After two years of a bull market, money managers remain generally optimistic about prospects for the industry, but concerned about global geopolitical issues and the ramifications of the next presidential administration in the U.S.
The year 2024 featured some major M&A deals in the asset management industry, including BlackRock’s plan to acquire HPS Investment Partners for $12 billion as well as its $12.5 billion deal to acquire Global Infrastructure Partners. Most sources believe consolidation will continue next year, as firms face growing pressure to achieve scale.
“Increasing fee compression, combined with the rising need for technology and infrastructure investment, will highlight the need for further consolidation and economies of scale,” said Donald Sanya, CEO of RBC Global Asset Management’s U.S. business.
Keith Cahill, head of North America Institutional asset management at J.P. Morgan Asset Management, also expects to see continued consolidation, as some smaller niche players will find it hard to compete and could become takeover targets by larger firms.
Robert D. Kendall, president of Raymond James Investment Management, also expects to see M&A deals. “For boutique managers to compete in this environment, it is important to think about how you can operate with some level of scale,” he said. “Future success will require significant investments in technology, distribution, and portfolio management tools and data.”
Kendall also said he does not see the demand for private markets firms slowing down, and that is likely to drive asset management M&A. “Private credit, real estate and secondaries private equity will all be in demand going forward as traditional public markets-focused asset managers look to expand their capabilities and provide investors with a wider range of investment strategies,” he added.
Taimur Hyat, chief operating officer at PGIM, the asset management arm of Prudential Financial, said his firm will continue to invest in further building out their alternatives franchise, “continuing to globalize our client relationships, crafting tailored new investment strategies for our defined contribution and high-net-worth clients and scaling our institutional multiasset solutions platforms, all underpinned by investment in technology, significantly including AI.”
Absent any major market disruptions, Hyat of PGIM also believes there will be continued robust M&A activity.
“This is because clients increasingly want to do more with fewer managers across both public and private markets,” he explained. “In addition, minimum efficient scale in our industry has risen rapidly with the investments required in brand, technology including AI, and regulatory compliance across multiple jurisdictions; which also drives consolidation.”
Money managers are also focused on a number of other issues in 2025.
Cahill at J.P. Morgan Asset Management said what his firm is most focused on for 2025 is increasing “client engagement,” which includes coordinating with clients on the plethora of macroeconomic and geopolitical issues — including inflation, monetary policy decisions by the Federal Reserve, the impending arrival of the second Trump administration, increasing tensions between U.S. and China and the ongoing wars in Gaza and Ukraine — that have been roiling the markets and will likely continue to do so in 2025.
Cahill is also telling clients that the stock market rally is likely to continue, but leadership should broaden out beyond the concentrated Magnificent Seven stocks, thereby presenting attractive opportunities for active managers. JPMAM has more than $3.3 trillion in assets under management.
Hyat said from a macro perspective his firm is especially focused on heightened geopolitical risks, as well as the macroeconomic implications of the incoming Trump administration’s policy agenda, including the impact of tariffs, domestic tax cuts, immigration policy and a sweeping deregulation agenda.
Hyat noted that, aside from Trump’s victory, there were elections in nearly 70 other countries in 2024, with a similarly “strong anti-incumbent and protectionist zeitgeist, against a backdrop of two major wars.”
In terms of investment strategies, Hyat said a main focus will be on private alternatives as client demand for private credit and private equity secondaries “remains robust.”
There are also “early signs of a recovery in some of the quieter corners” of real estate as transaction activity picks up and clients begin to re-engage in that asset class, Hyat noted.
In addition, with interest rates staying “higher for longer,” along with an aging population and corporate pension funds looking at derisking strategies, Hyat believes fixed income will be a key component in investor allocations in 2025.
Finally, Hyat is seeing an increasing flow of capital from insurers into private alternatives, particularly private credit and asset-backed finance. “We are well-positioned across assets and liabilities to support our clients in this space,” he added.
