Asset manager Franklin Templeton has announced the successful closing of Franklin Templeton Structured Solutions 2026, L.P., its first Collateralized Fund Obligation (CFO), raising $1.5 billion from investors worldwide.
CFOs are a structured form of financing for diversified private equity portfolios, establishing multiple debt tranches with priority over equity holders. According to the firm, the product is designed to provide investors with diversified, capital-efficient exposure to Franklin Templeton’s primary private markets strategies. This includes private equity secondaries and continuation vehicles managed by Lexington Partners, as well as U.S. middle-market direct lending managed by Benefit Street Partners (BSP)—Franklin Templeton’s alternative credit specialist—across multiple vintages and a broad array of underlying portfolio companies.
Growing Demand for Private Market Diversification
“We are seeing growing client demand for access to differentiated private market strategies through efficient, scalable structures,” said George Stephan, Global Chief Operating Officer, Wealth Management Private Markets at Franklin Templeton. “This first CFO responds directly to that demand by combining the specialized expertise of our private market managers into an offering that reflects the full scope of capabilities Franklin Templeton can deliver.”
“This transaction demonstrates how structured solutions can bring together distinct private market capabilities to meet the evolving needs of institutional portfolios,” noted Jake Williams, Co-Head, Private Markets Product at Franklin Templeton. “The transaction leverages the breadth of Franklin Templeton’s private markets platform and our ongoing commitment to developing innovative solutions that help clients achieve their objectives.”
The successful closing marks a significant milestone for Franklin Templeton, establishing a new capital-raising channel for its private markets platform and positioning the firm to capitalize on rising demand for structured private market solutions as adoption spreads across a broader range of investors, including registered investment advisors (RIAs), family offices, insurance companies, and wealth distributors.
Franklin Templeton currently manages $295 billion in alternative assets under management (as of July 31, 2026) and offers a diversified private markets platform that includes Lexington Partners (secondaries and co-investments), Clarion Partners (private real estate), Benefit Street Partners (private credit), and Franklin Ventures (hedge strategies and digital asset capabilities).
International portfolio diversification for Brazilian investors has gained a new ally. Itaú Asset Management and Vanguard have announced a strategic partnership aimed at expanding the range of products linked to international markets while simultaneously boosting the development of the Brazilian ETF market.
The first concrete outcome of the agreement is the restructuring of SPXI11—Itaú Asset’s S&P 500-tracking ETF launched in 2015. The fund will transition its underlying asset to the Vanguard S&P 500 UCITS ETF, a UCITS-domiciled vehicle designed to track the primary U.S. equity benchmark.
The move represents more than swapping one asset for another: it places two major asset management platforms—one with a deep footprint in Brazil and the other with global scale—within a single investment vehicle tailored for the domestic Brazilian market.
The updated structure also enables automatic dividend reinvestment, a feature that supports long-term compounding by keeping distributed dividends fully invested within the fund.
A Market Looking Beyond Brazilian Borders
The partnership comes at a time when international diversification is becoming increasingly vital for local investors. Itaú Asset already operates a platform of significant scale, managing over 1.2 trillion reais (approx. $231.1 billion) with 2.6 million clients and over 380 professionals.
The bank reports that its clients hold more than 250 billion reais (approx. $48.1 billion) in overseas investments—underscoring the magnitude of demand for international assets among its client base.
In this environment, ETFs provide an efficient avenue for accessing foreign markets. SPXI11 offers direct exposure to the S&P 500 through local Brazilian market infrastructure, holding approximately $67.8 million in net assets. Partnering with Vanguard allows Itaú to enhance this offering using one of the global industry’s most recognized index vehicles.
Vanguard’s Global Scale
Vanguard manages approximately $12 trillion in assets worldwide, serving tens of millions of investors. Founded in 1975, the firm is globally renowned for index-tracking strategies and low-cost structure. Its involvement in Brazil signifies a deeper commitment to one of Latin America’s largest investment markets, where exchange-traded products have steadily gained ground across equities, fixed income, and international assets.
