In 2025, portfolio management was changing through the vehicles investors use, the mix of public and private assets on offer, and the technology behind investment decisions. The clearest evidence was rapid active ETF growth and manager experimentation with private-market products; AI adoption was advancing, but unevenly. These developments change how portfolios are built and delivered—not whether a strategy is suitable or likely to outperform.
The figures below distinguish observed market activity from survey expectations. Most reflect 2024 data or surveys conducted in 2025, rather than guarantees about future returns.
Why portfolio management was changing in 2025
Asset managers faced pressure to offer more choice, personalize portfolios, and operate across traditional and alternative investments. McKinsey’s 2025 analysis describes firms responding through partnerships, new products, digital distribution, and investment-platform modernization. Citi Investor Services and CREATE-Research likewise found interest in personalized portfolios, outcome-oriented investing, and diversified strategies delivered at the point of sale.
For individual investors, these shifts matter because a familiar investment strategy may arrive in a different wrapper or packaged alongside less-liquid assets. Technology can help managers analyze information and tailor portfolios, but it does not remove the need to understand costs, risks, and the terms attached to an investment.
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Active ETFs are gaining ground as a fund format
Active ETFs were one of the most measurable changes. McKinsey’s 2025 analysis, drawing on Morningstar data, reported that in 2024 active ETFs represented 7% of ETF assets under management but captured 37% of ETF flows and nearly 24% of ETF-driven revenues. McKinsey also reported that more than 1,400 active ETFs had launched during the five years before its report.
| Measure | Active ETF result | Period and source |
|---|---|---|
| Share of ETF assets under management | 7% | 2024; McKinsey’s 2025 analysis, drawing on Morningstar data |
| Share of ETF flows | 37% | 2024; McKinsey’s 2025 analysis, drawing on Morningstar data |
| Share of ETF-driven revenues | Nearly 24% | 2024; McKinsey’s 2025 analysis, drawing on Morningstar data |
The figures show demand for the format, not proof that active ETFs outperform. The wrapper and the investment strategy are separate questions: a fund can offer active management without delivering a distinctive approach or better results.
Some growth is investors switching wrappers
McKinsey’s 2025 Financial Advisor Survey found that roughly 60% of active ETF allocations came from active mutual funds. Among the 100 largest active ETFs, approximately 60% of inflows went to strategies converted from or cloned from mutual funds; the remaining 40% went to new or differentiated exposures. That suggests growth reflects both a change in distribution format and some demand for different strategies.
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What to compare before choosing a fund
- Costs: Compare the fund’s ongoing charges and any other applicable fees with alternatives using the same or a similar strategy.
- Transparency and holdings: Check what the fund discloses and how often; the ETF label alone does not tell you how a particular fund reports its portfolio.
- Tax treatment: Tax outcomes depend on the fund, account, and jurisdiction. Do not assume an ETF will produce the same tax result for every investor.
- Liquidity and trading: ETF shares trade on an exchange, but that does not guarantee a narrow bid–ask spread or easy trading in every market condition.
- Strategy and portfolio role: Find out whether the strategy is converted, closely resembles an existing fund, or offers meaningfully different exposure—and whether that exposure fits your objectives.
Public and private investments are being packaged together
Traditional asset managers and alternative-investment firms increasingly overlap in product design and distribution. McKinsey describes a proliferation of public-private strategies, evergreen products, and public-private model portfolios during 2024 and 2025. These structures aim to package exposure to both public and private markets, with high-net-worth and affluent investors identified as nearer-term growth segments. Broader access for mass-affluent investors and defined-contribution plans depends in part on brokerage availability and more complex implementation.
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Repair common Windows errors and clear accumulated junk for a smoother, more stable PC - no reinstall needed.Free scan · no reinstallA survey by Citi Investor Services and CREATE-Research, conducted from March to June 2025, included 269 asset managers across 26 markets, representing US$37.7 trillion in assets under management. In it, 67% of respondents believed that democratizing access to private markets would drive organic growth for the industry over the following three years. This is a view about business growth—not a forecast of investor returns or a finding that private assets suit everyone.
Access does not make private assets liquid
A product that combines public and private holdings does not make the underlying assets behave alike. Before investing, compare redemption terms, valuation frequency, fees, disclosure, investor eligibility, and the intended role in your portfolio. Private investments may be harder to sell and may be valued less frequently than exchange-traded holdings; a packaged product does not erase those differences.
