The survey gathered responses from 450 institutional investors globally including multiasset managers, private markets managers, pension funds and insurance companies. 120 and 30 of the survey respondents are based in APAC and Australia respectively.

The data shows Australian institutional investors expect to increase private market allocations to 45% over the next 3 to 5 years, up 6 percentage points from 2024’s survey responses – the largest increase of any APAC country.

6 in 10 of the Australian respondents currently have 10% to 30% of their portfolio allocated to private assets. Over the next 3–5 years, this is expected to shift, with 7 in 10 anticipating an allocation above 30%, and 4 in 10 expecting to allocate more than 50% to private markets. Across APAC more broadly, institutions plan to marginally increase allocations to private markets from 35% to 38% over the 3-5 year period, continuing a steady upward trend noted in previous years.

State Street’s Head of Australia Product Team, Cleyde Hazell, said: “The 2025 survey results reflect confidence in private market assets and growing institutional readiness for alternative vehicles in the current macroeconomic environment. We are seeing increased interest in private markets assets that offer relatively low volatility compared to public markets.

“Renewed uncertainty about the world economic environment from the new US administration’s tariff policies and the possible reciprocations from its major trading partners, is influencing institutions’ investment strategies. Australian investors are responding to these structural and market shifts by embracing private markets and they are doing so more assertively than their regional peers.

“In the 2024–25 Budget, the Australian Government committed $22.7 billion over the next decade to build the ‘Future Made in Australia campaign, which will encourage and facilitate significant private sector investment.

“Although investments in private assets continue to rise, the pace of global growth seems to be levelling off. This trend aligns with findings from our earlier surveys, which suggest that the heightened emphasis on due diligence and evaluating risk versus return—prompted by the higher interest rates of the early 2020s—is resulting in fewer, but higher-quality investments,” said Ms. Hazell.

Semi-liquid retail funds set to drive majority of fundraising

The survey reveals a significant shift in how investors plan to access private markets. Within the next one to two years, retail-style fund vehicles are expected to become the dominant channel for private markets investment globally, with 53% of respondents believing at least half of private market flows will soon come through semi liquid retail products.

This marks a sharp contrast to 2024, when 51% of survey respondents expected traditional institutional fundraising to remain the primary source of capital in the near term.

In Australia, interest in semi-liquid vehicles is also gaining momentum. Currently, about one-third of Australian respondents expect retail will be the key channel for fundraising in the next 2-3 years—up from 17% last year. At the same time, many Australian institutions are shifting away from traditional fundraising channels in favour of retail-focused strategies.

Ms Hazell said: “It’s encouraging to see institutions across Australia taking a leading role in expanding access to private markets. The rising interest in semi-liquid, retail-style fund structures is being driven by product innovation and better access to data, which are making these vehicles more attractive for long-term allocations.

“Regulatory developments will also play a critical role. In Australia, as is the case for North America, lowering means-based barriers to entry – wealth and/or income minimum thresholds – is seen as the key enabler of broader market participation.

“We believe the superannuation industry will take a leading role in expanding access to private markets to the new generation of investors.”

Private equity and private debt set to benefit the most Private equity continues to be the most appealing private markets asset class for institutional investors across APAC. According to the survey, 75% of APAC respondents expect to increase their allocation to private equity over the next two years—higher than the 66% reported globally.

Among APAC countries, respondents from Australia (47%) and Singapore (38%) see private debt benefitting the most from the growth of semi-liquid funds.

Ms Hazell added: “Investors believe private debt is easily securitised and therefore will benefit greater from the growth of individual/DC focused semi liquid funds. Developed APAC has been singled out as a key market for investing in private debt.”

“Geopolitical uncertainty—such as ongoing tensions around tariffs and global trade relationships—have also influenced this shift. These developments appear to be accelerating the democratisation of private markets. The relatively smoother, less volatile return profile of these assets is a key part of their appeal with a significant proportion of APAC respondents citing this as a key reason for increasing allocations,” Ms Hazell.