Both institutions noted that the agreement encompasses broader areas of collaboration, including investor education, best-practice sharing, and future product development.
This multi-faceted alignment could prove particularly strategic. Itaú Asset currently operates a multi-desk setup managing 165 billion reais ($31.8 billion) across 23 distinct investment desks. Combining this local distribution and active desk network with Vanguard’s global indexing expertise positions both firms to address growing domestic demand for international exposure.
Ultimately, the alliance reflects a broader trend across the Latin American asset management industry: major domestic managers partnering with global platforms to expand international product offerings directly within local market clearing and execution systems.
As regulatory frameworks across the U.S., Europe, Asia, and the Gulf mature and converge in their treatment of digital assets, crypto investors are rethinking not only asset allocation but also their legal domicile. The core question has shifted from which assets to hold to which jurisdiction enables compliant holding, banking, and reporting under increasingly stringent oversight standards. This is the central finding of “Crypto Secure Jurisdictions: Where Crypto Actually Works,” a global report produced by Global Citizen Solutions (GCS), an international firm specializing in residence and citizenship planning.
The report evaluates how 22 jurisdictions integrate digital assets into tax systems, licensing regimes, and banking frameworks as cryptocurrencies transition into regulated financial infrastructure.
“Residency or citizenship determines how digital assets are taxed, reported, and maintained within the banking system,” stated Artur Saraiva, COO of GCS. “As crypto oversight expands, mobility serves as a structural hedge.”
Distinct Market Profiles
The study identifies three core traits common to resilient crypto jurisdictions: regulatory clarity (defined legal status and formal oversight), institutional infrastructure (regulated exchanges, custodians, and banking access), and predictable tax and compliance treatment.
Rather than naming a single “best” destination, the report categorizes countries by function:
Institutional Benchmark Jurisdictions: Switzerland, Singapore, Germany, the UK, and Canada prioritize legal certainty and integration into broader capital markets.
Structuring & Mobility Hubs: Portugal, Malta, Estonia, and the UAE balance regulatory alignment with attractive residency and tax-planning frameworks.
Deep Capital Markets: The U.S. remains the deepest market for digital capital, albeit under a multi-agency regulatory perimeter.
The report asserts that investment-driven migration now acts as a form of jurisdictional optionality, allowing cross-border investors to diversify regulatory exposure and structure operations under stable legal frameworks.
Regional and Emerging Paradigms
In Latin America, Brazil leads adoption while formalizing its framework under the Banco Central do Brasil to strengthen virtual asset service provider (VASP) compliance. El Salvador continues its state-level adoption model anchored by its Digital Assets Law, offering a high-conviction ecosystem distinct from traditional financial centers. Elsewhere, Caribbean nations with Citizenship by Investment programs are embedding digital assets into existing AML/CFT structures to safeguard credibility while accommodating financial innovation.
Wikimedia Commons"The South Sea Bubble, a Scene in 'Change Alley in 1720" by Edward Matthew Ward
The AI craze and the rallies it has generated in stock markets—especially in the United States—have put the debate over valuations back on the table. While some contend that this is a technology so revolutionary that it can handle all investor dreams, others see a promise too overblown to meet the market’s heavy expectations. Although the question of whether there is a bubble in AI-related stocks remains unanswered for now, the history of financial markets contains some relevant examples.
One of these is the so-called South Sea Bubble, which starred a British company that found successive new heights based on the excitement generated by its royal backing and the slave trade. In a matter of months, the stock inflated to unsustainable levels, and when the bubble burst, the scandal reached the doors of the English Parliament.
Founded in 1711 as a public-private partnership aimed at consolidating, controlling, and reducing the national debt and helping the United Kingdom participate in the lucrative slave trade, The South Sea Company sparked the interest of investors of the era.
