Investors must strengthen portfolio resilience amid persistent macroeconomic uncertainty
Frithjof VanZyp
Independent global investment consultancy bfinance has released its latest Manager Intelligence and Market Trends report, offering comprehensive insights on institutional investor activity, risk appetite, market developments and asset manager performance across all major asset classes.
The report includes data on institutional investors’ asset manager search activity from bfinance’s investor client base across 45 countries.
Top findings include:
- Private markets fundraising hit its lowest level since 2015, with activity slowing across Private Equity, Private Debt, and Real Estate. However, secondaries and infrastructure remained resilient, with record-breaking secondaries transactions and mega-fund closings in the pipeline for 2025.
- Private Debt remains a dominant force in private markets allocations, representing over 40% of private market searches, as investors look to enhance income generation and explore niche strategies such as Healthcare Direct Lending and Special Situations.
- Equity market concentration remains a concern for investors, with the big tech stops continuing to drive returns, which has led to a notable increase in manager searches, accounting for over 30% of new mandates in 2024. Investors are increasingly reassessing regional, style, and factor exposures, seeking to mitigate risks stemming from narrow leadership in large-cap equities.
- Hedge fund selection is increasingly geared towards convexity and market-independent strategies, with over 80% of searches targeting defensive diversification approaches. Investors continue to prioritise resilience against macroeconomic uncertainty and liquidity risks, even as directional strategies outperform.
- Fixed income strategies continue to play a crucial role in portfolio rebalancing, with Investment Grade and Emerging Market Debt manager searches reflecting a shift towards credit opportunities amid tightening spreads and evolving yield curve dynamics.
- Sustainability remains a key driver of product innovation and investor demand, with growing interest in Impact Private Debt, Carbon Trading, and Energy Transition Commodities. Meanwhile, regulatory developments and data consistency challenges continue to shape ESG investment decision-making.
- The re-emergence of Donald Trump as a key political figure has added a layer of complexity. Policy proposals such as tax cuts, regulatory shifts, renewed energy production initiatives and aggressive use of tariffs are reshaping market expectations, injecting further volatility into an already uncertain environment.
bfinance’s Australia Senior Director Frithjof van Zyp, said: “Private markets fundraising has declined to its lowest level since 2015, though certain segments, such as secondaries, have demonstrated resilience heading into 2025. Private Debt continues to dominate allocations, with growing interest in evergreen solutions and ESG-aligned strategies, including Impact Private Debt. Additionally, activity in liquid alternatives has increased, with a strong emphasis on convexity and market-independent strategies aimed at defensive diversification, as investors seek to enhance resilience against macroeconomic uncertainty and liquidity risks.”
