What Are Markets Pricing In and What Are They Saying About the Conflict with Iran?

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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.

Investor Discipline, Key to Stabilizing Defaults in the Private Credit Market

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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 Expands Access to Global Funds in Collaboration with Allfunds

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Five Meetings and One Conclusion: Caution and Wait-and-See in the Face of the Middle East Conflict

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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.

“U.S. High Yield Is More Vulnerable Than European High Yield and We Could See Defaults”

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Photo courtesyFrançois Collet, CIO of DNCA

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 SEC Clarifies the Application of Federal Securities Laws to Crypto Assets

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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.”

Americas and Iberia: Two Drivers of Growth for M&G

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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.”

BNP Paribas AM Seeks to Increase Managed Assets Volume by More Than 5% by 2030

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Photo courtesySandro Pierri, CEO of BNP Paribas Asset Management.

The BNP Paribas Group presented this week its 2030 Strategic Plan for its integrated asset management platform, which consolidates it as a key component in the Group’s path toward a return on tangible equity of 13% in 2028.

According to the company, following the successful acquisition of AXA IM, BNP Paribas Asset Management now has a large-scale presence across Europe, representing a transformative leap in its growth. The firm currently manages more than 1.6 trillion euros, covering all asset classes and offering a highly diversified mix of strategies and distribution channels. In addition, as highlighted by the firm, “the BNP Paribas Asset Management platform leverages the strength of the BNP Paribas Group’s integrated model, including its origination capabilities and broad distribution reach, enabling it to hold a leading position in alternative assets, long-term savings, and a rapidly expanding ETF franchise.”

The entity explains that its 2030 plan is structured around four strategic growth pillars: strengthening leadership in alternative assets; expanding active management and accelerating ETF development; developing partnerships with insurers and institutions; and accelerating growth in wealth and retail management segments.

Plans in figures and targets

Based on these growth drivers, the plan sets an ambitious financial trajectory for the period from 2025 to 2030. Specifically, it has set a target of achieving approximately 350 billion in cumulative net inflows by 2030 and growth in assets under management exceeding 5% annually (compound annual growth rate 2025–2030), with a modeled market effect of around 0%.

In addition, the asset manager expects revenue growth of around 4% between 2025 and 2030 (compound annual growth rate), mainly driven by the increase in assets under management and synergies. It also expects to keep operating expenses stable between 2025 and 2030 and improve the cost-to-income ratio to below 60% by 2030. Finally, it aims for growth in pre-tax income to nearly double by 2030 (equivalent to a compound annual growth rate of approximately 13% compared to the 2025 pro forma base) and a pre-tax return on allocated capital (RONE) above 65% in 2030 (versus 48% in 2025).

According to the firm, these targets will be achieved “through rigorous execution and the generation of approximately 150 million euros in revenue synergies and around 400 million euros in cost synergies by 2029, thanks to platform convergence, fund rationalization, and operational efficiencies of scale.” It also notes that the platform’s technological and client service capabilities will continue to be strengthened through the integration of artificial intelligence tools across the entire investment and client service value chain, significantly enhancing scalability and performance.

The executives’ view

In the opinion of Sandro Pierri, CEO of BNP Paribas AM, the asset manager is entering a new phase of transformation and growth driven by favorable structural trends in savings and investment. “The objective of our 2030 Strategic Plan is to strengthen our position as one of Europe’s most powerful investment platforms. Thanks to the combination of quality and scale in public and private markets, as well as the strength of the BNP Paribas Group ecosystem, we are uniquely positioned to connect savers and investors with all the opportunities offered by the real economy. Our mission is clear: to deliver solid and sustainable results to our clients while helping finance the economic transitions shaping the future.”

For his part, Renaud Dumora, Deputy COO and Head of the Investment & Protection Services division, adds: “The Investment & Protection Services (IPS) division is an integrated services ecosystem that is particularly well positioned to meet the growing and evolving needs of individuals, companies, and institutions in Europe and other markets. In this context, the new scale of our asset management business will provide a strong boost to the IPS division and the entire BNP Paribas Group. Its scale, the diversity of its capabilities, and its integration within our One Bank model will be decisive in channeling long-term capital into the real economy, while helping clients adapt to economic, social, and technological changes. With our new strategic plan, we are ideally positioned to open new avenues for growth.”

Scotiabank Bets on Dallas to Build Business in North America

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Scotiabank announced the opening of its new regional office in Dallas, Texas. The objective is to strengthen its presence in North America, as the only bank with the capacity to support its clients in the Mexico–United States–Canada region, the company reported in a statement, considered the second most important economic bloc in the world, with approximately 30% of global GDP.

It also seeks to strengthen its presence in that part of the United States, very close to the border with Mexico, an area of significant and growing trade exchange.

The expansion is relevant if we consider the exponential growth of regional trade, especially ahead of the upcoming review of the United States–Mexico–Canada Agreement (USMCA). Trilateral trade in the region exceeds 1.5 trillion dollars annually, according to official figures from the three nations.

