Asset managers plan to further increase their use of alternative data for research and analysis. Specifically, they are showing interest in emerging data types such as geolocation and consumer spending data. These are among the findings highlighted in the latest global report produced by Exabel and BattleFin.
The study, conducted with investment managers and analysts working at fund management firms overseeing a total of $820 billion in assets under management, found that 86% expect to increase their use of alternative datasets over the next two years. All data categories are expected to see increased demand, with 51% forecasting a drastic rise in the use of geolocation data over the next three years, and 50% anticipating significant growth in the use of consumer spending data.
The Exabel report, “Alternative Data Buy-side Insights & Trends 2025,” revealed that all surveyed managers and analysts in the U.S., U.K., Singapore, and Hong Kong currently use alternative data in some form. Nearly all respondents (98%) agree that traditional data and official figures are too slow to reflect changes in economic activity.
Consumer spending datasets are considered the most likely to provide a significant informational edge in the near future, according to the study. About 75% of respondents selected consumer spending data, compared with 50% who chose Natural Language Processing (NLP) and sentiment analysis, 45% who opted for social listening, and 43% who selected employment and labor mobility data. Only 7% chose satellite data.
The study also revealed that investment managers and analysts have developed experience in using alternative data: 61% said they began using it between three and five years ago, while nearly one in ten (9%) have used it for more than five years. Around 28% started using it between one and three years ago. Overall, their experience with these data sources has been positive, with 87% rating the process of using alternative data as good or excellent.
In response to these findings, Andreas Aglen, President of Exabel, stated: “Institutional investors have embraced alternative data as a key source of differentiated insight, and demand for alternative data as a critical component in generating alpha continues to accelerate. It is now even more evident that alternative data has become mainstream, serving as a vital source of information for investment managers worldwide.”
The following table shows fund managers’ forecasts for rising demand across different types of alternative data over the next three years, with all categories projected to grow.
According to forecasts from the latest Janus Henderson Global Dividend Index, dividends could grow by 5% in headline terms this year—a projection that would bring total payouts to a record high of $1.83 trillion. “Underlying growth is likely to be closer to 5.1% for the full year, as the strength of the U.S. dollar against numerous currencies slows overall growth,” the asset manager explains. However, the current environment of uncertainty and slower economic growth is prompting investment firms to reflect on what might happen with dividends this year.
BNY Investments notes that we are operating in a world undergoing deep structural changes, where inflation is likely to remain elevated and interest rates are no longer near zero. “Those ultra-low rates were a historical anomaly, a response to the financial crisis, but they do not represent the norm. As inflation persists, we should expect rates to stabilize around 3% to 5% in the long term,” says Ralph Elder, Managing Director for Iberia and Latam at BNY Investments.
In this regard, he believes this shift also has a geopolitical dimension: “We are moving from what we used to call the ‘peace dividend’ after the Cold War to a new era of rearmament. The global economy is fragmenting, shifting from globalization to regional blocs and from free trade to more protectionist policies. All of this contributes to greater uncertainty and structural inflation.”
The Role of Dividends In this context, Elder recalls that dividend income has historically been the most consistent driver of total returns in equity markets, except during highly unusual periods such as quantitative easing, when artificially low interest rates distorted valuations.
“Looking at long-term data, dividend reinvestment dramatically improves outcomes. If you had invested $1 in 1900 and simply followed the market, today you would have approximately $575. But if you had reinvested dividends year after year, that figure would exceed $70,000. That is the power of the compounding effect of dividends over time,” Elder points out.
He argues that in a more volatile, inflationary world with higher interest rates, dividends can provide stability and act as a buffer. “They help smooth the investment journey and will continue to be an essential component of equity returns going forward,” he emphasizes.
This view is also shared by Viktor Nossek, Director of Investment and Product Analytics at Vanguard in Europe: “Dividends remain a fundamental component of long-term equity returns. Since 1993, the FTSE All-World Index has risen nearly 1,150%, with 586 percentage points of that increase attributable to reinvested dividends. It’s a trend that will likely gain importance, especially in a market environment with greater uncertainty and stagflationary tendencies.”
