The growing use of cryptoasset ETPs is normalizing the inclusion of digital assets within standard portfolio allocations, according to a new global study by Nickel Digital Asset Management (Nickel), a European leader in digital asset hedge fund management based in London and founded by former executives from Bankers Trust, Goldman Sachs, and JPMorgan. The research, conducted among more than 200 senior executives from institutional investors and wealth managers, reveals that 84% agree that the rise in the use of cryptoasset ETPs will normalize digital assets in allocation models within three years, with 26% showing strong agreement with this statement.
More than half (55%) of respondents state that it is very likely they will use cryptoasset ETPs for the first time in the next two years, either to increase their exposure or to make their initial investment. About a fifth (19%) indicate that they already use them, while 23% point out that they are quite likely to invest in them. Only 3% appeared unsure or unlikely to use them.
Respondents show confidence in the expansion of global net inflows into digital asset ETFs: more than four out of five (81%) expect net flows to increase in the next 12 months, including 19% who foresee very significant increases.
The study, conducted in the U.S., UK, UAE, Germany, Switzerland, France, Italy, Netherlands, Singapore, Brazil, and the Nordic countries, concludes that the increase in flows into ETPs will be beneficial for the overall sector. Nearly 90% state that the growth of ETPs has had a positive impact on their organization’s perception of the digital asset market.
Almost nine out of ten respondents (87%) predict that the growth of ETPs will increase demand for active digital asset managers and hedge funds in the next 24 months, with 22% estimating a significant increase. Only 3% expect ETF growth to slightly reduce demand for active management.
However, more than half (52%) note that regulatory uncertainty remains the biggest obstacle to increasing institutional use of cryptoasset ETPs. Around 44% fear that ETFs do not solve underlying market or custody risks, while 40% express concern over liquidity and trading costs.
The main reason for using cryptoasset ETPs cited by respondents is the greater ease of obtaining approval from investment committees or boards of directors (28%). Around 21% value their liquidity and transparency, while 20% highlight operational and custody simplification. Nearly three out of four (74%) state that fees or TER (Total Expense Ratio) are critical or very important when selecting funds.
Opinion is divided on which region will experience the fastest growth in institutional assets under management (AUM): 27% point to the U.S., another 27% point to Europe, and 26% to the Middle East. Only 11% chose the UK.
By product type, multi-asset crypto baskets are expected to register the highest institutional growth over the next two years (45%), followed by actively managed digital asset ETFs (43%). Nearly two out of five (39%) opted for staking or yield-generating products, and 38% for tokenized real-world asset funds.
“Crypto ETPs are fast becoming a vital bridge between traditional finance and digital assets. By providing familiar, transparent, and operationally simple access, they are helping investment committees bring digital assets into the mainstream portfolio construction conversation. However, ETPs primarily offer passive market exposure. As institutional participation deepens, we anticipate rising demand for specialized active managers capable of navigating the market’s inefficiencies, volatility, and operational complexity. At Nickel, we have built an institutional-grade risk management framework, custody infrastructure, and investment capabilities designed to capture these opportunities with the governance and protection standards demanded by institutional investors,” highlights Anatoly Crachilov, CEO and Founding Partner of Nickel Digital.
Photo courtesyBen Lord, Fund Manager at M&G Investments
“My two strongest convictions are that sovereign bonds are really attractive and that investors need to be cautious with risk. Risk markets are ignoring all kinds of problems, potential shocks, and valuation issues.” These are statements from Ben Lord, fund manager at M&G Investments. Lord was one of the spokespersons chosen by the firm to celebrate 20 years of Bond Vigilantes, in a series of conferences held in Madrid. In an interview with Funds Society, Lord expressed his view that investors should maintain long positions in sovereign bonds, especially from the United States and the United Kingdom. “If we analyze returns across all fixed income, 75-80% of the opportunity comes from sovereign bonds,” he asserts.
Why sovereign bonds?
Sentiment toward sovereign bonds is terrible. Central banks have missed their inflation targets for five years. Governments are not cutting spending or raising taxes enough, and they continue to spend more and more. That means they have to issue more and more public debt, and that is the context we find ourselves in. This is the current market environment.
So, do you find sovereign bond yields attractive?
In our view, it all depends on valuation, and with bonds above 3.5%, British bonds above 5.5%, and Treasuries above 5.3%…, these are levels where we see long-term value. We believe that the nominal yield on the 10-year sovereign bond should essentially sit around the average level of nominal GDP. That is, 2% inflation plus real GDP growth of 1%-2% over ten years. That means that when we are above 5% in the United States and the United Kingdom, these levels start to look interesting.
