Photo courtesyAlejandro Masseroni, Regional Sales Leader at Temenos
Over its 25 years operating in Latin America, banking technology company Temenos has seen how digital transformation has steadily taken hold in the wealth management industry. Looking ahead, the firm expects this trend to continue deepening, with the affluent market as a particularly fertile space for these types of solutions.
For the company’s regional representative, we are currently only beginning to see the start of the wave of technological transformation in the financial industry. “Today we are starting to see the first benefits extending to other markets in areas such as financial education and digital channels. That is the piece that enables users of these types of products to be more inclined or more predisposed to adopt tools, even artificial intelligence, for the investment side,” said Alejandro Masseroni, Regional Sales Leader at Temenos, in an interview with Funds Society.
Looking ahead, one area they are watching closely is the “affluent” market, a more mass segment that wealth management firms have been opening up to, supported by technology. “In the affluent market is where we see the greatest potential, due to volume,” he explains.
The executive describes a “snowball effect” in the adoption of technology in the sector. “Users who began using these tools for their day-to-day operations, for simpler products, are now the ones trusting these channels to invest or making their first investments through them,” he notes.
The Potential of the Affluent Market
For Masseroni, the appeal of technologies such as artificial intelligence lies in supporting investment advice—not replacing the executive or financial advisor, but providing information, responding to investors’ interests, and understanding their needs. The idea, he says, is for clients to use it as a kind of “copilot.”
“In the affluent market, there is more to be done in empowering the advisor,” says the Temenos representative. Given the mass nature of the segment, technological tools have the potential to amplify the actions of a financial advisor. “This is where there will be a more drastic change,” he adds, in terms of creating new tools and enhancing advisors.
In that sense, Masseroni highlights that greater access to investment strategies for smaller portfolios has been driving the “significant” growth seen in the affluent segment. “What matters is understanding the new wave of investors that exists thanks to these digital channels and these new ways of investing,” he notes.
Moving up the capital ladder, for high-net-worth and ultra-high-net-worth portfolios, Temenos’ view is that a hybrid service model will emerge, maintaining some features of traditional financial advice while incorporating the efficiency of technological tools. This includes operational aspects as well as specialized information.
Dynamics in Latin America
In line with this trend, the technology firm sees an attractive business opportunity in Latin America, where it has been present for 25 years. It currently operates in Mexico, Brazil, Argentina, Chile, Peru, Bolivia, Colombia, and key markets in Central America and the Caribbean.
Regarding where they see the greatest potential for growth, Masseroni emphasizes that “the greatest potential is where there is the lowest penetration of the financial industry among the population.” For example, he points to Mexico, which has a broad offering but is concentrated in certain client segments, and Brazil, where investment platforms have not reached the same level of mass adoption as the transactional Pix system.
To achieve this, he stresses, it is essential to build the foundations and provide education, which foster trust when using platforms. For people to begin investing through these channels, their use must first be established in basic transactions and in the consumption of simpler financial products, such as bank deposits.
By contrast, the markets where they see greater penetration of technological tools in wealth management are Chile and some markets in the Caribbean and Central America, highlighting Panama, the Dominican Republic, Bermuda, and the Bahamas, among others. In these markets, Temenos has observed a high level of digital transformation activity.
This momentum has been led by services for high-net-worth and ultra-high-net-worth clients. Today, Masseroni adds, “they are looking to reach lower-wealth segments to make it more mass-market.”
“Part of the region’s potential is that there is also significant investment,” where institutions are allocating resources to transform themselves, he concludes.
Photo courtesySerge Weyland, CEO of the Association of the Luxembourg Fund Industry (ALFI).
UCITS funds have established themselves as one of the European Union’s most successful financial exports, with a global presence spanning more than 70 countries outside the EU. After European investors, Asian and Latin American investors are the largest holders of this type of vehicle. Why funds listed in Europe?
In the opinion of Serge Weyland, CEO of the Association of the Luxembourg Fund Industry (ALFI), the country’s central location in Europe, its strong regulatory framework, the investor protection it offers, and its discretion, though not a lack of transparency, are the main advantages investors find when choosing a product listed in Luxembourg or, more broadly, in Europe. “These conditions are not found in other jurisdictions or in other offshore investment centers such as, for example, the United Arab Emirates or Singapore. Although it is true that more and more countries and regions are developing regimes similar to that of the European fund industry,” he acknowledges.
For Weyland, the European hub, led by Luxembourg, has proven its validity, having successfully weathered recent global and financial crises. “The nearly 40-year track record of UCITS and AIFMD vehicles through the dot-com bubble, the 2008 crisis and subsequent sovereign debt crisis, and COVID-19 has shown that we are dealing with a robust regulatory framework. In addition, the coordinated work of supervisory institutions ensures consistency in the regulatory approach and in how systemic risks are managed. This reassures international investors, and this is also why institutional investors in Latin America have long trusted European products and, in particular, Luxembourg funds,” emphasizes the CEO of ALFI.
Latin American Investor and US Offshore
According to Weyland, a clear example of this trust in the European framework in recent years is the interest of Chilean pension funds. Following this trend, he notes that new jurisdictions such as Argentina, Brazil, and Peru are beginning to look at passported funds listed in Europe.