In 1713, they secured the monopoly for the trade of enslaved Africans in the South Pacific Ocean, among the Spanish colonies in the Americas. The document known as the “asiento de negros,” a monopoly contract signed between the Spanish Crown and merchants from other countries, served as the framework for the business. This was because the Spanish monarchy preferred not to participate directly in the practice, instead subcontracting services from other European powers.
The Fever Begins
Considering how profitable the slave trade had been over the previous two centuries, the expectation was that the operation would be highly lucrative. The enthusiasm was boosted by the idea that foreign trade would normalize following the end of the War of the Spanish Succession in 1713.
This prospect, along with the confidence generated by the royal backing of the company, attracted a variety of English investors. There are even reports that the physicist and mathematician Sir Isaac Newton participated in this financial fad, investing the modern equivalent of millions of pounds sterling.
Initially, the firm offered a 6% interest rate to those who bought the stock, but the excitement around the shares drove them to a peak in 1720. And the stock maintained its strength, even though no slave trade boom materialized after the signing of the Treaty of Utrecht, which ended the war.
The Spanish gave the British a limited portion of the business and even kept part of the profits, placed taxes on the importation of slaves, and put strict restrictions on the fleets of ships they could send. This undermined the profit prospects of the business.
However, the stock price continued to scale, supported by royal backing. In 1718, King George I of Great Britain assumed the governorship of The South Sea Company, which generated further confidence among the investing public, driving prices higher and coming to generate a 100% interest in the shares.
The Beginning of the End
As happens with many bubbles, prices detached from business fundamentals. Considering that the trade of enslaved Africans was not generating the necessary revenue to justify the stock boom, the rally began to falter.
Furthermore, the company was trading more and more of its own shares and was beginning to participate in questionable practices. There are records of people within the company pressuring—or bribing—their friends and acquaintances to buy shares, keeping valuations high, and there were even bribes and other acts of corruption involving British ministers and officials.
In 1720, the year the house of cards fell, the British Parliament allowed The South Sea Company to buy the national debt. The company paid out 7.5 million pounds to acquire a debt of 32 million pounds. The plan was to use the profits from share sales to pay the interest on the debt.
It was at this moment that the stock price reached its peak. The company’s shares went from about 100 pounds sterling in 1719 to 128.5 pounds in January 1720. From that point, widespread market enthusiasm took it over 1,000 pounds in August of that year.
Shortly after, the price collapsed to little more than its IPO price.
The dilemma of the model created by The South Sea Company is that it was a kind of financial carousel, where the expected added value from the slave trade did not materialize. Instead, the company was inflating its stock price with its own market operations against the public debt it acquired.
The Bursting
The turning point was in September 1720, when the shares began to fall. Once doubt set in, investors began to lose faith and sell the stock, causing prices to plummet. The British company’s stock ended up falling back to 124 pounds in a matter of days, accumulating a drop of more than 80% from its highest point.
The end of the bubble brought heavy losses with it and, along with them, outrage among the investing public. Because the collapse happened in the dawn of the English stock market—the creation of The Royal Exchange dates back to 1571, driven by Queen Elizabeth I—there were no explanations available for the level of speculation the bubble generated in the first place.
A significant number of people lost a lot of money, to the point that the suicide rate increased, according to reports of the era, and those affected reached the political sphere demanding explanations. Thus, Parliament launched an investigation that uncovered the company’s bad practices, turning into a financial and political scandal.
In response, lawmakers passed the Bubble Act of 1720, prohibiting the creation of joint-stock companies like The South Sea Company without special permission by royal charter.
Mind you, although the effect was highly publicized, it did not have a major impact on the general economy and did not generate a recession, unlike other famous bubbles in history.
The company, for its part, continued to trade until 1853, undergoing a restructuring in the interim.