In the United States, one could say that today inflation is at 3% and growth is at 3.5%. That implies a nominal GDP of 6.5%. Therefore, one could argue that 10-year Treasuries do not offer a good valuation. I would say it is quite difficult to expect that for ten years inflation will remain at 3% and U.S. real GDP will continue growing at 3.5%. I think both levels will probably come down. In the United Kingdom, inflation is at 3%, but real GDP is between 1% and 2% and is declining.
I know there are risks. But when you analyze 10-year sovereign bonds, you have to keep in mind that there will be changes over the next ten years. That is why we see value, as we consider that if we assume 2% inflation and 2% real GDP growth, 4% is roughly the level where we should be neutral. And we are well above that level in both the United Kingdom and the United States. In Europe, we believe inflation will probably settle at 2% and real GDP around 1%. Therefore, we have a nominal GDP of 3% in Europe, while 10-year bonds are at 3.6%.
How long can these levels persist?
If the cost of a government’s debt is higher than its nominal GDP—that is, its potential growth—in the long run borrowing at those levels will have consequences for the economy because funding becomes very expensive. More and more money will go toward interest payments, which takes resources away from other areas. Ultimately, high debt costs reduce potential growth. That is why we believe it makes sense to maintain long positions. It is also very easy to say that governments are simply going to borrow more and more and that we will end up entering a crisis. That risk exists. And I think many people are comfortable holding short positions in duration and in sovereign bonds. But they are relying on the idea that, when the crisis comes, they will be able to switch to long positions in duration.
That sounds fairly complicated
It is impossible. I have never been able to time the market. I have never met anyone who can. I would really question anyone’s ability to maintain a short position right now. The crisis can hit any day. And when a crisis hits the sovereign bond market, what happens? Governments have to cut spending. They have to raise taxes. They are forced to do it quickly and aggressively. Let’s go back, for example, to 2011-2012, with the sovereign debt problems in the European periphery. It was very easy to stand there holding short positions and think that there was nothing anyone could do. But Mario Draghi came along and said he would do “whatever it takes.”
And look at everything that happened afterward… What we are saying is that yes, it is scary. Yes, it has hurt. Yes, it has been a bad few years as yields have gone up. But you have to maintain long positions if you want to benefit when the moment comes, when governments get the message, when a bailout is required, or when a failed auction occurs. Suddenly, governments will have to fix it. And on that day you need to be long.
Do you think central banks are closer to committing a monetary policy error?
What I find interesting is that we have a supply shock in oil. It is caused by a single person. That is a tax on consumption. Between 2022 and 2024, everyone had a lot of savings left over from the pandemic. Those savings have already been exhausted in the United States and the United Kingdom. In Europe there is still a fraction left, but it is much smaller than two or three years ago.
Real wages are now growing between 2% and 3%, while average real disposable income is growing between 0% and 2%. Therefore, we are not in a particularly strong consumer environment. Now we have a tax in the form of higher energy and fertilizer costs. And El Niño. All these factors act as a tax on consumption.
And now, since central banks have taken five years to bring down inflation, the bond market is saying: you have had enough time. If you do not bring down inflation now, the bond market is going to react. For that reason, I get the sense that the bond market is regaining control. But if we combine more expensive energy, potentially more expensive food and fertilizers due to other related global events, and now we also raise interest rates because the bond market needs inflation to come back down after so much time, yes, there is a clear possibility that central banks will overtighten monetary policy.
What are the chances of a recession occurring?
In risk markets, I get the feeling that the probability of a recession is practically 0%. It is enough to look at where stock markets, credit spreads, and valuation differentials are. But if we are tightening monetary policy for governments, companies, and households while at the same time all of them are facing these cost-of-living pressures, there is a high probability that the tightening occurs at the worst possible time, when demand is falling.
Is there a risk of a fiscal policy error?
If excessive tightening occurs, there is a possibility that we have a consumer recession. The traditional economic policy response over the last 40 years to a slowdown has been to announce large spending programs. Now there is a higher probability than there has been in a long time that the bond market would react negatively to that kind of fiscal easing.
But that is not my central scenario. If we enter a slowdown, there is one thing I do know: central banks will cut rates. They will cut them aggressively. Therefore, my view would be that if we enter a recession, stock markets will fall, credit spreads—both high yield and investment grade—will widen, and what will investors buy? They will buy sovereign bonds. If a negative reaction occurs in the bond market—and it is not my central scenario, but it is something we have to consider—perhaps one would need to be more cautious with long-maturity sovereign bonds. To me, that would be a term premium shock.