“We also see that many private banking and institutional investors in Latin America who used U.S. ETFs are moving away from these ETFs to switch to European-listed funds because they are easier to manage from a tax perspective. So I think there are many reasons why, for high-net-worth families and private investors in Latin America, the UCITS and AIFMD framework offers confidence, probably more than some of the more recent regimes in other financial centers,” he argues.
From the perspective of US offshore investors,Weyland acknowledges that using Miami as a financial hub creates a direct connection with Europe and, specifically, with Luxembourg: “Historically, this type of investor used UCITS and alternative funds, and now we are seeing a return to Luxembourg. I think another factor has come into play. After the 2008 crisis, the country’s rating remained strong, something that did not happen in other European jurisdictions. We have never lost the triple A, and international investors place great value on being in a solid and financially strong country,” he states.
Interest in Alternative Funds
From the European fund industry, and particularly from Luxembourg, there is a focus on ensuring that ELTIFs achieve the same “recognition and success” as UCITS among these investors. In fact, Weyland believes that another strength of this jurisdiction is the wide range of alternative funds it has developed. “We now have €5 trillion in UCITS and €3 trillion in alternative investment funds in Luxembourg, and of those €3 trillion, a large portion of the assets are, of course, institutional assets in different types of vehicles. Many are in LPs, but also increasingly in vehicles such as ELTIFs, which can also be used for broader distribution, although volumes are still relatively small compared to the rest,” he states.
According to his analysis of the industry, large family offices or larger private investors have invested in Luxembourg through partnership vehicles, RAIFs, or the reserved alternative investment fund regime, or SIF, a specialized investment vehicle.
“I think that has been Luxembourg’s strength: being able to offer a ‘tool kit’ of funds and fund structures that can be tailored to the needs of a global investor base. Luxembourg funds are currently distributed in more than 70 countries, which positions us as the number one domicile in the world for global distribution. That agility in finding new tools to make investors’ lives as easy as possible sets us apart,” he asserts.
Brazil: Yet to Be Conquered
Up to this point, everything highlights what Luxembourg offers and what international investors value, but what barriers does the industry face? In Weyland’s view, one of them is Brazil: “We know that Brazilian investors can now invest abroad, but they remain very focused on domestic allocation. They have $2 trillion in funds domiciled in Brazil, but this is also linked to the high interest rates of their central bank, which are still between 12% and 14%. For them, it is easier to invest locally in domestic bonds offering that level of return than to direct money to global markets where that same level of return is not always achieved. However, we believe that diversification will also reach these markets.”
By contrast, he acknowledges that the strong trend toward digitalization in the country’s financial services could help open the development of new investment platforms to products listed in Europe. “Many of these platforms are brokerage platforms, which favor direct investment in equities and bonds. In my opinion, funds are also gaining ground on these platforms, as are ETF share classes,” he concludes.
Larry Fink, Chairman and CEO of BlackRock, has published his annual letter, where he reflects his main insights after a year of conversations with clients, policymakers, and business leaders from around the world. His starting point has been to acknowledge that no one is sure “how to navigate at this moment,” but in the face of this uncertainty, he believes that the next phase of global growth will depend on expanding participation in capital markets so that more people can benefit from the value being created.
“We live in a world where information moves instantly, and reactions arrive just as quickly. At times, it can seem like an environment driven by dopamine, in which the constant flow of stimuli rewards short-term impulses. But speed can distort perspective and crowd out long-term thinking. To be fair, in financial markets all this short-term activity serves a function,” he notes at the beginning of his letter, adding: “staying invested has mattered far more than timing the market.”
His main reflection is that the vast majority of wealth has gone to those who owned assets, not to those who earned most of their income from labor. “Since 1989, one dollar invested in the U.S. stock market has multiplied its value more than fifteen times compared to a dollar tied to the median wage. And now artificial intelligence threatens to repeat that pattern on an even larger scale, concentrating wealth among the companies and investors best positioned to capture it. This is where much of today’s economic anxiety originates: in a deeper sense that capitalism works, but not for enough people,” he argues.
A “Civic Miracle”
Faced with this reading of reality, Fink maintains that, at its best, long-term investing works a kind of “civic miracle”: “When people invest their savings—over decades, not days—capital markets put that money to work, financing companies, infrastructure, and jobs. And when that cycle happens in your own country, your future and that of your nation become linked. You help finance its growth. And that growth helps finance yours. My belief in this civic miracle is obviously shaped by my work. But I do not speak only as CEO of BlackRock: that conviction reflects decades of experience seeing how investing can help more people participate in economic growth.”
For this reason, his proposal for this “difficult moment to navigate” is to maintain the pattern behind the “civic miracle”: invest for the long term so that citizens’ wealth compounds at the same time as economies. “That is what this moment is about: expanding that opportunity. Ensuring that more people can have a stake in their country’s growth. Because today too many are left out. Therefore, the starting point must be helping people build basic financial security. And that is beginning to happen,” he adds.
Now, how does growing with your country translate in practice? In his view, everyone faces this question, though in different ways. “In the United States, it starts with early wealth-building accounts and a long-overdue conversation about Social Security. In India, one billion smartphones are becoming gateways to capital markets. In Germany, a change in the pension system could help deepen European capital markets. In Japan, a single regulatory change helped bring ten million new investors into the market in three years,” he notes.