Franklin Templeton, a global investment firm, has announced the successful closing of Franklin Templeton Structured Solutions 2026, L.P., its first Collateralized Fund Obligation (CFO), which raised $1.5 billion from investors around the world.
According to the company, the CFO is designed to provide investors with diversified and efficient exposure to Franklin Templeton’s flagship private markets strategies, spanning private equity secondaries and continuation vehicles managed by Lexington Partners, a pioneer in private equity secondaries and co-investments, as well as U.S. middle-market direct lending managed by Benefit Street Partners (BSP), Franklin Templeton’s alternative credit specialist, across multiple investment vintages and a broad range of underlying portfolio companies.
Growing appetite for diversification in private markets
“We are seeing growing demand from clients for access to differentiated private markets strategies through efficient and scalable structures,” said George Stephan, Global Chief Operating Officer, Wealth Management Private Markets at Franklin Templeton. “This inaugural CFO is a direct response to that demand, combining the specialized expertise of our private markets managers into an offering that reflects the full breadth of what Franklin Templeton can deliver.”
“This transaction demonstrates how structured solutions can bring together different private markets capabilities to address the evolving needs of institutional portfolios,” said Jake Williams, Co-Head, Private Markets Product at Franklin Templeton. “It draws on the breadth of Franklin Templeton’s private markets platform and our continued focus on developing innovative solutions that help clients achieve their outcomes.”
The successful close marks an important milestone for Franklin Templeton, establishing a new capital formation channel for its private markets platform and positioning the firm to capture growing demand for structured private markets solutions as adoption expands across a broader range of investors, including registered investment advisers (RIAs), family offices, insurance companies and wealth distributors.
Franklin Templeton has $295 billion in alternative assets under management as of July 31, 2026, and offers a diversified private markets platform that includes Lexington Partners, focused on private equity secondaries and co-investments; Clarion Partners, specializing in private real estate; Benefit Street Partners, a leader in private credit; and Franklin Ventures, hedged strategies and digital asset capabilities, providing investors with broad access across alternative asset classes.
Over the past decade, Europe appeared condemned to lower growth, less innovation, and more modest returns. However, this consensus is beginning to reverse. An improving economic cycle, increased spending on infrastructure and defense, a push toward reindustrialization, and the development of new technologies are putting Europe back on investors’ radars. Lazard, Edmond de Rothschild, MFS, Aberdeen, and Neuberger agree that the continent is reaching an inflection point, opening up investment opportunities in both equities and fixed income—though they warn that the potential lies not so much in overall indexes, but in the sectors and companies capable of benefiting from this new cycle.
This shift in perception is not driven solely by better economic performance. Underlying fundamental economic improvements are beginning to back the investment thesis. Benoit Anne, strategist at MFS Investment Management, highlights that Eurozone growth has positively surprised in recent weeks, with leading indicators pointing to a stronger-than-expected recovery. Specifically, he underscores that the Eurozone Citi Economic Surprise Index reached its highest level since early 2023—a sign that the European economy’s resilience is proving greater than anticipated by the market. In his view, this environment reinforces the appeal of both European equities and credit.
This macroeconomic improvement coincides with a structural shift that several asset managers view as a primary investment driver for the coming years. Edmond de Rothschild Asset Management contends that Europe is undergoing a “silent revolution” propelled by increased investment in infrastructure, defense, electrification, and artificial intelligence. Unlike other cycles, they explain, the potential is not limited to a handful of large-cap companies, but spans the entire industrial value chain, with small- and mid-cap companies playing a particularly prominent role.
Reindustrialization Shifts From Narrative to Opportunity
In this regard, Craig Wright, Head of European and Asia-Pacific Real Estate Investment Research at Aberdeen, points to the new global European policy, “Made in Europe.” Designed to raise manufacturing industry output to 20% of GDP by 2035, this initiative is driving a structural transformation that Wright believes will require massive investments in factories, logistics, pharmaceuticals, energy, and semiconductors.
