Amid rising geopolitical conflict, private credit markets still represent an attractive asset class for investors due to their return potential, according to research by Schroders.
The investment firm’s 2026 global investor insights survey found that capital resilience is an important objective for private credit allocations, with 39 per cent of experts surveyed highlighting this as a key driver for both real estate and infrastructure debt exposures.
Respondents indicated that direct lending is seen equally as a source of reliable income generation as well as alpha potential. Meanwhile, 48 per cent of surveyed experts view investment grade private credit as delivering dependable yield.
Schroders’ survey assessed more than 1000 institutional investors and wealth managers globally, representing US$72tn (£54tn) in assets.
The respondents were surveyed between April and May 2026, and were based across North America, Europe, Asia Pacific, Central and South America, the Middle East and South Africa.
Read more: Exclusive: Schroders’ James Lowe on the LTAF opportunity
As investors worldwide seek a greater mix of cashflow, diversification, resilience and return opportunities to hedge against geopolitical uncertainty, Schroders said this is visible in credit allocations across both public and private markets.
Within public credit markets, 62 per cent of respondents said distressed and special situations credit was primarily viewed as a source of alpha generation, with 61 per cent pointing at high yield bonds and emerging market debt as sources of alpha.
Read more: Schroders Capital AUM jumps by £800m in Q1
With rising conflict and global leadership being questioned, approximately half of respondents listed commodity and energy price shocks as well as economic slowdown or recession as events most likely to impact portfolios in the year ahead.
“In recent years we have moved from a globalised world prone to deflationary shocks to a geopolitically fragmented world, where restructuring of supply-chains can contribute to inflationary shocks,” said Johanna Kyrklund, group chief investment officer at Schroders. “The ability to be selective, manage risk and respond dynamically to fast-moving market conditions is our active edge to navigating these choppier waters,” she added.