So, what would you do in the event of a recession?
Generally speaking, I would be bullish on sovereign bonds and duration if we ultimately enter a slowdown for any reason. But beyond that, if rate cuts or hikes occur more aggressively, that could generate a really strong shock.
My first reaction is to think that, in a risk-averse scenario triggered by a recession, investors will flock to sovereign bonds. They are the cheapest assets I see. But we have to accept that a tail risk exists: if politicians react to a slowdown or a recession aggressively and announce a lot of public spending, the bond market might not welcome it. Therefore, I would start favoring 2-, 5-, 7-, and 10-year sovereign bonds, and I would be more prudent with 20- and 30-year sovereign bonds.
Snowden Lane Partners named Paula Alvis Vice President and Market Leader for South Florida, a position in which she will be in charge of supervising the firm’s offices in the state and leading initiatives to expand its presence in one of the relevant regions for the wealth management business targeted at international clients.
“I am very grateful for the opportunity to assume this new role and continue growing alongside Snowden Lane Partners. I am particularly excited to be able to lead our offices in Florida, support our financial advisors, strengthen our presence in South Florida, and contribute to attracting new talent and opportunities for the firm,” noted Alvis when referring to her appointment.
The executive also highlighted the current moment the organization is going through and the development prospects of her team. “We have an excellent team and we are in a moment of great growth, so I am very excited about everything we can continue building together,” she added.
The appointment combines operational management responsibilities with business development goals. In addition to supervising the Florida offices, Alvis will need to drive the growth of the financial advisor network, strengthen the team’s capabilities, and contribute to the onboarding of new professionals and business opportunities.
Her track record in the wealth management industry includes experience in developing relationships with financial advisors, consolidating teams, and expanding business, with specialized knowledge of international and Latin American markets. These areas of expertise are relevant for a firm seeking to serve clients with wealth management needs that can extend beyond United States borders.
Alvis has developed her professional career primarily in the banking and wealth management sector in the United States. She joined Snowden Lane Partners in 2021 as Vice President of Operations and Compliance, and in 2023 assumed branch leadership as Branch Manager and Vice President of Operations, based in Miami.
Prior to that, she worked for nearly a decade at Wells Fargo and Wells Fargo Advisors, where she held positions in business banking, client coverage, and account coordination, in addition to serving as group director and analyst. Her background combines operational experience, regulatory compliance, and knowledge of the wealth advisory business, skills she will now bring to her new regional leadership responsibility.
South Florida constitutes a strategic market for international wealth management services, particularly due to its connection with Latin America and the presence of entrepreneurs, investors, and families with assets and interests across different jurisdictions. In that environment, the ability to build long-term relationships, develop advisory teams, and understand the needs of international clients is part of the competition among firms in the sector.
With this designation, Snowden Lane Partners strengthens its leadership structure in Florida and places the growth of its advisory teams among the priorities of its regional strategy. For Alvis, the new role represents an opportunity to expand her responsibility within the organization and participate directly in the next stage of the firm’s development in the southern part of the state.
The relevance of South Florida for the wealth management industry goes beyond its economic dynamism and Miami’s appeal as a real estate investment destination. The city has consolidated itself as an international financial hub for private banks, wealth managers, independent financial advisors, and family offices serving clients from Latin America and the Caribbean.
An analysis published in April 2025 by Family Wealth Report estimated that Miami was then home to around 1,800 money managers, in addition to 60 international banks, 600 U.S. commercial banks, and hundreds of independent financial advisory firms and family offices.
The appeal of this market is also linked to the evolution of Latin American wealth. The UBS Global Wealth Report 2026 recorded a 23.3% growth in personal wealth in Latin America during 2025, measured in dollars, the second highest rate among the analyzed regions and subregions.
This growth expands opportunities for institutions offering investment services, wealth planning, and advisory to entrepreneurs and families with assets in more than one country. For managers with a U.S. presence, Miami functions as a bridge between that wealth and international financial markets. There is business to be had, and plenty of it.
September was, as expected, a negative month for stock market returns. However, according to historical seasonal patterns, we are now entering the friendliest period for equity market investors.
