Although unstable, 2024 saw a strengthening of financial markets. Despite changes in governments, policies and ongoing geopolitical tensions, we head into 2025 with a positive outlook for the global economy. Explore the macroeconomic themes.

Several leading indicators point to a recovery in the real estate markets, both public and private, with selective opportunities available today for institutional allocators. Despite ongoing capital markets dislocation, several real estate sectors are supported by economic mega forces in the real economy and can provide ample scope for asset managers with the market expertise and operational abilities to harness them.

More defined contribution plan sponsors are recognizing the importance of addressing individual participants’ situations to help maximize their retirement security via their plan lineups. Now that there’s more data available on participants, there’s increasing interest in custom target-date funds and managed accounts. Hybrid and flexible solutions, with an improved participant user interface, can help improve employees’ paths to reaching retirement goals.

In this supplement, we introduce our new Market+ solution, present a novel risk management technique, highlight the importance of economic risk in driving equity portfolio returns, discuss new approaches to Quality and Defensive investing, examine factor investing in emerging markets and share insights on integrating climate opportunities and solutions into strategies.

From reassessing strategic asset allocation and refining fixed income exposures to a more selective stance on private markets and alternatives, public defined benefit plans are actively engaged with their asset managers as they seek to continue to hit their target rates of return. More diversification within and across asset classes and a careful watch on potential downside risks are top of mind, as are the need to institute tactical flexibility in the current markets.

We explain why shifting economic conditions may bode well for hedge funds broadly but also see reasons that manager selection may be more important than ever.

Pension risk transfer has gained tremendous popularity among pension funds enjoying positive funded status and the ability to offload their pension liabilities via an annuity contract. PRT transactions are getting larger and more complex in terms of plan provisions and assets involved – and insurers have stepped up to meet this demand with greater capacity and robust administrative capabilities.

High-growth companies with proven and sustainable business models present an attractive opportunity for institutional allocators seeking more differentiated returns in the private credit space. It’s an opportune time for growth lending that can deliver strong risk-adjusted returns via an experienced manager that has the deep origination and underwriting capabilities to access this specialized and robust market.

Institutional investors looking for diversification, inflation hedging and income generation should take a closer look at a range of real assets, including infrastructure and real estate, to act on some timely opportunities. They can consider multi-asset exposures in a diversified real asset portfolio or specialized exposures in areas like commercial mortgage loans, depending on their investment horizon and risk-return objectives.