The state of play in U.S. investment management 

Infrastructure investments are experiencing renewed interest from institutional investors and family offices. Digital infrastructure, in particular, has emerged as a bullish area, reflecting the ongoing digital transformation across industries and the growing need for data center capacity, telecommunications networks and related technological infrastructure. 

The infrastructure trend extends beyond digital assets to encompass traditional physical infrastructure projects. The combination of government policy support, aging infrastructure needs, and the search for inflation-protected returns has made infrastructure an attractive allocation for long-term institutional capital. 

After experiencing significant headwinds in recent years, private equity is showing signs of recovery in 2025. The improvement is largely attributed to a more supportive interest rate environment, with Federal Reserve rate cuts since September 2024 creating favorable conditions for leveraged buyouts and growth investments. The combination of lower interest rates, anticipated deregulation and resilient economic growth has created optimism among private equity investors. Both mergers and acquisitions (M&A) and initial public offerings (IPOs) are beginning to restart, providing much-needed exit opportunities that have been constrained up until this point. 

Private real estate is positioned for increased investment activity in late 2025, with major private equity firms preparing for emerging opportunities. Real estate debt has been highlighted as particularly attractive given the dislocation in traditional commercial real estate lending markets. Specialized alternative strategies are also gaining traction, including investments in royalties, intellectual property and sustainability-focused ventures. Venture capital funds have been particularly active in green mobility investments, accounting for ~40% of approximately $5.8 billion in net asset value (NAV) in this sector. 

The relationship between U.S. investment managers and SWFs has evolved beyond simple capital provision to strategic partnerships. These relationships often involve co-investment opportunities, shared expertise and long-term strategic alignment rather than traditional limited partner arrangements. The Middle East has been particularly active in this evolution, with SWFs and institutional investors in the region increasingly allocating capital to U.S.-managed private market strategies. This reflects both the region’s significant capital reserves and seemingly insatiable appetite for diversification into U.S. alternative investments. 

The pursuit of international capital occurs within a complex regulatory framework. The Committee on Foreign Investment in the United States (CFIUS) continues to review foreign investments for national security concerns, adding a layer of complexity to international fundraising efforts. The regulatory environment has become more complex with the Trump administration’s creation of a U.S. sovereign wealth fund, as directed by executive order on February 3, 2025. This development suggests the U.S. government’s recognition of SWFs’ growing importance in global capital markets. 

The staffing reductions have created an unsustainable ratio between regulatory responsibilities and available resources. The current workload translates to approximately 11.8 registered and reporting entities per SEC employee – a ratio that could continue to intensify while the agency faces requirements to reduce its workforce further. 

The resource constraints could lead to changes in regulatory approach across multiple functions. Enforcement activities may become more focused on post-incident investigations rather than routine oversight and prevention.  

A review by King & Spalding found that the SEC enforcement actions from February 1 to July 31, 2025 equated to a 47% decrease versus the same six-month period in 2024 and a 66% drop compared to that period in 2021. However, former Commissioners Daniel M. Gallagher and Elad L. Roisman have both made public comments aimed at alleviating concerns about the future of enforcement, with Roisman stating that “the death of enforcement is [] overplayed,” and Gallagher asserting that the idea that enforcement is going away is “crazy” as it is a “central function of the agency.”   

Regardless, overall impact suggests a move from proactive regulatory oversight to reactive enforcement, creating both opportunities and risks for investment advisers. Reduced rulemaking activity may ease restrictions in some areas, but, while enforcement remains a core function, less predictability in enforcement actions may create compliance challenges. 

Despite leadership changes, the established 2025 examination priorities remain in effect, providing continuity for firms subject to SEC examination authority. The Division of Examinations continues to focus on firm compliance with existing rules and regulations, emphasizing perennial and emerging risk areas. 

Current priorities include fiduciary standards, compliance programs, and private fund adviser oversight. The Division maintains focus on investment advisers’ adherence to fiduciary standards of conduct, cybersecurity preparedness, and artificial intelligence governance. Particular attention continues to be paid to advisers that have never been examined or have not been recently examined, with continued focus on newly registered advisers. 

While priority areas remain the same, the new administration signals significant changes in examination and enforcement philosophy. Novel case theories will require Commission approval before subpoena issuance rather than at investigation conclusions, which should help avoid regulatory overreach. The investigatory process is more likely to involve informal interviews rather than formal enforcement actions. Under Atkins’ leadership, the SEC is likely to adopt a more cautious approach to finalizing rules, particularly those related to digital assets, ESG disclosures, service provider requirements, and shareholder proposals. This represents a marked shift from the previous administration’s approach. 

Enforcement is expected to become more collaborative and less punitive. While examination procedures may remain similar, the threshold for enforcement actions and the issues that trigger formal investigations are likely to change significantly. 

Early market data suggests positive reception of these changes, with 2025 IPO projections already exceeding 150 transactions compared to 120 in 2024; a 25% increase that supporters attribute to anticipated deregulatory impact. 

The changing regulatory environment requires adaptive compliance strategies that account for both reduced SEC capacity and evolving enforcement priorities. Investment managers should focus on maintaining robust compliance programs while preparing for a more collaborative regulatory relationship. Firms should anticipate continued focus on fundamental fiduciary duties and compliance program effectiveness, but potentially with more emphasis on education and guidance rather than punitive enforcement. This environment may favor firms with strong internal controls and proactive compliance cultures. 

Reduced regulatory oversight does not diminish the importance of operational performance. If anything, the combination of larger fund sizes, international investors and complex strategies increases the premium on operational sophistication and risk management capabilities. Investment managers should invest in technology, personnel and processes that support scalable operations while maintaining the flexibility to adapt to evolving market conditions and regulatory requirements.