Fund managers anticipate a significant rise in fund launches and inflows in 2025, driven by growing investor demand for alternative assets and ETFs, according to research.
According to the survey of 251 fund management executives and 200 institutional investors managing over $4.6 trillion in assets by independent third-party management company Carne Group, 81% of fund managers expect increased inflows this year. On the other hand, about 84% anticipate a rise in fund launches, with 42% predicting a dramatic surge.
84% of managers said they foresee increased hedge fund fundraising, with 57% expecting “dramatic growth”. Private equity is also set to see expansion, according to the survey, with 72% predicting increased inflows, alongside real estate (71%) and private debt (59%).
83% of institutional investors expect volatility to rise in 2025, compared to 67% last year. According to the survey, 69% predict a higher risk appetite in their investment strategies.
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ETFs are shifting from short-term allocations to core portfolio holdings. 82% of institutional investors agreed with this shift, and 89% of equity and fixed income fund managers either offer or plan to offer ETFs in the next three to four years. Assets under management in ETFs are expected to grow over the next five years as managers meet rising investor demand, the survey showed.
Nearly all respondents said they believe regulatory burdens will increase over the next two years. To address these challenges, 88% of fund managers plan to increase outsourcing to third-party providers in the next 12 months, with 49% anticipating a “dramatic rise”. Client demand for better reporting and transparency is the leading reason, according to the respondents, followed by regulatory pressures and operational efficiency.
67% of institutional investors shared plans to expand outsourcing in 2025, with 40% expecting a dramatic rise—double last year’s figure of 20%. Meeting higher reporting standards and managing regulatory burdens are their top concerns, according to their survey responses.
John Donohoe, CEO and founder of Carne Group, commented: “With fund managers anticipating a year of increased inflows and product launches, 2025 offers grounds for optimism to a sector that has been contending with significant challenges, from market volatility and continued focus on fees to industry-wide consolidation.
“For managers looking to embrace this optimism, it is clear that investor demand for alternative asset classes and the growing popularity of ETFs are two of the most critical opportunities for growth over the coming years.
“Nevertheless, managers will have several challenges to navigate in order fully to seize these opportunities, with our research indicating that increasing regulatory complexity and client pressure for higher standards will be front of mind in the year ahead.”
