Germany's KENFO is planning to increase its private markets allocation from 25% to 30% over the next two years, while simultaneously reducing its exposure to private equity. This strategic shift by the sovereign fund, which manages over €28bn and was established to finance nuclear waste disposal, prioritizes real assets like real estate and infrastructure over buyout strategies.

KENFO's head of investment management, Verena Kempe, noted that the fund sees compelling risk-adjusted opportunities in real estate and infrastructure, stating, "We continue to see attractive returns in those markets." However, she cautioned that private equity now requires a more selective approach due to recent underperformance and the impact of higher interest rates and artificial intelligence on business models.

In addition to its private markets recalibration, KENFO has adjusted its fixed income positioning. The fund significantly reduced its US Treasuries holdings by the end of 2025 but has since rebuilt the position. Chief executive Anja Mikus emphasized a flexible approach to Treasuries, highlighting their importance and attractive yields. KENFO reported strong performance, with a 6.2% return in 2025 and 7.9% in the first half of 2026, generating cumulative value of €8.8bn since inception.