- Private market mandates represented 50% of manager searches in the 12 months to March 2025, up from 43% the previous year but still below the 2022 peak of 58%, reflecting a rebalancing within illiquid asset allocations
- Equity manager searches accounted for 23% of all mandates over the same period, down from 33% the previous year but well above the 17% figure seen in 2022, as investor focus shifted toward global and emerging market strategies
Institutional investors are rotating towards private debt, infrastructure, and diversifying hedge fund strategies as geopolitical and macroeconomic pressures continue to drive selective risk-taking, according to the latest quarterly Manager Intelligence and Market Trends report from independent global investment consultancy, bfinance.
Investor activity
Private markets remained the leading area of institutional mandate activity, representing 50% of manager searches in the 12 months to March 2025—up from 43% the previous year. While private equity remained subdued, demand for private debt and infrastructure remained strong, with the latter rising to 13% of all private markets searches. Semi-liquid vehicles and asset-backed strategies featured prominently, reflecting investor demand for stable income with built-in flexibility.
Equity mandates accounted for 23% of total searches, down from the previous year’s high, but with clear thematic shifts. Global equity rebounded to comprise 56% of equity mandates, while investors increasingly targeted emerging markets, with strong activity in India, Saudi Arabia, and GEM ex-China. Enhanced index and systematic equity strategies also gained traction, as allocators sought more consistent, risk-aware outperformance.
In fixed income, overall search activity remained steady, but investor preferences shifted meaningfully. Multi-sector strategies rose to 20% of fixed income mandates, driven by appetite for more dynamic duration and credit exposure management. In contrast, interest in high yield strategies fell to 7%, reflecting concerns about stretched valuations and credit spread volatility. Emerging market debt continued to attract demand, supported by yield differentials and relative value opportunities.
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Diversifying strategies saw growing interest, accounting for 13% of mandates, with hedge fund allocations increasing. Investor appetite focused on market-neutral, event-driven, and alternative risk premia strategies. The latter delivered +3.7% returns in Q1, extending a strong and consistent performance run that has re-energised allocator interest. Systematic strategies that de-emphasise directional risk also resonated in a quarter marked by reversals and dispersion.
Portfolio design
Amid market volatility and shifting policy landscapes, investors adapted their approaches. The first quarter was characterised by abrupt reversals in sentiment due to the reintroduction of tariffs by the US administration, reigniting stagflation fears.
As a result, there was a clear shift towards cash allocations, diverging from the traditional rotation into bonds. Meanwhile, gold reached record highs, reaffirming its role as a hedge against inflation and geopolitical instability.
Equity market volatility also influenced portfolio construction. Investors displayed caution around US equities and rotated towards European markets and targeted emerging markets, while also increasing allocations to enhanced and systematic equity strategies for sustainable alpha.
Manager performance
Performance across asset classes was varied. In equities, 56% of active global managers outperformed the MSCI ACWI benchmark in Q1, led by value and defensive styles. Impact strategies, however, continued to underperform across one-, three-, and five-year periods.
In fixed income, emerging market and multi-sector strategies outperformed, while high yield managers faced headwinds. Among hedge funds, macro and trend-following strategies lagged, while more beta-neutral approaches led gains.
Oliver Wade, associate, investment content at bfinance said: “As global markets contend with rising volatility, inflationary persistence and geopolitical disruption, investors are rethinking how risk is allocated – not just how much risk is taken. We’re seeing a pivot toward asset classes and strategies that offer both adaptability and resilience: private debt, multi-sector credit, real assets, and uncorrelated hedge fund styles. Manager selection has become a more targeted exercise, with allocators looking for precision tools to match a more complex environment.”
Frithjof Van Zyp, senior director at bfinance Australia said: “The bfinance Risk Aversion Index hit a twoyear high given the current geopolitical landscape and policy uncertainty. Manager positioning has remained resilient, however, we’re starting to see growing interest in certain geographies like Europe, where specialist managers might not be on the radar for some Australian asset owners.”