The Impact on Dividends Now then, how do recession risks affect earnings per share (EPS)? According to DWS, recessions with higher inflation rates have historically had a smaller impact on the S&P 500’s earnings per share (EPS) than deflationary recessions. Their analysis shows that the average decline in S&P 500 EPS during recessions has been 20%, from the peak to the trough of earnings over a four-quarter period, with results since 1960 ranging between 4% and 45%. The asset manager notes that although deeper recessions tend to lead to more pronounced EPS declines, the inflationary environment also plays an important role.
David Bianco, Chief Investment Officer for the Americas at DWS, notes that in recessions with inflation above 4%, the impact on S&P EPS is smaller than what would be suggested by the contraction in real GDP. “This is due not only to high inflation driving nominal sales growth but, more importantly, to the fact that—unlike during severe disinflation or deflation—recessions with high inflation can help avoid rising financing costs for the financial sector; limit losses from corporate inventory liquidations; prevent consumers from further delaying purchases in anticipation of falling prices; support commodity prices and demand for related capital goods; enable large companies to implement price increases; and limit asset write-downs that negatively affect reported EPS,” explains Bianco.
In the long term, Bianco expects S&P 500 companies to absorb about one-third of the tariffs ultimately implemented by the Trump administration, which he estimates would impact S&P net earnings by 3.5%, or approximately $10 per share. “Our revised S&P EPS forecasts for 2025 and 2026 are $260 and $285, respectively, assuming slower growth and weak output, but no deep U.S. recession or sharp decline in the value of U.S. assets. We also include a $5 foreign exchange gain in the S&P EPS, as we expect a weakening of the U.S. dollar going forward,” he concludes.
Dividends in the First Quarter In the first quarter of 2025, global dividend distribution volume reached $398 billion, representing a 9.4% increase compared to the same period the previous year. Although growth remains robust, it is significantly lower than the 15.3% rise recorded in Q4 2024.
According to Vanguard, these figures are an early indication that global uncertainties are increasingly weighing on corporate confidence, although the 12-month global dividend distribution volume remains at $2.2 trillion for the year.
“Dividend payouts in 2024 hit record levels. And although distributions continued to rise in Q1 2025, the early effects of potential tariffs are becoming evident. Declines were primarily observed in Asia-Pacific and emerging markets (excluding China); in addition, there were dividend cuts from consumer goods companies in the U.S. (down $5.8 billion year-on-year) and China (down $2.3 billion year-on-year). These losses were offset in the first quarter by dividend distributions from North American financial and technology stocks,” notes Nossek.
While Viktor Nossek, Director of Investment and Product Analytics at Vanguard in Europe, acknowledges that China will continue to drive dividend growth, North America remains the largest payer. “Globally, the dividend distribution landscape is uneven. Japan saw an 18% increase, North America 4%, the U.K. 1%, and Europe 0%. Emerging markets, excluding China, recorded growth nearly 7% lower than the previous year, while companies in the Pacific region, excluding Japan, reduced payouts by 14%. Despite China’s exceptional interim dividend, North America remains the largest dividend payer, with around $191 billion in Q1, followed by emerging markets ($74 billion), Europe ($51 billion), and China ($38 billion),” he concludes.
To shed some light on how this evolution is taking place, Capgemini has analyzed these trends through the lens of three central themes that will define the future of the industry: “customer first” – referring to customer experience – business management – focused on process transformation – and the concept of “intelligent industry” – linked to the impact of new technologies.
According to the consultancy, these themes reflect how companies in the wealth management industry are responding to the industry’s challenges and opportunities, positioning themselves to drive a customer-centric, efficient, and innovative future for wealth management. Specifically, the 10 trends identified by Capgemini’s report are:
Trend 1. Wealth Firms Strengthen Digital Platforms to Consolidate Services and Create a Seamless Customer Experience. The integration of services such as market information, personalized alerts for new releases, and the full range of portfolio products – all accessible through digital platforms – enhances visibility and convenience for clients, resulting in greater overall satisfaction. Thus, faster and smoother interactions, along with innovative portfolio creation options, help wealth firms retain clients and increase wallet share, driving growth and profitability.
Trend 2. Artificial Intelligence Can Enable Tailored Investment Advisory Strategies. AI can tailor product recommendations to individual preferences to spark engagement and build customer loyalty. This technology can help optimize tax planning strategies and provide ways to amplify returns, enhancing clients’ overall financial well-being.
