SFR Institutional Investment Study 2025 is out!

The evening was full of inspiring discussions as we explored the most interesting findings from the 2025 study, investing in the age of AI, and the development and future challenges of private investment markets. In this blog post, we share highlights from the event and present some intriguing insights from this year’s research.

According to SFR Research’s Head of Research, Iiro Nikander, the multi-phase investment year of 2025 seems to be ending under the same uncertain conditions as it unfolded. The global geopolitical power play is likely to keep investors on their toes going forward.

In equity investments, Finnish institutional investors currently emphasize increasing diversification both geographically and across sectors, mainly through passive products. Among geographic regions, Europe stands out more strongly than before, as many respondents allocate funds there while reducing their high U.S. exposure and the share of dollar-denominated investments. However, the United States is still widely perceived as the region from which the largest growth companies will continue to emerge. Unpredictable politics, the impact of import tariffs, high company valuations, equity returns concentrated in mega-tech, and currency risks remain concerns for investors.

The independence of the U.S. Federal Reserve is a particularly hot topic among the most professional investors. Many believe that the status of U.S. government bonds as a safe haven will become more questionable in the future, as indicated by the sharp weakening of the dollar and the rise in gold prices. Fixed-income investing has changed significantly following the zero-interest era and the rate hikes of 2022, and liquidity-based allocation is becoming more common.

Based on the research results, the share of alternative investments in portfolios continued to grow broadly, except for real estate. Among the most professional investors, however, no clear structural need for changes in the weighting of alternatives was observed. In real estate funds, redemption gates have largely remained in place, and market recovery has been slower than expected. In direct real estate investments, some investors feel that exit markets have even deteriorated compared to last year. On the other hand, a small group of investors sees the current market as an excellent opportunity to increase real estate exposure.

Private equity remains attractive to investors, although for many with a longer history in the asset class, the focus was primarily on increasing diversification. Growth in the role of secondary markets was anticipated, and the weakness of exit markets in recent years was seen as offering interesting opportunities for strong managers.

A sluggish year in real estate and M&A markets compared to expectations is making new investments more challenging, and liquidity management has become increasingly important in institutional investment strategies. Evergreen structures (including funds under the revised ELTIF 2.0 framework) are attracting growing interest among institutional investors. The importance of a thorough due diligence process will continue to increase, and investors must ensure visibility into the valuation basis of underlying assets, actual liquidity, and realistic return expectations.

In 2025, Nordea achieved the highest score in the Large category and was awarded the SFR Platinum Award. Evli secured second place, while OP Asset Management and Danske Bank shared third place with equal points. In the Challengers category, we awarded United Bankers for achieving the highest score, and in the Specialist category, Schroders took the win, earning praise for its liquid funds.

We also recognized the providers with the highest ESG scores in the Large category, which this year were Nordea and SEB, tied for first place. In addition, we presented an award to the top performer in alternative sub-asset classes, which this year was SEB in Private Equity. You can explore all the award winners in detail here.

At the start of the panel, the experts discussed the massive investments being made by AI companies and the potential for a bubble, given that the logic for investment payback remains largely unknown. Tony explained how enormous amounts of money are currently being pumped into AI, alongside exceptionally high expectations from investors. He reminded the audience that just a few years ago, today’s everyday AI tools would have seemed almost unimaginable—and he believes the rapid development of AI will continue.

Jyri continued the discussion by saying that the prisoner’s dilemma is an apt way to describe the situation: no one wants to fall behind in AI development, so everyone is investing aggressively, trusting that a viable business model will emerge in the future. According to him, the bubble will burst sooner or later, revealing the true value of companies. Ruth also shared that she has long believed in the existence of a bubble and noted that this is why traditional financial theories have not held up in recent years. However, she emphasized that, unlike during the dot-com bubble, she sees the tools developed in the current environment—such as AI, machine learning, and statistical methods—as genuinely useful.

One of the themes of the discussion was the geopolitical dimension of AI. Ruth highlighted how the AI race between the United States and China has also contributed to market bubbles. She noted that AI can serve as a tool in states’ broader pursuit of power and pointed out that, at present, China is able to leverage AI better than the West. China’s advantages include access to massive datasets from its own citizens as well as data from Western users through apps like TikTok. Ruth mentioned that she personally uses apps from Western service providers.

Finally, the panelists were asked whether they currently see innovations in development that could completely transform the investment industry. Tony stated that while many projects are underway, in his view, other industries are likely to experience greater disruptions before the investment sector does. Jyri, on the other hand, noted that blockchain technology is talked about less these days, but a more fundamental disruption could potentially come from there. He also suggested that if the AI bubble bursts, the industry should be allowed to develop quietly for a few years, after which truly significant and useful innovations could emerge.

At the start of the discussion, moderator Hamed Salehi described how private markets have gained popularity among investors over the past two decades. For example, in Finnish pension insurance companies, the share of private equity in portfolios was just over one percent in 2005, but now it is approaching 20 percent. Kari continued on the topic, outlining the development of private markets and their different phases during his career. He explained how the IT bubble at the turn of the millennium did not hit the private side as hard as listed equities, since valuations in private markets did not inflate in the same way. After the financial crisis began the era of zero interest rates, when investors shifted from poorly performing traditional instruments to better-yielding private market products, significantly boosting their valuations. Now the situation has changed: interest rates are positive again, and there is no return to zero in sight. This means that invested capital must generate returns within a certain time frame. Kari expressed concern that not all private market products will necessarily meet investors’ return expectations, which could lead to challenges.

The discussion raised the question of whether investing in private markets provides genuine diversification for a portfolio. Tiina explained that their portfolio at Sitra is broadly diversified across different private markets, and she believes they offer significant additional diversification. One reason, she noted, is that the drivers of return and risk in private markets differ partly from those in listed markets. David, in turn, emphasized that by investing only in listed markets, investors miss out on a vast range of opportunities. In his view, private markets definitely add diversification to a portfolio, even though, for example, private credit and private equity may correlate to some extent.

One of the key themes of the discussion was the rise of evergreen and, more broadly, semi-open fund structures alongside traditional closed-end funds. According to Kari, there are both pros and cons, and he described the differences between the funds: evergreen funds continuously raise capital and aim to allocate it efficiently, while closed-end funds call capital in stages as suitable opportunities arise. He noted that closed-end funds can optimize return calculations and thus use a higher internal rate of return (IRR). Tiina, however, pointed out that IRR is not the best metric for closed-end funds and also highlighted the liquidity challenge of evergreen funds. In private equity, the typical investment horizon is about seven years, but if a fund promises three-month liquidity, this creates a significant contradiction in the market. She summed up the potential problem aptly: “The fund has liquidity—until you need it.”