According to the Aberdeen manager, certain figures are striking: reaching the target of industry representing 20% of European GDP by 2035 will require building roughly 20 million square meters of industrial and logistics space every year for a decade. Furthermore, defense spending alone could generate demand for an additional 37 million square meters, over and above e-commerce growth.
Capital Looks Toward European Fixed Income
Benoit Anne of MFS considers Euro high yield to currently be the most attractive asset class in global fixed income from a risk-adjusted carry perspective. Meanwhile, Paul Grainger, Managing Director and Senior Portfolio Manager for Fixed Income at Neuberger, offers a counterpoint: Europe remains more interest-rate sensitive, and growth still displays vulnerabilities. Yet, precisely for these reasons, he believes European fixed income is once again offering compelling opportunities.
“European real yields have also risen as the ECB raised rates and continued to guide or allow the market to price in further hikes; currently, the market is pricing in two additional hikes over the coming year, which would put official rates at 2.75%. The impact of AI spending appears smaller in Europe, but we must still account for positive correlations and links between major developed bond markets,” Grainger explained.
The Major Catalyst: Increased Public Spending
Rising expenditure on infrastructure and defense could become one of the primary drivers of European growth over the coming years, provided the geopolitical landscape does not significantly impair the economy. On this point, Ronald Temple, Chief Market Strategist at Lazard, explained that the war with Iran penalized Eurozone growth forecasts more than those of any other major developed economy this year.
“Even so, I maintain an optimistic outlook and believe the region’s GDP will accelerate heading into 2027, driven by higher infrastructure and defense spending. As long as the war continues, Eurozone inflation will remain exposed to energy price volatility. However, there are few signs of spillover from energy into the broader economy, giving me confidence that inflation will ease by 2027,” Temple emphasized.
Without a doubt, expert consensus presents Europe as a major investment opportunity ahead of the next economic cycle. While international geopolitical ambiguity means conditions could evolve rapidly, experts remain notably optimistic regarding the continent’s outlook.
Ricardo Sucre returns to Amerant, marking a new chapter in his career while reinforcing the firm’s international growth strategy. After 12 years at Mercantil Commercebank, nine at Morgan Stanley, and two at Bolton Global Capital, Sucre has stepped into the role of Head of International Wealth Management Sales at Amerant, aiming to drive business development, recruit financial advisors, and support the growth of international books of business.
In a dialogue with Funds Society, the executive outlines the advantages of a platform combining wealth management, banking, brokerage, advisory, and lending, while detailing Amerant’s growth objectives for the coming years. Venezuela once again holds a prominent position within the strategy, while Argentina, Colombia, and Central America stand out as priority markets. Amid growing demand for dollar-denominated assets and access to U.S. markets, Sucre highlights Amerant’s capacity to deliver a comprehensive service relationship to Latin American clients.
You return to Amerant following your initial time at Mercantil Commercebank and your tenure at Morgan Stanley and Bolton Global Capital. What prompted your decision to return?
I worked at Mercantil Commercebank for 12 years between 2002 and 2014, serving in Treasury, Private Banking, and Investments. It was an extraordinary training ground that gave me a solid foundation, enabling me to later explore opportunities at institutions like Morgan Stanley, where I spent nine years, and Bolton Global Capital over the past two years.
Both experiences contributed immensely to my professional development, but I felt a key element was missing: a corporate culture aligned with my principles and an organization close to my roots. Amerant represents precisely that combination. Furthermore, the ability to offer an integrated wealth management and banking platform serves as a unique differentiator in our industry, particularly for the international segment.
How has the institution evolved since your first tenure, both in terms of brand and strategy?
The institution has grown, matured, and significantly diversified its business lines and presence across various international markets. In the specific case of Amerant Investments, we have strengthened a strategic relationship with Pershing spanning over 20 years, allowing us to offer a robust and highly competitive platform. The range of products, services, and solutions available today competes with and even exceeds that of many participants within this market segment.