Fink goes a step further and explains why he believes that growing with your country has never mattered more: “The world is reorganizing around self-sufficiency, and that is expensive. The enormous wealth created over recent generations went mostly to those who already owned financial assets. And now AI threatens to repeat that pattern on an even larger scale. Each of these forces, on its own, would already be reason to rethink how we invest. Together, they reinforce one conclusion: if we want more people to participate in future growth, we have to make long-term investingeasier, broader, and more accessible.” After this positive message, the CEO of BlackRock also highlights a real risk that artificial intelligence could widen wealth inequality if ownership is not expanded at the same time.
AI and the Labor Market
Throughout his letter, Fink refers to the disruption generated by AI but focuses on the labor market. “It is an enormously important issue, and one that goes beyond economics. Work provides income, purpose, and dignity,” he argues, explaining that AI will transform productivity and jobs just as in previous historical moments.
“In the short term, there are indeed roles for which demand is clearly strong and that are well paid: skilled trades, especially those that build the physical infrastructure of AI, such as data centers, electrical systems, and power grids. In the United States, employment of electricians is growing at a rate three times higher than the national average. Many of these jobs pay well above the average wage, in many cases with six-figure incomes. And this is also happening in many Western economies,” he states in his letter.
His analysis goes further, acknowledging that the question is how to ensure more people can access these jobs: “The skills gap is real and requires sustained investment in training and vocational learning (…) But the problem goes beyond training. For decades, many societies have equated success with a university degree and a white-collar career. As technology reshapes parts of that landscape, we need a broader conversation about opportunity, dignity, and the value of different types of work. What are we going to do about it? It is a conversation worth having.”
BlackRock’s Positioning Regarding BlackRock’s response in this context, Fink states that “our global and integrated platform allows us to meet our clients’ portfolio needs, across all asset classes in public and private markets, in all regions and through both active and indexed strategies, all supported by our Aladdin technology.”
In this regard, he highlights that the firm entered 2026 from a position of strength: record inflows, double-digit organic growth in base fees in the fourth quarter, a new high of $14 trillion in assets under management (AUM), and a unified, integrated platform aligned with the current opportunity set. “We help clients navigate change and invest with confidence, creating durable value for them and for you, our shareholders,” he adds in his letter.
Looking ahead to the company’s ambitions for 2030, Fink notes that they have built a strong foundation across the pillars of their platform: ETFs, Aladdin, whole portfolio solutions, fixed income, and liquidity management. He also highlights progress in organic developments in structural growth categories, including digital assets, active ETFs, model portfolios, and systematic equities.
“Looking toward 2030, we aim to exceed $35 billion in revenue, with 30% or more coming from private markets and technology. We expect that revenue growth to be supported by our targets of 5% or higher organic base fee growth and low-to-mid teens growth in technology ACV. Our goal is to nearly double adjusted operating income from 2024, along with adjusted operating margins of 45% or higher across the market cycle. We already have industry-leading margins, and we see room to expand them thanks to the growth trajectory of fee-related revenues in private markets and our highly scalable core businesses,” he concludes.
The conflict in the Middle East has shifted from being perceived as something temporary, calculated, and priced in to being seen as a conflict with greater duration and impact on the energy market. Investor sentiment is changing, as reflected in Bank of America’s global fund manager survey for March. Its results show an increase in liquidity, but without a decline in equities despite concerns about Iran.
The main conclusion is that the conflict and developments in private credit are putting an end to the excessive optimism of recent months in the fund market. According to the Investment Strategist team at BofA, led by Michael Hartnett, “the fund market in March is bearish enough to sell oil above $100/barrel, sell DXY above 100, buy GT30 at 5%, and buy SPX at 6600.” However, they believe positioning is far from the extremely bearish levels seen at recent lows in risk assets.
Optimism and risks
According to the survey, optimism about global growth falls to a net 7% from 39%, inflation expectations rise to a net 45% from 9%, and optimism about rate cuts is at its lowest since February 2023. “But no one is considering a recession; the probability of a hard landing is just 5%, compared to 46% expecting no landing and 44% expecting a soft landing,” BofA notes.
In the view of Diego Franzin, head of portfolio strategies at Plenisfer Investments, part of Generali Investments, in the short term market developments will continue to depend mainly on news related to the conflict with Iran. “Interest rate developments already reflect expectations of a renewed rise in inflation and a possible response from central banks, as policymakers remain very aware of the monetary policy mistake made in 2022, when they waited too long to raise rates after inflation began to accelerate,” he notes.
However, the Plenisfer Investments expert warns that the macroeconomic backdrop differs significantly from that of 2022: “Growth momentum is weaker, fiscal capacity is significantly more limited in most developed economies, and the initial levels of both interest rates and inflation are different.”
In terms of risks, in March geopolitics and inflation replaced the AI bubble as the main tail risks. Notably, 63% say private capital/credit is the most likely source of a systemic credit event, making clear which other market investors are watching.