PGIM has $1.4 trillion in AUM, including $859 billion in fixed income and $332 billion in alternatives.
Jean M. Hynes, CEO of Wellington Management, said as the interest-rate environment is shifting, “we are working with clients to address their fixed-income needs in areas like core bond plus, intermediate credit, and rotational strategies.” On the equity side, she noted they are “working with clients to address rising equity market concentration, with potential solutions like extended (140/40) strategies.”
Wellington has more than $1 trillion in assets.
Sanya, CEO of RBC Global Asset Management’s U.S. business, said his firm is focusing on three key areas in 2025: emerging markets, fixed income and alternatives. RBC-GAM has more than $503 billion in AUM, including $278 billion in fixed income, $38.5 billion in emerging markets (both equity and debt), and $23.8 billion in alternatives.
“The long-term growth rate for emerging markets economies is expected to outpace developed market economies due to favorable demographic trends, increased domestic consumption and other secular trends,” he said.
With respect to fixed income, Sanya noted that with the U.S. presidential election over with, “we anticipate meaningful potential to deliver attractive returns through active management across fixed-income sectors.” As for alternatives, Sanya said his firm is seeing “increased interest in our alternative credit strategies, which have generated strong performance by taking advantage of volatility and dislocation across developed and emerging markets.”
William Huffman, CEO of Nuveen, said his firm will continue to build out its platforms in real estate, real assets and private capital in 2025. “To create the scale we need to serve clients around the world, we’ll continue to expand our presence internationally, invest in our technology, data and operating models, and develop new products and solutions that are resilient throughout market cycles,” he added.
In terms of investing strategies, Huffman said demand for private credit remains high, and “we’re excited about the opportunities in real assets, ranging from listed REITs and farmland to private infrastructure and real estate debt.”
It could also be a big year for energy infrastructure, Huffman noted, as “we anticipate demand will grow for nuclear energy, new electric local transmission facilities and natural gas-related investments.” That could also drive new opportunities in energy-related financing investments necessary to fund commercial building energy upgrades, he added.
Nuveen has $1.3 trillion in AUM.
Potentially inflationary tariffs
Armen Panossian, co-chief executive officer and head of performing credit at alternative manager Oaktree Capital Management, said one of the major issues his firm is looking at in 2025 is risks related to the incoming Trump administration.
“Some of President Trump’s primary campaign promises are potentially inflationary, including tariffs, tax cuts and immigration controls,” he said. “In addition, Trump wants to preside over a vigorous economy and is therefore likely to push for lower interest rates to stimulate growth, despite the risk of inciting further inflation. This, coupled with the deficit, may put upward pressure on longer-dated rates as investors demand a higher term premium.”
Panossian also said his firm will explore private credit investments around the world. “While we continue to see private credit opportunities globally, India, in particular, will be a region of focus for us in 2025,” he said. “We are seeing opportunities to invest in India given the strengthening economy and legal protections, which have made this market attractive for foreign investment.”
Oaktree has $205 billion in AUM.
Jordan Irving, portfolio manager at boutique asset manager Glenmede Investment Management, said a big theme for the upcoming year will be on whether the dominance of megacap growth-oriented stocks finally gives way. “A broadening equity market leadership would have significant impacts on overall asset allocation as areas that are widely underrepresented would see outperformance,” he said. “It is likely, however, that markets will remain choppy as investors digest various sentiment indicators and get more clarity on the economic policies of the new Trump administration.”
Glenmede has about $7.5 billion in AUM.
Kendall, president of Raymond James Investment Management, said in 2025, his firm plans to “unveil a new ETF platform and enter private markets through an interval fund structure, as well as continue building additional capabilities.”
Kendall also noted that significant capital has moved to the alternatives space, sometimes at the expense of small-cap equities. “We are starting to see clients re-evaluating asset allocations in public markets, and in some cases looking at (small caps) again,” he added. “With enthusiasm growing around the potential for this part of the market to perform well, this will be another area of focus.”
