President Trump has ushered in a more transactional world that makes it challenging for European businesses seeking relationship-based partnerships, but news headlines don’t necessarily reflect US policy, and America continues to provide the most durable source of excess returns in private markets, thanks to thriving underlying ecosystems of capital, talent and risk-taking, according to HarbourVest Partners.

In a wide-ranging discussion at the Fiduciary Investors Symposium, John Toomey, chief executive officer of the Boston-based firm shared his key views of the current investment landscape, including his observation that US tariffs have been lower than originally feared.

“Tariffs were intended to encompass much larger percentages and a much wider swathe of goods, but even the more recent data from the US government shows that the receipts are a lot lower and the effective tariff rates are a lot lower,” he told the symposium at Oxford University.

HarbourVest has invested in Europe since 1984, putting capital to work across primaries, secondaries, co-investments, private credit, infrastructure and real assets, said Toomey.

Typically, capital flows first to country-specific funds which then grow to become pan-regional funds, and he noted that investors worldwide are becoming more expert, with deeper resources and more confidence in their ability to execute.

Still, some Eastern European countries remain challenging for private market investors because they are illiquid and thin so that even though the manager, industry opportunities and local returns are strong, investment options are crimped because investors can’t trade in and out. “What we have found is the market depth isn’t there,” he said.

Investment opportunities in Europe are also impacted by the lack of an ecosystem. Although Europe has developed tech champions like Revolut, Karna and Spotify, the market faces a shortage of seed capital flowing to start-ups plus sufficient returns from that capital to attract future capital.

In contrast, the US has a thriving ecosystem of plentiful capital, talent and people prepared to take risks, as well as an early customer base to prototype.

Building a culture that takes root overseas too

Toomey started in finance from “ground zero” when he joined HarbourVest in 1997 as an analyst, after deciding that a career in finance “sounded way more interesting” than being in a lab using his Harvard science degree.

He said that HarbourVest’s partnership model has nurtured teamwork, open ideas and inclusion in a culture that puts people first. “We’re in the human capital business. Of course, we are entrusted with capital, and we make investments and build portfolios and create returns that are important to the beneficiaries of those programmes. But at the end of the day, our team is responsible for this important work, so nurturing talent is a core part of our strategy.”

A significant proportion of his time is spent thinking about how to help people work together and become better organised, as well as developing talent and ensuring HarbourVest is a place where everyone’s voice is valued and heard.

A hiring sweep at the company has seen as many as 250 hires a year across 15 offices. Scaling the culture of the business and building expert leadership centred on core principles like always putting clients’ interests first, displaying a sense of urgency and operating with integrity at all times is more challenging away from head office.

Culture is also instilled by performance reviews now, including “the how,” he said.

Employees are now also asked to name a few things that they did that were outside their job description that helped a client or helped a peer “where they weren’t required to do it but instead went above and beyond their normal duties.

“We don’t want people creating a lot of success, but ultimately really doing that at the expense of our values,” Toomey said.

Many asset owners are hesitant to invest fiduciary capital into cryptocurrencies due to their perceived volatility and uncertain fundamentals, but allocators who have bought into digital assets made the case that they could be an emerging store-of-value asset comparable to gold.  

This is the thesis of the A$60 billion ($39 billion) AMP Super in Australia, which made a “small” allocation to Bitcoin futures last year via its dynamic asset allocation (DAA) program, which includes commodities. 

The move, when publicly announced, was overwhelmingly supported by its members, according to the fund’s head of portfolio design and management Stuart Eliot. 

“The phones in the superannuation contact centre rang off the hook. People were asking ‘which of your funds have Bitcoin in them, I want to move my superannuation there’. And ‘do you have a standalone Bitcoin option’, which we found quite interesting,” he told the Fiduciary Investors Symposium at Oxford University. 

When assessed with common properties of a store-of-value asset, such as scarcity, durability, portability and liquidity, AMP Super’s analysis suggests Bitcoin fits into the definition better than gold or fiat money.  

Store-of-value assets broadly have a role in the superannuation or pension context to maintain the real value of portfolio assets, hedge against monetary debasement and event risk, and improve portfolio returns and Sharpe ratio, Eliot argued.  

