PIMFA
Top considerations for financial intermediaries 2025Â
We identify the five considerations that we believe financial intermediaries should have front and centre as they look ahead.Â
In recent years, financial intermediaries have had to navigate an investment landscape transformed by the converging risks of high inflation, rising yields, and market volatility. Between 2010 – 2020, inflation across the 38 OECD member countries hovered between 0% and 3%; by October 2022, aggregate inflation had surged to peak above 10.69%, transforming global monetary policy and the risk and market backdrop for global portfolios. Since then, the trajectory of global interest rates and inflation have dominated the market narrative, with markets gauging the likelihood of central bankers successfully navigating a soft landing for the global economy.
Our annual 2025 Themes and Opportunities paper delves into the evolving structural trends expected to shape portfolios over the long term, highlighting financial intermediaries and their clients to reevaluate strategic priorities across asset allocations. As we enter a period marked by heightened uncertainty and a shifting macroeconomic environment, the paper underscores the importance of adaptable approaches to balance risk and opportunity.
A focal point of the paper is rising concentration risk within global equity markets, where a narrow set of high-performing stocks dominates returns, potentially increasing vulnerability to market corrections. Paired with the complexities of a new macroeconomic regime — characterised by persistent inflationary pressures, elevated interest rates, and shifting geopolitical landscapes — the potential for heightened volatility has grown. The paper explores how these dynamics may challenge traditional investment models, highlighting the need for diversified, forward-looking strategies that can respond effectively to unpredictable market conditions and emerging structural shifts.
The 2025 Top considerations for financial intermediaries paper explores in more detail how financial intermediaries can achieve this, and the key considerations for investors seeking to diversify portfolios across asset classes, geographies, sectors, and investment styles to better withstand higher-for-longer interest rates and an uncertain growth outlook.
It highlights key shifts that financial intermediaries should consider in their portfolio construction, from the blurring lines between private market strategies and the risks of market concentration to the total portfolio impacts of the trajectory of interest rates and inflation.
In today’s environment, flexibility and diversification are key. Semi-liquid funds are providing a route into private markets for a broader set of wealth investors, while next-generation infrastructure investments align with long-term secular trends like the energy transition and digitalisation. Hedge funds can be used to take advantage of market volatility, while active ETFs — which are revolutionising active exposures across the wealth landscape — offer tactical liquidity and cost efficiency.
We believe that emerging market equities remain attractive despite recent underperformance and view this dynamic market complex as an important strategic allocation as the global economy becomes increasingly ‘multi-polar’.
To effectively manage portfolios in this complex environment, ongoing assessment of strategies and the flexibility to recalibrate allocations will be key to success for financial intermediaries. By expanding their focus and embracing a more diversified, adaptable approach, financial intermediaries can help clients manage risks and seize opportunities in a volatile global economy.
We recommend considering the following five opportunities:
- Semi-liquid funds
- Next-generation infrastructure
- Hedge funds
- Active ETFs
- Listed EM equity
Read the full report here.
Sebastian Maciocia, Director of Wealth Management UK, Mercer
