Fund managers are expecting significant increases in inflows and product launches in 2025, as they look to capitalise upon growing investor appetite for alternative assets and ETFs, new research from Carne Group has indicated.

The group also stated that growing regulatory complexity and client pressure for higher standards could do drive increased outsourcing of non-core functions.

Carne’s latest report surveyed 251 international C-suite executives in fund management and 200 institutional investors, who are together responsible for more than $4.6trn in assets under management (AuM).

When questioned on their outlook for fund flows this year, fund managers responded positively, with the vast majority (81%) expecting to see an increase in the flow of new capital into their funds and segregated accounts during 2025.

A significant proportion (84%) are expecting the number of new funds launching in their sector this year to be higher than in 2024, while 42% are predicting this increase to be dramatic – compared to just 14% of those surveyed last year.

“With fund managers anticipating a year of increased inflows and product launches, 2025 offers grounds for optimism to a sector that has been contending with significant challenges, from market volatility and continued focus on fees to industry-wide consolidation,” said CEO and founder at Carne, John Donohoe.

Carne’s research also indicated that demand for private markets will continue to boom in 2025, with hedge funds and private equity being the alternative asset classes expected to see the biggest increases in fundraising this year.

According to the findings, 84% of fund managers expect the level of fundraising by hedge funds to increase compared to last year, with 57% predicting a dramatic increase, while 72% expect an increase in flows to private equity and 31% a dramatic increase. The corresponding figures for real estate were 71% and 33%, while for private debt they were 59% and 24%.

Carne also stated that ETFs remain “front of mind” both for institutional investors and asset managers looking to service client demand in 2025.

The report showed that 89% of the equity and fixed income fund managers Carne surveyed currently offer either ETFs or ETPs, and of those who don’t, 89% expect to offer them within the next three to four years.

“For managers looking to embrace this optimism, it is clear that investor demand for alternative asset classes and the growing popularity of ETFs are two of the most critical opportunities for growth over the coming years,” added Donohoe.

“Nevertheless, managers will have several challenges to navigate in order fully to seize these opportunities, with our research indicating that increasing regulatory complexity and client pressure for higher standards will be front of mind in the year ahead.

“At the same time, competition within private markets is becoming fierce, with managers vying to seize the best investment opportunities, deploy funds effectively at attractive margins, and penetrate new client segments for additional capital inflows.

“Against this backdrop, managers are increasingly recognising that outsourcing non-core functions to third-party specialists can offer transformative improvements in operational resilience and efficiency.”

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