Raymond James IM has about $102.7 billion in AUM.
Ognjen "Oggie" Sosa, CEO at fixed-income manager Breckinridge Capital Advisors, said with the shift in the balance of power in Washington, his firm “will be focused on the implications of the emerging themes of the new administration and unified congressional alignment with emphasis on inflation, immigration, income taxes and regulatory reform.” In addition, Breckinridge will be “closely watching the Fed to better understand its path forward on its interest rate-cutting cycle in 2025.”
Breckinridge has $51 billion in AUM.
Active investing
With respect to the eternal battle between active and passive investment strategies, most managers think “active” will be prominent.
Sanya of RBC said he is very optimistic about “opportunities for active investing into 2025, particularly within the less efficient segments of the market like fixed income, emerging markets and small caps.”
However, Nuveen’s Huffman said that the continued popularity and growth of private assets and the way that the asset management industry is rethinking portfolio construction makes the “active vs. passive” question less relevant by the day. “Investors should think beyond the binary choice between active vs. passive,” he added. “Each (strategy) play important roles in a client’s portfolio, and each investor’s need to find that balance is why the guidance of investment professionals will always be at the forefront of the asset management industry.”
Casey Clark, president and chief investment officer of Rockefeller Asset Management, said a confluence of macro factors are expected to continue market volatility, including risks that inflation reaccelerates and the potential for new tariffs, policies and other regulatory actions, all of which may have an impact on select asset classes, sectors, geographies and companies.
“We believe this underscores the importance of both a well-diversified asset allocation and value of active management to identify best relative value,” he added. Rockefeller has $16.3 billion in assets under supervision.
Kendall of Raymond James “absolutely” thinks active investing will outperform in 2025. “As we see the fundamental economic picture in the U.S. and around the world looking more optimistic, there is increasing breadth across earnings which is now translating into an increased breadth of price appreciation across different sectors, industries, and market capitalizations,” he said.
“This increase in breadth is supportive of the current bull market broadly, but there has also been increasing dispersion in stock performance. Correlations across the market are near multiyear lows, and dispersion has picked up as investors become more discerning and focus on fundamentals across the market.”
In the wake of the U.S. election, active management — particularly through sector and security selection — will be increasingly important, said Panossian of Oaktree.
“Some industries may be more impacted by Trump’s proposed policies than others, but it’s hard to speak with any certainty,” Panossian noted. “For example, the tariff proposals described may hurt some U.S. retailers with products that rely on Chinese components, but others with little to no reliance on China stand to benefit. Tariffs may also reduce American consumers’ spending power and thus change their purchasing patterns, potentially benefiting lower-cost retailers, though many of these retailers have historically relied on China for low-cost manufacturing.”
Help wanted
Wellington expects to add roles in “many key areas where we are investing, such as global research, privates, and wealth; and we will continue to have replacement hires in roles across the entire firm, as employees move to new internal or external roles in the regular course of business," Hynes said.
Citing that talent is his firm’s most important asset, Hyat said PGIM is “always looking for top talent across our industry, on a global basis.” PGIM is actively hiring across a range of areas including technology, distribution, private credit and asset-backed finance, and institutional multiasset solutions, he added.
JPMAM, Cahill said, will continue to invest in technology in 2025 and could potentially hire more people in this area, as well as AI, cybersecurity and portfolio management.
Hepsen Uzcan, the newly appointed CEO of DWS Group-Americas, said a core part of her firm’s 2025 strategy will be to continue investing in junior talent.
“We have hired 14 top graduates this year and will continue to build a pipeline of future leaders who will help drive our growth and success in the region and beyond in 2025,” she said. The new hires will be focused on the company’s alternatives and Xtrackers ETF teams, to support expansion in those areas.
DWS Americas has about $225 billion in AUM.
As Nuveen seeks to expand internationally, Huffman said, the firm is “growing our technology and operations teams. Further, to meet client demand, our responsible Investing team will also grow in 2025.”