As we enter 2025, the global asset management industry faces an environment of rapid transformation. From integrating advanced technologies to shifting investor priorities, firms must adapt to navigate both opportunities and risks. Global economic dynamics, technological innovation, and an evolving regulatory landscape will shape the year ahead.
1. Slowing Global Economic Growth and Persistent Inflation
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According to the IMF, the global economy is projected to grow at a modest rate of 3.3% both in 2025 and 2026, down from 3.5% in 2024. Central banks in advanced economies are expected to maintain elevated interest rates to counter inflation, with the U.S. Federal Reserve targeting 2.5%-3.0% inflation and the European Central Bank aiming for 3%-3.5%. Fixed-income strategies will benefit from higher yields, with U.S. Treasuries expected to offer returns above 4.5% On the other hand, equity markets will remain volatile, with global indices predicted to grow by a moderate 5-6%, driven by emerging market performance.
2. Institutionalisation of the Crypto Market
The cryptocurrency market continues to mature, becoming a central focus for institutional investors. Bitcoin, now trading above $100,000, symbolises growing acceptance, while the broader crypto market cap is expected to surpass $4trn in 2025. I can see emerging trends in the crypto space in the following two areas.
The first is tokenised assets. The tokenisation of traditional assets, including real estate and equities, will open new investment avenues, with market estimates predicting over $2trn in tokenised assets by 2030. The second area of crypto space development is DeFi Expansion. Decentralised finance (DeFi) platforms are gaining traction, offering yields exceeding 8%-10%, appealing to institutional capital.
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By GlobalData3. ESG Investments Dominate Portfolio Strategies
Environmental, Social, and Governance (ESG) factors will continue to reshape investment portfolios. Global ESG assets under management (AUM) are expected to grow to $50trn by 2025, representing over 35% of total AUM. Companies will be focused on climate infrastructure, with investments in renewable energy, electric vehicles, and sustainable agriculture projected to reach $2trn annually. As for the carbon markets, the global carbon trading market is estimated to grow YoY, with new platforms emerging in Asia and North America.
4. AI and Technology-Driven Transformation
AI and machine learning are revolutionising asset management, enabling firms to optimise portfolios, enhance risk modelling, and automate operations. By 2025, over 70% of global asset managers are expected to integrate AI into their decision-making processes. One of the most common ways to utilise AI is predictive analytics. Advanced models predict market trends with higher accuracy, improving alpha generation by 2-3% annually and operational efficiency. Such automation is capable of reducing operational costs by 15-20%, allowing firms to scale effectively.
5. The Rise of Private Markets
Private markets, including private equity and credit, are poised for significant growth. Global private markets are projected to rise from $13trn at the end of 2024 to $20trn by 2030, driven by demand for alternative investment strategies. Among others, it would be private credits and will still be popular real assets as infrastructure and real estate investments continue to provide stable, long-term returns, particularly in emerging markets.
6. Addressing the Global Talent Gap
One of the most pressing challenges for the industry is the shortage of skilled professionals in risk management and quantitative finance. This gap has widened due to the rapid pace of technological change and outdated hiring practices. Approximately 55% of asset management firms report difficulty hiring for advanced risk roles. On top of that, the demand for quantitative talent is growing by 20% annually, yet fewer than 15% of candidates meet industry requirements in AI-driven modelling and data analytics.
7. Geopolitical Uncertainty Fuels Market Volatility
Geopolitical tensions, including West vs BRICS+ relations and elections in major economies, will drive market volatility in 2025. Asset managers must employ macro and event-driven strategies to capitalise on these fluctuations.
8. Regional Growth in Emerging Markets
Emerging markets are set to outperform developed economies in 2025, with GDP growth expected to exceed 4.5%-5.0%. Key regions include Asia-Pacific, which is a hub for technology and renewable energy investments. Another area is the Middle East and Africa, with its infrastructure and energy projects that are attracting significant capital inflows.
The global asset management industry in 2025 will be defined by innovation, adaptability, and a focus on sustainability. Firms that integrate technology, expand into private markets and address the talent gap will lead the way in navigating a complex yet opportunity-rich environment.
To succeed, asset managers must embrace change, leverage emerging trends, and build resilient strategies to deliver consistent returns in an evolving global economy.
Sergei Grechkin, FRM, Chief Risk Officer at Cayros Capital
