How Schroders Capital Solutions designs and manages multi-private markets portfolios
Private markets can improve portfolio outcomes, especially when integrated deliberately across return, risk, liquidity and governance. Our multi-private market strategy showcases how we achieve this in practice.
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From allocation to portfolio construction
In private markets, the strategic question for investors is no longer simply whether to allocate. It is how to do so in a way that improves total-portfolio outcomes. In a world of more persistent inflation, higher dispersion and less reliable public market correlations, that could mean thinking beyond single-asset strategies.
For many investors - particularly those building or broadening a private markets programme - a managed multi-private markets solution can offer a more efficient and direct route. It combines access across private equity, infrastructure, real estate and private debt or credit alternatives, while also providing investors with a clearer framework for pacing, liquidity and risk management.
The benefits do not come from diversification alone. They come from designing the portfolio as an integrated whole: deciding the role private markets should play within a broader portfolio, identifying where capital is best deployed, selecting managers to access differentiated sources of return, and ensuring the portfolio can adapt as market conditions change.
This shift is supported by evidence suggesting that private markets can offer return premia and diversification benefits over the long term.
Private market returns have exceeded public markets over the long term
Past performance is not a guide to future performance and may not be repeated. SCPE co-investments performance is net of underlying fees and carry and gross of Schroders Capital fees and carry. Realised IRR and multiple is based on full realisations, partially realisations and IPOs as of Q2 2025 (IPOs valued at last quarter end date) Greencoat Core+ refers to UK wind levered return since inception to Q2 2025 (Total Return Index NAV, (NAV + Reinvested Dividends). SC EU Value Add net levered returns of 15.2%, refers to 31 realised and unrealised transactions below €100m in size (Q2 2025). Dark blue bars represent relevant Preqin benchmark indices, returns annualized over 10 years (Q2 2015 – Q2 2025).
Past performance is not a guide to future performance and may not be repeated. Source: Schroders Capital, 2025. The private markets portfolio comprises: SCPE co-investments (58%), Greencoat UK Wind (30%) (60% levered), Preqin Value Add Real Estate Index (12%). The public portfolio comprises: 60% global equities (MSCI All Country World Index) and 40% global bonds (BofA Global Broad Market Index). The combined public-private portfolio allocation is: 48% global equities, 32% global bonds, 11% SCPE co-investments, 6% Greencoat UK Wind (levered), and 3% Value Add real estate.
Building portfolios, not allocations
The principles outlined above underpin our approach to constructing multi-private markets portfolios at the total portfolio level, rather than treating each asset class or strategy in isolation.
That distinction matters. Private markets are not a single exposure, but a broad opportunity set with very different risk and return drivers, cashflow profiles and liquidity characteristics.
A well-constructed solution can target more tailored outcomes by combining private markets strategies delivering growth, contracted income, inflation sensitivity and downside resilience – aligning these components to the investor’s overall objectives rather than allocating to them independently.
In practice, this requires integrating asset allocation, manager selection, risk analysis and implementation into a single process. It also requires access to specialist capabilities across private equity, infrastructure, real estate and private debt, supported by dedicated sustainability, operations, tax and risk capabilities.
The result is a single access point to private markets, where portfolio construction, oversight and implementation are aligned from the outset, packaging complexity and delivering simplicity.
Start with outcomes, not asset classes
Our process begins with four core questions:
- What return is required?
- What level of risk can be tolerated?
- What are the liquidity requirements?
- What role should private markets play as part of the total portfolio, alongside public assets – including, where relevant, specific sustainability or impact objectives?
These questions shape the portfolio before we make a single allocation decision. Where relevant, this includes incorporating sustainability or impact considerations alongside financial objectives, ensuring these are reflected in portfolio construction from the outset.
From there, we establish a strategic asset allocation across not only asset classes, but also across implementation methods – including primaries, co-investments, secondaries, semi-liquid vehicles and direct investments. The objective is to build a portfolio with differentiated and distinct return drivers, rather than a bundle of exposures that appear to be distinct but behave like repackaged beta.
Selectivity is critical. There is true upside in choosing the right sub-sectors across asset classes, implementation methods and partner GPs when investing in private markets. Return dispersion is far higher than in public markets, meaning outcomes depend heavily on where and with whom capital is deployed. We spend significant effort identifying segments where technical expertise, sourcing, track record and governance supports a strategy delivering genuinely distinct sources of return.
Position sizing is equally important. We assess this using economic risk and realistic cashflow assumptions, rather than relying solely on reported NAV volatility. This involves looking through valuation marks to underlying risk drivers, modelling deployment and distributions, and stress testing how the portfolio behaves under different scenarios.
This philosophy is outcome-driven, risk-first, liquidity-conscious and adaptive. It is designed to help investors avoid hidden concentrations, keep capital efficiently deployed, and adjust allocations as relative value evolves across the opportunity set.
That is as relevant for evergreen and semi-liquid strategies as it is for closed-end programmes. A robust framework is required to absorb inflows, manage pacing and preserve optionality – particularly in environments where liquidity can deteriorate and investors risk becoming forced sellers. Aligning investor liquidity terms with the liquidity of the underlying strategies or vehicles and flexibility to redeploy is also important for portfolio stability over time.
