The Future of Asset Management | Global Conference

Macroeconomic and Geopolitical Landscape

• U.S. economic activity contracted recently, with the Federal Reserve Beige Book reporting no growth or modest declines in 9 of 14 regions.
• Markets experienced a 12% drop in the S&P 500 over seven days following "Liberation Day" announcements, followed by a full recovery.
• Forecasts are being scrapped by CEOs and economists due to uncertainty surrounding tariffs and trade policies.
• The U.S. Treasury Secretary has signaled a lack of desire to maintain the U.S. dollar as the global reserve currency.
• Geopolitics is shifting from a background factor to a primary market driver as the world becomes multi-polar.
• Traditional equity-bond correlations are fracturing, rendering standard Modern Portfolio Theory less effective in non-recessionary cycles like stagflation.

Asset Management Strategy and Product Trends

• Flow into active ETFs has reached 40% year-to-date, contrasting with a 90/10 passive-active asset split and signaling a potential long-term shift toward active management.
• Capital Group manages $3 trillion in assets by disaggregating operations into five independent investment units to maintain agility.
• The global asset management industry collectively manages approximately $6 trillion in assets, with a trend toward using scale to fund innovation and client resources.
• A partnership between Capital Group and KKR launched a vehicle with a 60% public / 40% private split, lowering the minimum investment to $1,000 and fees to under 1%.
• Nuveen is integrating annuities into target-date funds to address retirement longevity risks, effectively combining defined benefit and defined contribution structures.
• Infrastructure investment is projected to reach $100 trillion over the next 25 years, driven by the energy transition and digitization.

Technology and AI Integration

• Global infrastructure investment is converging with technology ("infratech"), utilizing AI, robotics, and distributed ledger technology to improve grid efficiency and decarbonization.
• Global Infrastructure Partners (GIP) plans to deploy an AI agent in its investment committee to instantly process transaction analysis and valuations.
• Capital Group is using AI to accelerate research analysis, allowing human analysts to make faster, higher-quality investment decisions.
• Investors view AI not as a replacement for talent but as a tool to increase efficiency and decision-making speed in a fee-compressed industry.
• The biotech sector is advancing with RNA/DNA targeting capabilities, moving beyond small oral drugs to broader biological treatments.

Diversity, Inclusion, and Human Capital

• Shareholder votes on anti-DEI proposals at major U.S. firms (Goldman Sachs, Levi Strauss, Pfizer) have been rejected by 98-99% of shareholders.
• Future Fund maintains that diverse teams provide the highest probability of accurate prediction in a complex, uncertain global environment.
• The industry faces a "wisdom gap" as younger employees lack experience with full market cycles, prompting increased reliance on AI for historical pattern recognition.
• Asset managers are incentivizing retention through long-term incentives and emphasizing the industry's role in funding global innovation and retirement security.

Demographic Shifts and Wealth Transfer

• A historical wealth transfer of $70–$80 trillion is expected to pass to the next generation over the coming decades.
• The incoming generation shows heightened interest in sustainability, climate change, and social justice as key investment criteria.
• Global median age has risen from 32 in 1900 to 73 today, necessitating a redesign of retirement structures for populations living 40+ years longer.
• Healthcare innovations, particularly GLP-1 drugs and genetic therapies, are expected to lower morbidity and extend life expectancy to 90–100 years.

Regional Investment Opportunities

• European markets are attracting interest due to fiscal reallocation driven by NATO and defense spending, potentially lifting yield curves.
• Japan is emerging as a viable market as younger leadership increases risk-taking and venture capital activity, countering demographic decline.
• Australia is seeing increased returns as domestic funds begin to look offshore, reducing local competition for high-quality assets.
• The U.S. market, currently 70% of global equity cap, faces risks from concentration; experts predict a dispersion of valuation and growth over the next decade.

Forward-Looking Statements and Optimism

• Active managers predict that market broadening will create significant alpha opportunities after a decade of high concentration.
• Investors anticipate the democratization of alternative assets, specifically making private credit and infrastructure accessible to wealth clients.
• The energy transition is viewed as a "golden age" of opportunity despite short-term complexity and costs.
• Experts expect a "productivity boom" from AI adoption across global companies, potentially driving the next decade of economic growth.
• The shift from "public vs. private" to "public and private" asset allocation is viewed as the future standard for portfolio construction.