AI is entering investment workflows, but adoption is uneven
Surveys point to experimentation and implementation, not routine autonomous portfolio management. In a US survey of more than 100 asset-management professionals, KPMG found that the share of respondents describing their organization as being at the conceptual AI stage fell from 39% in its July 2024 pulse survey to 33% in a survey conducted after the December 17–18, 2024 Federal Open Market Committee meetings. The developmental-stage share rose from 26% to 39%. These figures indicate reported progress in organizational maturity; they do not measure investment performance.
In the 2025 Citi/CREATE-Research survey, 41% of respondents said they were at the AI implementation phase and 26% at the generative AI implementation phase. Respondents also identified barriers including legacy systems, data quality, security, and transparency. McKinsey describes potential uses such as synthesizing research, analyzing unstructured information, and customizing portfolios. These are developing capabilities, not evidence that AI consistently makes better investment decisions.
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For a technology-enabled investment process, the practical questions are whether data are reliable and integrated, how recommendations can be explained, who reviews or overrides outputs, and how the system is protected. A firm’s adoption label by itself does not answer those questions. Investors should look for understandable disclosures about the process and its risks rather than assuming that “AI-powered” means automated, independently verified, or more profitable.
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An AI-themed fund may not use AI to select investments
ESMA’s 2025 report analyzed around 40,000 open-end and exchange-traded funds in the European Union. It counted 37 UCITS funds with AI-related terms in their names in March 2020 and 76 in June 2025. But funds promoting technology in their investment process remained a niche, with less than EUR 3 billion in assets under management, and their number had fallen from an early-2023 peak. Most AI-named products instead focused on the AI industry sector. A fund name can describe what it invests in rather than how its manager makes decisions.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Investor preferences point toward alternatives and real assets—but not certain returns
KPMG’s US-focused 2025 Asset Management Industry Outlook reported respondents’ expectations about potential opportunities. The percentages below are survey preferences, not observed returns, a global consensus, or a recommendation.
| Investment category | Survey finding | Horizon and qualification |
|---|---|---|
| Private debt and credit | 36% named it as having the greatest expected ROI | Respondents’ expectation for the following three years; KPMG’s US-focused 2025 outlook |
| Private equity | 31% named it as having the greatest expected ROI | Respondents’ expectation for the following three years; KPMG’s US-focused 2025 outlook |
| Residential/build-to-rent real estate | 47% named it a top real-estate investment class | Respondents’ expectation over the following two years; KPMG’s US-focused 2025 outlook |
| Data centers | 40% named them a top real-estate investment class | Respondents’ expectation over the following two years; the previous KPMG survey reported 27%; US-focused survey |
These results describe what surveyed industry professionals expected, not what subsequently happened. Expectations can change with economic conditions, financing costs, asset prices, and other factors; private investments and real estate also bring risks that a survey ranking does not capture.
Technology and operating models are becoming portfolio capabilities
Managers are treating data, analytics, distribution, and operations as part of investment capability rather than back-office concerns alone. McKinsey points to integrated portfolio information, scalable platforms, digital-enabled distribution, and simpler operations as priorities. Its discussion of smaller managers emphasizes partnerships as a way to gain access to capabilities without building every function in-house.
For clients, better-integrated systems can support oversight and customization, but only if the underlying data and controls are dependable. Citi and CREATE-Research respondents’ interest in personalized, outcome-oriented portfolios describes an industry direction, not a guarantee of improved investor outcomes.
Two other 2025 surveys offer context without enough public detail to support allocation conclusions. State Street Investment Management surveyed 82 wealth managers in nine countries—Switzerland, the UK, Spain, Italy, Germany, Israel, France, Finland, and Denmark—with combined assets under management above $5 trillion. Its public summary covers ETFs, active strategies, alternatives, and thematic investments, but does not provide detailed allocation results. Coalition Greenwich’s 2025 overview also highlighted private-market strategies, ETF innovation, and a trans-Atlantic ESG divide as industry issues, without supplying detailed statistics in its public synopsis.
Regional and asset-allocation views remain uncertain
McKinsey noted early signs of investor interest in reducing exposure to the United States, while emphasizing that whether this persists depends on relative growth, policy, currency movements, and available alternatives. That is not evidence of a durable global shift. Similarly, KPMG’s reported asset-class preferences are expectations from a US-focused survey, not a reliable guide to outcomes in other regions.
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