centred on why we believe global diversification matters more than ever, how we think it\u2019s possible to balance inflation resilience with a total\u2011return mindset, and the practical implications for real estate, infrastructure and private credit.<\/p>\n<p>Below, we\u2019ve summarised some of the key takeaways from the episode.<\/p>\n\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\n\t\t\t\t\t\t<div class=\"col col-12 snk-textColumn\">\n\t\t\t\t\t\t\t<div class=\"snk-textBlock\">\n\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<h3>2025 in review and key themes for 2026<\/h3>\n\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<p>Private credit and infrastructure delivered another year of steady returns in 2025. Real estate valuations appeared to bottom out, meaning income was the main driver of return (see table below).<\/p>\n<p>Meanwhile, global public equities performed strongly. From a total portfolio perspective, this would have reduced private market weightings for many asset owners, potentially setting up a more active year for allocations in 2026.<\/p>\n\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t<\/div>\n\t<\/section>\n\n\n\n\t<section class=\"snk-section snk-section_noPadding\">\n\t\t<div class=\"container container-xs\">\n\t\t\t<div class=\"snk-media snk-media_image\">\n\n\t\t\t\t\t\t\t\t\t<img decoding=\"async\" data-src=\"https:\/\/assetphysics.com\/wp-content\/uploads\/2026\/02\/pm-review-chart-1.png\" alt=\"Chart 1 - Market &#038; Economics\" title=\"pm-review-chart-1\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" class=\"lazyload\" style=\"--smush-placeholder-width: 1040px; --smush-placeholder-aspect-ratio: 1040\/720;\" \/>\n\t\t\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t<\/section>\n\t\n\n\n\t<section class=\"snk-section snk-section_xs\" >\n\t\t<div class=\"container container-xs\">\n\n\t\t\t\n\n\t\t\t\n\t\t\t\t<div class=\"row snk-textColumns\">\n\t\t\t\t\t\n\t\t\t\t\t\t<div class=\"col col-12 snk-textColumn\">\n\t\t\t\t\t\t\t<div class=\"snk-textBlock\">\n\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<p>New capital allocations were mixed. Based on fund closes in 2025, it was a record year for infrastructure, modest improvement for real estate and weaker in private equity and credit.<\/p>\n<p>Our three main themes for 2026 are as follows:<\/p>\n<ul>\n<li><strong>Geopolitics:<\/strong>\u00a0Amid ongoing uncertainty, investors may want to seek out geographical diversification particularly stable complements to the US.<\/li>\n<li><strong>Inflation resilience:<\/strong>\u00a0We believe sticky inflation underscores the benefits of assets with pricing power that may enable cashflows to rise in inflationary conditions.<\/li>\n<li><strong>Total-return approach:<\/strong>\u00a0As interest rates remain elevated, harvesting income yield alone may not be sufficient to deliver the performance most equity investors are wanting.<\/li>\n<\/ul>\n\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t<\/div>\n\t<\/section>\n\n\n\n\t<section class=\"snk-section snk-section_xs\" >\n\t\t<div class=\"container container-xs\">\n\n\t\t\t\n\n\t\t\t\n\t\t\t\t<div class=\"row snk-textColumns\">\n\t\t\t\t\t\n\t\t\t\t\t\t<div class=\"col col-12 snk-textColumn\">\n\t\t\t\t\t\t\t<div class=\"snk-textBlock\">\n\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<h3>Real estate: Selection, location and the spectrum of income<\/h3>\n\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<p>Long\u2011term expected returns look reasonable around 7% in the UK and US, a little lower in Europe. The dispersion between sectors is less pronounced than in the past decade, so a simple \u201cown more XYZ sector\u201d approach is unlikely to be a free lunch.<\/p>\n\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t<\/div>\n\t<\/section>\n\n\n\n\t<section class=\"snk-section snk-section_noPadding\">\n\t\t<div class=\"container container-xs\">\n\t\t\t<div class=\"snk-media snk-media_image\">\n\n\t\t\t\t\t\t\t\t\t<img decoding=\"async\" data-src=\"https:\/\/assetphysics.com\/wp-content\/uploads\/2026\/02\/pm-review-chart-2.png\" alt=\"Chart 2 - Market &#038; Economics\" title=\"pm-review-chart-2\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" class=\"lazyload\" style=\"--smush-placeholder-width: 1040px; --smush-placeholder-aspect-ratio: 1040\/720;\" \/>\n\t\t\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t<\/section>\n\t\n\n\n\t<section class=\"snk-section snk-section_xs\" >\n\t\t<div class=\"container container-xs\">\n\n\t\t\t\n\n\t\t\t\n\t\t\t\t<div class=\"row snk-textColumns\">\n\t\t\t\t\t\n\t\t\t\t\t\t<div class=\"col col-12 snk-textColumn\">\n\t\t\t\t\t\t\t<div class=\"snk-textBlock\">\n\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<p>In such an environment, we believe the following approaches may help investors find alpha:<\/p>\n<ul>\n<li><strong>Going beyond sector tilts.