Nick Zylkowski is Managing Director and Co-Head of Customized Portfolio Solutions at Russell Investments.
What were the key theme(s) for your business in 2025?
In 2025, we saw a continued shift toward deeper strategic partnerships as asset owners and asset managers sought scalable implementation tools that could also help navigate complexity. Demand grew across trading, overlays, and completion portfolios as clients focused on de-risking, liquidity access, and more precise risk management solutions. Broad beta allocations do not suffice, investors are needed to look much deeper at risks in their total portfolio like concentration risk, factors and liquidity profiles.
At the same time, product innovation accelerated, with wealth and asset managers seeking greater customization and cost efficiency for their end clients. Wealth Managers have increasingly leaned on our white-label and outsourced implementation capabilities to modernize their platforms – this included launching numerous funds that are proprietary strategies to our clients, and helping implement product restructures through our transition management desk. Stepping back, 2025 was defined by stronger reliance on expanding implementation solutions and more collaborative, long-term partnerships.
What are your expectations for 2026?
In 2026, we expect restructuring activity to remain high as regulatory change and retail-product consolidation drive large implementation events. Investors will likely depend even more on overlay and completion strategies to mitigate concentrated equity risks, while maintaining liquidity across their total portfolio. With private-markets distributions still subdued, liquidity management and efficient rebalancing will remain top priorities. Technology will continue pushing customization further down-market, expanding demand for SMAs and Tax Managed solutions.
Another area we have renewed focus on is supporting the non-profit sector. We’ve been growing our presence with the Health Care and Endowment & Foundation clients. These are the types of investors that value the ability to flex between derivatives and securities to manage exposures in their total portfolio, and with distributions from their private market investments lower than prior years, they are needing to ensure they have well thought out liquidity strategies that span their total portfolio.
What trends are emerging that people may not yet be focused on?
Several trends rooted in the wealth ecosystem are beginning to reshape institutional investing. Model-based implementation has long been standard in wealth and is now giving institutions new avenues for efficiency and customization.
We’re working with institutional investors who’ve transitioned from a traditional model-investing across multiple commingled vehicles or supporting multiple separate accounts for each manager—to centralized implementation in a single account. This shift is giving these investors increased transparency into their portfolio, more control to implement screens and tilts, and often we’re seeing meaningful decreases in overall fees and costs. It’s a trend that’s beginning to take hold, and we expect adoption to continue accelerating.
Which industry trends are now fading?
The extreme concentration of returns in U.S. mega-caps has begun to plateau in late 2025, and a broadening out of fundamentals would suggest the pace of U.S. market and USD outperformance should ease. Tariff-related policy uncertainty has also subsided.
How have client pain points evolved over the past year?
For financial institutions, competitive pressures are driving more customization, innovation and cost efficiency. Many are adopting model implementation and reconsidering overlay techniques to deliver more flexible, scalable multi-manager solutions.
For asset owners, a stronger funded status has shifted the focus toward protecting gains while staying invested in active strategies. This has increased demand for diversification, portfolio protection, and precision risk management, making overlay and completion portfolios central to managing total-portfolio risk.