“The thing that’s really holding asset allocators back [from investing in store-of-value assets] is the lack of a capital market forecasting framework, for gold in particular,” he said.  

When trading Bitcoins in its DAA program, AMP Super worked with signals including price momentum, investor sentiment, and measures of liquidity and inflation. 

“If you look at how both Bitcoin and gold have responded to inflation, particularly since 2020, it’s not actually the level [that matters], it’s rather the change. If consumer measures of inflation expectations change or realised inflation is increased, that tends to be positive for the price of these assets,” he said. 

More recently, the fund started exploring on-chain analytics, which examines public blockchain information such as transaction patterns to determine cryptocurrencies’ potential price movements. 

“You can actually see the price at which every unit of Bitcoin last moved and compare that to the current valuation, that turns out to give really good trading signals,” Eliot said.  

Technology developments like cryptocurrency or tokenisation – which refers to the process of turning rights to financial assets into digital tokens on a blockchain – have significant investment implications. Robert Crossley, global head of industry and digital advisory services at Franklin Templeton, said assets of the future will be programmable and dominated by wallets instead of non-interoperable accounts. 

“What all technology does, from steam power to blockchain, is it fundamentally changes the fixed and variable cost structure of the industry. New things become possible and previously impossible things become possible,” he said.  

The UK is one of the latest countries looking to enable tokenisation in its asset management industry, with its Financial Conduct Authority giving the nod to a “direct to fund” model in a consultation paper in October, where end investors can directly buy into a fund, streamlining the investment process without the fund manager acting as a principal.  

There are a lot of big concepts when it comes to digital assets, but Crossley said one concrete step allocators can take right now is educating internal teams and stakeholders.  

“The dirty secret of this industry is we talk about tokenisation all the time, but what’s really happening in nearly every case is we’re creating duplication. We have the legal book of record that we reconcile the sort of on-chain ‘pretend book’ of record to at the end of the day, that’s why you can’t pay intraday interest,” he said.  

“[Education helps to] be able to separate where there is material progress, and the technology is being used in a way that’s pushing things forward, and then from that, you start to understand the investment part of it. But don’t put the cart before the horse. 

“The biggest risk that we all run collectively is really that the world is changing faster than we’re updating our beliefs about it.” 

Private asset managers can expect to work harder for LP capital as allocators increasingly look for more bespoke, flexible fund structures that meet their changing needs around liquidity, fee and types of investment exposures. 

Blue Owl Capital, which manages $295 billion on behalf of clients, is acutely aware that narratives around private investments are changing.  

“A lot of us [private markets managers] have had this 40-mile per hour tailwind behind our back since the financial crisis, where money has essentially been free and it’s been underallocated to private markets,” Blue Owl global head of institutional capital, James Clarke, told the Fiduciary Investors Symposium at Oxford University.  

“They’ve essentially treated their clients like a piñata that they hit with a stick until the money comes out – that’s not good enough anymore, because the wind has changed and it’s in our face.” 

It’s now more critical than ever that managers do the work and understand allocators’ goals around liabilities and performance for the bespoke solutions, he said. While more private asset managers are seeking new sources of capital in the wealth space, Clarke said institutional investors remain “the bedrock of any successful asset management firm”. 

“They are loyal, provided you deliver good performance and provided you treat them as partners, so it’s fundamentally important,” he said. 

The M.J. Murdock Charitable Trust, a US not-for-profit endowment, said it has been on a journey in the past two years to transform illiquid private markets investments into semi-liquid structures.  

It moved assets out of three traditional closed-end infrastructure funds into a bespoke sleeve with the same manager in a bid to have better control of deployment pacing. It is now having similar conversations with its real estate and credit fund managers.  

“We’ve created for ourselves a lot of optionality. If you’re a person of corporate finance, you know that options create value, and the more options you have, the more value,” the endowment’s chief investment officer Elmer Huh said.  

“[We want to see] if we can create – not your traditional SMA (separately managed accounts), not your traditional evergreen vehicle – but something that’s much more bespoke, much more flexible, where you have the control and you can use their subscription line as a synthetic proxy of NAV financing to accelerate or delay your capital calls. 