Implications for the investor
This sentiment and market outlook in March has translated into a rotation of positions, moving from booming sectors, such as banks, to stagflation sectors, such as consumer staples. “In general terms, covering of short positions in the US dollar has been moderate, investors maintain long positions in commodities (most since April 2022) and retain large overweight positions in equities, especially in emerging markets (most since February 2021), Japan (most since May 2024), banks, and industry, in sharp contrast to a significant short position in consumer discretionary stocks (the largest underweight since December 2022),” explain BofA.
For Franzin, risk assets still appear to be pricing in, to some extent, a relatively benign scenario. “The prevailing view among equity investors remains that the conflict will be short-lived and will have limited economic repercussions. In our view, however, the potential repercussions of the conflict come at a time when the global economy is already facing a number of structural vulnerabilities, increasing the risk of a stagflation scenario. In this context, assets that have been penalized mainly by positioning dynamics—among them some emerging markets such as Brazil—could be among the first to outperform once the flow of news begins to stabilize,” he notes.
From the perspective of Yves Bonzon, Chief Investment Officer (CIO) of Julius Baer, the current market correction offers an opportunity to initiate or increase exposure to asset classes supported by structural trends. “Emerging market bonds denominated in local currencies and Chinese equities stand out, including those linked to AI. Chinese equities benefit from continued signaling from Beijing in favor of a controlled and sustained equity bull market, implying government intervention to mitigate disruptions and volatility. In addition, China remains the only market offering investors exposure to AI outside the US, with the added advantage of developing the technology in a notably capital-efficient way,” Bonzon argues.
Asset performance
According to Benoit Anne, Senior Managing Director and head of the Investment Solutions Group at MFS Investment Management, it is particularly interesting to analyze the performance of different asset classes since the start of the war with Iran. His analysis points to a significant shortage of defensive assets.
“Clearly, the price of oil has been the standout winner, rising more than 40% since the start of the crisis; and the US dollar has also increased, although more modestly. By contrast, gold, which had been a market star for some time, has declined by more than 5.5% since the start of the conflict. Duration has also performed poorly, with the UST index and the Bund index falling by around 2%, mainly due to upward pressure on government bond yields. Looking ahead, we face a highly volatile environment given the extreme level of geopolitical uncertainty,” he summarizes regarding the performance of the main market assets.
In his view, although the DXY index has risen by around 2.6% during this period, a sharp reversal in recent movements cannot be ruled out, although this will depend on the duration of the geopolitical crisis. “In this context, the price of oil has become the most important barometer of global markets. Only a couple of currencies have managed to appreciate against the dollar in the past two weeks, including the Colombian peso and, to a lesser extent, the Israeli shekel. All other major asset classes have declined, some quite significantly. Emerging market equities, eurozone equities, and emerging market local currency debt rank at the bottom of that list,” Anne concludes.
Private credit fund managers in North America expect conditions related to financial stress and defaults to stabilize and gradually improve over the next 12 months, according to an independent report commissioned by Ocorian, a provider of asset services in the United States and globally.
The study, conducted among private credit managers in the United States and Canada overseeing $1 trillion in assets under management, depicts a market that is neither complacent nor defensive, but increasingly disciplined as it matures and absorbs the effects of rapid growth.
More than four out of five managers (84%) expect the level of financial stress and defaults among borrowers to improve over the next year, while another 10% foresee conditions remaining broadly unchanged. Only a small minority (6%) anticipate a deterioration. The results suggest that managers consider current stress to be manageable and already reflected in lending standards, pricing, and portfolio monitoring.
Managers point to stricter structuring, greater interaction with borrowers, and increased selectivity as key elements of their outlook. Growing use of payment-in-kind (PIK) interest is expected, with 90% anticipating some increase over the next two years. Rather than being seen as a solution in itself, PIK is viewed as a cash flow management tool that can provide breathing room for borrowers, while requiring closer scrutiny and more active oversight from lenders.
At the same time, managers maintain a realistic view of the risks associated with the sector’s rapid growth. The global private credit market, estimated at around $3 trillion at the beginning of 2025 and projected to reach $5 trillion by 2029**, continues to attract capital, intensifying competition for assets.
Around 71% of managers report being very concerned about the risk that strong capital inflows may encourage aggressive lending, while the rest say they are fairly concerned. This lack of complacency reflects a heightened awareness of discipline in origination as a differentiating factor in an increasingly crowded market.
Managers are also aware of the opacity inherent in private credit markets, acknowledging that limited transparency can complicate valuation and risk assessment. However, respondents emphasize that this opacity is a long-standing characteristic of the asset class rather than a new vulnerability, reinforcing the importance of governance, reporting, and operational controls.
All managers surveyed said they maintain a high level of vigilance regarding sources of financial stress and default risk, with more than half (55%) stating they are very concerned. This concern is not framed as alarmism, but as an essential part of professional risk management in a market designed to price, monitor, and manage credit stress.
Vincent Calcagno, head of growth in the United States at Ocorian, noted: “While private credit managers are taking on risk, they are not ignoring it. The expectation of continued growth coexists with a realistic assessment of risks, valuations, and policy uncertainty. It is a market that is adapting, not retreating.”
XP International has announced the expansion of its product offering through an alliance with Allfunds, a global fund platform. According to the company, the initiative seeks to expand access for Brazilian investors to international strategies and asset managers, maintaining selection processes and due diligence in choosing the products offered.