<\/strong>\u00a0We see alpha increasingly coming from forensic segment and asset selection and location intelligence.<\/li>\n<li><strong>Being deliberate about income style.<\/strong>\u00a0At one end, long\u2011income assets with inflation\u2011linked leases may look more attractive post\u2011repricing. At the other, operational real estate \u2013 which swaps lease security for revenue exposure \u2013 could offer higher potential returns but also requires operating expertise.<\/li>\n<li><strong>Targeting delivery gaps.<\/strong>\u00a0Under\u2011development in recent years has created shortages of high\u2011quality stock. Where planning, cost and demand fundamentals align, we believe development and heavy refurbishment can be compelling sources of excess return.<\/li>\n<\/ul>\n\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t<\/div>\n\t<\/section>\n\n\n\n\t<section class=\"snk-section snk-section_xs\" >\n\t\t<div class=\"container container-xs\">\n\n\t\t\t\n\n\t\t\t\n\t\t\t\t<div class=\"row snk-textColumns\">\n\t\t\t\t\t\n\t\t\t\t\t\t<div class=\"col col-12 snk-textColumn\">\n\t\t\t\t\t\t\t<div class=\"snk-textBlock\">\n\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<h3>Infrastructure: Digital demand meets the power challenge<\/h3>\n\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<p>Big Tech capex continues to dominate the digital infrastructure market. Data centre demand continues to outpace constrained supply, underpinning strong rental growth and higher valuations for power\u2011rich capacity. We expect strong US growth to continue. While European demand growth is relatively more moderate, we see data sovereignty continuing to drive investment. Regions with abundant, stable, lower\u2011cost clean power, such as Iberia and the Nordics, are drawing mounting interest.<\/p>\n\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t<\/div>\n\t<\/section>\n\n\n\n\t<section class=\"snk-section snk-section_noPadding\">\n\t\t<div class=\"container container-xs\">\n\t\t\t<div class=\"snk-media snk-media_image\">\n\n\t\t\t\t\t\t\t\t\t<img decoding=\"async\" data-src=\"https:\/\/assetphysics.com\/wp-content\/uploads\/2026\/02\/pm-review-chart-3.png\" alt=\"Chart 3 - Market &#038; Economics\" title=\"pm-review-chart-3\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" class=\"lazyload\" style=\"--smush-placeholder-width: 1040px; --smush-placeholder-aspect-ratio: 1040\/720;\" \/>\n\t\t\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t<\/section>\n\t\n\n\n\t<section class=\"snk-section snk-section_xs\" >\n\t\t<div class=\"container container-xs\">\n\n\t\t\t\n\n\t\t\t\n\t\t\t\t<div class=\"row snk-textColumns\">\n\t\t\t\t\t\n\t\t\t\t\t\t<div class=\"col col-12 snk-textColumn\">\n\t\t\t\t\t\t\t<div class=\"snk-textBlock\">\n\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<p>How might investors approach digital infrastructure?<\/p>\n<ul>\n<li><strong>Valuation discipline.<\/strong>\u00a0Balancing what\u2019s paid for live, operational capacity versus future cashflows from data centres under construction.<\/li>\n<li><strong>Backing power\u2011secure platforms.<\/strong>\u00a0Time-to-power is the biggest barrier to new developments, meaning investors may wish to prioritise sites and partners with firm, scalable grid access.<\/li>\n<li><strong>Diversifying within digital infrastructure<\/strong>. This may be achieved by combining exposure across data centres, backbone fibre and towers.<\/li>\n<li><strong>Seeking synergistic AI infrastructure partnerships.<\/strong>\u00a0Choosing partners for data centre growth who can create cost synergies across the vertical AI infrastructure stack.<\/li>\n<\/ul>\n\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t<\/div>\n\t<\/section>\n\n\n\n\t<section class=\"snk-section snk-section_xs\" >\n\t\t<div class=\"container container-xs\">\n\n\t\t\t\n\n\t\t\t\n\t\t\t\t<div class=\"row snk-textColumns\">\n\t\t\t\t\t\n\t\t\t\t\t\t<div class=\"col col-12 snk-textColumn\">\n\t\t\t\t\t\t\t<div class=\"snk-textBlock\">\n\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<h3>Private credit: Resilient IG and nuanced sub-IG<\/h3>\n\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<p>2025 was a record year for IG private credit issuance, led by infrastructure and utilities. Spreads are tight, but higher base rates keep all\u2011in yields attractive, in our opinion, relative to history. Credit quality has also been resilient. We retain high conviction here for 2026.<\/p>\n<p>In sub investment\u2011grade (sub-IG) credit, the high\u2011profile First Brands* bankruptcy made headlines in late-2025, prompting a healthy re\u2011examination of portfolio credit quality and underwriting standards. Activity slowed in Q4, but we see no evidence of systemic stress to date.<\/p>\n<p>Defaults remained relatively low. Returns moderated (c. 9.5% in 2025 vs c.11% in 2024) mainly due to the rates\/spread backdrop rather than loss severity.