• Fund managers foresee a rise in geopolitical conflicts, projecting a significant impact on the global economy and financial markets.
• Concerns for sticky inflation have diminished with expectation for central banks to achieve “soft landing”, with a majority consensus for up to a 0.75 percentage point reduction in the US Fed Funds Rate.
• Views were divergent on expectations of Asian markets for 2025 but there is consensus in the longer term that markets will remain stable or strengthen, with projected increases in key indices.

Singapore, 8 January 2025 – Concerns about a fragmenting global order have risen to the forefront in the 2025 edition of the IMAS Investment Managers’ Outlook Survey. 56% of respondents expect an increase in geopolitical conflicts, forecasting a significant impact on the global economy and financial markets.

Meanwhile, 2024’s fears over persistent inflation have eased, with 52% of respondents confident that central banks will successfully achieve a “soft landing.” Additionally, 75% expect the US Fed to cut rates by up to a 0.75 percentage points.

The annual Investment Managers’ Outlook Survey reflects insights from some of the world’s largest fund houses, collectively managing over US$35 trillion in assets. This year, the survey brought in a total of 52 responses from C-suite personnel across the industry.

“The survey offers a critical lens into the evolving landscape of asset management, identifying key drivers and risks that will influence decision-making in 2025.  Amidst geopolitical uncertainties and shifting market dynamics, firms must adapt their strategies to remain competitive while capitalizing on emerging opportunities.  This includes leveraging technological advancements, embracing innovative investment solutions, and addressing evolving client demands.  As the global economic environment becomes increasingly complex, it is imperative for the asset management industry to demonstrate resilience, agility, and foresight in navigating challenges and driving sustainable growth,” said Jenny Sofian, Chairman of IMAS.

This year, a new question was included to poll fund managers’ expectations for Asian Markets in 2025. 54% of respondents were concerned about heightening trade tensions whilst 23% expected markets to be affected by a weaker China. 19% of the respondents, however, expected the market to perform robustly. Despite differing viewpoints, respondents were generally positive on the outlook for Asian markets in the longer term, with expectations for the key indices such as MSCI Asian Ex Japan, MSCI China Index and J.P. Morgan Asian Credit Index (JACI) to end 2025 broadly unchanged or stronger. Closer to home, 43% of respondents expect the Straits Times Index (STI) to remain broadly unchanged with another 40% expecting it to strengthen by 5% to 10%.

When asked about the top three threats to the growth of Singapore’s asset management industry over the next 12 months, fund managers identified accelerated flows to passive solutions, further margin erosion, and shifting investor preferences as their key concerns.

Respondents also anticipate sustained strong demand for innovative technological solutions to reduce costs and increase productivity. Advanced analytics, machine learning and artificial intelligence – including the use of Generative AI (GenAI) have been consistent as the top FinTech areas of interest.

Within the investment management sector, Fund Operations, the Middle Office, and Research are identified as the main functions most likely disrupted by technology. By embracing tools like GenAI, firms are not only addressing disruption but actively reimagining these functions to unlock new levels of value.

“Companies address the ongoing threat to their margins by broadening their offering to new asset classes such as private markets as well as expanding into additional distribution channels. These trends reflect an industry in transformation, driven by a commitment to meet evolving client demands and capitalize on future growth opportunities.” said Thomas Kaegi, Chairman of the IMAS Development Committee.

Sustainability has dropped significantly in priority for firms this year, falling six spots compared to last year as a key factor for business differentiation. This shift suggests that many firms have already developed baseline ESG competencies and are now focusing on implementing new asset classes to further differentiate themselves.

The multitude of Environmental, Social and Governmental (ESG) standards, lack of data standardisation, and lack of standardised frameworks for different asset classes were cited as the top three challenges when it came to implementing ESG policies.

Despite this, ESG integration into existing strategies remains the top choice for firms’ ESG strategies this year. Investing in new sustainable asset classes has moved up four places from last year to third, highlighting growing interest and commitment in this area.

For year-end 2025 currency forecasts, the US dollar is expected to moderate against the Singapore dollar to 1.34 USD/SGD. Opinions were divided on the USD’s trajectory against the Chinese yuan. While 37% of respondents anticipated a weakening of around 5% to 10%, settling at 7.22 USD/CNY, the remaining 63% were evenly divided between expecting the exchange rate to remain broadly unchanged or strengthen. Meanwhile, oil prices are projected to stabilise at approximately US$72.40 per barrel.

This year’s infographic reporting on the survey findings can be found here.

Building on its commitment to supporting the asset management industry, IMAS is proud to announce the launch of the Model Discretionary Investment Management Agreement (“IMA”). This initiative, developed by the IMAS Legal Committee — comprising experienced representatives from leading legal firms and legal departments of fund managers —provides a comprehensive framework that sets out the key terms and conditions governing the relationship between clients and investment managers under a discretionary mandate.

It is designed to meet baseline regulatory requirements while incorporating explanatory notes and detailed provisions to facilitate its adoption. By introducing this Model IMA, IMAS seeks to enhance operational efficiency, promote best practices, and support the sustainable growth of the asset management sector in Singapore, particularly smaller fund management companies that face resource constraints.

The IMA will be made accessible for IMAS members on the IMAS website here.

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About the Investment Management Association of Singapore (IMAS)

The Investment Management Association of Singapore (IMAS) was founded on 22nd September 1997 by 10 major financial institutions in Singapore and has since grown to include more than 160 members. As a representative body of investment managers, IMAS spearheads the development of the industry in Singapore, by fostering high standards of professionalism amongst practitioners and creating public awareness of, and interest in the industry. We act as a forum for members, promote exemplary best practices, represent members collectively, educate investors, and improve standards of research and fund management expertise, as a collective drive to promote the investment management industry.

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