Equities: investors’ portfolio objectives override preferences for private or public
The traditional distinctions between public and private equities are breaking down as investors focus more on holdings’ function within portfolios.
Portfolio objectives are increasingly taking precedence over structural distinctions between asset classes, including whether they are public or private, according to the latest annual Global Investor Insights Survey undertaken by Schroders.
The survey, which questioned over 1,000 professional investors from 24 countries, was undertaken after the outbreak of war in the Middle East and against the backdrop of a global energy shock. With volatility on the rise (85% of respondents expect higher volatility over the coming year), investors’ desire to achieve diversification (84%) and downside protection/capital preservation (83%) were top-ranked objectives, ahead of the need for capital growth (37%).
More detailed findings from the survey revealed an evolving approach to asset allocation focusing more on portfolio outcomes than traditional asset class boundaries. When asked to consider public and private equity opportunities, half of investors said they applied a combined framework, considering the full range of options across both public and private. In some regions – such as Asia, the Middle East and South America – this proportion was higher (53%-57%). In Europe, the UK and US it tended to be lower (46%-49%).
Focusing on what equities deliver, rather than their structure
Within this approach investors match different equity strategies — across public and private markets — to specific portfolio objectives such as growth, income and inflation protection.
For long-term capital growth, investors favour actively managed long-only public equities, small and mid-cap public strategies, large cap private equity and small-mid cap private equity. As shown in Figure 1, preferences for these categories are comparable. Again, when seeking income or inflation protection, investors show broadly equivalent interest in assets across the public-private spectrum.
Figure 1: Which asset classes meet which objectives?
Source: Schroders Global Investor Insights Survey 2026. Respondents were asked "which equity strategies do you primarily use to achieve the following objectives?"
How investors view distinctions between public and private – and how these are changing
While investors are willing to consider a wide potential range of asset options, they are discerning about those asset classes’ characteristics and potential advantages and drawbacks for their portfolios. When asked to reflect on how the distinctions between public and private equities were changing, the top three responses included recognition of private equities’ potential benefits, with the fact that companies are remaining private for longer being cited by 46%. Respondents also noted increased institutional capital flows into private equity (37%). However, they also highlighted liquidity concerns, with 47% saying liquidity differences between public and private equities were “becoming more important”.
Johanna Kyrklund, Group Chief Investment Officer at Schroders, said: “Investors are adapting portfolios to a more complex and fragmented market. A holistic approach to public and private assets is also reshaping portfolio construction, with investment objectives looking through a ‘total portfolio approach’ lens taking precedence over traditional benchmarks.”
Find out more about investors' current concerns and how they are responding: visit Schroders Global Investor Insight Survey 2026
In an era of concentrated markets, passive strategies are seen as the biggest danger – rather than a case of public vs private
When looking at challenges posed by different asset classes, investors’ responses again appeared to be focused on the broader problems faced by their portfolios. They were comparatively agnostic about asset structures.
On the question of valuation risk, for example, actively managed long equity and large cap private equity were both cited as exposed. Private equities scored slightly better than public in terms of offering access to differentiated strategies and opportunities, but had a similar profile when it came to resilience in the face of geopolitical uncertainty.
The standout finding revealed in Figure 2, below, is unrelated to any comparison of public/private: it is the fact that 60% of investors see passive, index-tracking strategies as risking concentrated exposure to a narrow set of large-cap stocks. This distrust of passive emerges strongly in other parts of the 2026 survey results: 85% of respondents were confident that active strategies could help meet their objectives over the coming 12-18 months.
Alex Tedder, CIO Equities at Schroders, said: “Much of the equity market’s recent strong performance has been powered by a narrow cohort of technology stocks linked directly to Ai-related capital expenditure such as High-Bandwidth Memory, CPU and Analog chipsets, and related components. These companies are located in the US and in certain Asian countries such as Taiwan and Korea. Behind most of their extraordinary revenue growth are the familiar mega-cap names driving the AI revolution.
“The survey results make clear that investors are worried about market concentration, but so far the scale of capitalization has been justified by growth and earnings strength. The question now is what return on investment these companies will achieve with Ai deployment. There are many reasons to be positive, but success is unlikely to be uniform. At this stage therefore active investment selection, based on fundamental research, is needed more than ever. In addition, given the inherent risks in any innovation cycle, diversification – within the technology sector and more broadly across regions, sectors, and styles – remains highly relevant in our view.”
Figure 2: What challenges do you see with the following asset classes?
Source: Schroders Global Investor Insights Survey 2026. Respondents were asked to identify up to two challenges in relation to each asset class.
Rainer Ender, Global Head of Private Equity at Schroders Capital, added: “Investors are increasingly open to accessing the vast universe of opportunities across private equity, which continue to expand as the trend of companies staying private for longer continues and innovation has become an increasingly global phenomenon. At a time when volatility and persistent uncertainty have become facts of life for investors, the ability to invest across the public and private continuum to access a range of resilient return opportunities and secure true diversification is more important than ever.”
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