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Schroders Positive On Renewable Infrastructure Asia, Europe

Amanda Cheesley Deputy Editor 20 October 2025

Schroders Positive On Renewable Infrastructure Asia, Europe

Nils Rode, chief investment officer at London-headquartered Schroders Capital, the private markets investment arm of Schroders, is quite positive about private markets for the fourth quarter of 2025 and into 2026, notably infrastructure.

Amid macroeconomic and geopolitical volatility, Nils Rode, chief investment officer at Schroders Capital believes that private markets will benefit from a cyclical decoupling and diverse sources of risk which can increase their attractiveness and enhance portfolio resilience.

“In recent months, public equities have broadly rallied, bond markets have stabilised, and expectations of further rate cuts in the US have fuelled investor optimism,” Rode said in a note. “However, dark clouds are forming on the investment horizon. Concerns about the uncertainty and ripple effects of tariffs, uncertainty around central bank policies and inflationary risks – particularly in the US – as well as questions of fiscal sustainability, are being temporarily eclipsed by the current wave of valuation euphoria, especially surrounding areas such as artificial intelligence.”

“At the same time, geopolitical risks stemming from ongoing conflicts in Ukraine and the Middle East, alongside persistent uncertainty over US policy, remain elevated,” he added.

Against this backdrop, Rode believes that select private market strategies can offer a degree of insulation from some of these macroeconomic and market risks. “The breadth and diversity of the asset classes provide exposure to differentiated sources of risk and return that, in combination, can enhance portfolio outcomes,” he continued.

Renewable infrastructure offers exposure to energy prices, for instance, which tend to show limited correlation with broader economic growth. “In general, strategies such as infrastructure and real estate, including both equity and debt exposures, are typically backed by tangible assets, which can support a more resilient return profile during periods of elevated volatility,” Rode said.

His research shows that private equity – particularly in the lower-mid-market segment – has delivered its strongest relative outperformance in periods of heightened public market volatility. 

At the same time, private markets are benefiting from a convergence of cyclical and structural tailwinds that are catalysing compelling opportunities for return generation and portfolio diversification. “Structural tailwinds include the global energy transition and the broader technological revolution, which are reshaping industries and capital flows,” he continued.

Overall, and in contrast to public markets – where indices in many regions are at or near record highs and valuations appear stretched – Rode believes that private markets offer attractive relative value across asset classes, with the notable exception of AI-related late-stage venture investments, which also show signs of exuberance.

“Together, these factors not only increase the relative attractiveness of private markets but also strengthen their resilience by restoring healthier valuation levels and creating a more solid foundation for long-term growth,” he said.

Focus on resilience
Looking ahead to 2026, Rode thinks resilience will remain the defining quality for successful investing. “In an environment marked by macroeconomic uncertainty and geopolitical tension, maintaining a steady investment pace, prudent risk management and a focus on long-term value creation will be essential. Private markets – with their long-term capital, active ownership approach and emphasis on bottom-up value generation – are well positioned to navigate this complexity and contribute to diversified, resilient portfolios,” he said.

Private equity
Rode highlighted that private equity is in a period of recalibration, with fundraising, deal activity and exits still below pre-2022 levels. This environment is creating pricing dislocations and reduced competition, particularly in less efficient segments where capital is scarce.

He sees opportunities in strategies that back local champions, drive transformational growth and harness multi-polar innovation. “Small and mid-sized buyouts, continuation vehicles and selective early-stage venture investments are especially well positioned to capture value as markets adjust – and as active ownership becomes an even greater driver of returns,” he said.

Private debt and credit alternatives
“Private credit continues to show resilience, supported by solid corporate and consumer balance sheets, and higher risk premiums and yields that provide meaningful income potential,” Rode said. “Bank regulation–driven inefficiencies and lower commercial real estate valuations create attractive opportunities in real estate debt. Infrastructure debt also remains compelling, particularly where revenues are inflation-linked or backed by essential assets.”

“The focus on collateral, security and diversification supports opportunities in asset-based finance, while diversifying strategies such as insurance-linked securities offer resilient income and uncorrelated returns,” he continued.

Infrastructure
“The energy transition remains the leading global infrastructure theme, though investment momentum in the US is moderating amid a shifting policy landscape. The segment continues to offer attractive inflation linkage and stable, long-duration income,” Rode said.

He sees the strongest investment opportunities in Europe and Asia. “In Europe and much of Asia, supportive policy frameworks and strong pipelines in wind and solar projects continue to drive investment activity. Beyond core renewables, higher-return strategies are emerging that take measured development risk and invest early in new technologies such as battery storage and green hydrogen that are powering the next phase of the energy transition.”

A number of companies have expanded their infrastructure investment capabilities, such as BNP Paribas Asset Management, which has just launched its BNPP Environmental Infrastructure Income Fund. The fund will invest globally in listed and critical environmental infrastructure covering power and digital infrastructure, water and waste management as well as transportation infrastructure.

Real estate
After a period of price discovery, Rode believes that prospects for global real estate markets are much improved. “Investment volumes remain below pre-2022 levels but are stabilising, rental income is being supported by low new supply and elevated construction costs, and there is evidence that transaction pricing is recovering,” he said.

Amid these dynamics, he believes that the next few years are shaping up to be strong vintages. Rode is particularly drawn to sectors where operational improvement can unlock alpha – such as logistics, living, storage formats and hospitality.

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