Underperformance among active global equity managers is driving investors to seek emerging market opportunities, the latest bfinance Manager Intelligence and Market Trends report reveals.
While global equities rose 7.6 per cent in Q3 2025, more than 75 per cent of active global equity managers underperformed the MSCI ACWI, which bfinance says reflects the market’s “narrow leadership and momentum-driven profile.
Meanwhile, 45 per cent of emerging market equity managers outperformed the MSCI EM Index in a quarter where EM equities gained 10.6 per cent.
Looking at manager searches, equities accounted for 23 per cent of searches, with emerging market equity reaching its highest share on record at 50 per cent of all equity mandates. Global equity searches fell to 35 percent as institutions sought regional and single-country strategies including Japan, Europe and India.
After a relatively muted Q2, private market manager search activity increased significantly during the third quarter of 2025. Overall, illiquid strategies represent 52 per cent of all mandates from bfinance clients over the twelve months to the end of September. This growth was primarily driven by heightened activity in private debt and real estate.
The report finds that institutional investors are being “more selective in their approach to risk as they try to navigate elevated equity valuations, tight credit spreads and a complex global policy backdrop”.
Mark Mortlock, Marketing Director at bfinance, says: “In today’s environment, resilience is structural. It derives from diversification, complementary income streams, and adaptability rather than from static allocations or simple de-risking. Ultimately, success lies in building portfolios that can endure policy-driven volatility, geopolitical shocks, and valuation corrections—while remaining positioned to seize opportunities in an increasingly complex, multipolar market landscape.”
Mortlock notes that allocations to real assets and gold stayed elevated, reflecting ongoing demand for inflation protection and portfolio resilience. Cash levels dropped lower but remain above historical norms, which he says signals cautious optimism and a preference for flexibility.
The research describes investors as “steady but selective” in terms of risk-taking, noting that sentiment has normalised, however positioning still favours liquidity and downside protection over aggressive beta exposure.
“Headline sentiment has steadied, but investors remain valuation-aware and selective. There is clear demand for quality, liquidity and diversified sources of return as institutions position portfolios for a more uncertain macro and policy environment,” Mortlock says.