Trend 3. With the Rise of Young Entrepreneurs, Wealth Management Firms Shape Their Advice to Reach HNWIs of All Ages. Wealth firms will increasingly engage with individual HNWIs. To attract these clients, they may target emerging talent, offering financial advice to young professionals navigating business with non-traditional career paths. As they progress in their careers, these individuals can become high-value clients. By understanding the unique financial needs and preferences of young entrepreneurs, wealth firms position themselves as trusted advisors and partners, driving long-term growth.
Trend 4. Wealth Firms Pursue Overseas Expansion to Broaden Services and Boost Revenue. Large wealth management firms are focusing on new wealth hubs and international markets driven by demographic and regulatory changes. They will continue merger and acquisition activity within the wealth management sector, consolidating smaller firms and regrouping larger ones with private equity firms or merging to form major companies.
Trend 5. Wealth Firms Implement ESG Asset Transparency Metrics as Regulators Standardize Sustainability Reporting. A consistent methodology for classifying raw data (carbon emissions, temperature rise) can simplify the measurement of sustainability performance, making it easier for investors to select suitable ESG assets and helping advisors explain how these investments are environmentally friendly. ESG metrics and standardized reporting enable financial services firms to transparently disclose their sustainability practices, combating greenwashing and fostering stakeholder trust.
Trend 6. Digital Onboarding Increases Wealth Firm Revenues Through White Labeling While Accelerating Client Acquisition and Enhancing Compliance. Smart automation in areas such as risk profiling, document signing, and asset transfers improves efficiency in client onboarding. White-labeled digital onboarding solutions can boost revenues for wealth firms. These firms can streamline the end-to-end journey – from prospecting to account opening – by capturing data early to power personalized value propositions, fostering stronger client relationships from the start, and offering wealth firms a comprehensive view of client needs and expectations across all life stages.
Trend 7. Wealth Firms Unify Operating Models to Provide a Consistent Experience to HNWIs Across Geographies. By streamlining operations, wealth firms can tailor services to regional trends, paving the way to bridge the gap between clients in different wealth groups and geographical areas. With a global, client-centric operating model, interactions can be simplified so clients can access the full suite of services on an international scale through a single, unified point of contact.
Trend 8. Gen AI Copilots Can Boost Relationship Managers’ Productivity. Gen AI copilots will automate time-consuming repetitive tasks, allowing relationship managers to use the saved time for more meaningful client interactions. This enables a focus on networking, building personal relationships, and fostering deeper connections. With AI copilots handling manual processes like transcription, scanning policy documents, and even suggesting potential offers or solutions, client-advisor conversations will become more efficient.
Trend 9. Real-World Asset Tokens Powered by Robust Blockchain Networks Improve Liquidity and Access. Tokenization speeds up liquidity for RWA owners such as real estate and facilitates fractional investment in high-value assets. Blockchain networks streamline the RWA token exchange process, enabling 24/7 trading with increased security of valuable assets and reduced transaction costs. The tokenization of RWAs will affect asset classes unevenly. Assets with large market sizes and fewer regulatory hurdles are likely to be adopted earlier. Less liquid assets or those with inefficient market processes will gain significant advantages from tokenization.
Trend 10. “Cloud-Native” Platforms Expand Workflows and Enable Cost-Effective Wealth Management Processes. “Cloud-native” platforms are designed with modular offerings, providing flexibility for wealth firms to scale use cases in line with their API strategy. The fast development cycles of “cloud-native” platforms versus “cloud-enabled” platforms allow for quicker adaptation to evolving market conditions and client needs. As clients and markets change, “cloud-native” platforms can scale up or down to accommodate data volumes. And the pay-as-you-go nature of this platform model supports cost efficiency.
In light of this, how can new financial instruments such as stablecoins be facilitated, and how can legacy systems be modernized?
According to the latest report by Citi Institute, titled “Digital Dollars: Banks and Public Sector Drive Blockchain Adoption”, with the tailwinds of regulatory support and factors such as the growing integration of digital assets into traditional financial institutions and a favorable macroeconomic environment, demand for stablecoins is expected to increase.
