The Future of Asset Management: AI, Alternative Investments & Compliance

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Omega Financial Solutions created Gaia, a complete front-to-middle-to-back Portfolio Management Software.

Key Findings

• • AI is fundamental to both front and back office operations; do not be left behind
• • Include Alternatives: Firms that fail to integrate alternative assets risk missing out on a major industry shift
• • New regulatory constraints: These are already planned and are coming into action in 2025. Be careful to DORA, among others, active since January 17, 2025
• • Follow the USD, beware of changes in the USD rates and global interest rates in 2025; hedge for the uncertainties and be ready to catch opportunities

Introduction

The Asset Management industry is undergoing a major transformation. With global AUM surpassing $132 trillion in 2024 and firms rapidly adopting AI-driven strategies, 2025 is set to reshape investment management. Regulatory shifts, economic uncertainty, and the growing dominance of alternative assets will define the competitive landscape.

Whether you’re a fund manager, investor, or industry professional, adapting to these changes is critical.

A.   The AI-Powered Evolution of Asset Management

AI is no longer just a buzzword - it’s a fundamental shift in how investments are managed. In 2025, AI-driven investment strategies will grow by 15%, with over 60% of firms leveraging machine learning for decision-making.

• • AI-powered portfolio optimization is enabling fund managers to detect trends faster and enhance risk assessment.
• • Mass customization of portfolios is becoming the norm - 80% of firms plan to personalize investment strategies at scale.
• • AI adoption is accelerating, but 72% of firms still feel behind, struggling to integrate AI beyond back-office operations.

Why this matters: AI-driven insights allow firms to enhance efficiency, reduce costs, and drive performance. But without a clear AI adoption strategy, firms risk falling behind in a rapidly evolving landscape.

B.     Alternative Investments Are Reshaping Portfolios

Traditional investment models are no longer sufficient. Investors are aggressively shifting to alternative assets, with firms increasing allocations to:

• • Private Equity (93%) – Capturing high-growth opportunities
• • Private Debt (91%) – Offering stable returns in volatile markets
• • Real Estate (96%) – Providing a hedge against inflation and economic shifts

Hybrid funds (blending hedge fund liquidity with private equity structures) are gaining traction but require specialized infrastructure.

• • Tokenized assets & digital securities are emerging, democratizing access to private markets and alternative investments.
• • Data centers & build-to-rent real estate are leading ROI expectations for institutional investors.
• • ESG investments are growing, but investors demand clear proof of returns and impact.

What this means for you: Firms that fail to integrate alternative assets and tokenization risk missing out on a major industry shift.

C.     Rising Regulatory Pressures: Are You Ready?

The regulatory landscape is tightening, with major compliance changes set to take effect in 2025:

• • The EU’s Digital Operational Resilience Act (DORA) (Jan 2025) will enforce stricter cybersecurity & ICT risk management.
• • The SEC’s new private fund rules demand greater transparency on fund performance, fees & investor disclosures.
• • Cross-border compliance complexities are forcing firms to invest in new regulatory frameworks.

The challenge? Regulatory scrutiny means higher compliance costs & operational adjustments. Firms must ensure their compliance frameworks are robust and adaptable to avoid penalties and maintain investor trust.

D.    Economic Uncertainty & Market Outlook for 2025

With interest rate uncertainty (67%) cited as the biggest challenge for asset managers, firms must prepare for a dynamic investment landscape:

• • The Fed expects rates to stabilize at 3.75%-4.00% in 2025.
• • U.S. dollar strength & interest rate differentials will influence global capital flows.
• • New uncertainty on the dollar strength with shifting trade policies in the United States
• • Private equity "dry powder" sits at $2.62 trillion, fueling a surge in deal-making.
• • AI hyperscalers (Amazon, Google, Microsoft) are investing heavily in data centers & digital infrastructure, creating new opportunities for institutional investors.

What this means: Firms that adjust their strategies to market conditions—with a focus on private markets, infrastructure, and AI-powered decision-making—will be in the best position for long-term stability.

What’s Next?

The firms that thrive in 2025 will be those that:

• • Leverage AI for data-driven investment decisions
• • Expand into alternative investments & tokenized assets
• • Strengthen compliance frameworks to navigate regulatory changes
• • Adopt mass personalization strategies to enhance client engagement

With Gaia, we help asset managers, investors, and institutions navigate this transformation with cutting-edge insights and tailored solutions.

What about you? What’s your biggest challenge heading into 2025?

Bibliography

• • Zwick, J., Kaczmarski, K., Hobart, J., Heredia, L., Phillips, B., Zhang, D., Chawla, A., & Bukingolts, L. (2025, January 10). 10 asset management trends for 2025. Oliver Wyman - Impact-Driven Strategy Advisors.
• • Kerrigan, M., Healy, G., Monaghan, W., Chambers, C., & Tremblay, R. (2021, May 12). The Future of Asset Management. United States; Accenture.
• • Hui, T., Zhu, C., Chow, M., Hui, I., Craig, K., Rasid, R., Jiang, A., Morioka, F., Lin, A., Qiu, J., Maekawa, S., & Wong, A. (2024, December). 2025 Market Outlook. Asia; J.P. Morgan.
• • Williams, G., & Maleyev, Y. (2025, January). 2025 Asset Management Industry Outlook. KPMG. https://kpmg.com/us/en/articles/2025/asset-mgmt-industry-outlook.html
• • Malone, K. (2025, January 6). 2025 outlook: Evolving models and strategies in Asset Management. Waystone. https://www.waystone.com/2025-outlook-evolving-models-and-strategies-in-asset-management/