With the T-Bond yield at 19-year highs, the intensification of conflicts in Ukraine and Iran, and persistent doubts regarding the sustainability of investment in the AI theme, the market stalled in September and investor sentiment also suffered from a lack of visibility. And, despite all of this, this week the S&P 500 reached record highs again.
Multiple compression, in an environment of very strong growth in earnings per share, has acted as a shield against geopolitical uncertainty and the flattening of the yield curve.
The fact is that signs point to an interesting end of the year in stock markets.
Inflation, Fed, and Warsh’s Working Groups The latest employment data, with worse-than-expected payroll growth in the U.S., consolidates the idea that the Fed’s focus of attention remains on inflation.
Likewise, last week’s latest PCE release—along with the drop in the price of a barrel of crude oil—provides positive short-term signals, confirming inflation expectations (measured with 5-year 5-year forward breakevens) that have been retreating in recent months and are approaching the 2% mark. In addition, there are indications pointing to a decline in structural price pressures. The U.S. PCE inflation trend indicator calculated by the New York Fed, which seeks to capture the persistence of inflationary pressures, has been falling since April and, although it is a series subject to revisions, Truflation’s “real-time” inflation gauge offers a similar perspective.
It is curious that surprises in U.S. inflation and hiring data have abated considerably since June, while the Fed toughens its hawkish rhetoric. However, the divergence does not necessarily imply inconsistency: the Fed reacts to the level of inflation—with core PCE still at 3.4%, after five years above the target—rather than to the pace of surprises, and with a real rate close to ~0.5% it considers its policy barely restrictive. Added to this is a credibility component: a new chairman under public pressure to cut rates has incentives to demonstrate independence before opening the door to a pivot.
The results of the Fed’s working groups (communication, balance sheet, data sources, productivity and employment, and inflation framework) could be an unexpected positive surprise ahead of the end of the year. Revising the inflation framework cannot be done with credibility if the Fed appears dovish while doing so. The data sources group could be key: Warsh prefers market-based and real-time inflation indicators (breakevens, Truflation-style measurements), and today those indicators point to disinflation. It is a hypothesis, but I would watch that group as a potential catalyst for a turn toward a less hawkish policy in 2027.
Valuation, Elections, and Earnings: The Bullish Case Real growth in the U.S. economy, wages, and inflation are already very close to the stage prior to the COVID-driven IPC surge. Although this does not mean we will return to a rate environment similar to that period, the curve does appear to maintain excessive skepticism regarding rate hike expectations. The spike in the bond yield relative to estimated U.S. GDP growth for the next 12 months sits at more than 1.5 standard deviations, a threshold that, since 1980, has resulted in past bond price rallies.
If this happens again, in an environment of solid corporate earnings growth, the S&P 500’s multiple would have room to recover.
38.7% of the stocks that make up the S&P 500 have accumulated drops of 39% from their 12-month highs. With the market anticipating greater monetary policy tightening than what is conveyed by the Fed’s “dot plot,” the context seems ideal for a positive repricing of risk assets before the end of the year.
We are just a few weeks away from the midterm elections. Betting houses and polls show a certain balance in the Senate (with positive momentum for the Democrats), and certainty regarding the Republicans losing the House of Representatives. Since 1950, three episodes have been recorded (out of the 19 midterms that have taken place since 1950) in which the opposition (in this case, the Democrats) snatched control of both houses from the incumbent party. 12 months after the elections, returns are positive in all cases and exceed, on average, both the S&P 500 return across all periods and the unconditional return and that recorded across the 19 midterms analyzed since 1950. The historical precedent is favorable, but, considering that only 3 of the 19 observed processes showed the likely outcome on November 4, the solid argument supporting good post-election performance is the midterm cycle, not the composition of Congress.
Along the same lines and, as explained above, the period between October and December is historically the most profitable for investors. The market has cleared technical overbought conditions, and investor sentiment has shifted to become less optimistic and more skeptical.
Finally, next week the earnings reporting season begins in the U.S., and the third quarter is shaping up to be positive for investors. Consensus anticipates that all 11 industrial sectors comprising the S&P 500 will report growth in revenues and earnings, an almost unprecedented situation over the last 25 years. The bar, however, is set higher than in previous quarters.
Photo courtesyMike Gitlin and Benno Klingenberg-Timm, from Capital Group
Capital Group has obtained authorization from ADGM’s Financial Services Regulatory Authority (FSRA) to provide financial services and operate as a regulated investment manager. The authorization enables Capital Group to conduct trading, investment management, and distribution activities in ADGM. As explained, this regulatory milestone marks a new phase in its long-term commitment to the region.