With this change, the platform now provides access to a broader range of global funds and strategies, expanding allocation alternatives across different asset classes abroad. The new products have been available exclusively through the XP app since March 16.
According to Fabiano Cintra, head of international funds at XP, “it is a strategic step for our international platform, because it expands access to the most in-demand global funds.” The executive states that the goal is “to combine technical selection and a high level of product sophistication, allowing access to opportunities abroad that were previously restricted to more specific profiles.”
For his part, Diego Correia, director of the international investments area at XP, highlights that “this evolution of the international offering reflects the demand for greater diversity of global products, with different strategies and asset classes.” According to him, the alliance makes it possible “to select and offer competitive products suited to the profile of the Brazilian investor, preserving governance and quality.”
The expansion also includes the offering of UCITS ETFs, vehicles domiciled in Europe, known as “Irish ETFs,” widely used by international investors. According to Cesar Florido, head of Investment Solutions and portfolio manager at XP, “in practice, the proposal is to democratize global investment products and strategies for all XP clients.” He adds that the expansion will allow access to “boutique asset managers specialized in specific sectors and strategies, as well as a wide range of alternative funds.”
In addition to expanding its international offering, XP International has also begun to include proprietary funds from XP Asset in its global offering. The strategies include asset allocation funds with balanced allocation across different asset classes, aimed at investors seeking structured solutions for investing abroad.
Correia states that the initiative “responds to a recurring need of the investor” and adds that “the expansion also aims to make the ‘what to invest in’ phase more seamless, with products that reflect allocation discipline and the experience accumulated by XP over the years.”
According to the company, this move is part of the strategy to evolve its global investment platform, in line with the increasing complexity of international allocation decisions and the maturation of the Brazilian investor.
Despite the message of caution delivered by the main central banks in developed markets following this week’s meetings, experts from international asset managers believe that, for the rest of the year, the path of interest rates will inevitably be shaped by developments in the Middle East.
In their view, central banks around the world are adopting a “wait-and-see” stance in the short term, given the risk of stagflation stemming from the conflict in the Middle East. “In the coming months, the uneven impact on growth and inflation across countries will determine the next monetary policy paths,” recently noted Alessia Berardi, Head of Global Macroeconomics at the Amundi Investment Institute.
In her latest analysis, Berardi anticipated what unfolded this week: “The Federal Reserve will delay, rather than reverse, easing in order to protect the most vulnerable households, while the European Central Bank will face a more pronounced trade-off between inflation and growth and will maintain its stance over the coming quarters. Meanwhile, the Bank of England will extend its pause in the easing cycle, and in Japan, affordability measures from the Takaishi era should help moderate inflationary pressures, with the Bank of Japan expected to resume its gradual rate-hiking path over the summer.”
The Fed: higher uncertainty
For its part, the Fed, which also left rates unchanged, delivered a clear message: geopolitical risks are adding a higher level of uncertainty to both sides of its mandate. Beyond that, however, there were few changes in what remained a largely consensus-driven statement. “At the press conference, Chair Powell sought to provide cautious and measured guidance, emphasizing the need not to overreact to current developments and noting that ‘it is too early to know how they will affect the data,’ while stressing that uncertainty is exceptionally high. He also highlighted the importance of maintaining credibility in controlling inflation, particularly from the perspective of expectations,” said Max Stainton, Senior Global Macro Strategist at Fidelity International.
In his view, Powell made it clear that the Committee is comfortable adopting a wait-and-see approach as the impact of the conflict unfolds, and stressed the need for goods inflation to moderate significantly over the course of the year. “He was explicit in stating that any bias toward future rate cuts remains conditional on that progress materializing,” he adds.
For Deborah Cunningham, Chief Investment Officer for Global Liquidity Markets at Federated Hermes, the Fed’s decision to keep rates unchanged remains the most appropriate stance. She argues that the current conflict with Iran does not come close to the scale of disruptions seen during the COVID-19 pandemic, nor is it comparable to the 2008 global financial crisis, and therefore does not justify rate cuts of several hundred basis points.
“At the same time, inflation, even if energy prices stabilize, remains well above the Fed’s 2% target. This leaves open the possibility of a modest rate hike, although this does not appear to be the most likely scenario as long as alternative solutions for the safe distribution of oil and gas continue to progress or the conflict is resolved within a reasonable timeframe,” Cunningham notes.
What has not gone unnoticed are the Fed’s updated economic projections. Specifically, the median path in the Summary of Economic Projections still points to an additional 25 basis point cut in both 2026 and 2027, unchanged from December. In addition, inflation forecasts were revised upward, particularly for 2026 and 2027, alongside somewhat stronger real GDP growth projections for 2027–2028 and the long term (2.0% versus the previous 1.8%), possibly reflecting productivity gains linked to AI. “This upward revision helps explain why the central tendency for the long-term neutral rate increased slightly to 2.9%–3.6% (from 2.8%–3.6%). Notably, none of the 19 FOMC members expects rate hikes this year, and only one does for 2027. In this context, it was somewhat surprising that Chair Powell noted at the press conference that ‘the possibility that the next move could be a hike was discussed,’” said Martin van Vliet, member of the Global Macro team at Robeco.