The flight to quality

Previous surveys showed investors becoming more discerning about their private market investments, with increased focus on due diligence and risk assessment. The 2025 survey suggests the move from quantity to quality is now entrenched in investment strategies.

Further evidence of this flight to quality trend is seen in capital allocation moving from emerging to developed markets.

In APAC, institutions are particularly looking at investment opportunities in North America for private equity investments and in developed APAC for private debt. They are focusing on developed markets because of the flight to quality (or flight from risk). Willingness to invest in Emerging APAC showed the largest decline, with 14% of LP respondents planning allocations in this market, down from 25% in the 2024 research.

APAC leads Gen AI/ LLM adoption but Australia lags behind

Most APAC respondents were shown to be either investing in (31%) or planning to invest in (38%) generative AI (GenAI) and large language models (LLMs) for their private market investments, 12% of APAC institutions are already using the technologies, higher than 8% of their global counterparts.

In contrast, Australian institutions appear to be slower in embracing these technologies. 6 out of 10 respondents are still in the early, aspirational stages of GenAI adoption, lagging behind their regional peers.

Nevertheless, unstructured data remains a key challenge, with half of Australian respondents reporting difficulties in managing it at both the portfolio and project levels. Despite the slower uptake, around 7 in 10 Australian organisations expect their technology spending to rise over the next one to two years, in line with broader regional expectations.

“While many APAC institutions are already unlocking the value of generative AI and large language models in private markets, Australian organisations remain in the early, exploratory stages,” said Ms Hazell.

“Our research shows that while interest is rising, adoption in Australia is notably behind regional peers, with many firms (40%) still uncertain about return on investment,” concluded Ms Hazell. “That said, there is cautious optimism—technology spending is expected to grow, and as institutions gain clarity on GenAI’s impact, we anticipate a more decisive shift in adoption strategies across the country. This technological adoption at the APAC level is seen as a critical enabler for improving decision-making, enhancing risk management, and supporting the democratisation of private markets.”

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Institutional investors on balance still saw the glass as half full in May. The aggregate allocation to equities at the expense of cash points to a clear desire to maintain risk budgets. Within this moderate risk on environment long-term investors began to reassess their USD overweight once again and rediscovered their appetite for higher yielding FX and fixed income instruments.

“At the same time, however, there is also clear hesitation on cyclically exposed assets both in equities and commodity exposures. There was also significant dispersion in risk preference across emerging markets, where demand for Chinese equities continues to be robust, but investors lightened their holdings of Indian equities ahead of the election,” highlights Michael Metcalfe, Head of Macro Strategy at State Street Global Markets.

The State Street Holdings Indicators showed that long-term investor allocations to equities rose 33bps to 53.7% as cash holdings fell a further 0.4 percentage points to 18.4%. This is the first time in tenth months cash holdings are below their long-term average (see Figure 2 overleaf). This left fixed income holdings largely unchanged after their sharp rise last month.

“The trends in State Street’s holdings indicators were encouraging in May. Despite mixed macro news investors allowed their allocation to equities to drift higher alongside market price movements. The aggregate allocation to equities is now at its highest level since June 2008. This month the move into equities was entirely funded by allowing a further fall in cash allocations, which have slipped to a ten-month low and are now below their long-run average.

“The early indication here is that despite ongoing uncertainties surrounding the outlook, investors are willing to run cash allocations at below average levels to take advantage of the return opportunities in either fixed income or equity markets. As vulnerable as equities look with such a high allocation, the changes in allocations in May were nevertheless encouraging,” added Mr Metcalfe.

About the indicators

The Institutional Investor Indicators (the three i’s) were developed at State Street Associates, State Street Global Markets research and advisory services business. They measure investor confidence or risk appetite quantitatively by analyzing the actual buying and selling patterns of institutional investors derived from State Street’s USD42trn1 in assets under custody and administration (note not investors’ balances held at State Street itself). The Risk Appetite Index is derived from measuring investor flows in twenty-two different dimensions of risk across equities, FX, fixed income, commodity-linked assets, and asset allocation trends. The index captures the proportion of the twenty-two risk elements that saw either risk seeking or risk reducing behavior. A positive reading suggests that on balance investors are adding to their risk exposures, while a negative reading suggests risk reduction. State Street’s holdings indicators capture the share of investor portfolios allocated toward equity, fixed income and cash going back to 1998.