In May 2026, the firm announced its plans to establish its first office in the Middle East in Abu Dhabi. Since then, it has relocated employees from North America, Europe, and Asia to bring its investment, operational, and client coverage capabilities closer to clients and opportunities in the region. Local presence is expected to continue growing in line with business and client needs.
“Establishing a regulated presence in Abu Dhabi brings us closer to our clients and to investment opportunities across the Middle East, a region where we have been present for many years. From day one, we will have a significant presence, with on-the-ground capabilities in investment, operations, and client service. Just as was the case with the opening of our Singapore office in 1989, we are bringing together all of Capital Group’s expertise in Abu Dhabi, which reflects our confidence in the region’s long-term growth,” stated Benno Klingenberg-Timm, Head of the Abu Dhabi office and Head of Institutional for Europe and Asia at Capital Group.
For his part, Ahmed Jasim Al Zaabi, Chairman of ADGM, commented: “We are pleased to welcome Capital Group, a global investment manager, following its establishment in Abu Dhabi. Their decision reflects the strength of Abu Dhabi’s financial ecosystem and ADGM’s growing position as a premier international financial center for global institutions seeking long-term opportunities across the region.”
“The Middle East is of strategic importance to Capital Group and to our clients. Securing our regulatory license in Abu Dhabi reflects our long-term commitment to the region and our conviction that it will continue to develop as a world-class international financial hub. We look forward to further strengthening our relationships with clients and partners,” added Mike Gitlin, President and Chief Executive Officer of Capital Group.
BNY has announced the expansion of its Digital Asset Custody platform for selected institutions in the European Union under the Markets in Crypto-Assets (MiCA) framework, making BNY “one of the first global systemically important banks to offer regulated custody of digital assets in the region.”
According to company statements, the expansion follows the inclusion of The Bank of New York Mellon SA/NV, BNY’s European banking entity, in the European Securities and Markets Authority’s MiCA register in July 2026, which allows BNY to provide custody, administration, and transfer services for crypto-assets on behalf of its clients in one of the world’s largest regulated digital asset markets.
“The adoption of digital assets is accelerating across Europe: from banks and broker-dealers expanding their crypto-asset and stablecoin offerings, to asset managers and corporate treasurers leveraging digital payments and tokenized securities to improve liquidity, settlement, and collateral mobility,” points out Jennifer Barker, Head of Europe at BNY. Barker adds that to support increasingly digital strategies, institutions need solutions with the same resilience, oversight, and safeguards they rely on in their traditional operations. “By expanding our platform in Europe, we provide clients with an institutional-grade infrastructure to navigate this transition with confidence,” she specifies.
Secure and Regulated Digital Asset Custody
Launched in 2022, BNY’s Digital Asset Custody platform offers secure custody and management of digital assets through an infrastructure designed with security and risk management controls, including multi-party computation technology, segregated client wallets, and private key storage.
Through a well-developed custody model, BNY can offer market participants regulated access to assets such as BTC, ETH, SOL, and USDC, with the ambition to support a broader range of crypto-assets and stablecoins.
“Our platform is not a standalone solution; we built it on the deep expertise, rigorous controls, and firm commitment to client trust that underpin our existing asset services franchise. As we expand this capability, we prepare more clients to integrate their current operations with emerging digital strategies more seamlessly, efficiently, and transparently across the entire asset lifecycle,” comments Emily Portney, Global Head of Asset Services at BNY.
Foundation for Innovation in Digital Assets
Digital Asset Custody is the foundation of BNY’s digital asset capabilities, as it supports use cases in digital cash, tokenized assets, payments, settlement, and collateral mobility across the financial ecosystem. According to Carolyn Weinberg, Chief Innovation and Market Transformation Officer at BNY, “thanks to our central role and scale in capital markets, BNY remains committed to building the financial infrastructure of the future in partnership with our clients. This expansion reflects our ongoing investment in BNY’s capabilities to connect traditional and digital financial ecosystems, as well as to develop solutions that drive new forms of financial activity for our clients globally.”
The U.S. Federal Reserve delivered on consensus expectations by raising its policy rate by 25 basis points (bps) at its September meeting. The Federal Open Market Committee (FOMC) also shared updated forecasts in the Summary of Economic Projections (SEP), sending a strong signal that September’s rate hike will very likely be followed by another hike this year, and possibly an additional hike in 2027 if inflation doesn’t moderate quickly enough.