ECB: ready to intervene in an energy crisis
In the case of the European Central Bank (ECB), it kept rates unchanged at 2%, highlighting a balanced risk outlook between inflation and growth, as well as the need to closely monitor the conflict in the Middle East. Lagarde pointed to resilient domestic demand and inflation well anchored at target, but reiterated the willingness to intervene in the event of energy crises.
For Ulrike Kastens, Senior Economist at DWS, the key point is that the ECB has already incorporated the initial effects of rising energy prices into its growth and inflation projections. “As a result, short- and medium-term inflation outlooks have deteriorated significantly, and core inflation forecasts have also been revised upward,” she notes.
“The new projections show slightly higher and more persistent inflation above target in the medium term, while growth estimates have been revised downward, reflecting the negative impact of higher energy prices on real income. The ECB’s guidance was less restrictive than markets expected, maintaining a flexible approach with decisions taken on a meeting-by-meeting basis,” adds Antonella Manganelli, CEO of Payden & Rygel Europe.
A relevant point is that, although Lagarde highlighted the differences compared to 2022, she also made it clear that the ECB would do whatever is necessary to ensure price stability in the medium term. According to Konstantin Veit, Portfolio Manager at PIMCO, the ECB will be attentive to indirect effects on core inflation and will closely monitor inflation expectations.
“For now, we only expect hawkish communication, but we believe the threshold for the ECB to completely overlook a period of above-target inflation is somewhat higher than before 2022. Different starting conditions, a monetary policy less anchored to a central scenario, and a reduced reliance on macroeconomic models could lead to a more flexible ECB. If the ECB were to act later this year, we do not expect it to raise rates beyond what is already priced in by markets,” Veit concludes.
The BoE: unanimity
In line with other monetary institutions, the Bank of England (BoE) kept rates unchanged at 3.75% as it waits to assess the impact of the war in Iran. “There was a time when it seemed certain that the BoE would cut rates at this meeting, but given the conflict with Iran, it is not surprising that the institution decided to hold them. What stands out is that all policymakers voted in favor of keeping rates unchanged, showing that even the more dovish members of the committee want to see how the conflict evolves before resuming cuts,” said Luke Bartholomew, Deputy Chief Economist at Aberdeen Investments.
According to Bartholomew, while labor market data show that wage growth continues to moderate, there are strong arguments for cutting rates at some point. “Now that the inflation outlook appears more complex, the BoE will focus on anchoring inflation expectations. Therefore, although the hurdle for returning to rate hikes is very high, the economy could face a long wait before the next rate cut.”
According to experts, the combination of geopolitically driven increases in energy prices, more persistent inflation risks, and the Monetary Policy Committee’s cautious communication has effectively ruled out a rate cut in March. “The message has been one of strong data dependence and increased vigilance, in line with markets pricing out key rate cuts in 2026,” adds Martin Wolburg, Senior Economist at Generali Investments.
SNB and the strength of the Swiss franc
The Swiss National Bank (SNB) has also followed this trend, keeping its policy rate unchanged at 0%, in line with expectations. According to Roger Rüegg, Head of Multi-Asset Solutions at Zürcher Kantonalbank, the recent strength of the Swiss franc does not appear sufficient to justify a return to negative interest rates. “After reducing its interventions in the foreign exchange market to weaken the currency throughout 2025, the SNB also adopted a cautious stance in the first quarter. In particular, with respect to the U.S. dollar, its relationship with the U.S. government is likely influencing this approach,” the expert notes.
In Switzerland’s case, concerns about the conflict are different, as inflation currently stands at 0%. “Medium-term price stability is supported, among other factors, by falling electricity prices, moderating rental inflation, the strength of the currency, and contained growth in wages and economic activity,” Rüegg adds. In this context, it is expected that the SNB’s policy rate will remain at 0% until the end of 2026.
BoJ: keeping the door open to hikes
Finally, the Bank of Japan (BoJ) also kept its policy rate unchanged, leaving the reference rate for the money market at around 0.75%. According to experts, the key takeaway was that the BoJ stated the Japanese economy continues to recover moderately, albeit with some signs of weakness, and noted that core inflation had been above 2% but has recently eased toward that level due to factors such as government measures to reduce energy costs. “The fundamental scenario for continuing monetary policy normalization and further rate hikes remains valid, but the combination of pending data and changing geopolitical risks suggests a wait-and-see approach at this meeting,” said Gregor M.A. Hirt, CIO of Multi Asset at AllianzGI.
The central bank also adopted a more cautious tone given the global environment, highlighting market volatility and rising oil prices following increased tensions in the Middle East, and noting that their impact on growth and inflation will need to be monitored. However, it reiterated that, if its economic and price outlook materializes, it will continue to gradually raise interest rates.
While the market remains focused on the evolution of the commodity shock triggered by the war between Iran and the United States, investors should look beyond the short term to assess the potential medium-term impact of this new geopolitical episode on inflation. François Collet, CIO of DNCA Investments since October 2025, rules out a scenario similar to the one experienced during the 2022 Ukraine war, but warns about the need to hedge against a potential rise in inflation and the second-round effects it could bring, for example, on U.S. credit.