In this trend, the report considers blockchain’s potential to be a key lever. “At a global level, government processes remain largely a series of discrete, isolated steps that still rely on large volumes of paper and manual labor. Blockchain offers significant potential to replace existing centralized systems with smoother operational efficiency, better data protection, and reduced fraud,” the institution notes.
However, it acknowledges that significant risks and challenges persist. These include vulnerability to potential fraud, concerns about confidentiality, and secure access to digital assets.
Trends Supporting the Growth of Stablecoins According to the report by Citi Institute, 2025 could be for blockchain what ChatGPT was for artificial intelligence in terms of adoption in the financial and public sectors, driven by regulatory changes.
It is estimated that the total circulating supply of stablecoins could grow to $1.6 trillion and up to $3.7 trillion in an optimistic scenario by 2030. That said, the report notes that the figure could be closer to half a trillion dollars if adoption and integration challenges persist.
“We expect the supply of stablecoins to remain predominantly denominated in U.S. dollars (approximately 90%), while non-U.S. countries will promote central bank digital currencies (CBDCs) denominated in local currency,” the report states.
Regarding the regulatory framework, it points out that in the U.S., stablecoins could generate new net demand for U.S. Treasury bonds, with stablecoin issuers becoming some of the largest holders of these bonds by 2030. “Stablecoins pose some threat to traditional banking ecosystems by replacing deposits, but will likely offer banks and financial institutions opportunities for new services,” notes Citi Institute.
The Role of the Public Sector Finally, the document notes that blockchain adoption in the public sector is also gaining ground, driven by a continued focus on transparency and accountability in public spending, as demonstrated by the DOGE (Department of Government Efficiency) initiative from the U.S. government and blockchain pilot projects from central banks and multilateral development banks.
According to the report, key uses of blockchain in the public sector include: spending tracking, subsidy distribution, public record management, humanitarian aid campaigns, asset tokenization, and digital identity. “Although initial on-chain volumes from the public sector will likely be small, and risks and challenges remain considerable, increased interest from the public sector could be a significant signal for broader blockchain adoption,” the report concludes.
What’s Happening in the Rest of the World? In the case of the European Union, the ECB has passed the halfway mark in the preparation phase of the digital euro project, which began in November 2023. The decision to move to the next phase is scheduled for October 2025, and the final decision on its launch is subject to the adoption of a legal framework.
“The second ECB report on preparations for the digital euro, published in December 2024, highlights significant progress in key areas such as updating digital euro standards, collaboration in user-centered design, selecting potential providers for the digital euro service platform, and proactive engagement with stakeholders,” explains Milya Safiullina, analyst at Scope Ratings.
According to Safiullina, most countries exploring central bank digital currencies (CBDCs) are focused on improving payment systems, financial inclusion, and the effectiveness of monetary policy, while also addressing challenges such as privacy and regulatory frameworks. In her view, countries are making progress, but each has different priorities, ranging from financial sovereignty to reducing reliance on foreign currencies or improving payment efficiency.
“More than 130 countries are exploring the creation of CBDCs, and over 60 are in advanced stages of development, pilot testing, or launch, although only four (Bahamas, Zimbabwe, Jamaica, and Nigeria) have implemented CBDCs. The digital yuan is in an advanced pilot phase. Other major economies are actively researching or testing CBDCs, though they remain in earlier stages,” the analyst highlights.
A new global analysis by Ortec Finance shows that clients are increasingly focused on the ESG credentials of their investment portfolios. However, many wealth managers and financial advisors lack the tools and systems needed to effectively track and manage ESG and climate risks, and the industry must invest heavily to improve.
Around 90% of respondents in the study—comprising wealth managers and financial advisors whose firms collectively manage approximately £1.207 trillion—said they are seeing more clients focused on the ESG credentials of their portfolios, with 12% reporting a drastic increase.
This trend is expected to intensify, with 85% agreeing that client focus on ESG factors in their portfolios will increase over the next 24 months. Only 14% believe this focus will remain the same during that period.
93% of respondents say they are seeing more clients looking to avoid funds and stocks that invest in companies or sectors that harm the environment or contribute to climate change. About 83% report increased client attention to the climate risk potentially affecting their investment portfolios, with 38% of those observing a drastic increase.