The FOMC statement explained the move as an action to “support a timelier return to the Committee’s 2 percent goal.” While a range of underlying inflation measures suggest that inflation is moderating back to target, the Fed’s preferred measure – core Personal Consumption Expenditures (PCE) – has reaccelerated and is currently running above a 3% annual pace. Headline inflation has also risen along with higher energy prices.
The outlook for energy is unusually uncertain, as geopolitical tensions continue to keep energy prices elevated and volatile. However, unless energy prices increase materially, headline inflation is likely to be much closer to target by next spring, as the initial energy price shock at the outset of the Iran conflict begins to drop from the year-over-year calculation. (This is referred to as the base effect.) Going forward, this may alleviate some pressure on the Fed.
In his press conference, Chair Kevin Warsh described the move as removing a “dose” of accommodation to achieve a timelier return to 2% inflation. Warsh’s description is a departure from other FOMC members’ characterizations of policy as neutral to slightly restrictive, and it suggests that he views rate hikes as something more than purely managing the risk that inflation expectations drift higher. When asked to reconcile the FOMC’s goal of a timelier return to 2% inflation with the median SEP projection that core PCE inflation will not return to target until 2029, Warsh responded that the projections were not his forecast, and that he is serious about delivering on the price stability objective. In other words, Warsh may favor a more restrictive policy stance than the SEP projection of two 25-bp hikes by the end of 2027 (including this hike just announced in September) in order to return inflation to 2%.
Inflation progress has slowed
The Fed’s decision to hike appears to be a response to slower progress toward the Fed’s 2% target over the last few years, as a series of supply shocks and one-off price adjustments related to tariffs, energy supply, and AI-related demand have lifted inflation. Typically, the Fed would look through these shocks. However, with inflation persistently elevated and strong demand-side factors supporting the economy due to post-pandemic wealth gains, the Fed’s policy rate hike is likely aimed at adjusting policy to ensure that inflation expectations remain anchored.
Across a broader set of underlying measures, inflation has made progress but remains above the Fed’s 2% target. Trimmed mean and median inflation measures have returned to their pre-pandemic ranges, although readings around 2.5%–3% remain inconsistent with the Fed’s definition of price stability. Notwithstanding looming methodological changes, the median SEP forecast for core PCE inflation in 2026 was marginally higher at 3.4%, and the FOMC no longer appears comfortable with a slow pace of progress from “2-point something” inflation back to 2.0% inflation.
The Fed is not the only major central bank hiking interest rates in an effort to keep inflation expectations stable, as the European Central Bank hiked its policy rate last week. Given the heightened frequency of asymmetric inflation shocks and geopolitical turmoil, it may be sensible for central banks to lean in a more hawkish direction to ensure their inflation fighting credibility remains intact.
Labor is not driving U.S. inflation
Nevertheless, this is not 2022. The labor market is one reason the Fed is able to move gradually. Nominal wage growth has decelerated, while higher productivity has helped restrain unit labor costs. Labor’s share of income has also declined, widening the gap between consumer inflation and companies’ labor cost growth. Today’s inflation is therefore more closely associated with profits and non-labor costs than with wages.
Structural forces reinforce that conclusion. Aging and retirements are reducing labor supply, while AI is reshaping hiring, productivity, and worker bargaining power. Worker-flow data also suggest that higher-paid employees are disproportionately leaving full-time employment, pulling aggregate wage growth lower. Wage, unit labor cost, and workforce flow measures consequently show less inflationary pressure than the unemployment rate alone might imply. (Learn more in our 19 August Macro Signposts, “Counterintuitive Labor Market Shifts Constrain Measured U.S. Wage Gains.”)
Aside from rising non-labor costs, inflationary pressures in the U.S. economy are coming from strong corporate profits and wealth gains. This is consistent with the “K-shaped” narrative of the economy (in which gains are felt more by higher-income segments of the population), but historically inflation and unit labor costs tend to move in tandem. With the labor market not exhibiting inflationary pressures and productivity growth remaining robust, underlying inflation may slow as the impact from tariffs and computer memory prices fades.
A changing Fed under Warsh
Finally, the September meeting offered another glimpse of how the Fed is changing under Warsh’s leadership. Warsh’s communication regarding the Fed’s commitment to price stability has been resolute, and as he stated at Jackson Hole, the Fed must be “confident that underlying inflation is moving to [its 2%] objective, clearly and at sufficient speed” or there is “work to do.”
The September meeting was the first time that Warsh’s rhetoric was supported by action, and we believe the Fed is likely to follow with additional tightening as it navigates the final mile of disinflation.
