Wealth firms still going for growth amid market disruption, Natixis finds

Fund selectors at large US wealth firms expect asset growth to remain strong in 2025, even as inflation, high valuations and geopolitical tensions weigh on market sentiment, according to a new survey from Natixis Investment Managers.

Nearly six in 10 respondents cited elevated asset prices and persistent inflation as the top risks to portfolios this year. Despite that, US gatekeepers project an average asset growth rate of 17.6 percent – well above the 13.7 percent global average. Their counterparts in Europe, excluding the UK, expect growth of 11.2 percent, while Asian respondents forecast 8.3 percent.

The findings are based on responses from 170 US fund selectors managing a combined $17.5 trillion in assets across private banks, wirehouses, RIAs and aggregators.

“Following a year of contentious national elections in the United States and other major economies, wealth managers are moving to adapt to policy changes, economic uncertainty, technological advances, and industry consolidation,” Dave Goodsell, executive director of the Natixis Center for Investor Insigh, said in a statement unveiling the results.

More than half of those surveyed are recommending clients move toward longer-duration assets, with 54 percent expecting interest rates to settle between 3.5 and 4.49 percent. While 80 percent remain optimistic about the outlook, a growing number are bracing for inflation pressures and geopolitical volatility.

About two-thirds of US managers believe President Donald Trump’s economic policies could drive inflation higher. Still, most anticipate business-friendly policies could bring a boost to areas like manufacturing, M&A, and alternative investments.

“To secure both short-term asset growth and long-term prosperity, wealth managers recognize that broadening their service offerings and delivering more sophisticated investment options to clients will be critical,” Goodsell said.

Alternative investments and technology are central to those strategies. Managers reportedly plan to dial up their allocation to private assets from 12.8 percent to 14.5 percent this year, with over half looking to expand into private credit. Direct indexing is also gaining traction, with 49 percent aiming to introduce it by 2027.

In a recent quarterly survey of InvestmentNews readers, one-third (34 percent) said they currently use or were planning to use direct indexing as an investment strategy, while 39 percent were not doing so.

Touching on active ETFs, the survey found half of US managers planning to adopt active ETFs in their processes within two years, driven by 81 percent who see ease of trading compared to mutual funds as a compelling draw. Those eyeing active ETFs said they'll be instrumental in supporting expense management (43 percent), as well as driving thematic investments (41 percent) and representing core holdings in model portfolios (42 percent).

On that note, more than 80 percent of respondents say they already use model portfolios to manage risk and ensure consistent outcomes. Just over half plan to increase client allocations to these models in the year ahead.

The survey also revealed some mixed feelings on technology, with artificial intelligence seen as both a growth lever and a competitive threat. While 42 percent viewed AI as a business driver, half worried about falling behind disruptive, tech-driven entrants.

Wealth managers aren't giving in to analysis paralysis, however, as the respondents to Natixis' survey reported exploring AI applications across investment research (73 percent), risk analytics (71 percent), client service (51 percent), and portfolio optimization (63 percent).

The US results are part of a broader global study involving 520 wealth professionals across North America, Europe, the UK and Asia.