In an interview conducted during the Natixis Investment Managers Thought Leadership Summit 2026, recently held in Paris, Collet addressed topics such as opportunities in European sovereign debt, with a particular focus on Spain and Portugal, as well as the regime shift in the safe-haven role of U.S. Treasuries. He also provided insights on asset allocation in a context of persistent inflation, advocating for greater diversification beyond the 60/40 model.
How do you assess the increase in geopolitical risk from a fixed income manager’s perspective? What could be the medium-term impact on inflation?
The market has priced in short-term inflation very quickly, especially in Europe. The impact on one-year inflation expectations is close to 1% in Europe, while in the U.S. it is lower, around 50 basis points.
So I think the market’s short-term assumption is correct. What has not really been priced in yet is a kind of second-round effect. When a commodity crisis occurs, there is a direct impact on CPI, but many other factors take time to materialize, such as gasoline prices, of course, but also higher transportation costs or airline tickets. All of this will eventually have an impact on wages, because as inflation rises and the labor market remains tight, people will demand higher compensation. So I really believe this will lead to higher core inflation in the future. The transmission from headline CPI to core CPI due to commodity shocks is about 12 to 18 months. So I expect that, within a year, inflation will not return to the levels seen just before the conflict began.
In light of what happened during the 2022 commodity crisis, is the ECB more willing to raise interest rates this time?
I think the situation is very different. First, the impact of the commodity crisis is much smaller when it comes to gas prices. In 2022, 70% of electricity prices depended on gas prices. Now it is only 40%. Therefore, the impact on electricity should be much lower, partly due to the increase in renewable energy and because the impact on gas has been more contained.
Second, the starting point for inflation is different. We are around 2% inflation versus 4% in 2022, and the starting point for monetary policy is not the same at all. Back then, we had negative interest rates. Today, we are in a neutral position.
So overall, I think the ECB has time to assess the medium-term impact of this inflationary shock and try to avoid past mistakes, such as raising rates too late in 2022, but also the mistakes made in 2018 and 2011.
That said, could rates rise before the end of the year? Of course, but I doubt it will happen in June. And even if they do raise rates, I think it would be two hikes of 25 basis points, compared to the 450 basis points we saw in 2022.
What impact can be expected on sovereign bonds?
What the market is pricing today is perhaps the worst-case scenario for the ECB. However, there are countries with excellent fundamentals, such as Portugal and Spain, that offer very attractive valuations. Since the beginning of the year, yields around 3.25% have represented a great opportunity for Spanish bonds, which have moved within a narrow range. I do not expect that to change before the end of the year. Taking into account carry and roll-down, that implies an expected return of around 4% over 10 years for Spanish sovereign bonds this year, which is quite attractive.
Fixed income markets currently look quite tight in many areas, especially in investment grade…
Yes, it is true that credit spreads are tight. However, it is very difficult to imagine defaults among investment grade companies. Fundamentals are quite solid. So the issue is more about the attractiveness of buying these bonds rather than the risk of them collapsing due to defaults.
It is not exactly the same picture in the U.S., where I think the high yield market is more vulnerable and some companies could default. But I do not believe there will be contagion between private credit and public credit. On the contrary, I think that lower interest in private debt in the future could redirect some flows toward public credit. Overall, I am not that pessimistic about public credit.
Over the past year, there has been much debate about U.S. Treasuries and their ability to remain a safe haven. Do you think they still fulfill that role?
Unfortunately, I think the sustained negative correlation between Treasuries and equities is a thing of the past. We are living in a higher inflation environment than in the previous decade. When inflation is low or around the central bank’s target, this negative correlation can exist, but not when inflation is above target, and today it stands at around 3%. I do not think the Fed will maintain a restrictive policy. We are facing this inflationary shock. So, fundamentally, I believe investors should rethink their asset allocation rather than simply hedging equity portfolios with Treasuries. That will no longer work in the long term.
What do you suggest to protect portfolios going forward?
Diversification is key, not just through a 60/40 portfolio, but by investing in inflation-linked bonds, commodities, and different types of assets, including cryptocurrencies depending on the investor’s profile. Ultimately, I believe investments should be spread across as many asset classes as possible.
It is important to be careful not to invest in low-quality products, because the financial sector is very good at launching high-margin products. In the long run, costs have a significant impact on returns. But once you invest in well-designed products, I think it is very important to do so.
How are you positioning your portfolios?
We are mainly invested in government debt. We have a long position in European real rates and in peripheral rates. We also maintain long positions in sovereign bonds from the United Kingdom and New Zealand, where we see expectations of rate hikes as premature and yield curves as very steep.
We have a structural position consisting of a short position in the euro and long positions in commodity-exporting currencies, as well as Asian currencies such as the Japanese yen, the Korean won, the Indonesian rupiah, and also the Australian dollar. We believe Asian currencies should benefit from a revaluation, as exchange rates are currently undervalued in these economies.
Another key position for us is investing in U.S. inflation breakevens. We believe it will be very difficult for the Fed to bring inflation down, which has been temporarily suppressed by short-term factors related to the government shutdown. I think personal consumption expenditures (PCE) is a more relevant indicator than CPI. PCE was around 3% before the war. I believe it could rise to between 3.5% and 4% over the next 12 months. Investing in inflation breakevens, currently around 2%, provides a good hedge.
