Northern Trust has just released its “Asset Owners in Focus: Global Asset Owner Peer Study 2025, examining investment and operations strategies employed by institutional investors.

A new survey by Northern Trust highlights a growing focus on alternative investments, operational efficiency, liquidity and risk management amongst asset managers.

It is based on a survey of 180 global asset owners, with investment portfolios ranging from $1 billion to over $500 billion. The survey reveals that while asset owners on average continue to favor equities (42 per cent) and fixed income (27 per cent) in their portfolios, alternative investment allocations continue to increase, with private market assets making up 13 per cent of the average portfolio and 86 per cent of portfolios having some investment in private assets. There is also a keener interest in liquidity management, with 60 per cent of asset owners noting that liquidity has become more important and cash allocations averaging 11 per cent of portfolios globally.

A recent survey by Blackstone also shows that private market allocations are set to rise in 2025. In January, US-based Hamilton Lane also published a report showing that private market allocations are rapidly becoming a significant portion of advisors book of business in 2025.  

“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 by Northern Trust gathered responses from senior leaders of pension funds, 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. 

In conversations that Family Wealth Report has had with a number of wealth managers and family offices, there appears to be a mix of those increasing exposure to private market investing as part of a secular long-term trend – a shift from public markets – and some concerns in certain quarters that private investments aren't immune to stock market turmoil and changes in interest rates. One question that arises is whether, in the current tough econonic environment in the US following the Trump administration's tariffs, it could see a slowdown to corporate M&A – often an important driver of private equity realizations – as well as a muted IPO market (which is also important for private equity investment exits).

Asset Allocation
The vast majority (86 per cent) of respondents invest in private markets, while 68 per cent invest in hedge funds, absolute return investments and other diversifiers, the survey reveals. 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 per cent 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, the survey shows. Liquidity risk is the most important risk metric, ranked as a top-three concern by 54 per cent of respondents.

Technology, operations and outsourcing
Asset owners concentrate on efficiencies and automation, hiring and retaining talent, and harnessing the power of artificial intelligence, the firm said. For those with outsourced investment operations, the most outsourced functions are document management and regulatory reporting (both outsourced by 49 per cent), trade execution (45 per cent), performance and analytics reporting (45 per cent), and accounting administration for alternative investments (45 per cent).

The study indicates some regional differences among asset owners, with EMEA and APAC allocating lower amounts to equities and more to cash than their US 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 per cent) and compliance and regulatory reporting (48 per cent) as top areas for increasing their technology spending. Additionally, 50 per cent believe that technology product implementation and target operating model design from a service provider would be the most effective way to improve operations, while 43 per cent said 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,” Angelo Calvitto, head of Asia-Pacific at Northern Trust, added. “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.” 

Northern Trust has a global presence with offices in 24 US states and Washington, DC, and across 22 locations in Canada, Europe, the Middle East and the Asia-Pacific region. It has assets under custody/administration of $16.8 trillion, and assets under management of $1.6 trillion.