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Notes:
[1] As of Q4 2023 reported State Street earnings.

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Clayton Issitt

For asset owners and asset managers alike, data silos are a silent productivity killer.  The antidote is democratising data.

By democratising access to data, institutional investors empower their employees and stakeholders to make timelier and more confident investment decisions, transform their operating models and deliver a superior client experience.

However, many organisations suffer from decades of accumulated “technology debt” thanks to the proliferation of disparate solutions and the siloed data stores that were created to support those systems.  Once data silos take hold at an enterprise level, smaller silos start to proliferate because teams combine information from larger silos across the organisation in order to support their own workflows and areas of responsibility.

Against that backdrop, harnessing powerful technologies like AI, launching innovative new products and expanding into new asset classes is difficult if not impossible.

Data silos and the attendant lack of a holistic data management strategy are surprisingly commonplace. In our latest survey of 500+ institutional investors, three quarters of respondents rated their current data capabilities across the board at a nascent or intermediate stage of development. And most singled out data accuracy, access, analytics, governance and data integration as key areas for development.

This has ramifications for customer retention and revenue growth. The forward looking firms that claimed to have a data management strategy in place say they experienced a 24 percent increase in customer satisfaction, a 21 percent increase in customer retention and a 19 percent increase in revenue growth on average.

Investment professionals have problems they need to solve, and they build or acquire specific technology solutions to address these needs. The solutions may address particular problems sufficiently, but often they are not interoperable with other technology applications.  As firms acquire other businesses or expand into new geographies, asset classes or strategies, this tends to proliferate.  The result is a complex landscape of systems that have difficulty communicating with one other.

A ray of light has been provided by the emergence of the Cloud, which is enabling meaningful interoperability between disparate applications and data stores for clients. Instead of engaging in time consuming data movement to feed applications, we can now bring the applications to the data by leveraging cloud native solutions like Snowflake.

That reduces a lot of the extracting, transforming and loading (ETL) overheads and time-consuming manual reconciliations so clients can start transitioning from high volume, low value IT operations to higher value activities.

From an asset owner perspective, it’s increasingly important to deliver a whole-of-fund view across public and private markets for both internally and externally managed assets. That involves capturing and curating structured and unstructured data from multiple sources and providers. Alongside the challenges of capturing information in a timely fashion from external asset managers, firms need to combine that with the decisions being made internally to ensure they are not working against themselves in the market or doing something today that may conflict with an investment decision taken by an external manager.

Bringing all of that financial information together with investment data is something the asset owner community has struggled with for a very long time and can now be delivered.  And enriching investment data with financial data accelerates the ability to bring applications to the data.

In the end, you can have a data set encompassing front, middle and back-office data together in a single model that all of your users can understand.  It’s data that everyone can trust because they’re looking at the same data at any given point in time.

It’s not just about getting information into a single place; it’s about sharing it with the rest of that ecosystem so that everybody in the organisation is working off a consistent set of trusted information.

So, democratising data; that’s something everyone can vote for.

By Clayton Issitt, Head of Alpha Client Solutions, Asia Pacific

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Jessica Donohue

State Street Corporation (NYSE: STT) has announced it has appointed Executive Vice President Jessica Donohue as head of Global Investment Insights, Sustainability and Impact.

Donohue succeeds Rick Lacaille who announced his retirement earlier this year. She will report to Lou Maiuri, president, chief operating officer, and head of Investment Services.

In this role, Donohue will oversee State Street’s sustainability efforts with a focus on delivering insights to our clients and the industry. In addition, Donohue will lead and coordinate across State Street’s Investment Services and the broader organisation to bring together investment insights and solutions to deepen relationships, particularly with Chief Investment Officers at our client organisations.

