Northern Trust: One in five private market investors are channeling funds into cryptocurrencies and digital assets.

Navigating Uncertainty: How Asset Owners Are Embracing Change in 2025

As the financial landscape undergoes a significant transformation, the need for innovative investment strategies has never been more pressing. The latest findings from Northern Trust’s 'Asset Owners in Focus: Global Asset Owner Peer Study 2025' highlight the strategies that asset owners are employing to tackle the challenges posed by market volatility, regulatory shifts, and rapid technological advancements.

Cryptocurrency and Private Markets: A New Era of Investment

A striking revelation from the study indicates that 21% of asset owners engaged in private markets are now investing in cryptocurrencies and digital assets. This trend reflects a broader shift toward alternative investments, as institutions increasingly diversify their portfolios to mitigate risks. Private debt has emerged as a foundational element in numerous institutional portfolios, reaffirming its significance in the current investment climate. Popular sectors such as real estate, private credit, and direct lending continue to attract substantial interest, underscoring their enduring appeal to asset owners.

According to the survey, a remarkable 86% of participants are active investors in private markets, while 68% are drawn to hedge funds, absolute return investments, and other diversifiers. Equity investments remain favored by 42%, with fixed income attracting 27% of respondents. Notably, allocations to alternative investments are on the rise; private market assets now constitute 13% of the average portfolio, and a substantial 86% of portfolios include some degree of investment in private assets.

Investment Challenges: A Landscape of Risk and Complexity

The survey also sheds light on the myriad investment challenges that asset owners face, including fluctuations in interest rates and instability in both global and domestic political realms. Other pressing concerns include management fees and climate change, factors that cannot be overlooked. However, liquidity risk has emerged as the foremost concern, with 54% of respondents identifying it as a critical risk metric that must be carefully managed.

Insights from Industry Leaders: Navigating the Future

Melanie Pickett, head of asset servicing for the Americas at Northern Trust, emphasizes that today’s asset owners are cultivating sophisticated portfolios amidst economic and geopolitical turbulence. She states, “Asset owners must execute their investment strategies while efficiently managing costs and navigating the regulatory environment. Our research empowers asset owners across North America with valuable insights into peers’ priorities and the trends reshaping the market. These insights can guide investment and operations leaders as they refine their strategies and allocate resources judiciously.”

Adding another layer to this discussion, James Wright, head of asset owners for the EMEA region at Northern Trust, observes a growing recognition among asset owners of the critical role technology plays in managing both operational and investment risks. He notes, “With rising regulatory pressures and the increasing need for enhanced data management, asset owners are striving to elevate their decision-making capabilities and adapt to changing regulatory frameworks. This evolution is evident in how they increasingly leverage technology to optimize operations and better manage risk.”

Embracing Technology: A Path Toward Operational Efficiency

In the Asia-Pacific region, Angelo Calvitto, head of Northern Trust, emphasizes the importance of technology adoption in promoting operational efficiency. He remarks, “Many asset owners are enlisting the help of service providers to scale their operations and focus on core competencies, particularly regarding administration for alternative investments. This trend aligns well with the region’s push for greater technology utilization to enhance efficiency. It is clear that outsourcing is vital in helping asset owners streamline their processes and improve overall operational performance.”

As the market continues to evolve, it is evident that asset owners are not merely reacting to changing conditions; they are actively embracing innovation and adapting their investment strategies in response to the growing complexities of the financial landscape. The insights derived from Northern Trust’s research are instrumental for asset owners seeking to navigate this unpredictable terrain and realize their long-term goals.