Northern Trust Peer Study: A Look into the Evolving Priorities of Global Asset Owners
Growing focus on alternative investments, liquidity and risk management, technology and operational efficiency seen in global survey of 180 institutional plans
Northern Trust (NASDAQ:NTRS) today released "Asset Owners in Focus: Global Asset Owner Peer Study 2025," offering insight into the investment and operations strategies employed by institutional investors worldwide to meet challenges ranging from rising market volatility and evolving regulations to accelerating technological changes.
Based on a survey of 180 global asset owners, with investment portfolios ranging from US$1 billion to over US$500 billion, the findings highlight a growing focus on alternative investments, operational efficiency, liquidity and risk management and the increasing role of technology and data in decision-making.
The survey revealed that while asset owners on average continue to favor equities (42%) and fixed income (27%) in their portfolios, alternative investment allocations continue to increase, with private market assets making up 13% of the average portfolio and 86% of portfolios having some investment in private assets. Liquidity management has also taken on greater focus with 60% of asset owners noting that liquidity has become more important and cash allocations averaging 11% of portfolios globally.
"Today's asset owners maintain sophisticated portfolios in a time marked by economic and geopolitical uncertainty – and must execute their investment strategies while efficiently managing costs and navigating the regulatory environment," said Melanie Pickett, head of Asset Servicing, Americas at Northern Trust. "Our data offers asset owners in North America valuable insights into their peers' current priorities and trends shaping the market. These insights can help investment and operations leaders benchmark their strategies and understand where peers are focusing resources as they chart a course for their own organizations."
The survey gathered responses from senior leaders of pension funds, OCIOs and multi-managers, family offices, sovereign wealth funds, endowments, and other institution types across the Americas, EMEA (Europe, Middle East and Africa) and APAC (Asia-Pacific) regions. Findings reveal how asset owners are aligning their strategies with market and operational challenges, including:
Asset Allocation
- The vast majority (86%) of respondents invest in private markets, while 68% invest in hedge funds, absolute return investments and other diversifiers.
- Private debt is now a mainstay in many institutional portfolios, with commercial real estate, private credit and direct lending, and residential real estate the most popular sectors.
- Cryptocurrencies and other digital assets are invested in by 21% of those that allocate to private markets.
Risk Management
- Interest rate changes, geopolitical and domestic political instability are top external investment challenges, followed by investment fees and the effects of climate change.
- Liquidity risk is the most important risk metric, ranked as a top-three concern by 54% of respondents.
Technology, Operations and Outsourcing
- Asset owners are focused on efficiencies and automation, hiring and retaining talent, and harnessing the power of artificial intelligence.
- For those with outsourced investment operations, the most outsourced functions are document management and regulatory reporting (both outsourced by 49%), trade execution (45%), performance and analytics reporting (45%), and accounting administration for alternative investments (45%).
The study indicates some regional differences among asset owners, with EMEA and APAC allocating lower amounts to equities and more to cash than their U.S. counterparts. Regional differences also emerged in risk metrics, technology investment and other areas covered by the survey.
"Asset owners in EMEA are increasingly recognizing the value of technology in addressing both operational and investment risk," said James Wright, head of Asset Owners, EMEA at Northern Trust. "The trends we're seeing in EMEA align closely with the survey findings, particularly around the growing importance of technology and enhanced risk management. As regulatory pressures rise and the need for more robust data management grows, asset owners are looking to strengthen their decision-making capabilities and adapt to evolving regulatory landscapes. This shift is reflected in how asset owners are integrating technology to optimize operations and manage risk more effectively."
Asset owners are particularly focused on portfolio analytics tools (51%) and compliance and regulatory reporting (48%) as top areas for increasing their technology spending. Additionally, 50% believe technology product implementation and target operating model design from a service provider would be the most effective way to improve operations, while 43% say better integration of applications from providers would be the most valuable enhancement.
"In APAC, asset owners are relying on outsourcing and technology adoption to drive operational efficiency," said Angelo Calvitto, head of Asia-Pacific at Northern Trust. "Many asset owners are leveraging service providers to scale their operations and focus on core activities, particularly in areas like administration for alternative investments. This aligns with the region's interest in increasing technology adoption to drive efficiency. It's clear that outsourcing is playing a key role in helping asset owners streamline processes and enhance overall operational performance."
Further survey details and commentary from our experts will be available on A-Suite by Northern Trust, a community in which asset allocators can learn, collaborate, and move the needle on issues that matter most to them.
For many decades, Northern Trust has been dedicated and steadfast in serving the asset owner segment. The goal within the asset owner segment is to empower the missions of its clients, helping them to maximize investment returns so that they may then serve their constituents, their communities and the world.
About Northern Trust
Northern Trust Corporation (NASDAQ:NTRS) is a leading provider of wealth management, asset servicing, asset management and banking to corporations, institutions, affluent families and individuals. Founded in Chicago in 1889, Northern Trust has a global presence with offices in 24 U.S. states and Washington, D.C., and across 22 locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of December 31, 2024, Northern Trust had assets under custody/administration of US$16.8 trillion, and assets under management of US$1.6 trillion. For more than 135 years, Northern Trust has earned distinction as an industry leader for exceptional service, financial expertise, integrity and innovation. Visit us on northerntrust.com. Follow us on Instagram @northerntrustcompany or Northern Trust on LinkedIn.
Northern Trust Corporation, Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A., incorporated with limited liability in the U.S. Global legal and regulatory information can be found at https://www.northerntrust.com/terms-and-conditions.
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