Market Signals: Why Real Assets, Why Multi-Fund

Key takeaways

Real asset middle market investments are often better positioned to capture growth from secular themes than large, mature assets.
Opportunities are expanding beyond traditional core assets, supported by trends relating to digital infrastructure, energy security, and regional priorities.
Active, multi-fund management is becoming critical, with single strategies struggling to adapt as quickly to market changes.

Today, the backdrop for real assets has reset. Growth is returning, but in different parts of the market than many investors remember. While in the post-pandemic period performance was defined by scale, now it is the result of adaptability and having access to a broad array of organization sizes and business plans.

See more: Private Market Access Without the Hassle

The result is that portfolios need to be positioned for a different set of opportunities than those that defined the past few years.

The rise of middle market investments

To understand where opportunities in real assets are emerging today, it helps to understand how the market has evolved.

In the years following COVID, larger assets were better able to withstand higher interest rates. Scale enabled better financing terms and more resilient capital structures, reinforcing the dominance of established infrastructure platforms.

That dynamic is now changing. As the market has reset in a higher but more stable rate environment and growth re-emerges, smaller and middle market investments are becoming more competitive. In many cases, they are better positioned to capture the next phase of market opportunities.

Lower cost to entry in mid-market infrastructure

Enterprise value to EBITDA (x)

The reason for the dynamic shift is structural. Large infrastructure assets tend to be mature and their focus is often on managing existing cash flows, optimizing operations, and delivering growth projects that, while large in absolute size, are more muted on returns.

By contrast, middle market investments are inherently more dynamic. They are earlier in their life cycle, more operationally flexible, and more exposed to both organic and inorganic growth opportunities. In practice, this means they can improve operations, expand commercial capabilities, and pursue acquisitions in ways that meaningfully accelerate growth. These characteristics also make them well suited to areas such as digital infrastructure and energy systems, where demand is evolving rapidly and new business models are emerging.

Diversified portfolio construction is not about replacing large assets but complementing them. A portfolio that includes multiple dimensions of size and business models is better positioned to capture a wider range of outcomes and to adapt as market leadership shifts.

Strong mid-market returns

Why active, multi-fund

As opportunity expands, the way portfolios are constructed becomes more important. Infrastructure evolves as economies change, with every decade bringing new policy priorities, new technologies, and new risks. What feels different today is the breadth of changes occurring simultaneously and at high velocity.

For instance, digital infrastructure continues to grow, but the opportunity within it is becoming more nuanced, with downside risks growing for some business models. Energy markets are also being reshaped, with the focus having shifted from pure decarbonization toward security, resilience, and national priorities. At the same time, some traditional sectors are being redefined, while others face more persistent headwinds.

In this environment, static allocations can quickly become misaligned. Single funds, by design, have limited flexibility. They typically hold a concentrated set of illiquid assets and require time to reposition. Adjusting exposure across sectors, regions, or themes can take years as managers seek to sell assets and reinvest elsewhere.

Moreover, only investing in listed or unlisted infrastructure assets limits the spectrum of opportunities investors have access to. Combining public and private portfolios allows for access to a more diverse range of underlying asset types.

Listed and unlisted infrastructure sector exposures

A multi-fund, actively managed approach allows for a different level of responsiveness. It enables capital to be reallocated as themes evolve, exposures to be adjusted as risks emerge, and new opportunities to be accessed as they develop. It also provides a clearer view of underlying exposures, helping to manage concentrations that may not be obvious at the surface.

The past few years have reinforced this point. The rise of single-sector strategies, particularly in renewables and emerging clean energy technologies like hydrogen, reflected a period when one theme appeared dominant. However, as the landscape has shifted, those concentrated exposures have been harder to reposition, highlighting the need for portfolios to evolve with markets.

Single-sector strategies can drop off

Why act now

The real assets market has always been changing alongside the needs of the world and that remains the case today. Secular growth themes, particularly in digital infrastructure and energy, are driving strong underlying demand.

At the same time, many portfolios have not fully adjusted. Some remain concentrated in large, mature assets. Others are exposed to narrow themes that no longer reflect the current landscape. In both cases, there is a risk of being positioned for the market that was, rather than the one that is emerging.

The past cycle rewarded scale and stability. The next cycle is likely to reward flexibility, breadth, and active positioning. A real assets allocation built across the full opportunity set, and managed with the ability to adapt, can help investors capture today’s returns while remaining resilient as markets continue to evolve.

A message from Advisor Perspectives and VettaFi: Discover something new! Click here to register for our upcoming webcasts.

The information, analyses and opinions set forth herein are intended to serve as general information only and should not be relied upon by any individual or entity as advice or recommendations specific to that individual entity. Anyone using this material should consult with their own attorney, accountant, financial or tax adviser or consultants on whom they rely for investment advice specific to their own circumstances.

Products and services described on this website are intended for United States residents only. Nothing contained in this material is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The general information contained on this website should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional. Persons outside the United States may find more information about products and services available within their jurisdictions by going to Russell Investments' Worldwide site.

Russell Investments is committed to ensuring digital accessibility for people with disabilities. We are continually improving the user experience for everyone, and applying the relevant accessibility standards.

Russell Investments' ownership is composed of a majority stake held by funds managed by TA Associates Management, L.P., with a significant minority stake held by funds managed by Reverence Capital Partners, L.P. Certain of Russell Investments' employees and Hamilton Lane Advisors, LLC also hold minority, non-controlling, ownership stakes.

Frank Russell Company is the owner of the Russell trademarks contained in this material and all trademark rights related to the Russell trademarks, which the members of the Russell Investments group of companies are permitted to use under license from Frank Russell Company. The members of the Russell Investments group of companies are not affiliated in any manner with Frank Russell Company or any entity operating under the "FTSE RUSSELL" brand.

© Russell Investments Group, LLC. 1995-2026. All rights reserved. This material is proprietary and may not be reproduced, transferred, or distributed in any form without prior written permission from Russell Investments. It is delivered on an "as is" basis without warranty.