What does your role as Head of International Wealth Management Sales entail?
My role encompasses three main responsibilities: leading business development efforts and recruiting financial advisors for Amerant Investments’ international platform, highlighting the strengths of an integrated offering of investments and banking services; supporting our existing group of international advisors—seasoned professionals with established books—by helping them optimize their business growth through technology, solutions, and investment products; and managing my own client portfolio, built on long-term relationships over many years. My role retains an important production component that I look forward to continuing to build.
What are your concrete goals for the next 12 to 24 months?
Our goal is to achieve double-digit annual growth in assets under management. To accomplish this, onboarding top-tier advisors with transferable books of business and experience in the international segment will be essential.
Amerant emphasizes an integrated offering. How does that translate in practice for an international client?
In practice, it means a client can hold an investment account—whether brokerage or advisory—custodied at Pershing, alongside a bank account at Amerant Bank. The integration of both platforms provides access to a much broader suite of products and services. A clear example is the ability to secure a portfolio-backed line of credit issued directly by the Bank, combining investment and financing capabilities within a single relationship.
What financial advisor profile are you looking to recruit, and what does Amerant offer compared to independent models like Bolton?
We are seeking advisors with expertise in international business and transferable portfolios who value the benefits of an integrated banking and investment platform. Compared to other models, Amerant offers a unique mix of banking capabilities, investment solutions, specialized financing, and over four decades of experience serving international clients, creating additional opportunities for both advisors and their clients.
Venezuela and the U.S. have been normalizing relations, following the lifting of sanctions on Venezuelan public banking in April of this year. How does this process impact Amerant’s business, given its Venezuelan roots?
Venezuela is part of Amerant’s roots; it is a market we have never walked away from. On the contrary, activity has increased in recent years. Without a doubt, developments following January 3rd have generated renewed interest and expanded growth opportunities.
Do you expect a rebound in capital flows from Venezuela or the diaspora into the U.S.?
Amerant has managed the Venezuelan market for many years—I would venture to say since its founding over 40 years ago. In fact, Venezuela is a market that never stopped growing at Amerant, even during its most challenging periods. Today, since my return to the institution, I can state that Amerant possesses a platform, infrastructure, and team better prepared than ever to capitalize on emerging opportunities.
Beyond Venezuela, which other Latin American markets are priorities?
Argentina, Colombia, and several Central American countries represent priority markets for our international growth strategy. The geographic diversification we have driven over recent years has yielded excellent results, particularly on the Bank’s side.
How do you view international wealth management clients’ demand for dollar assets and U.S. banking in today’s geopolitical environment?
Year after year, we have observed growing demand from international clients to keep their savings, investments, and capital market access based in the United States. Beyond the stability of the dollar and the depth of U.S. financial markets, clients seek institutions that make them feel welcome, understand their specific needs, and deliver solutions tailored to their reality and cultural context.
More than half of surveyed insurers plan to increase their exposure to private credit over the next 12 to 24 months, outpacing investment-grade public fixed income, which was cited by 48% of participants. These findings from the 2026 Global Insurance Asset Survey by Mercer (a business of Marsh) confirm that insurer demand for private credit remains robust. Indeed, the 2026 results contrast significantly with the 2024 survey, when 37% and 32% of insurers planned to increase their allocations to fixed income and private credit, respectively.
However, the study reflects that while demand remains strong, insurers are becoming increasingly selective. Within private credit, allocation priorities are focused on direct lending, investment-grade private placements, investment-grade structured credit, asset-backed finance, net asset value (NAV) lending, and fund finance.
“Private credit represents an attractive opportunity for insurers, particularly in the asset-backed space. It allows for the diversification of corporate risk and access to higher yields compared to similarly rated public investment-grade bonds,” says David Morrow, Global Insurance Proposition Leader at Mercer.
