Fund Managers Expect More Product Launches in 2025

Against a backdrop of growing investor appetite for alternative assets and exchange-traded funds (ETFs), fund managers are predicting big increases in inflows and product launches in 2025, according to new research from the Carne Group.

However, growing regulatory complexity and client pressure for higher standards are driving increased outsourcing of non-core functions, Carne Group, a large European third-party management company, which surveyed C-suite executives in fund management and institutional investors across Europe, looking at industry ambitions and expectations for the year ahead, said on Tuesday.

The firm’s annual report into industry ambitions and expectations for the year ahead, “Change 2025,” surveyed 251 C-suite executives in fund management and 200 institutional investors across Europe, together responsible for $4.67 trillion in assets under management.

The Change 2025 report is based on two major international surveys commissioned by Carne Group through the market research company Pureprofile in December 2024 and January 2025.

One survey interviewed 200 investors working for pension funds, family offices, wealth managers, insurance and reinsurance asset managers, and consultants to institutional investors and asset managers in the UK, Germany, Switzerland, Italy, France, the Netherlands, Norway, Finland, Denmark, and Sweden, with a total of $2.33 trillion assets under management (AUM).

The second survey interviewed 251 senior executives working for fund managers in the UK, the US, Germany, Switzerland, Italy, France, the Netherlands, Norway, Finland, and Denmark, with a total of $2.31 trillion AUM.

Increase in New Capital Inflows

When questioned on their outlook for fund flows this year, fund managers responded positively, with 81% expecting to see an increase in the flow of new capital into their funds and segregated accounts during 2025, the survey showed.

Some 84% of the respondents expect the number of new funds launching in their sector this year to be higher than in 2024. Moreover, 42% predict this increase to be dramatic, compared with 14% of those surveyed last year, Carne Group said.

Fund managers believe that demand for private markets will continue to boom in 2025, with hedge funds and private equity being the alternative asset classes expected to see the biggest increases in fundraising this year.

Around 84% of fund managers also expect the level of fundraising by hedge funds to increase this year, with 57% predicting a dramatic increase, while 72% expect an increase in flows to private equity of 31% – a dramatic increase. The corresponding figures for real estate are 71% and 33%, while for private debt they were 59% and 24%.

The appetite for these asset classes, which provide diversification, downside protection and hedging opportunities, appear to be supported by market conditions, with 83 per cent believing that the level of volatility in stock markets will rise this year, up from 67 per cent of those surveyed last year.

This predicted increase in volatility comes hand-in-hand with a rise in risk appetite. Sixty-nine per cent predict that their organisation’s appetite for risk will be higher this year, with 7 per cent believing that levels will be much higher, the survey shows.

Contribution of ETFs

Exchange-traded products remain front of mind both for institutional investors and for asset managers seeking to service client demand in 2025.

“In terms of AUM, three-quarters of the managers surveyed say that ETFs already account for between 10% and 15% of their total assets. Managers expect this proportion to grow over the next five years, which is also in accordance with investor expectations: 82% of institutional investors surveyed agree that investors are moving ETFs from short-term asset allocation strategies to core portfolio holdings. Of these, 17% agree strongly,” the research showed.

Regulation continues to play a critical role in the evolution of the fund management sector and 98% of fund managers and 99% of institutional investors agreed that regulatory complexity will increase over the next two years.

Institutional investors also plan to rely more heavily on external providers this year. More than two-thirds will increase outsourcing in 2025, with 40% expecting a dramatic increase, which is much higher than last year’s 20%.

When asked to give the main reasons for increasing outsourcing, institutional investors showed most concern about their ability to meet client requests for higher reporting standards, followed by the growing burden of regulation.