Private markets and debt remain attractive as capital continues its search for well-structured investments delivering good risk-adjusted returns without the volatility of equity markets. Investor expectations are evolving beyond simple yield metrics. Capital allocators are demanding greater visibility over underlying assets, stronger grasp on downside protection, and a clear link between return and real-world resilience. 

Gone are the days when “high yield” was enough to compel confidence. In its place: risk-adjusted performance, scenario thinking and measured capital deployment. 

As interest rates trend downwards, unlisted property funds will start to gain support and become more compelling from a return perspective. They may even move to being comparable to private credit returns. However, the private real estate credit space remains particularly attractive given the uncertainty persisting in global markets. 

While unlisted property funds generate returns over much longer terms and rely on both income and capital growth, private real estate credit provides fixed returns over shorter investment terms—offering more certainty and flexibility in an environment where agility matters. 

Consolidation amongst private markets fund managers is accelerating, particularly as larger managers seek to establish and grow market share, especially in private real estate credit. Simultaneously, there’s a trend towards managed accounts amongst financial planners. 

Both developments create genuine opportunities for boutique managers who are not part of a larger homogenised market. Managers like Ark Capital can provide the bespoke and personalised experience that advisers increasingly seek to differentiate themselves from a more standardised landscape and design truly customised investment portfolios for their clients. 

Talk on regulation will continue, though where this leads remains interesting to watch. We’re likely to see requirements for more transparency on investments and valuations. Regulatory tightening will keep surfacing across financial services, especially around credit and disclosure. Borrower quality and counterparty transparency will matter more. Liquidity structures will be stress-tested. 

We’re watching alternative assets become more prominent in investment portfolios, with private real estate credit leading the charge. These asset classes have always been around but they’re now occupying a more significant position in portfolio construction due to sector growth, growing investor awareness of their risk and return profiles, their relative stability compared to volatile equity markets and a growing number of prominent, high-quality managers entering the space. 

For fund managers, this environment is an invitation to lead differently. It calls for discipline, not just in selection but in communication. Investors want to know not only what you’re investing in but why you’re not. They’re asking tougher questions. And they should.

Amidst all this, the flight to quality will intensify. FY26 will reward those who aren’t just opportunistic but principled. The ones willing to say “no” more often than “yes.” Those prepared to educate, to underwrite differently and to lead with conviction, not consensus.

As we move forward, let’s stay focused on the fundamentals but brave enough to challenge assumptions.

What’s your top risk signal for FY26? Read more here

Want more insights like this? Follow Peri Macdonald on LinkedIn.