The U.S. Securities and Exchange Commission (SEC) has issued an interpretation clarifying how federal securities laws apply to certain crypto assets and the transactions involving them. According to the agency, this represents an important step in its efforts to provide greater clarity on how it treats crypto assets and complements Congress’s efforts to codify a comprehensive market structure framework into law. In addition, the Commodity Futures Trading Commission (CFTC) joined this interpretation to indicate that it and its staff will administer the Commodity Exchange Act in a manner consistent with the Commission’s interpretation.
“After more than a decade of uncertainty, this interpretation will provide market participants with a clear understanding of how the Commission treats crypto assets under federal securities laws. This is what regulators are supposed to do: draw clear lines in clear terms,” said Paul S. Atkins, Chair of the SEC.
Specifically, the Commission’s new interpretation provides a coherent taxonomy of tokens for digital commodities, digital collectibles, digital tools, stablecoins, and digital securities. It also addresses how a “crypto asset not considered a security”, that is, a crypto asset that is not itself a security, may become subject to an investment contract, and how it may cease to be so.
Finally, it clarifies the application of federal securities laws to airdrops, protocol mining, protocol staking, and the bundling of a crypto asset not considered a security.
As a result, market participants, from innovators and issuers to retail investors, should review this interpretation to better understand the regulatory jurisdiction between the SEC and the CFTC.
Key takeaways
According to Atkins, “it also recognizes what the previous administration refused to admit: that most crypto assets are not, in themselves, securities. And it reflects the reality that investment contracts can come to an end. This effort serves as an important bridge for entrepreneurs and investors while Congress works to advance bipartisan legislation on market structure, which I hope to implement alongside Chairman Selig in the near future.”
For his part, Michael S. Selig, Chair of the CFTC, stated: “For too long, American creators, innovators, and entrepreneurs have waited for clear guidance on the status of crypto assets under federal securities and commodities laws. With this interpretation, that wait is over. Chairman Atkins and I are committed to fostering a regulatory environment that allows the crypto industry to thrive in the United States with clear and rational rules of the game. This joint action by both agencies reflects a shared commitment to developing workable and harmonized regulations for this new frontier of finance.”
Photo courtesyIgnacio Rodríguez Añino, Head of Distribution for the Americas at M&G; and Alicia García Santos, Head of M&G for Spain, Portugal, and Andorra.
As part of the presentation of its annual results, M&G announced that it continues to expand its international presence in the asset management business. In fact, third-party assets outside the United Kingdom increased to reach 142.54 billion dollars, compared to the 118 billion recorded at the end of 2024.
According to Andrea Rossi, Group CEO, 2025 was a year of strong commercial momentum and strategic progress for M&G. “We continue to invest in our business, laying the foundations for long-term growth and expanding our distribution and investment capabilities internationally. In May, we also closed a long-term strategic partnership with Dai-ichi Life HD, which is now our largest shareholder,” he noted.
The asset manager states that its strategic priorities are clear: maintaining its financial strength, continuing to simplify the business, and driving sustainable growth across all markets and segments. One of these markets is the Americas, where the company’s business includes U.S. offshore, institutional clients in Latin America, as well as institutional markets in the United States and Canada.
“Our growth strategy is tailored to each market, with a strong focus on understanding local client needs and offering a broad range of investment solutions. Across the region, we are focused on delivering differentiated capabilities in both public and private markets, leveraging M&G’s global investment platform while adapting distribution and product positioning to each segment,” said Ignacio Rodríguez Añino, Head of Distribution for the Americas at M&G.
Reviewing 2025, Rodríguez noted that the asset manager’s growth in the Americas was driven primarily by non-U.S. equity and fixed income strategies, along with structured credit in the institutional channel. “We also saw growing client interest in diversifying beyond U.S.-focused exposures. Looking ahead, we expect this trend to continue, with increased demand for international diversification, including European equities, Japan, emerging markets, and structured credit solutions, especially among institutional investors,” he stated.
Iberian market
Another key market for the asset manager is Iberia, where it closed 2025 with 9.4 billion dollars (8.2 billion euros) in assets under management in Spain, a significant milestone as it marked 20 years in the market. Under the leadership of Alicia García Santos, Head of M&G for Spain, Portugal, and Andorra, the firm’s assets under management have grown steadily from 5.2 billion euros in 2020 to 8.2 billion in 2025, supported by the strengthening of its local presence with a team of 20 professionals in distribution and investment, including specialists in public fixed income, private debt, and real estate.
According to García, the main drivers of growth in 2025 were strong demand for its public fixed income and European equity strategies, complemented to a lesser extent by activity in ABS. “We have also continued to diversify our client base and expand our strategic offering, with institutional investors now representing a significant part of our business, which is now much more diversified,” she added.
García highlighted that M&G’s expansion in private markets, through Catalyst, responsAbility, PCP, and BauMont, continues to strengthen its capabilities and its ability to meet the evolving needs of clients in the region. She noted that in 2025, “M&G also reinforced its role in the real economy by channeling institutional capital into areas where investment is most needed.”
