Large Asset Owner Barometer 2025 

At present, equity, fixed income and currency markets are experiencing extreme volatility due to elevated trade tensions arising from shifting US policy. From our data, we can see that large asset owners are positioned for the long term and are largely sanguine about shorter-term market moves, but at the same time, are making strategic adjustments to portfolios to mitigate the risks they regard as most significant.

Large asset owners remain confident that their portfolios are well positioned to withstand a range of shocks over the coming year, but there is an increase in perceived vulnerability to several key risks over the coming 12 months, notably:

• 35% of large asset owners consider their portfolios vulnerable to geopolitical risks, a 4% rise compared to last year.
• 31% consider them vulnerable to inflation, a 9% rise year-on-year.
• 30% say they are vulnerable to monetary tightening, a 7% rise year-on-year.

When asked to look further into the future, confidence in resilience against risks decreases marginally, although it remains high. Over a 3 – 5-year view, the percentage of large asset owners that consider themselves vulnerable to geopolitical risks rises to 38%. Noticeably, concerns over regulatory risks increase sharply by 12%, suggesting that, after a year of major political change, asset owners are uncertain about the future direction of regulation. 

The trend of increasing private markets allocation is set to continue over the coming year. Almost half (47%) of large asset owners expect to grow their portfolio allocation to private debt/credit in the next 12 months, while 46% expect to increase their infrastructure allocation. This is particularly pronounced among the very largest asset owners; 70% of those with more than $20 billion under management intend to increase allocations to private debt/credit in the next 12 months and 63% intend to invest more heavily in infrastructure. 

Conversely, the outlook for public markets among investors is mixed. Confidence in UK equities remains low, while US equities are dividing the opinions of large asset owners, with a significant proportion of participants either seeking to increase or decrease their allocations over the next 12 months.

While there is a retreat in sustainable investment terminology,  seven in ten (70%) large asset owners now incorporate sustainable investment goals into their investment objectives, a seven-percentage-point increase since last year.

However, although two-fifths (42%) of large asset owners have already set a net-zero target, the intention to set climate transition and net-zero targets appears to be declining. 36% of large asset owners now say that they are not planning to set net-zero targets, a 10% rise compared to last year; 39% say they are not planning to set climate transition targets, versus only 8% last year.

Nevertheless, while fewer large asset owners may be inclined to set climate targets, they are still materially increasing their allocation to sustainable and impact-focused funds. In sustainable funds, 24% of large asset owners said they intend to increase their allocation over the next 12 months versus only 8% who intend to decrease. 29% say they expect to increase their exposure to impact strategies, versus only 1% who expect to decrease.

AI is considered to be the definitive long-term factor set to shape the macro environment over the next 5-10 years. More than two-fifths (43%) of large asset owners surveyed said that AI will be a “highly influential” factor in determining the macro environment in the coming 5-10 years, more than any other factor – ahead of geopolitics (34%) and the energy transition/climate change (34%).

Despite this sentiment, more than two-thirds (69%) of large asset owners say they have neither implemented nor started to develop an AI/Gen AI policy. Only 10% of large asset owners plan to implement an AI policy over the next year, although nearly half (49%) expect to do so over the next three years.