A Schroders Capital report has shown that 85 per cent of investors expect greater market volatility over the next year.
The report interviewed 1,000 investors and intermediaries with combined assets under management of around $72 trillion.
Conflict in the Middle East (69 per cent), uncertainty over US foreign policy and global leadership (67 per cent), and threats to energy security (60 per cent) were the most-cited concerns. Diversification (84 per cent) and downside protection (83 per cent) were seen as the most important portfolio priorities.
Nils Rode, chief investment officer at Schroders Capital, says: “While financial markets have demonstrated remarkable resilience in the face of geopolitical tensions, policy uncertainty and shifting economic expectations, the underlying drivers of volatility have not disappeared.
“Recent developments in the Middle East illustrate this dynamic clearly. The agreement of a fragile truce in Iran has reduced immediate fears of a broader regional escalation and helped stabilise markets. Yet a durable peace settlement remains to be agreed, leaving the potential for renewed disruption.”
Private equity continued to show signs of an early recovery in early 2026. The report pointed to data showing that investment and exit activity improved in the first quarter of the year by value, but not by number, suggesting the prolonged downturn that followed the post-pandemic boom, which is now in its fifth year, is beginning to ease.
However, the report also noted that this “nascent rebound” faces headwinds from geopolitical uncertainty and macroeconomic volatility that is yet to feed through into data.
Across private equity, private debt, infrastructure and real estate, Schroders Capital itself maintained that it continues to favour segments characterised by disciplined valuations, operational value creation, diversified income streams and structural demand drivers.