The study indicates that appetite for private credit is particularly strong in North America. In the United States, 65% of respondents plan to increase their allocations, a figure that rises to 74% in Canada. In contrast, only half of European insurers plan to increase their exposure, dropping to 46% in the United Kingdom.
Interest is most pronounced among larger insurers: 81% of those managing over $25 billion plan to increase their exposure, compared to 46% of entities with assets below that threshold. By segment, life insurers show a higher propensity to invest in private credit than health and property and casualty (non-life) insurers.
Aligned with Private Credit Risks
Insurers are fully aware of the risks involved in private credit. According to the Mercer study, the primary concerns highlighted are the compression of the illiquidity premium and the narrowing of spreads, reflecting a desire to be adequately compensated for liquidity constraints. Other noted issues include the deterioration of underwriting standards and covenants, as well as an increase in defaults, spread widening, or payment-in-kind (PIK) structures—factors associated with borrower stress or a potential loosening of lending standards as the market matures.
“Capitalizing on the benefits of private credit requires insurers to conduct a rigorous manager selection process, choosing those with proven capabilities in origination, underwriting, portfolio construction, and special situations management to navigate the next phase of the credit cycle,” notes Amit Popat, Global Head of Financial Institutions at Mercer.
Capabilities Gap in Private Markets
The survey reveals a clear gap between insurers’ interest in private markets and their readiness to capitalize on opportunities. Only 30% state they possess “most” of the necessary capabilities to invest with confidence, while 29% acknowledge having only “some” of them.
This lack of resources limits insurers’ ability to allocate capital, achieve sufficient diversification in private markets, and maintain appropriate allocations with ongoing due diligence. Against this backdrop, investment partnerships are growing to secure required expertise in manager evaluation, cash flow modeling, capital treatment, liquidity management, and execution support.
“Even the largest insurers recognize they do not possess all origination capabilities or resources internally, leading them to seek specialized external managers in private credit to fill gaps and enhance risk-adjusted returns,” points out Josh Zwick, partner in the Insurance and Asset Management practice at Oliver Wyman. “Everyone wants to strengthen their capabilities, and that often means bringing in partners to navigate the complexity across the diverse segments of the private credit market,” he adds.
AI Still Plays a Limited Role in Insurer Investing
The capability gap is also mirrored in the adoption of artificial intelligence. More than half of insurers report not using AI in a significant manner. Fewer than a third employ it in data analytics and alternative investment research. The most immediate AI applications within investment teams are data integration, scenario generation, document review, manager monitoring, and risk analysis.
Finally, the study highlights that scale is a decisive factor: 75% of entities managing over $100 billion report significant AI use, compared to barely 10% of those managing under $1 billion.
94% of North American fund managers now hedge their forecastable currency risk, the highest level recorded by MillTech since tracking began in 2023 and up eight percentage points year-on-year according with a new report from advanced FX and cash management solutions provider, MillTech.
The increase in hedging comes as 97% of North American fund managers experienced losses from unhedged FX exposure amid geopolitical uncertainty in Q1 2026. Funds lost an average of approximately $731,000, while 12% reported losses between $1 million and $4.9 million. Of funds that don’t hedge, 69% are now considering doing so due to market conditions.
Reflecting this more cautious approach, hedge ratios rose from 45% in 2025 to 48% in 2026, while average hedge lengths increased from five months to around five and a half months as managers seek greater certainty amid ongoing policy and geopolitical risks. This shift towards greater protection is set to continue, with more than a third of funds planning to increase their hedge ratios, while 63% intend to extend their hedge lengths.
The impact of this uncertainty extends beyond FX management, with almost all respondents reporting they had delayed investment decisions due to US policy uncertainty and more than a third delaying them significantly.
The MillTech North America Fund Manager FX Report 2026 analyses the findings from a survey of 250 senior finance decision-makers at fund managers across the US and Canada. The report explores how firms are adapting FX strategies amid policy uncertainty, dollar volatility, shifting rate expectations and rapid technological change.