<\/p>\n<p>What are the key considerations for sub-IG in 2026?<\/p>\n<ul>\n<li><strong>Higher-for-longer:<\/strong>\u00a0Elevated rates support investor returns but may strain highly levered borrowers, especially the 2021 vintage that is due to refinance.<\/li>\n<li><strong>Uncertainty in AI exposure: <\/strong>A large proportion of direct lending borrowers are in technology or tech\u2011adjacent sectors. AI will create winners and losers. We believe it\u2019s important to focus on managers with sector depth, proactive surveillance and credible workout capabilities.<\/li>\n<\/ul>\n\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t<\/div>\n\t<\/section>\n\n\n\n\t<section class=\"snk-section snk-section_xs\" >\n\t\t<div class=\"container container-xs\">\n\n\t\t\t\n\n\t\t\t\n\t\t\t\t<div class=\"row snk-textColumns\">\n\t\t\t\t\t\n\t\t\t\t\t\t<div class=\"col col-12 snk-textColumn\">\n\t\t\t\t\t\t\t<div class=\"snk-textBlock\">\n\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<h3>Final thoughts<\/h3>\n\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<p>2026 is shaping up to be an active and complex year. We believe that focus on global diversification, pricing power and alpha generation are the key to resilience and outperformance.<\/p>\n<p><em><strong>Assumptions, opinions, and estimates are provided for illustrative purposes only. There is no guarantee that any forecast will come to pass.\u00a0<\/strong><\/em><\/p>\n<p><em><strong>It should be noted that diversification is no guarantee against a loss in a declining market.\u00a0<\/strong><\/em><\/p>\n<p><em><strong>*For illustrative purposes only. Reference to a particular security is on a historic basis and does not mean that the security is currently held or will be held within an L&amp;G portfolio. The above information does not constitute a recommendation to buy or sell any security.\u00a0<\/strong><\/em><\/p>\n<p>More about Lushan Sun<br \/>\nHead of Cross-Asset Research, Private Markets, Asset Management, L&amp;G<br \/>\n<a href=\"https:\/\/blog.landg.com\/authors\/private-markets\/lushan-sun\/\" target=\"_blank\" rel=\"noopener\">LGIM Blog \u2013 Lushan Sun, Private Credit Research Manager<\/a><\/p>\n<p><strong>Disclaimer:<\/strong>\u00a0Views in this blog do not promote, and are not directly connected to any L&amp;G product or service. Views are from a range of L&amp;G investment professionals, may be specific to an author\u2019s particular investment region or desk, and do not necessarily reflect the views of L&amp;G. For investment professionals only.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a class=\"snk-btn-link\" href=\"https:\/\/blog.landg.com\/categories\/markets-and-economics\/private-markets\/carving-a-path-in-private-markets\/\" target=\"_blank\" rel=\"noopener\"><span>Link zum L&amp;G Blog<\/span><\/a>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t<\/div>\n\t<\/section>\n","protected":false},"excerpt":{"rendered":"<p>With 2026 well underway, we look at the key themes we see shaping private markets in the months ahead.<\/p>\n","protected":false},"author":100,"featured_media":21761,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"_co_authors":[],"footnotes":""},"categories":[],"tags":[224,767,167],"type_content":[659,18,35,36],"class_list":["post-21760","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","tag-private-markets","tag-real-assets","tag-technology","type_content-analysis","type_content-article","type_content-comment","type_content-infographic"],"acf":{"homepage_featured_article":true},"_links":{"self":[{"href":"https:\/\/assetphysics.com\/de\/wp-json\/wp\/v2\/posts\/21760","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/assetphysics.com\/de\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/assetphysics.com\/de\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/assetphysics.com\/de\/wp-json\/wp\/v2\/users\/100"}],"replies":[{"embeddable":true,"href":"https:\/\/assetphysics.com\/de\/wp-json\/wp\/v2\/comments?post=21760"}],"version-history":[{"count":7,"href":"https:\/\/assetphysics.com\/de\/wp-json\/wp\/v2\/posts\/21760\/revisions"}],"predecessor-version":[{"id":21779,"href":"https:\/\/assetphysics.com\/de\/wp-json\/wp\/v2\/posts\/21760\/revisions\/21779"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/assetphysics.com\/de\/wp-json\/wp\/v2\/media\/21761"}],"wp:attachment":[{"href":"https:\/\/assetphysics.com\/de\/wp-json\/wp\/v2\/media?parent=21760"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/assetphysics.com\/de\/wp-json\/wp\/v2\/categories?post=21760"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/assetphysics.com\/de\/wp-json\/wp\/v2\/tags?post=21760"},{"taxonomy":"type_content","embeddable":true,"href":"https:\/\/assetphysics.com\/de\/wp-json\/wp\/v2\/type_content?post=21760"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}