After the liquidity episodes of previous years, starting from last year’s low point, private equity is in the process of recovery. Despite better figures and somewhat more liquidity in the market, consultancy firm McKinsey expects that the liquidity solutions the industry has been shaping in recent years will remain in place. These types of liquidity vehicles, they stated in the latest version of their Global Private Markets Report, are here to stay.
“LPs are demanding more than just paper returns,” warned the consultancy firm. “Their understandable imperative is causing LPs and GPs to rely on a full suite of liquidity solutions, such as partial realizations and a more robust secondary market,” the firm indicated in its report. Partial realizations, McKinsey explains, provide temporary liquidity relief to managers, which is something they can pass on to their LPs who are dealing with capital calls from their alternative investment programs.
Thus, in a context where the holding period of private equity assets has been lengthening, “partial realizations show that GPs are increasingly recognizing the viability of generating liquidity from an aging asset.” Furthermore, secondary transactions surpassed their 2024 record and reached new heights in 2025, growing 48% to 240 billion dollars. This figure, the consultancy firm indicated, “was driven by the ongoing pursuit of liquidity in an environment of low distributions.”
Meanwhile, they added, GP-led transaction volume reached 115 billion dollars last year. This figure, they detailed, was fueled by greater use of continuation vehicles, even with the rebound in the IPO market. With all these elements on the table, McKinsey’s conclusion is that these solutions, which have earned a spot in the private equity ecosystem, will continue to be a prominent piece despite the improvement in liquidity conditions.
Here to Stay
“Liquidity solutions, such as GP-led transactions (the majority of which are continuation vehicles), have more than tripled in value over the past five years, rising from 35 billion dollars in 2020 to 115 billion dollars in 2025,” the consultancy firm indicated in its report. Current estimates suggest that 14% of all sponsor-backed exits go through continuation vehicles. And LPs’ expectation is for that figure to increase: they anticipate that 20% of such deals will go through continuation vehicles at the end of their holding period now, and that 29% will do so in the next five years.
Along those lines, given the proliferation of these situations, investors are paying closer attention to the underlying assets and watching to ensure that liquidity does not become a breeding ground for poor management. “LPs are showing concern that continuation vehicles could be used to hide underperforming assets. Our survey indicates that around 30% of LPs consider the assets in this type of vehicle to be ‘distressed’ or ‘challenged’,” the firm stated in its report.
For this reason, McKinsey emphasizes that this underscores the need for more transparency and alignment between managers and fund contributors, “as the PE industry navigates a more complex investment lifecycle.” That said, the survey also showed that LPs are generally not penalizing GPs who use continuation vehicles to extend the life of an asset. Nearly two-thirds of respondents express a neutral or positive view of investing with firms that typically apply these types of structures.
Exchange-traded funds (ETFs) under management have reached record levels of more than $22 trillion this year, but the evolution of this industry varies considerably depending on geographic regions. A situation that poses a series of unique challenges and opportunities for both sponsors and distributors, according to a study conducted by Brown Brothers Harriman & Co. (BBH). BBH’s recent event held in London, titled “The World of ETFs: Regional Perspectives, Global Visions,” offered insights from the firm’s experts on key regional differences and the challenges facing the sector.
Challenges in the U.S. Market BBH’s Head of U.S. ETF Services, Tim Huver, highlighted the country’s position as the most mature and innovative ETF market globally. According to Huver, active ETF structures now account for the vast majority of new fund launches in the United States, attracting a disproportionate share of net inflows. He also pointed out the growing product innovation in areas such as the conversion of mutual funds into ETFs and share classes, fund cloning, and the broader benefits provided by U.S. tax regulations supporting ETFs. However, despite the boom in the exchange-traded fund business in the United States, challenges remain in the U.S. market. “In many ways, barriers to market entry have never been lower, but certain distribution hurdles persist, particularly with wealth management platforms and wirehouses, whose requirements regarding track record, asset levels, and liquidity can prove restrictive,” Huver stated.
The Potential of Latin America The discussion on Latin America focused less on product innovation and more on market access and distribution. The Latin American investment market suffers from a lack of regional harmonization, according to BBH. Daniel Montoya, Head of Relationship Management for the Americas at BBH, described how each local market has distinct regulatory, tax, and operational requirements, creating significant complexity for asset managers and their distributors. “The success of ETFs in this market depends far less on launching new products and much more on securing strong local distribution partners and establishing relationships with local market makers, as well as understanding the behavior of institutional buyers and adapting strategies country by country,” he said. Despite these challenges, Montoya believes there is ample room for growth in regional and local ETF markets. “While local ETF markets remain relatively small, demand for exposure to global ETFs is already substantial in countries like Mexico and Chile, while Brazil has built a solid retail ETF investor base,” he noted.