“North America is experiencing a new stage of productive and financial integration. At Scotiabank, we have the scale, presence, and financial architecture necessary to support our clients operating in all three countries, connecting solutions, capital, and opportunities along the corridor,” said Pablo Elek, CEO of Scotiabank Mexico, in the statement.

The Canadian-headquartered firm has consolidated its presence in the region with assets of approximately 1.5 trillion dollars, where North America represents 71% of the bank’s income. Since 2023, the institution has strengthened its strategy focused on the region, where it currently offers comprehensive financial solutions to companies with cross-border operations, including investment financing, treasury services, and foreign exchange operations, as well as access to international capital markets.

Geopolitical conflicts: Tools to benefit from market volatility in investment portfolios

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geopolitical conflict market volatility
Pixabay CC0 Public DomainAutor: sergeitokmakov

Tensions between the United States, Israel, and Iran are once again placing geopolitics at the center of financial markets. For asset managers, the challenge is not only to react to volatility, but to design portfolios capable of withstanding energy shocks, unexpected inflation, and recurring episodes of global uncertainty.

For years, institutional investors operated under an implicit assumption: geopolitics could trigger episodes of volatility but rarely altered the long-term functioning of global markets. That paradigm is now changing.

The conflict in the Middle East serves as a reminder that geopolitical risks can directly affect energy markets, inflation dynamics, and the behavior of financial assets.

The critical point lies in the Strait of Hormuz, the world’s most important energy corridor, through which approximately 20% of global oil consumption flows. Any disruption in this strategic route could trigger sharp movements in energy prices, inflationary pressures, and greater volatility across financial markets.

For asset managers, the key question is clear: how to construct portfolios capable of withstanding and adapting to a more volatile geopolitical environment.

This geopolitical context arrives at a time when the asset management industry was already undergoing structural changes.

The world’s largest asset managers currently oversee nearly $140 trillion in assets, intensifying competition to generate alpha, innovate in product offerings, and expand distribution channels.

At the same time, several analyses point to clear trends shaping the industry:

  • accelerated growth of private markets
  • fee pressure in traditional products
  • greater use of technology and artificial intelligence in portfolio management
  • increasing demand for alternative strategies

In this environment, reports such as Northern Trust’s Global Investment Outlook 2026 warn that markets may face greater dispersion among assets, more persistent inflation, and recurring episodes of volatility—factors that reinforce the importance of active management.

Another important transformation is the growing convergence between public and private markets. Increasingly, traditional asset managers are incorporating private market strategies, while alternative firms are seeking structures that allow them to broaden their investor base.

The result is a new asset management model in which public and private markets begin to integrate within a single investment architecture.

Portfolio resilience in the new geopolitical era

In this new environment, portfolio resilience no longer depends solely on diversification between equities and bonds. It increasingly relies on a combination of structural factors and the architecture of the investment vehicle itself.

How markets typically react to geopolitical shocks

Although geopolitical conflicts often trigger initial episodes of volatility, they can also create temporary dislocations across financial markets. Historically, such events tend to affect asset classes and economic sectors in different ways.

In the case of tensions in the Middle East, markets usually react through four primary channels:

  • Energy and commodities: risk to strategic routes such as the Strait of Hormuz can push oil and natural gas prices higher.
  • Safe-haven assets: during periods of heightened risk aversion, assets such as gold, the U.S. dollar, and U.S. Treasury bonds often attract stronger inflows.
  • Defense and security: geopolitical conflicts are often accompanied by increased defense and national security spending.
  • Market volatility: rising uncertainty tends to increase volatility and dispersion across asset classes.

From strategy to investment vehicle

In this context, the structure of the investment vehicle becomes almost as important as the underlying strategy itself.

Asset securitization allows investment strategies or portfolios to be transformed into more efficient and scalable vehicles, offering several advantages for asset managers:

  • facilitating access to international capital
  • consolidating institutional track records
  • improving transparency and distribution
  • providing flexibility in the selection of underlying assets and enhancing diversification 
  • connecting private market opportunities with the liquidity of public markets

These solutions are gaining traction precisely because they address one of the industry’s biggest challenges today: how to expand access to new investment strategies in an increasingly competitive environment.

Geopolitical crises generate uncertainty, but they also tend to create new investment opportunities.

In this environment, institutional asset managers are paying greater attention to risk diversification, exposure to real-economy assets, and the use of more flexible investment structures.

In a world where geopolitics once again plays a decisive role in financial markets, firms that successfully combine structural innovation, genuine diversification, and global access to capital will be better positioned to transform volatility into a competitive advantage.

In line with this evolution in the industry, solutions such as those offered by FlexFunds enable asset managers and investment firms to transform strategies into efficient and scalable investment vehicles, facilitating access to international markets and distribution to a global investor base. For more information, please contact our experts at info@flexfunds.com