The foundation has around “pretty aggressive” private markets allocation of 66 per cent, which speaks to the value of its late founder Jack Murdock and its cultural DNA of technology and innovation. 

By creating more liquid private fund structures, the foundation ensures that it can pay grants to not-for-profit partners out of its cash reserve – which amounts to around $100 million a year – and still have the option to deploy down the road, Huh said. 

Changing needs of investors 

Damien Webb, deputy chief investment officer of Australia’s Aware Super, said that as investors evolve, their needs as LPs also change. The fund is the third largest player in Australia’s fast-growing defined contribution system, and its assets under management have grown from A$40 billion ($26 billion) a decade ago to A$230 billion ($150 billion) today.  

“We’ve had to reinvent ourselves as an organisation every five years – like fundamentally, soup to nuts,” he said. “From the chair and the board, down to the investment team, legal, tax, ops, DD, portfolio and value creation. So the reality for us is that we think about what portfolio do we want to own, and we spend a lot of time thinking about the [factor] exposures.” 

“The conversation around are [private markets] funds dead, it’s really around what is the access point… For us, I think the answer then splits very much by asset class.” 

For example, funds are still a significant part of Aware Super’s private equity investments, which account for eight per cent of the total fund allocation. It has a “high-alpha” approach and an appetite for first-time funds, seeking opportunities in co-investments and secondaries with deeper, more global relationships. 

But the dynamic is entirely different in real assets. Over the past 12 years, Webb said that Aware Super moved from investing in core evergreen funds, to individually managed accounts and joint ventures, and finally to master relationships whereby it allocates a huge amount of capital to a single global manager. “That didn’t quite work,” he said.  

The fund also operates a separate real estate platform, Aware Real Estate, which invests in Australian industrial, commercial, and retail/mixed-use sectors.  

“Now we’re at point where we’re really leaning into real estate operating companies. There is still very much a role for fund managers. It’s just we usually use them for very bespoke things in that operating company, like origination or value creation or particular things,” Webb said.  

But amid the changes, what remains constant is that sound relationships between LPs and GPs are the prerequisites for great investments. M.J. Murdock Charitable Trust’s Huh said the quality that the allocator wants to see above all else in GPs is “humility”. 

“Every private investor has a black eye, there’s no one with a 100 per cent great track record,” he said. 

“We sometimes spend anywhere from six months to three years getting to know the manager – it’s like slow dating – and it’s really hard to not spend the time and figure out where the warts are, so we want to know what’s the low point of your existence as a fund manager. 

“If you don’t get a proper answer of ‘hey, I’m glad you asked that, let’s talk about that’… You kind of ran into a manager who’s just more of an asset gatherer.” 

M.J. Murdock Charitable Trust has high conviction in its managers – around six firms look after 60 per cent of the portfolio. But even great relationships come to an end as the fund let go of four managers with which it has been working with for more than 25 years.  

“If you have a relationship with a manager and you have to deliver bad news, there’s a high level of respect because you’re principled on why you’re leaving and what you need to do for the portfolio,” Huh said. 

“In this business, it’s very hard to find those managers.” 

Aziz Hamzaogullari, chief investment officer of growth equity strategies at Loomis Sayles, has urged active investors to focus on long-term consumer and enterprise demands, warning that chasing short-term market moods and toggling between “risk-on” and “risk-off” positions is ultimately a “loser’s game”. 

With a declining active share in fund managers’ portfolios and trading costs, the odds are against those whose main approach to adding value is frequent trading and not taking active bets, he told the Top1000funds.com Fiduciary Investors Symposium.  

“If you look at, for example, the large cap space, the best of the best managers may have a 0.3 or 0.4 information ratio, which is the excess return over the risk that you generate,” he told the symposium, held at Oxford University. “Just simple math tells you… that you have to have a minimum active share to beat the benchmark.” 

“We believe that active doesn’t mean necessarily just trading but rather making very selective long-term decisions.” 

