Private Markets Outlook Q3 2025: Five takeaways for wealth investors

In a market that continues to be defined by uncertainty, the potential of specialist private market strategies to bring enhanced portfolio resilience, returns and income has arguably never been more important.

Schroders Capital recently published its Private Markets Investment Outlook Q3 2025: How to navigate uncertainty, sharing our views on the environment for new private markets investments.

In it, we highlight that uncertainty remains the dominant theme for the global economy, in the face of multiple geopolitical and policy headwinds. The potential of private markets to help navigate this prevailing global uncertainty has arguably never been more important.

Importantly, private markets continue to benefit from cyclical tailwinds. A broader slowdown in terms of fundraising, new deal activity and exits in private equity, infrastructure and real estate is now into its fourth year – and supply of capital in financing markets continues to be constrained.

As a result, private market valuations and yields are generally attractive in both absolute and relative terms – and there are specific opportunities across private asset classes to boost portfolio diversification, resilience and returns. At the same time, in a market with heightened idiosyncratic risk, diversification across private market strategies remains key.

In this article, we present the key takeaways for wealth managers and private investors, highlighting the continuing key role private markets can play in strategic asset allocation.

1. Selectivity and downside protection hold the key
Private markets have historically offered some protection against public market volatility and have often thrived amid environments of uncertainty. We have shown this previously in our study on private equity performance during crisis periods over the past 25 years.

However, in common with our view in the previous quarter, we believe that in the current market environment there will be some private market strategies that exhibit notably better risk/return profiles than others.

Investors should therefore continue to be selective and focus on strategies with downside protection in the form of modest leverage or asset backing, that provide access to companies and assets that are to a degree insulated from global trade tensions, and that can bring diversification through reduced correlation with listed markets and distinct risk exposures.

2. In private equity, three key themes are emerging
Within private equity, we have identified three complementary levers that we believe can help to mitigate today’s challenges:

• Local champions: Backing companies whose revenues are overwhelmingly domestic and service-orientated, limiting exposure to tariff, supply-chain and geopolitical uncertainties (see chart). This can be achieved through a focus on small and mid-market buyouts.
• Transformative growth: Investing in businesses where operational complexity or innovation agendas create controllable value-creation paths and extra return premia, offsetting broader market turbulence. Again, small and mid-buyouts are key opportunities – and continuation investments (also known as GP-led secondaries) also provide a compelling and cost-effective avenue to access the next phase growth for high-quality, private equity-backed companies, without disrupting value creation plans.
• Multi-polar innovation: Allocating to the widening set of regional technology hubs so portfolios capture breakthrough growth wherever it emerges, diversifying away single-market concentration risk. This brings a focus on early-stage venture concentrated in key sector opportunities.

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