External factors
US tariffsand trade policy and Federal Reserve or Bank of Canada rate policy were each cited by 34% of respondents as the biggest external factor influencing their FX hedging strategy. Middle East geopolitical tensions followed closely at 31%, indicating that funds are managing several overlapping sources of risk rather than one dominant driver.
Among the small group of respondents that do not currently hedge, burdensome hedging infrastructure was the most common barrier, followed by a preference to deploy capital elsewhere and cost. Cost pressures are also rising across the wider market, with 96% saying their hedging costs had risen over the past year and 60% reporting increases of at least 50%. The average increase was 57%, while 11% said costs had more than doubled. In addition, 89% reported that their credit provider had increased interest rates or fees.
Other key findings
Dollar volatility boosts returns despite unhedged losses – While the majority reported losses from unhedged FX exposure, 94% said dollar volatility had a positive overall impact on their fund’s returns from an FX perspective.
Digital FX instruction takes the lead – In-house IT systems and online user interfaces have become the most common methods for instructing FX transactions. This marks a shift away from manual forms of instruction, with email use falling from 60% in 2025 to 36% in 2026 and phone use declining from 53% to 31%.
Visibility leads FX operational challenges – Getting comparative quotes, forecasting existing currency risk and fragmented service provision are the primary operational challenges, pointing to a broader need for clearer pricing, stronger exposure visibility and more connected FX workflows.
AI adoption becomes more measured – All fund managers surveyed are considering deploying automation and AI, but just 14% said they were already using AI, down from 42% in 2025. This may reflect a shift in how firms define and assess live AI integration, with 31% citing cyber and privacy concerns as the biggest barrier to scaling adoption.
Eric Huttman, CEO of MillTech, commented: “North American fund managers are being pulled in several directions at once. Trade tariffs, shifting central bank expectations and geopolitical tensions are making currency moves harder to predict and investment decisions harder to make. The fact that almost every respondent suffered losses from unhedged FX exposure helps explain why hedging participation and ratios are moving higher. However, rising currency risks mean firms shouldn’t simply hedge more, how they hedge is just as important. They should use technology to improve pricing transparency, gain clearer visibility of their exposures and reduce the operational friction involved in managing currency risk to protect returns.”
The U.S. financial advisory industry is facing a major generational shift. Approximately 35% of financial advisors, controlling 40% of industry assets, plan to retire over the next decade, with more than a quarter showing uncertainty regarding their succession plans within their firms. According to Cerulli Associates, this reality highlights the pressing need for wealth management firms to better attract and retain the next generation of talent.
Additionally, pressure is mounting on firms to establish comprehensive and effective training programs that equip junior advisors with the tools and skills required for long-term success. “Providing advisors with the resources and guidance needed to develop succession plans and transfer client portfolios to the next generation will be crucial for wealth management firms,” they note in one of their latest analyses.
However, many training managers have identified obstacles in selecting and developing junior profiles. According to Cerulli, 73% of these professionals point to the time required to learn the business as a major challenge, followed by 67% who state that daily instruction consumes too much time.
Cerulli recommends that firms adopt a longer-term approach when onboarding young, qualified talent. “Junior advisors integrated into broader advisor teams with long-term career development plans will be better positioned to create natural retirement and business succession pathways for senior advisors, who can monetize their practice while transitioning it to highly qualified financial advisors within their own firm,” states Olivia Morgan, analyst at Cerulli.
In the consulting firm’s experience, practices that adopt this approach and highlight it during recruitment processes will be far more likely to attract top-qualified candidates interested in wealth management—particularly those who prioritize a sustainable, long-term career path. “A long-term strategy functions as both a retention and recruitment tool, fostering a high-quality pipeline of new and existing advisors to seamlessly manage the transition stemming from industry retirements,” Morgan concludes.