These decisions include, for example, tapping into the structural demand behind aviation companies driven by consumers’ desire for luxury and travel as income rises, with consistent increases to miles flown per traveller every year and very rare disruptions like COVID-19.  

“[If you follow that principle], you will do better than a portfolio with an approach based on ‘oh today is risk-on, let me just go and load up on these companies that will be higher beta’, and the next morning I’ll get more defensive – I think that’s a loser’s game,” he said.  

“At least when I look empirically, I don’t see anyone who can time these things perfectly.” 

A more structural view of risk also protects the portfolio in all weather, Hamzaogullari said. He noted that the Loomis Sayles research examining the performance of 281 US large cap growth equity managers found that most of its peer group tend to do well in either bull or bear markets, but never both. 

This could be caused by managers implementing front-end screens that filter out assets that do not meet their bespoke criteria and therefore narrow down the investment universe, Hamzaogullari suggested, but it also causes portfolios to “be biased either to the up market and down market”.  

“I think the reason is those front-end screens and not having an approach to risk that’s permanent and structural,” he said. 

“As human beings, we have this hindsight bias, and we always talk about risk as if we knew it was going to happen… but in reality, most of the time people are reacting to what just happened.  

“I think that mindset means that from our perspective, we want to invest in a portfolio of products and services that are not highly correlated with each other.” 

Following this philosophy, Hamzaogullari said the manager does not approach an investment based on a country or regional framework but on whether it has robust business qualities – China is one such example.  

“Everyone is like ‘China is investable’ or ‘China is non investable’ – even through an approach like that, I think China is a big market with a big population, and there are some excellent businesses out there that we will benefit from in the long run,” he said. 

“We look at growth as being secular in nature, and we define it as cash flow growth, and we want to buy these [good companies] at a significant discount to intrinsic value.  

“We make very few decisions in a given year, and that’s our selective approach to [active] investing rather than geographies.” 

Europe is receiving unprecedented attention from investors who were startled earlier this year by the Liberation Day tariffs and rotated out of the US market. But a lack of integration among the fragmented European regulatory and market structures is not helping investors put their capital to work in the region, according to Apollo.  

Tristram Leach, head of investments and co-head of European credit at the $908 billion manager, said there is a new impetus for change in the European capital markets, but also many speed bumps, such as the vastly different insolvency regimes and stock market regulations between nations.  

“Personally and possibly for many people in this room, the Capital Markets Union is going to be very, very important,” he told the Top1000funds.com Fiduciary Investors Symposium at Oxford University, referring to the economic policy initiative that aims to strengthen European financial markets’ competitiveness. “That means allowing capital to address opportunities across Europe without some of these frankly arbitrary barriers.” 

Solutions proposed so far include the introduction of a 28th regime in the European Union where businesses – and particularly small and innovative enterprises – can apply Europe-wide standards.  

“Creating the environment whereby the reforms can happen is a big part of the challenge that Europe faces, because the roadmap is there,” Leach said.  

“I think there’s buy-in at the Europe level and a lot of national, political elite levels, but it’s getting buy-in through electorates across elections and multiple geographies that’s really the challenge.” 

In terms of specific investment themes, defence is a much-discussed subject in Europe but Leach said opportunities are likely to revolve around supply chains and partnerships with defence original equipment manufacturers (OEMs) rather than around “big national projects”.  

Germany is better placed to borrow more off its sovereign balance sheet than most other EU countries, which are already debt-ridden due to the need to fund various competing objectives, he said. Germany had a debt-to-GDP ratio of 62.4 per cent at the end of the second quarter in 2025, compared to the EU average of 81.9, according to the union’s official data.  

Leach said private credit is a natural source of long-dated capital for investments like infrastructure and can complement public markets. But he rejected the suggestion that private credit is inherently riskier due to its opaqueness.  

“Public investing can be both risky and safe, and private investing can be both risky and safe. I would go one step further and say these days, public investing can be both liquid and illiquid, and private investing can be both liquid and illiquid,” he said. 

For an asset allocator that invests in private markets, the most critical thing is the “rigour of the underwrite”, as well as knowing that they are taking on the right risk and lending to the right companies regardless of format, Leach said.  