“Being a strategic and trusted partner to our clients to meet their complex and changing needs requires us to continue to evolve our investment-related thought leadership and solutions,” said Maiuri. “Jessica’s background in research and investment-related insights, coupled with her deep understanding of clients’ unique challenges and the market overall is precisely what our clients need as we continue to deliver as their essential partner.”

Donohue has held a variety of senior roles for more than two decades with State Street including leading Investor Behaviour Research at State Street Associates, the company’s partnership with academia, and then expanding her role to head this group. She also served as Chief Innovation Officer and Head of Advisory and Information Solutions for Global Exchange (now State Street Alpha℠) and head of Performance & Analytics for Investment Services. Most recently, she was the global head of State Street’s Asset Owner segment.

Donohue’s financial services experience is complemented by her background in academia where she held several teaching positions at Brandeis University and the University of Minnesota. She is also a champion of our inclusion, diversity, and equity program and serves as the co-executive sponsor of our Disability Awareness Alliance.

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The new State Street Alpha for ETF Issuers offering integrates Charles River Development’s front office products with State Street’s industry leading ETF servicing capabilities to deliver end-to-end technology and processes for ETF issuers.

“In the first 4 months of 2023, growth in ETFs showed no sign of slowing. According to our internal research, ETFs had over US$200 billion of inflows globally, the third highest total on record1, bringing the total ETF market to approximately US$10T,” said John Plansky, head of State Street Alpha. “By optimising ETF workflows with consistent data, key analytics and more efficient basketing capabilities, asset managers are better equipped to drive investment decision making with access to near real-time data modernise their operating models as the ETF marketplace continues to grow.”

State Street Alpha provides a centralised platform for ETF Issuers across the entire ETF lifecycle, including portfolio management, trading and compliance to enable growth across a variety of ETF strategies and increase speed to market.

“For the past 30 years, State Street has continuously innovated to support what has become a US$10T ETF marketplace. Today State Street is the largest ETF administrator in the world with more than 2,700 ETFs serviced in 13 countries2 and provides fully integrated global ETF servicing capabilities. This heritage of expertise has been leveraged throughout the development of the Alpha Platform and reaffirms our position as the forefront leader in ETF servicing,” said Frank Koudelka, global ETF Product Specialist for State Street.

State Street’s Alpha platform is designed as an open architecture structure to integrate with external ETF providers as well as State Street’s internal ETF systems. More broadly, State Street has also established a fully integrated middle office servicing model that has been tailored specifically for ETF issuers.

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Notes:
[1] https://www.ssga.com/us/en/institutional/etfs/insights/investors-put-2022-in-the-rearview-and-double-januarys-average-etf-inflow
[2] State Street Internal Research

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Historically, the carbon assets market has been made up of many disparate components and manual processes. In utilizing the new carbon asset services solution, State Street seeks to help clients navigate this complex environment, and simplify the management of carbon assets. Additionally, clients accessing the solution will be able to incorporate carbon assets into both existing ESG and non-ESG portfolios, leveraging State Street’s back and middle-office capabilities.

State Street’s Carbon Asset Servicing Solution provides a range of fund administration and depositary services, including record keeping, NAV calculation, reporting and other oversight functions. With the adoption of this solution, clients can now leverage State Street’s full range of asset services for this growing carbon asset class.

“The carbon assets market is growing dramatically—as the total traded value for compliance and voluntary credits reached a record €865 billion in 2022^[1] and is expected to grow fifteen-fold by 2030 as new regulations in major regions push corporations globally to report on and offset their greenhouse gas emissions^[2],” said Phil Kim, global head of ESG Product at State Street. “Our new carbon asset servicing solution will help clients gain access to this emerging asset class so they can directly hold carbon allowances and credits and trade them as they would other products, and ultimately look to maximise the potential of their investment portfolios using State Street’s fund administration expertise.”

