- This article explains the trends that will impact asset management and the financial sector in 2025.
- The information is aimed at asset managers and investment advisors who want to understand how artificial intelligence, private equity, and other investments are shaping the industry.
- At FlexFunds, we offer asset securitization solutions to issue exchange-traded products (ETPs) that enhance diversification and liquidity in investment strategies. For more information, feel free to contact our team of experts.
2024 was a year of growth for financial markets, which partially impacted the asset management industry.
Firstly, the U.S. Federal Reserve (Fed), led by Jerome Powell, began cutting interest rates as inflation showed signs of approaching the 2% annual target.
On the other hand, it was announced that pro-market and pro-cryptocurrency Republican Donald Trump will be the next president of the United States starting this January.
Meanwhile, artificial intelligence (AI) solidified its presence across industries, with dozens of companies reporting favorable financial results thanks to this new technology.
Since January the S&P 500 advanced nearly 30%, a historic range of more than 6,000 points; and the tech-focused Nasdaq 100 index, up 31% to just shy of 22,000 points.
In this context, asset management specialists are shaping their strategies for 2025, especially by considering the following trends:
1. Sustainable investment
Investors are increasingly aware of the importance of protecting the planet and improving various social aspects of humanity, fundamental principles within environmental, social, and governance (ESG) criteria.
For this reason, they are betting on sustainable investment in two ways:
Green stocks
Specifically, in 2025, there could be growth in “green stocks,” which are shares linked to companies providing products and services for the energy transition, such as solar and wind energy production, battery development, and electric vehicles, among others.
Green bonds
Additionally, the market could lend its money to organizations issuing debt to invest in such sustainable projects. These “green bonds” would pay an interest rate upon maturity, which could even be lower than current rates due to rate cuts by major central banks worldwide.
“The year 2025 will be defined by a race to overcome constraints and fill a growing gap between supply and demand for clean energy. Market and technology advantages such as low cost and modularity could be even more important amid policy uncertainty in the coming year,” summarized Deloitte.
2. Artificial intelligence
Artificial intelligence had a significant impact on financial markets in 2024, and this trend could continue into this year in two ways:
Tech companies
Companies using AI in their applications, such as Microsoft, Alphabet, and Meta Platforms, or those manufacturing hardware for such uses, like Nvidia, Broadcom, and AMD, were the main leaders this year. A clear example of this bullish behavior was the iSTOXX AI Global Artificial Intelligence Large 100 index, which comprises 100 such companies and soared 32% over the past 12 months.
Operations optimization
Additionally, AI will optimize the operations of many organizations, including those in the financial and asset management sectors. For instance, according to IBM, “AI-powered systems can analyze vast amounts of data, which enables real-time decision-making and the optimization of business processes.”
Furthermore, “AI can also provide actionable recommendations to address issues and augment incomplete or inconsistent data, leading to more accurate insights and informed decision-making.”
3. Alternative assets
Alternative assets, particularly private equity and cryptocurrencies, are also expected to play an important role in asset management in 2025.
Private equity
Investing in emerging companies that are not publicly listed has the potential to generate significant long-term returns. Institutional investors are increasingly noticing this, which is why BlackRock, the world’s largest and most important asset manager, is focusing on this sector.
The giant managing $11.5 trillion announced the acquisition of HPS Investment Partners for $12 billion and Global Infrastructure Partners for $12.5 billion. It also plans to acquire Preqin, a private market data provider, for $3.2 billion.
Cryptocurrencies
Similarly, like artificial intelligence, cryptocurrencies proved in 2024 that they are here to stay. The launch of spot Bitcoin and Ethereum ETFs marked a turning point, boosting crypto prices to around $4 trillion in market capitalization, according to Forbes.
In 2025, this trend is expected to continue, as President-elect Trump has expressed his desire to make the United States a “Bitcoin powerhouse” with a strategic reserve centered on this asset, which would demonstrate confidence in the decentralized industry.
4. Personalization and diversification
Amid a framework full of highly innovative investment alternatives, asset management experts are aiming to provide increasingly diversified and personalized strategies based on their clients’ goals and needs.
To achieve this, they are leveraging exchange-traded products (ETPs) like those developed by FlexFunds, which are created through an asset securitization process.
With FlexFunds’ asset securitization program, any asset or group of assets can be converted into bankable assets, facilitating global distribution, improving liquidity, and emphasizing diversification for asset managers and investment advisors.
To learn more about FlexFunds’ ETPs and asset securitization solutions, feel free to contact our team of specialists. We’ll be delighted to assist you!
Sources:
https://www2.deloitte.com/us/en/insights/industry/renewable-energy/renewable-energy-industry-outlook.html
https:/stoxx.com/index/ixagal1l/
https://www.ibm.com/blog/ai-in-operations-management
https://ir.blackrock.com/news-and-events/events-and-presentations/event-details/2024/BlackRock-Acquire-HPS-Investment-Partners-Call/default.aspx
https://www.forbes.com/digital-assets/nft-prices