Evolution in Europe Andrea Murray, Head of EMEA ETF Services at BBH, described the regional adoption of ETFs as a phenomenon increasingly driven by savings plans, investment platforms, pension reforms, and government initiatives designed to encourage the transition from savings to investment. Murray highlighted the rise of platform collaborations, co-branded ETFs, and bank launches of their own exchange-traded fund products as major structural developments. The adoption of active ETFs varies across geographic regions, and although active ETFs still represent a small portion of the overall European market, Murray noted that they are “growing rapidly” due to regulatory changes that make this format more attractive to traditional active managers. “European transparency and regulatory changes—such as progress toward a Savings and Investments Union (SIU)—are accelerating the launch of active ETFs. Europe is also opening up retail distribution in markets like Germany, and we are observing an increasing adoption of actively managed ETF products,” she stated. However, Murray also identified key market challenges, including the need for specialized expertise in ETF-related capital markets in a region where having quality, highly knowledgeable distribution partners can also be critical to success. “Capital markets expertise remains the single largest operational challenge for new issuers in Europe,” she added.
Asian Fragmentation Chris Pigott, Head of Asia ETF Services at BBH, described the region as a “thriving,” albeit “multifaceted and fragmented” market that is undergoing rapid changes. Describing some unique market trends observed in Asia, Pigott added that ETF “Connect” programs with mainland China create significant cross-border growth opportunities, while digital distribution channels are also gaining increasing importance in markets like Hong Kong. “Retail investors continue to exert a strong influence on Asian markets, though their behavior can vary dramatically from one local market to another. The market is evolving rapidly, and ETF approvals by mainland China could unlock a major new market in the region,” he stated.
Conclusions Ultimately, ETFs have evolved from a mere product category into a truly global investment vehicle, and the development of active ETFs has become an increasingly dominant global growth trend. With the United States leading innovation, Europe is driving retail distribution and the adoption of active strategies through regulatory changes. Meanwhile, Asia is creating new growth models, while Latin America continues to present significant untapped market potential. In this context, the firm believes that retail investors are becoming increasingly important everywhere. Experts systematically highlighted distribution as the primary factor determining success, in many cases proving to be even more important than product creation. On the downside, there are indications, particularly in Europe, that much-needed ETF-specialized capital markets expertise is in short supply. Nevertheless, across all regions, experts agreed that the combination of active ETFs, the growth of retail investors, and the improvement of distribution infrastructure is helping shape the next phase of the sector’s expansion.
Partners Group has updated its strategy to become an umbrella fund with two sub-portfolios, designed to offer investors greater flexibility in how they allocate money to private equity over time. This change is part of the evolution of its established private equity evergreen strategy, Global Value SICAV, and comes as a response to the broadening preferences of investors. Both portfolios will be managed by the same team, as highlighted in a press release.
Global Value SICAV boasts a 19-year track record and has multiplied invested capital by 4.5 times since its inception, the asset manager emphasized. As the industry grows, institutional and private banking investors are increasingly seeking greater flexibility to allocate capital more dynamically across private markets. In response to this market growth, the firm has launched two sub-portfolios, which will represent a compounding fund and a distributing fund. These vehicles will offer investors the option to monetize returns across the portfolio and will be built from different vintages.
The company offers its investors the possibility to maintain the current Global Value SICAV strategy, convert shares from the distributing fund to the compounding fund, or redeem shares in one or both sub-portfolios. As explained, the fund is optimized for the arrival of new investors and will manage capital more efficiently.
Regarding the evolution of the program, the next step will be to launch an umbrella fund, which is subject to shareholder approval. The firm’s update aligns with the assets under management forecasts communicated during Partners Group’s first-half updates in July and September 2026.
“Our proposal to segment Global Value SICAV into two tailored portfolio profiles prepares one of the most successful private equity evergreen strategies to continue accumulating returns in the future. We are simplifying portfolio construction and management, allowing investors to align capital with their liquidity needs and return objectives without compromises. The long-term exposure offered by the compounding fund has already sparked interest from new institutional investors,” stated Roberto Cagnati, Partner and future Co-CEO of Partners Group, in the press release.