By providing comprehensive fund administration and first-of-its-kind depository services required in the European Union, State Street’s Carbon Asset Servicing Solution provides asset managers, asset owners and other financial institutions seamless integration of carbon assets into State Street’s core investment servicing offering — coordinating multiple parties’ data, including top carbon registries, exchanges and cash agents, allowing clients to gain exposure to this growing asset class via spot and derivatives markets.

“As businesses continue to move toward models that reduce greenhouse gases and emission standards increase in scale and magnitude, the price of carbon offsets are likely to increase. Investing in carbon assets can help fund the energy transition and diversify portfolios, all while offering the opportunity for investment returns,” concluded Kim.

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[1] Refinitiv, “Carbon Markets Year In Review 2022”, February 2023
[2] McKinsey, “Putting carbon markets to work on the path to net zero”, October 2021

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Mostapha Tahiri

State Street has announced that Mostapha Tahiri, Asia Pacific chief executive officer, will take on additional responsibilities to lead the company’s Middle East business, effective immediately.

Tahiri will serve as head of the Middle East along with his current responsibilities for the Asia Pacific region. In his expanded capacity, Tahiri will be responsible for all business activities for the Middle East and Asia Pacific regions, including driving strategy, increasing client engagement, developing talent, pursuing growth opportunities, and managing diverse stakeholders including local officials and regulators.

Based in Singapore, Tahiri will continue to report dually to Andrew Erickson, chief productivity officer and head of International Business, and Lou Maiuri, president, chief operating officer and head of Investment Services.

“As we continue to execute our strategy to be an essential partner to institutional investors, it is critical that we continue to look for opportunities to drive growth,” said Maiuri. “The Middle East is an important market for us to grow our global business.”

“Since Mostapha joined State Street in 2020, he has proven his leadership by successfully transforming and growing our Asia Pacific franchise,” said Erickson. “Mostapha’s extensive business development and expansion experience in emerging markets, complemented by his broad segment knowledge makes him uniquely suited for this role.”

“Similar to Asia Pacific, the Middle East is a growth engine for State Street,” Tahiri said. “Building on our 30-year presence and on-the-ground service in the Middle East, I am excited to work with our teams and partners to support our clients achieving their objectives and accelerating their growth.“

Prior to joining State Street, Tahiri worked in numerous leadership positions at BNP Paribas for 20 years, including Asia Pacific chief executive officer of BNP Paribas Securities Services.

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The Global Investor Confidence Index increased to 81.4, up 3.8 points from February’s revised reading of 77.6. The increase was led by an 11.0 point rise in European ICI to 117.5, along with a smaller 0.9 point increase in North American ICI to 73.9.

Asian ICI, meanwhile, fell 6.3 points to 91.9. The Investor Confidence Index was developed at State Street Associates, State Street Global Markets research and advisory services business. It measures investor confidence or risk appetite quantitatively by analysing the actual buying and selling patterns of institutional investors.

The index assigns a precise meaning to changes in investor risk appetite: the greater the percentage allocation to equities, the higher risk appetite or confidence. A reading of 100 is neutral; it is the level at which investors are neither increasing nor decreasing their long-term allocations to risky assets.

The index differs from survey-based measures in that it is based on the actual trades, as opposed to opinions, of institutional investors.

“In the face of heightened stress in the US banking sector, institutional investors continued to take a defensive stance with the Global ICI posting at 81.4 in March, well under the risk neutral level of 100,” commented Rajeev Bhargava, head of Investor Behavior Research, State Street Associates.

“While the aggregate sentiment remained weak, it is important to report that investor confidence did not deteriorate further in March but actually firmed a touch, with our global measure gaining around 4 points.

Indeed, the North American ICI remained steady through March albeit at weak levels, possibly supported by talks that the FDIC will extend insurance to all deposits, and in Europe investor optimism climbed sharply higher. With Asia being the only region that witnessed a decline is sentiment, the behavior of institutions in March demonstrated some level of resilience to the recent bout of market volatility.”

The index is released globally at 10 a.m. Eastern time in Boston on the last Wednesday of each month.