“Being able to price those things appropriately and make sure you’ve been paid incrementally for liquidity characteristics, in the same way you would for credit characteristics, is a really important part of building a sophisticated asset manager appropriate to the needs of a world where these things are not separate categories,” he said. 

“Private credit is overwhelmingly, appropriately asset liability matched and it doesn’t face, say, the risk of a bank run, and generally speaking, it’s not particularly levered either. 

“The idea that there is increased systemic risk from private credit… I think is a challenging line to maintain.” 

President Trump’s executive order that America’s 401(k) plans invest more in private markets will take five to ten years to have an impact. Although private assets are a significant part of America’s defined benefit pension fund assets, the ability of defined contribution funds to invest in private markets is a little more complex, explained seasoned investor Michael Davis, head of global retirement strategy at T. Rowe Price, speaking at the Fiduciary Investors Symposium at Oxford University.

“I think, at the end of the day, it’s going to be a long road for private assets in defined contribution plans,” he told an audience comprising 68 asset owners from 17 countries gathered alongside global asset managers for the three-day conference.

“When I was in government, I learnt that you can kind of tilt [policy] in a direction, and eventually, it picks up speed, but it takes a while. I think the executive order will help, but I wouldn’t expect there to be a change overnight,” he said, recalling his time helping craft pension fund policy while serving under the Obama administration.

Enduring litigation issues will continue to dent plan sponsors’ enthusiasm to invest in private markets, he said. Investing in private assets incurs higher fees and will therefore attract lawsuits that particularly target fees, costs and performance.

“I experienced this myself in terms of some anxiety, because I am the head of the investment committee for our own T. Rowe Price plan. So I live some of the same anxieties that many of our clients experience,” said Davis.

Other barriers to change include low financial literacy. Although the US has higher levels of financial awareness than in other countries, he flagged that public knowledge of private assets is poor. “Even things like public assets, people struggle with.”

Liquidity is also an issue since DC investors “like daily liquidity.” However, he noted the continued evolution of liquidity-supporting private market structures and vehicles.

“We expect to see more of that innovation and I do think that this is an area that we can learn a lot from our colleagues around the world who have deployed these assets into defined contribution plans for a much longer time than the US has.”

He said private assets are unlikely to be offered as a separate option in a defined contribution plan. Instead, investors will most likely tap into alternatives via a diversified portfolio in a target date fund.

The pros and cons of legislation

America has a successful history of policy makers successfully steering the $37 trillion retirement industry in new directions.

The passage of the 1974 Employee Retirement Income Security Act (ERISA) laid the foundations for capital formation, and has gone on to fuel an industry of private asset managers characterised by hedge funds, private equity and private credit.

Davis noted that other countries are now starting to think about how to use their retirement assets as a lever to spur capital formation and local investment.

But he warned that governments need to tread a fine line between pushing for the productive use of capital and maintaining the fiduciary duty enshrined in ERISA law, which ensures plan sponsors act solely in the interest of beneficiaries. It’s a line that has got blurred in the US at times – like when unions pressured to direct assets towards creating jobs. Something that he believes has fed directly into the politicisation of ESG in the US.

Davis also talked about the importance of staying invested in an inflationary market and avoiding non-productive investments.

“If you’re in a bank account earning next to nothing, you are losing money every day.”

He suggested countries integrate a national default policy whereby beneficiaries default into a diversified pool of assets that includes growth and fixed income assets.

“Again, in a world where inflation is a bigger problem, the idea that you have big pools of people that are still investing in cash, I think is a tragedy. And the government can do something about that. In the United States, prior to 2006/ 2007 a lot of people were invested in either the stock of the company they worked for, which is not a diversified place to be, or cash. And the department did a thorough analysis to say this is not where people should be.”

Davis also argued the case for active management in today’s concentrated market.

Still, legislation in the US retirement industry has also created barriers to change and a disincentive to innovate in contrast to newer pension systems like Australia. Australia’s super funds have been able to hone in on the best concepts like automatic enrolment and centralisation, for example.

“One of the big issues in the United States is portability. So if [people] change employers, [they] have to individually take those assets. It’s a whole process to roll those assets over,” he concluded.