Deployment matters
One of the advantages of a multi-private markets approach is flexibility. Where certain areas of the market are slow or overheated, capital can be directed to segments where entry points are more compelling.
Different implementation methods also play a role in improving portfolio efficiency. Secondaries can provide exposure to more seasoned portfolios, co-investments can enhance capital efficiency and reduce fee drag, and semi-liquid structures can help manage inflows and liquidity.
The combination of these approaches can reduce the J-curve, support diversification and create a more balanced return profile over time.
Private equity typically acts as the primary driver of capital growth, accessing a broad and less efficient segment of the global economy. Infrastructure, real estate and private credit can complement this by providing more stable or contractual income, and elements of inflation linkage throughout the life of the portfolio. Used together, these levers can create a smoother deployment path and a more efficient compounding profile.
Active management is therefore central to the way we invest. The focus is not on short-term, tactical, trading (of long-term assets), but on continuously assessing relative value, pipeline visibility, liquidity needs and the balance of risks across the portfolio.
This allows allocations to evolve as conditions change – whether that reflects, for example, secondary transactions beccoming attractively priced on a risk-adjusted basis, improved relative value in specific sectors or geographies, or strong income characteristics in real assets.
The objective remains consistent: to keep capital efficiently deployed, maintain diversification and improve the probability of achieving long-term portfolio outcomes.
Governance and active portfolio management: the real differentiator
Governance and active portfolio management are central to how multi-private markets portfolios are implemented in practice.
Managing private markets as an integrated portfolio requires more than initial asset allocation. It requires a combination of portfolio-level oversight, specialist expertise across asset classes, and a governance framework that ensures consistent decision-making over time.
In our approach, this is supported by a portfolio management team with experience across multiple private market cycles, working alongside specialist investment teams across private equity, infrastructure, real estate and private credit. This combination allows for both top-down portfolio construction and bottom-up investment insight.
A key component is the governance structure. An investment committee spanning decades of expertise in the relevant asset class expertise ensures that portfolio-level decisions remain aligned with underlying investment activity, helping to avoid fragmentation between strategy and implementation.
Active portfolio management sits alongside this governance framework. Rather than maintaining static allocations, the portfolio is continuously assessed as capital is deployed, distributions are realised and new opportunities emerge.
This allows allocations to evolve as conditions change — reflecting shifts in relative value across asset classes, sectors and geographies, as well as changes in liquidity and income requirements.
This combination of governance and active management helps ensure that capital remains efficiently allocated, risks are actively managed, and the portfolio evolves in line with its long-term objectives.
This is simply illustrated by the way active portfolio management has improved capital efficiency over time – keeping capital allocated to the most attractive opportunities as conditions evolve can result in better investment outcomes.
Active portfolio management helps keep capital efficiently deployed
Source: Schroders Capital. 1Return assumptions: Cash 2%, PE 17.5%, Real Estate 14%, and Infrastructure 14%. Portfolio weights for the 5% cash portfolio are Cash 5%, PE 55%, Real Estate 20%, and Infrastructure 20%; for the 20% cash portfolio they are Cash 20%, PE 45%, Real Estate 15%, and Infrastructure 20%. For illustrative purposes only, outcomes are not guaranteed.
An impact-focused multi-private markets strategy in practice
Schroders Capital Solutions’ climate-focused multi-private markets strategy provides a useful illustration of how this framework can be implemented in practice.
The strategy is constructed around clearly defined outcomes: combining capital growth, income generation and clearly defined environmental and social objectives, supported by measurable outcomes where appropriate; rather than being built asset class by asset class.
In practice, this results in a diversified portfolio spanning private equity, infrastructure, real estate and selective liquid exposures. Each component plays a distinct role: private equity as a driver of capital growth, real assets providing income and inflation sensitivity, and liquid allocations supporting pacing and liquidity management.
Rather than applying sustainability as a screen after portfolio construction, impact considerations are embedded at the outset. Investments are selected based on their ability to contribute to environmental and social outcomes, alongside their financial return potential.
In practice, this can include metrics such as avoided emissions or the number of beneficiaries supported through climate adaptation and social investments.
As the portfolio evolves, capital is deployed and reallocated across asset classes and implementation methods in response to changing market conditions. This allows the strategy to maintain diversification, manage liquidity and continue allocating capital to the most attractive opportunities.
The resulting portfolio provides exposure to a broad range of underlying investments – as illustrated through selected case studies below.
The underlying exposures illustrate how our multi-private markets approach is implemented in practice across asset classes:
- Private equity: exposure to sectors such as healthcare and home care provision, supporting long-term growth and social outcomes
- Infrastructure: investments in renewable energy, including onshore and offshore wind and solar, providing contracted cashflows and inflation linkage
- Climate adaptation: exposure to climate insurance solutions in emerging markets, supporting resilience to climate-related risks
- Real estate and social infrastructure: investments in town-centre regeneration, social infrastructure and affordable housing, contributing to social inclusion and community development
Together, these exposures illustrate how a multi-private markets strategy can be constructed to deliver both financial and impact outcomes in a single, integrated portfolio.
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