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For more than 20 years CF Global Trading and their established team of traders has helped asset managers extend global trading infrastructure, improve access to liquidity, streamline workflow and reduce trading and infrastructure costs. CF Global Trading has expertise across multiple asset classes and will have execution desks in Hong Kong, London, New York and Lisbon (expected to be opened by the time of the close of this acquisition) and this deal will further expand State Street’s current outsourced trading, meaning clients can expect the ability to provide outsourced trading services to new clients and markets. Importantly, the combination of the two firms will allow State Street to offer a complete global trading solution as part of the firm’s State Street AlphaSM front-to back platform.

In addition to scale and adding significant expertise to State Street’s outsourced trading services, clients can also expect:

• Multi-asset class execution across equities, fixed income, exchange-traded derivatives and foreign exchange.
• Modular-based solutions that allow clients to outsource components of their trade execution without giving up control, as well as access to the front, middle and back office through State Street AlphaSM.
• 24-hour global trading capabilities across multi-asset classes via a transparent, broker neutral, agency model offering.
• Reduced operational risk with a robust risk management framework and business continuity back-up.
• Potential cost savings that allow clients to focus on what they do best.

“Market volatility, margin compression, increased regulation and cost pressures have presented multiple challenges for investment managers. Survival and growth depend on the ability to streamline processes, reduce costs and integrate infrastructure to allow more focus on core competencies of investment selection and alpha generation,” said Dan Morgan, global head of Portfolio Solutions at State Street. “With the addition of CF Global Trading, we add scale and significant expertise to our outsourced trading services that will complement and help further bolster our current offerings.”

State Street has provided clients with outsourced trading solutions since 2010, and has invested in technology and people to provide a leading agency, multi asset class outsourced trading solution. State Street currently provides outsourced trading to clients in the Americas, APAC and Middle East, and CF Global Trading will extend the ability for the firm to provide these services to clients in the UK and the EU, where outsourced trading is maturing the fastest. After closing, the new combined State Street footprint for outsourced trading will include trading desks in Boston, New York, Toronto, London, Lisbon, Hong Kong and Sydney.

“This is a very exciting day for all of us at CF Global Trading,” said Scott Chace, co-founder and CEO of CF Global Trading. “Our team has worked with our clients for 20+ years to develop a global, multi asset class execution platform with a focus on accessing liquidity, improving workflows and reducing costs. We look forward to joining the State Street team and continuing to build on our client platform and experience with the scale of one of the world’s largest institutional financial services providers.”

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ART was formed by the merger of Sunsuper and QSuper and manages more than AU$230 billion in retirement savings for its more than two million members^[1].

“This significant mandate demonstrates our dedication and commitment to the Australian superannuation industry,” said Mostapha Tahiri, CEO, Asia Pacific at State Street. “We are honoured to partner with ART as it enters the next phase of integration, transformation and growth following last year’s successful completion of the merger.”

State Street’s capabilities will allow ART’s in-house team to focus on core portfolio management and operational responsibilities, as well as enhancing products and services for their members.

“Institutional investors today are challenged by the depth and breadth of data available to them,” added Tahiri. “On top of our robust and scalable middle and back-office solutions, we are delighted to expand our support for ART to data management and analytics across public and private markets assets. Our innovative data solutions provide a seamless environment for ART to collect, curate and validate data so they can make better-informed decisions and effectively manage operations to serve the ultimate retirement needs of Australian superannuants.”

State Street’s rigorous data governance and operational control framework, combined with global cloud technology, provides clients with the ability to leverage the firm’s expertise, scale and infrastructure.

“Mergers mean not just an increase in scale, but also greater complexities, therefore it is critical for superannuation funds to have a middle, back-office and data management partner that can support their growth globally, and provide them access to the latest technology,” said Tim Helyar, head of Australia at State Street. “We are deeply committed to support superannuation funds’ long-term strategic objectives. We will continue to amplify our dedication to the industry with a focus on evolving our front, middle and back-office solutions to meet their unique and changing needs.”

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[1] Source: ART About

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