Hosted in partnership with Morningstar, IMAS members joined an exclusive luncheon dialogue with Morningstar CEO Kunal Kapoor, who shared his perspectives on the forces reshaping global asset and wealth management. The discussion explored the evolution of private markets, the changing investment landscape, the growing role of artificial intelligence, and the future direction of the industry.
Key Takeaways:
1. Investors Need to Reset Return Expectations
A recurring theme throughout the discussion was the need for investors to prepare for a lower-return environment. While market commentary often focuses on isolated credit events or short-term volatility, a more significant challenge may be investors’ expectations of future returns. Following a prolonged period of strong market performance, many asset classes are trading with tighter spreads and higher valuations, suggesting that future returns may be more modest than those experienced over the past two decades.
For investment professionals, this reinforces the importance of portfolio construction, diversification and managing client expectations in an environment where generating alpha may become increasingly challenging.
2. Private Markets Continue to Grow, but Liquidity Expectations Matter
The discussion highlighted the growing demand for private market exposure and the increasing popularity of evergreen and semi-liquid structures. While private credit appears particularly well-positioned for broader adoption, it was noted that private equity may remain more challenging to adapt into structures offering regular liquidity due to the underlying characteristics of the asset class.
A notable observation was that industry participants may need to focus less on product labels and more on investor understanding of liquidity characteristics. Terms such as “semi-liquid” can sometimes create unrealistic expectations regarding access to capital during periods of market stress.
3. Product Innovation is Expanding Investor Choice
The conversation highlighted how active ETFs, digital assets and alternative investment products are broadening the investment toolkit available to investors. This reflects a broader evolution towards greater investor choice and portfolio customization.
At the same time, the proliferation of products creates challenges for both investors and advisers in assessing costs, benchmarks and suitability. The ability to evaluate products through a cost-conscious lens remains critical.
4. Cost Compression Remains a Structural Industry Trend
One of the clearest messages from the session was that fee compression across the investment industry is likely to continue.
Lower costs ultimately benefit investors and can contribute to industry growth by encouraging greater participation in capital markets. Markets that have embraced lower-cost investment solutions have often seen increased investor engagement and stronger asset growth over time.
5. AI Adoption is Becoming a Strategic Imperative
Measuring the return on investment for AI remains difficult, even among the largest global technology firms. However, it was stressed that the greater risk may be failing to adopt AI altogether.
Morningstar’s approach has centred on encouraging experimentation, building AI literacy across the organisation and embedding AI into day-to-day workflows. A key success factor has been securing alignment across leadership, legal, compliance and technology teams to support responsible experimentation.
it was emphasised that firms should avoid treating legal, compliance or information security functions as barriers to innovation and instead involve them as enablers in the adoption process.
6. Firms that Successfully Integrate AI Will Gain Competitive Advantage
Beyond productivity gains, AI is expected to fundamentally reshape how investment firms operate, engage clients and deliver services. Firms which embrace AI effectively will be better positioned to improve efficiency, deepen client engagement and scale their operations. Conversely, organisations that delay adoption risk falling behind competitors who are embedding AI into their operating models.
7. Personalisation is the Next Frontier for Investment Management
The discussion also touched on the evolution of ESG and investor preferences.
As wealth management becomes increasingly personalised, data that helps investors express their values, priorities and objectives will become more important.
This trend aligns with broader shifts towards customised portfolios and personalised investment experiences.
8. Asia Remains a Key Growth Opportunity
Looking ahead, Kunal expressed confidence in Asia’s long-term growth prospects within the global investment ecosystem.
Among Asian markets, Singapore, Japan and Hong Kong were highlighted as important centres for Morningstar’s future growth, supported by deep capital markets, expanding wealth pools and growing demand for investment solutions.
