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2026 Themes for Asset Managers
With the UK budget now behind us, Stephenson Harwood’s Private Capital & Funds team summarises some key themes that will be front-of-mind for asset managers in 2026.
These include the continued importance of private credit and secondaries/continuation funds, the need for growth of private capital investment into infrastructure, questions around diversification and the choice between growth strategies - M&A or a strategic partnership, UK investment allocation, and communicating the value of active management:
- Private credit is here to stay. The flexibility offered by private credit means the competition remains live with traditional lenders. Private credit managers with the best due diligence and risk strategies will continue to thrive, as well as those who retain flexibility to move to more defensive or stable sectors during periods of economic uncertainty or those who ensure that risk and return is balanced appropriately.
- Clog-up in private funds. Despite many exits in 2025 being at double-digit uplifts to carrying value, concerns regarding PE valuations, and a reduced functioning of exit markets, including M&A and IPOs, has meant that secondaries and continuation funds continue to be a buoyant area.
- Private assets in public hands.The UK Government’s infrastructure plans necessitate private market investment, and, for long-term savers, inflation-protected investments, that are uncorrelated to equities, should be considered an appropriate investment for retail investors. However, access is limited. LTAFs and ELTIFs are one answer, but the liquidity mismatch remains for illiquid assets, no matter the timeframe for redemption. In stress scenarios, it’s usually the last remaining investors that suffer most. On the other hand, listed investment companies, despite current issues with prevailing discounts, remain a permanent capital vehicle that can provide the ‘mass affluent’ with access and exit opportunities, across private and real assets.
- M&A or partnership. While some asset managers remain committed to their specialism and existing distribution networks, we have seen the rise of the ‘mega-manager’, with large asset management houses sweeping up smaller players to provide a comprehensive offering under one roof. Asset managers have already, or are considering, expansion into new asset classes and distribution channels. Is M&A, or team hires, the best way to do this? Or perhaps instead forming partnerships with businesses that offer differing or complementary skillsets, distribution capabilities or balance sheet support, without affecting culture or, most importantly, client service?
- Client solutions. The key for the asset management industry is to offer the right product to the right investor. Evergreen structures are popular amongst certain investor groups, when compared to the standard closed-end, fixed life fund structure - new subscriptions can be invested immediately and exposure can be maintained throughout the investment duration. With more liquid strategies, active ETFs will not replace mutual funds, but in both cases can the investment strategy deal with additional or reduced capacity? The focus for the industry should be on client solutions, not structure, with client needs being paramount.
- Allocation to UK. Low retail investment in the UK is storing up a potential problem for retirees, hence the limitation on allocation to cash ISAs announced by the Chancellor this week. But even where investment is made by UK retail investors, it’s at levels that are approximately half of the UK global weighting. Pension funds, with fiduciary duties to consider, have been, in general, allocating less than global weighting to the UK, even while UK investments continue to perform well. Should there be mandating of allocation to the UK or other stimuli to encourage a greater share for the UK? The UK Government and regulators need to address these issues and carry through on Mansion House proposals. Education of retail investors and availability of independent advice will be important together with a change in culture around investment warnings, which may skew investors towards avoiding risks instead of encouraging investment.
- Active management should be valued. Regulation has, over the past decade, led to a focus on cost across a number of investor groups, perhaps to the detriment of emphasis on performance results. Greater flexibility in regulation would help to address this misalignment in consideration of client outcomes.
- How big of an opportunity is tokenisation? Potential is large, but it may take more time to see benefits. It should lead to greater democratisation of investment and wider distribution, but this will rely upon a change in infrastructure and the way services are provided.
If you would like to discuss any of the points above, please contact our Private Capital & Funds team.