Navigating Transformation and Driving Global Connectivity in 2025______

Brian Godins, Chief Commercial Officer

As we look to 2025, the global asset management industry finds itself at a critical juncture. Uncertainty remains a constant, driven by factors such as the pace of economic recovery, ongoing geopolitical tensions, and fluctuating interest rates. These macroeconomic challenges, paired with fee compression and heightened competition, are pushing firms to rethink how they balance immediate priorities and investor expectations with strategic long-term goals.

Balancing Cost and Growth

We expect 2025 to bring cautious optimism as economic recovery continues, but the question remains: how can firms achieve growth while managing costs? Competitive pressures in mature product markets are intensifying, and with diminishing returns on traditional vehicles, asset managers must pivot toward innovation and diversification to stay ahead.

The tension between these priorities will shape decisions in the coming year. Firms must balance the urgent need to reduce costs with the equally pressing imperative to invest in growth. For many, this means reevaluating their operating models and exploring new ways to drive efficiency and scalability. The challenge lies in making bold moves while maintaining financial discipline.

The Shift from Discussion to Action

A major shift we foresee in 2025 is the industry’s move from ideation to execution. Experimentation with concepts such as tokenisation, distributed ledger technology, and personalised investment solutions is giving way to pilots and production ready solutions. Tokenisation, in particular, is poised to move from theoretical exploration to full-scale deployment.

In 2025, we expect asset managers to place greater emphasis on how they can optimise the distribution of tokenised investment vehicles. This includes exploring the benefits of leveraging both private and public blockchains to enhance accessibility and efficiency in fund distribution.

Additionally, we anticipate a growing focus on tokenised money market funds and their role in collateralisation, recognising their potential to provide liquidity and flexibility in an evolving financial ecosystem. Firms will increasingly consider these strategic avenues to meet investor demand for faster and more seamless solutions.
Real, value add deliverables in this arena will act as a catalyst to bolster industry belief in the direction of travel and accelerate the take up of these technology led solutions to drive new growth, new revenues and new found optimism.

ETFs Continue to Dominate

Exchange-traded funds (ETFs) remain a cornerstone of innovation, and we expect 2025 to be no exception. The adaptability and broad appeal of ETFs ensure their continued dominance, with hybrid products—such as those integrating tokenised assets—gaining traction.

Regulatory clarity will further accelerate adoption, paving the way for a new wave of innovation. As these frameworks take shape, asset managers will increasingly turn to ETFs as a vehicle for growth, leveraging their scalability and cost-efficiency. Calastone remains deeply engaged in these developments, aligning our solutions with market needs and opportunities to ensure our clients are positioned for success.

Regional Dynamics in Focus

Regional trends will play an increasingly critical role in shaping strategies, particularly in Asia. Investors in the region are seeking greater global diversification, underscoring the need for seamless connectivity across markets. The ability to integrate local infrastructure with global networks will be essential in meeting these demands, enabling investors to access opportunities worldwide while maintaining efficiency.

As regulators and market participants across Asia focus on fostering growth, collaboration will remain vital. Ensuring interoperability and connectivity across borders will not only drive fund flows but also support the region’s broader ambition of becoming a hub for global investment activity.

While the broader sentiment for Asia as a region is cohesive, each market’s unique approach and pace of adoption highlight the need for tailored solutions—a challenge well-suited to Calastone’s strengths in driving seamless interoperability and connectivity across diverse markets.

Meanwhile, Europe faces its own set of challenges. Navigating the implications of economic instability—such as France’s financial crisis—and addressing the complexities of cross-border distribution will require agility and foresight from market participants. These regional dynamics underline the importance of tailoring strategies not only to meet regulatory requirements but also to align with local market appetites for innovation.

The interplay of these regional factors highlights a growing divergence in how firms approach technological adoption and regulatory compliance. As firms adapt to these variations, they must ensure that their global strategies remain cohesive while accommodating the unique demands of each market.

ESG: A Mixed Picture

The ESG sector continues to polarise opinion. While investor interest in sustainable products remains strong, persistent outflows from ESG funds highlight the challenges of meeting heightened scrutiny and evolving metrics. In 2025, we expect this tension to persist, with firms seeking to reconcile demand for ESG products with demonstrable impact and transparency.

This dynamic underscores the need for innovation within the ESG space. Asset managers that succeed in developing products that meet both investor expectations and regulatory standards will be well-positioned to capture growth. The challenge lies in balancing the competing demands of profitability, compliance, and impact.

The Year of Delivery

We expect 2025 to be defined by action and measurable outcomes. Clients are demanding more than concepts—they want tangible results. Whether through tokenised fund distribution, cost-efficient operational models, or innovative product offerings, firms will need to deliver real-world value.

This emphasis on outcomes also aligns with a deeper transformation within the asset management industry: the evolution of client relationships. As technology enables more interaction, firms will need to focus on building trust and delivering personalised experiences that go beyond transactional engagement. By leveraging tools like AI and digital platforms, asset managers can create meaningful partnerships with their clients, ensuring their evolving needs are met with precision and immediacy.

At Calastone, we are ready to lead this charge. Our focus on collaboration, interoperability, and innovation ensures that we are well-positioned to help clients navigate these challenges and seize opportunities. By connecting and optimising the global funds network, we are committed to driving meaningful change in this transformative era.

Charting a Path Forward

Despite the uncertainties, the industry is entering 2025 with opportunities to reshape its future. Interest rate trends, a substantial volume of assets in cash, and advancements in technology all point to significant potential for growth. Firms that focus on enhancing client experiences, broadening product offerings, and driving efficiency will position themselves to thrive.

At Calastone, we see 2025 as a pivotal year for firms to make transformative choices. By embracing innovation and fostering collaboration, the asset management industry can lay the groundwork for sustainable success in the years to come.

Calastone stands ready to support our clients in defining their future and achieving their goals.

Brian Godins, Chief Commercial Officer

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