Despite this growing focus, only 1% of respondents say they have “very effective” systems and tools to review ESG or climate risk in clients’ funds, stocks, or portfolios. An additional 71% consider their tools and systems to be “fairly effective,” while over one in four (27%) rate their ESG and climate risk review and monitoring tools as only “average.”
Overwhelmingly, more than 94% of respondents agree that the wealth and portfolio management industry must make significant investments in new technologies and systems to improve their understanding of ESG and climate risk factors across client portfolios, as well as in funds and equities more broadly.
“Wealth managers and financial advisors need to be equipped with the right tools and systems to fully analyze and understand the degree to which their clients are exposed to ESG and climate-related risks—especially as this is an area clients intend to focus on more in the coming years. Our research shows that many in the sector feel they lack the proper tools, systems, and resources, so it’s vital that organizations invest in order to empower both themselves and their clients to make the most informed investment decisions,” concludes Tessa Kuijl, Head of Global Wealth Solutions at Ortec Finance.
Banco Santander has agreed to sell to Erste 49% of the capital of Santander Polska for approximately 6.8 billion euros and 50% of its asset management business in Poland (TFI) not controlled by Santander Polska for about 200 million euros, bringing the total amount to around 7 billion euros. The transaction is subject to customary conditions in this type of deal, including the corresponding regulatory approvals.
The transaction, entirely in cash, will be carried out at a price of 584 zlotys per share, which values the bank at 2.2 times its tangible book value per share as of the end of the first quarter of 2025, excluding the announced dividend of 46.37 zlotys per share, and at 11 times 2024 earnings. Additionally, it represents a 7.5% premium over Santander Polska’s May 2, 2025, market closing price, excluding the dividend, and a 14% premium over the volume-weighted average price of the past six months. Santander Polska shares will trade ex-dividend on May 12, 2025.
Following the transaction, Santander will hold approximately 13% of Santander Polska’s capital and intends to acquire the entirety of Santander Consumer Bank Polska before closing by purchasing the 60% currently held by Santander Polska.
The closing of these transactions, expected around the end of 2025, will generate an approximate net capital gain of 2 billion euros for Santander, representing an increase of about 100 basis points in the group’s CET1 capital ratio, equivalent to approximately 6.4 billion euros, and will place the pro forma CET1 capital ratio around 14%.
Strategic collaboration In addition to the acquisition, Santander and Erste announce a strategic collaboration to leverage both entities’ capabilities in Corporate & Investment Banking (CIB), and to allow Erste access to Santander’s global payment platforms, in line with the group’s strategy to become the world’s best open financial services platform.
In CIB, both Santander and Erste will leverage their respective regional strengths to offer local solutions and knowledge of their respective markets to corporate and institutional clients through a referral model that will facilitate client interactions and an agile service offering. In addition, Santander will connect Erste clients with its global product platforms in the United Kingdom, Europe, and the Americas. Both entities will collaborate as preferred partners with the aim of building long-term, mutually beneficial relationships that maximize joint business opportunities.
In payments, the entities will explore opportunities for Erste, including Santander Polska after the transaction closes, which will allow it to leverage Santander’s capabilities and infrastructure in this area, including its PagoNxt payments business.
Santander’s strategy is focused on generating sustainable value for clients and shareholders, through common platforms across each of its five global businesses, enabling the best client experience at the lowest service cost and taking advantage of the group’s network and economies of scale.
Since announcing a new phase of value creation in 2023, Santander has added 15 million new clients, improved its efficiency ratio from 46.6% to 41.8%, and increased its earnings per share by 62%.
Regarding this sale, Ana Botín, Executive Chair of Banco Santander, commented: “This transaction represents a key step in our shareholder value creation strategy, based both on accelerating platform development through ONE Transformation and on increasing the group’s scale in highly connected markets. Santander is achieving very attractive multiples for its bank in Poland, and Erste is acquiring an exceptional business with a first-rate team that will continue generating value for customers, employees, and other stakeholders of Santander Polska. We will allocate the capital generated by this transaction according to our capital allocation hierarchy, which prioritizes profitable organic growth. We plan to dedicate 50% of the amount (about 3.2 billion euros) to accelerate the execution of the extraordinary share buyback programs by early 2026, possibly exceeding the announced buyback target of up to 10 billion euros, given the attractiveness of these transactions at current prices, subject to regulatory approvals. I especially thank Michał and the entire team in Poland for their outstanding contribution to the group over all these years. It has been an honor and a pleasure to work with you.”
