Investors use credit across public and private markets globally; active credit and duration management mitigates downside risks

Evolving objectives drive flexible allocations across the credit continuum

Across public and private markets, investors are using credit to meet distinct portfolio objectives.

When considering credit opportunities, almost half of investors (49%) take a holistic view and consider options across both public and private credit. That’s according to the 2026 Schroders Global Investor Insights Survey.

Investors are looking to credit to play a role beyond yield. Rather than treating credit as a single asset class, the data shows investors are matching credit strategies to distinct portfolio objectives.

Figure 1: Different credit strategies for different objectives

Investment grade corporate bonds 55%

Developed market government bonds 54%

Source: Schroders Global Investor Insights Survey 2026. Investors were asked which credit strategies they use to achieve each of the objectives, and to select up to two of 15 strategies.

The results show a segmentation of credit roles: investment grade credit for income, real estate and infrastructure debt for resilience, and higher-risk

When looking for reliable real yield, investors’ top preference was investment grade (IG) corporate bonds. That likely reflects the repricing in fixed income since the ultra-low-rate environment that followed the global financial crisis and pandemic. The starting yield on many IG corporate bonds now translates into a positive real yield (after inflation) that allows investors to secure steady, reliable income. At the same time, despite broader economic and geopolitical concerns, corporate fundamentals remain strong with default rates low and few signs of deteriorating credit quality.

That said, credit spreads (the premium paid for holding additional credit risk) are tight by historical standards, meaning there is less of a cushion if conditions were to deteriorate. An active approach, identifying issuer-specific risk, can help to mitigate this risk.

Developed market government bonds also featured among the top two choices for reliable real yield, likely reflecting both improved nominal yields and, in some markets, access to inflation-linked securities that can potentially help protect real income.

Julien Houdain, Head of Global Fixed Income , said “While starting yields remain attractive, shifts in market narratives can have a significant impact on direction. In this environment, an active approach to credit and duration management is better positioned to capture opportunities while helping to mitigate downside risks.”

Find out more about investors’ current concerns and how they are responding: visit Schroders Global Investor Insight Survey 2026

But income is only one objective. For capital resilience, investors favour strategies with more defensive characteristics, with real estate and infrastructure debt ranking highest for this objective.

In real estate, a substantial valuation reset across the underlying asset class means lending today represents an attractive, lower-basis opportunity. At the same time, long-term forces underpinning demand for well positioned properties remain supportive. These include demographic change, evolving consumer behaviour, technological adoption and the global energy transition.

Resilience also stems from certain structural features. There remains a considerable inefficiency in commercial real estate lending, due to regulation, creating a gap in available capital loans on land acquisition, development, construction or heavy transition projects. Meanwhile, in several parts of the market, property leases include explicit rent escalation mechanisms linked to inflation indices, while broader supply constraints and elevated construction costs are limiting new supply and supporting rents, supporting the long-term prospects and inflation resilience of established assets.

Infrastructure assets, meanwhile, often support essential services and generate stable, long-term cash flows through contractual income streams that are frequently inflation-linked and floating rate in nature. Combined with high barriers to entry, these characteristics have helped the sector remain comparatively resilient during periods of inflation and market volatility.

Michelle Russell-Dowe, Co-Head of Private Debt and Credit Alternatives, said “The transition to an income total portfolio approach continues to gain momentum in investing. It offers tremendous potential benefits as a way to best manage through cycles and market change by applying the ‘right tool at the right time’. It also allows investors to access more stable mechanisms to generate returns, benefitting from credit risk premium and liquidity premium – and from providing capital where there are fewer crowds. Likewise, remaining flexible rather than in strict buckets allows capital to move toward opportunity. For example, today, where credit risk premium is lower, investors can seek safety through lower basis and collateral security in real estate credit or infrastructure debt, or seek relief from common corporate sector concentrations in asset-based finance, which can offer investment grade risk profiles with higher returns.”

While capital resilience is associated with defensiveness and stability, alpha tends to come from a different set of credit exposures: those where dislocation, complexity and security-specific opportunities give active managers greater room to add value. Distressed or special situations credit and emerging market debt were investors’ top choices for alpha.

Distressed credit situations are often highly security-specific and specialist investors can influence or improve recoveries through restructuring expertise.

Emerging market debt offers a broad opportunity set. Emerging markets are home to some of the world’s most disciplined central banks, rapidly expanding middle classes, innovative economies and many first-class corporations. A relative lack of information and liquidity (compared to developed markets) can create mispricings, and returns are driven by multiple country‑ and security‑specific factors where skilled active management can add value.

The broader message from the survey is that investors are using different parts of the credit universe more selectively, and that includes private credit. Only 22% of respondents have no current allocation to private credit in their portfolio.

Figure 2: Most survey respondents currently allocate to private credit

Source: Schroders Global Investor Insights Survey 2026. Investors were asked approximately what proportion of their overall credit portfolio is allocated to private credit today.

While some areas of the private credit market have come under greater scrutiny, the opportunity set extends well beyond traditional direct lending into a wider range of strategies with different risk, return and liquidity characteristics, including real asset debt, as well as the broad spectrum of opportunities within securitised credit and asset-based finance.

This reinforces the case for looking across the full credit continuum. In a market where income, resilience and alpha may come from different sources, investors are increasingly building allocations around portfolio objectives rather than asset-class labels.

This suggests that flexibility matters more than ever: not simply in moving between public and private credit, but in identifying which parts of each market are best suited to the job at hand.

Zapisz się na nasze Analizy

Odwiedź nasze centrum preferencji, gdzie możesz wybrać, które Analizy przygotowane przez Schroders chcesz otrzymywać.