The latest Quarterly Manager Intelligence and Market Trends report from independent global investment consultancy bfinance shows that institutional investors are placing greater emphasis on diversification, income stability and inflation protection as markets continue to perform strongly despite an uncertain geopolitical and policy backdrop.
The report, which analyses asset manager search activity and market developments across bfinance’s global client base, indicates that allocators are maintaining exposure to risk assets but are increasingly focused on portfolio resilience, uncorrelated sources of alpha and selective regional opportunities.
Longer-term trend is still towards illiquid assets
Private markets reclaimed a majority share of manager search activity in 2025, accounting for 55% of mandates, continuing the longer-term trend toward illiquid assets among institutional investors.
Within private markets, real assets including real estate, natural capital and infrastructure represented 44% of private market searches and 25% of all new manager searches. This was supported by investor interest in energy transition and digital infrastructure themes and the perception of infrastructure as both a yield substitute and inflation hedge.
Private debt searches represented 37% of private market activity, with investors attracted by historically attractive spreads and resilient underlying company fundamentals, while private equity searches remained focused on secondaries and lower-mid market buyout strategies.
Equity mandates accounted for 21% of total searches. Demand shifted decisively away from global equity strategies and toward emerging markets, which represented close to 60% of all equity searches, the highest level on record for bfinance clients.
This represented one of the busiest periods on record for emerging market equity mandates, as investors sought to diversify regional exposure and take advantage of improving relative valuations in several emerging markets.
In fixed income, institutional demand continued to centre on high-quality assets in developed markets. Investment-grade corporate bonds remained a key area of activity despite tight spreads, reflecting the ongoing requirement for stable income and capital preservation within long-term portfolios.
Diversifying strategies also saw elevated activity. Hedge fund activity remained particularly strong during the final quarter of the year, accounting for 69% of searches within the diversifying segment, as investors sought uncorrelated return streams and greater portfolio resilience in a volatile macroeconomic environment.
Broader investment landscape presents mixed signals
The broader investment landscape continues to present mixed signals. Equity markets and credit have remained resilient, supported by easing monetary policy and structural investment themes such as artificial intelligence, while underlying macroeconomic indicators and geopolitical risks remain fragile.
A weaker US dollar and continued strength in industrial metals linked to infrastructure and technology investment have reinforced investor interest in commodities and real assets as portfolio diversifiers.
Institutional investors are increasingly navigating what the report describes as a “two-track reality”, balancing abundant liquidity and supportive policy conditions against uneven growth momentum, persistent inflation pressures in some sectors and rising political volatility.
Private markets and fundraising trends
Private markets fundraising remained uneven in 2025, with overall activity modestly below trend despite pockets of strength. Transaction volumes in the private equity secondaries market reached record levels of approximately $240 billion, reflecting strong demand for liquidity solutions and continuation vehicles.
Infrastructure markets demonstrated resilience, generating stable double-digit returns in many segments and reinforcing the asset class’s defensive characteristics during periods of macroeconomic volatility.
Fundraising in the asset class reached its highest quarterly level on record in Q4 2025, as investors continued to view infrastructure as a source of stable income and inflation protection.
Real estate performance remained mixed, with steady income but modest capital growth, while valuations and supply dynamics have begun to improve heading into 2026, encouraging a more selective re-entry by investors.
Growing importance of operational due diligence
The report also highlights the growing importance of operational due diligence, particularly in private debt and other less transparent markets. Investors are placing greater scrutiny on governance, collateral verification, valuation processes and reporting standards to better understand risk beyond headline performance metrics.
Recent market events have demonstrated how complex financing structures and insufficient transparency can obscure risks, reinforcing the need for robust operational frameworks and disciplined due diligence processes.
Simon Keane, Investment Content Lead at bfinance, said: “Institutional investors are operating in an environment where strong market performance coexists with persistent macroeconomic and geopolitical uncertainty. The response has not been to retreat from risk, but to become more selective.
“We are seeing greater emphasis on diversification, income stability and uncorrelated return streams, alongside a clear shift toward emerging market equities, real assets and market-independent strategies.
“At the same time, the growing complexity of private markets is reinforcing the importance of operational due diligence. Investors are looking beyond performance to understand how managers manage risk, liquidity and governance across different market conditions. The focus is on building portfolios that can remain resilient across a wide range of scenarios.”
Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. The writer’s views are their own and do not constitute financial advice.
This information should not be relied upon by retail clients or investment professionals. Reference to any particular investment does not constitute a recommendation to buy or sell the investment.
Main image: yue-ma-uY4eLs8gfuo-unsplash