Financial impact Following the transaction’s closing, the group will temporarily operate with a CET1 ratio above the target range (12%-13%), with the intention of gradually returning to that range by reinvesting capital according to the guidelines set in its capital strategy, which prioritizes profitable organic growth and investment in its businesses to achieve cumulative growth in profits, profitability, book value, and shareholder remuneration.
Santander plans to distribute 50% of the capital released by this transaction through a share buyback of approximately 3.2 billion euros. This will accelerate the achievement of the up to 10 billion euros share buyback target from 2025 and 2026 results and projected excess capital. As such, the previously announced target could be exceeded, given the attractiveness of buybacks at current valuations, subject to regulatory approval.
The transaction is expected to have a positive impact on earnings per share starting in 2027/2028, thanks to the reinvestment of capital in a combination of organic growth, share buybacks, and potential complementary acquisitions that meet the group’s strategic and profitability criteria. The generated capital will allow Santander greater strategic flexibility to invest in other markets where it already operates in Europe and the Americas with the goal of accelerating growth, increasing income derived from network collaboration across its five global businesses, and maximizing benefits for clients and shareholders.
Europe, the U.S., and Latin America are strong regions in the asset management industry, but beyond these geographies, one market stands out for its rapid growth: Saudi Arabia. It is estimated that assets under management surpassed the 1 trillion Saudi riyal threshold—approximately USD 266 billion—in 2024, driven by 20% year-over-year growth.
According to Samira Farzad, Director of Business Development at HF Quarters, the industry is undergoing a significant expansion phase, consolidating its status as the largest and most dynamic market within the Gulf Cooperation Council (GCC) region. In fact, assets under management are projected to exceed 1.3 trillion Saudi riyals (USD 350 billion) by 2026. This growth trajectory is being substantially fueled by the Kingdom’s ambitious Vision 2030 economic diversification strategy, which seeks to reduce the country’s historical dependence on oil revenues by developing non-oil sectors, along with support from the Financial Sector Development Program.
According to Farzad, while the current landscape is dominated by domestic asset managers affiliated with banks—who control a significant share of industry fund assets and revenue—the competitive environment is expanding with the entry of renowned international firms such as BlackRock and Goldman Sachs, drawn by the Saudi market’s considerable potential.
“The Public Investment Fund (PIF), the country’s sovereign wealth fund with a target of USD 2 trillion in assets by 2030, acts both as a key capital allocator within the industry and as a powerful direct investor shaping the national economy through large-scale megaprojects like NEOM,” the expert notes.
On the investment front, several key trends are actively transforming strategies. “There is a clear shift beyond traditional investments toward alternative assets such as private equity, venture capital, and private credit, which are complementing the already well-established real estate and equity portfolios. Demand for Shariah-compliant products remains a core feature of the market, influencing product development and asset selection criteria,” adds Farzad.
Another major trend is the rise of ESG considerations, which are rapidly gaining relevance, driven both by global investor preferences and national strategic priorities embodied in initiatives like the Saudi Green Initiative.
“Looking ahead, proactive regulatory reforms and market infrastructure enhancements, led by the Capital Market Authority (CMA), aim to foster a more robust, efficient, and investor-friendly environment, which will support the sector’s continued growth,” concludes the Director of Business Development at HF Quarters.
Major asset owners (LAOs) remain confident that their portfolios are well-positioned to withstand a variety of shocks over the next year. However, according to the latest Large Asset Owner Barometer 2025 published by Mercer, they perceive greater vulnerability compared to the previous year regarding several key risks over the next 12 months, including geopolitical risks (35% vs. 31% in 2024), inflation (31% vs. 22%), and monetary tightening (30% vs. 23%). In fact, over a three- to five-year horizon, perceived vulnerability to most risks has shown a slight increase.
In particular, regulatory risks during this period were cited by 32% of LAOs, marking a significant rise from 20% in the previous survey. This reflects growing uncertainty among asset owners about the future direction of regulation after a year marked by major political shifts and their potential impact on portfolios.
“Equity, fixed income, and currency markets are experiencing extreme volatility due to trade tensions, but based on our data, we see that major asset owners are positioned for the long term and generally remain calm about short-term market movements. That said, in the coming year they plan to make strategic portfolio adjustments, as they did last year, to mitigate risks and seize identified opportunities,” says Eimear Walsh, European Director of Investments at Mercer.
Positioning and Asset Allocation
According to Mercer’s report, over the past year LAOs have taken various steps to protect their portfolios, including adjusting fixed income allocation duration (53%) and modifying geographic asset exposure (47%). Notably, nearly half (45%) of respondents increased their allocation to private markets, a trend expected to continue into 2025.
Looking ahead to the next 12 months, 47% expect to increase portfolio allocations to private debt/credit, while 46% plan to boost allocations to infrastructure. This trend is especially pronounced among the largest asset owners; 70% of those managing over $20 billion intend to increase private debt/credit allocations, and 63% plan to invest more in infrastructure.
“Only five percent—one in twenty—of surveyed asset owners manage their investments entirely in-house. In an increasingly complex investment environment, we see strong appetite among major asset owners to outsource investment management, with the more complex asset classes often being handled by external teams,” notes Rich Nuzum, Executive Director of Investments and Global Chief Investment Strategist at Mercer.
Optimism Toward Domestic Markets
While generally confident in their resilience, European asset owners show greater concern about risks than their U.S. counterparts: 43% of European LAOs believe their portfolios are vulnerable to geopolitical threats over the next 3–5 years, compared to 18% in the U.S.
Unlike major asset owners in the U.S. and the U.K., European asset owners appear more optimistic about investing in domestic equities. 34% of Europe-based LAOs expect to increase their allocations to European equities over the next 12 months. On average, LAOs in the U.S. and the U.K. are more likely to reduce their allocations to domestic equity markets.
There is also evidence that European LAOs, which may have previously had lower exposure to private markets than their U.S. peers, are now looking to close that gap. 48% of European LAOs allocated to private markets in the past 12 months, compared to 27% of those based in the U.S.
Focus on AI
More than two-fifths (43%) of major asset owners surveyed believe that artificial intelligence will be a highly influential factor shaping the macroeconomic environment over the next 5 to 10 years, ahead of geopolitics (34%) and energy transition/climate change (34%). Despite this view, more than two-thirds (69%) of LAOs say they have not yet implemented or started developing an AI/GenAI policy.
Another key trend is the increasing incorporation of sustainable investment objectives among asset owners, though climate transition goals are declining. Larger LAOs (with more than $20 billion in AUM) are more likely to integrate sustainability goals into their investment strategies, with 81% including such objectives in their policies, compared to 64% of smaller asset owners. Additionally, over the next 12 months, 24% plan to increase their allocation to ESG/sustainable funds, and 29% expect to increase exposure to impact strategies.
Despite this, the number of LAOs planning to set climate transition and net-zero targets is decreasing: 39% do not plan to establish net-zero emissions targets, up from 29% last year, and nearly 39% do not plan to set climate transition goals, compared to just 8% the year before.
Mercer, part of Marsh McLennan and a global leader in consulting and investment, publishes the Large Asset Owner Barometer 2025. In it, surveyed asset owners—collectively representing more than $2 trillion in assets—provide key insights into the investment decision-making of the world’s largest capital allocators.
iCapital and Citi have announced that the global fintech platform will acquire Citi Global Alternatives, the advisor to Citi Wealth’s global alternative investment funds platform. Through this transaction, iCapital will manage and operate the funds platform, while Citi will remain the distributor of these funds and continue to guide clients on the role of alternative investments within a diversified investment strategy.
This platform represents more than 180 alternative funds distributed worldwide. It includes investment vehicles across a diverse range of alternative investment strategies and asset classes, including private equity, growth equity, private credit, infrastructure, venture capital, real estate, and hedge funds.
“iCapital’s technology platform will streamline operations and management of Citi’s current and future alternative investment funds platform,” said Lawrence Calcano, Chairman and CEO of iCapital. “In addition, we will enhance Citi Wealth’s global sales capabilities with a dedicated alternative investments team, equipping advisors with more resources focused on pre-sale, sale, and post-sale investment activities,” he added. The team will cover all asset classes and product structures, working closely with Citi and general partners to support the growth of the alternative investments platform, the executive explained.
“Citi Wealth already has a strong working relationship with iCapital in alternative solutions, and we are pleased to expand our partnership to deliver deeper integration of iCapital’s market-leading digital capabilities to our advisors, bankers, investment counselors, and clients,” said Daniel O’Donnell, Head of Citi Wealth Alternatives and Investment Manager Solutions.
In an increasingly dynamic environment for institutional investment, special purpose vehicles (SPVs) have become a key tool in the structuring of sophisticated investments. Their flexibility, tax efficiency, and risk mitigation capabilities make them a widely adopted solution among fund managers and private equity firms.
FlexFunds has developed a model based on the creation of SPVs, or special purpose vehicles, designed to support asset managers looking to package investment strategies in a flexible, scalable way—ready for international distribution.
SPVs are independent legal entities, created by a sponsor or parent company to isolate assets and structure investments with a specific purpose. They function as neutral vehicles that allow strategies to be implemented without affecting the balance sheet or liabilities of other group entities. To set up an SPV, the sponsor transfers the assets through a contract and trust structure, granting the SPV its own separate estate.
SPVs have a wide range of applications, including:
Public corporations may use SPVs for risk management purposes, such as isolating specific holdings from the parent company’s balance sheet.
In venture capital (VC) and private equity (PE), emerging fund managers often launch an SPV to build a track record before raising capital for a traditional fund.
SPVs can also act as “sidecars,” allowing investors to back companies that don’t fit the strategy or investment terms of their main fund.
In the FlexFunds model, SPVs are used to consolidate liquid or illiquid assets and convert them into listed securities that can be distributed through recognized platforms such as Euroclear. The asset manager’s track record is reflected on Bloomberg, SIX Financial, or Morningstar, increasing both visibility and liquidity for the investment strategies.
Key advantages for asset managers
Limited liability: Investors limit their exposure strictly to the capital they contribute.
Efficient risk management: Assets and liabilities are segmented, minimizing systemic risk.
Tax optimization: SPVs can be established in tax-efficient jurisdictions, maximizing net returns.
Structural flexibility: They can be designed as debt, equity, or hybrid vehicles, depending on investment objectives.
Important considerations when structuring an SPV
Transparency: It is essential to ensure visibility into the assets and their performance.
Leverage: Must be managed carefully to avoid excessive risk.
Operational complexity: Setting up an SPV involves administrative, legal, and regulatory costs.
Governance and conflicts of interest: A clear separation between sponsor and manager is critical to protect investor interests.
FlexFunds’ securitization program is based on Irish SPVs due to the structural, legal, and tax advantages this jurisdiction offers:
An on-shore jurisdiction that is a member of both the EU and OECD.
The only EU jurisdiction fully governed by common law.
A transparent and efficient tax regime with a broad network of double taxation treaties.
A special tax regime (under Section 110 of the Taxes Consolidation Act 1997) that allows an Irish SPV compliant with Section 110 to transfer income to investors in the most tax-efficient way possible.
Flexible listing options, including Vienna’s MTF and Euronext Dublin.
A highly developed infrastructure of service providers—auditors, legal advisors, corporate service providers, and other professionals—to support and manage SPVs.
While the use of SPVs is not new, FlexFunds has built a modern program designed to simplify the distribution and structuring of complex investment strategies. In a landscape where efficiency, customization, and traceability are essential, this type of structure provides asset managers with a real competitive edge.
“FlexFunds has built a series of efficient and reliable issuance platforms that offer all the benefits of SPVs established in Ireland. This model is becoming increasingly common, with 91% of Irish SPVs set up by international sponsors—70% of which are based in the United Kingdom or the United States,” notes Daragh O’Shea, Partner, Financial Services Department, Mason Hayes & Curran.
To learn more about how to establish an SPV and boost the distribution of your investment strategy, please contact with FlexFunds’ experts at contact@flexfunds.com
