In Goldman Sachs’ 2025 Mid-Year Outlook, they are encouraging asset managers and investors to “Recalibrate their portfolios.”
The reasons for this “include the unfolding impacts of tariffs, US fiscal risks, unusual dollar dynamics, conflict escalation in the Middle East, and European fiscal initiatives. The rapid advance of artificial intelligence (AI) is adding another layer of disruption.”
“We believe this evolving landscape demands a halftime reset—not a retreat. In our view, it’s important to stay invested, stay active, and diversify portfolio exposures across regions, sectors, and factors.”
One way to recalibrate your portfolio is to get into trade finance. This is a diverse sector that includes any of the following financial assets:
- Supply Chain Finance
- Invoice Discounting
- Payables Finance
- Accounts Receivable
- Invoice Factoring
- Pre- and Post-Shipment Financing
- Distributor Financing
- Reverse Factoring
Any party can act as an originator for a distribution deal. However, in most cases, the originator is a financial provider, such as a bank, an asset management firm, or a corporate treasury.
Any party can also act as a buyer or intermediary, depending on the deal terms. That’s one of the things that makes trade finance distribution so attractive: the market’s fluidity.
Why Trade Finance is Attractive to Asset Managers
As we’ve covered in other articles, the trade finance market and subsequent distribution market are huge.
Trade finance is a fast-growing market. 80 to 90% of world trade relies on trade finance, which is currently worth $9.7 trillion, with a CAGR of 3.1%.
Trade finance distribution is the most effective way to monetize this multi-trillion-dollar market.
One growth area is supply trade finance. SCF grew at a CAGR of 26% from 2017 to 2023, despite rising global protectionism and tariffs.
SCF continues to grow at a rate of “7% annually, currently worth $2.34 trillion, with funds in use at $916 billion,” according to the latest BCR Publishing’s World Supply Chain Report 2024. (2023 figures).
Alongside high growth rates, trade finance is very low-risk. Making this a more attractive opportunity in turbulent times. In most cases, default rates are in the 0.25% to 0.5% range. *
Table 1: The default rates of trade finance distribution have always been low
Low-risk and very low default rates for accounts receivable (AR) and supply chain finance (SCF) (source)
Another reason for asset management firms getting into trade finance is the move towards Basel III adoption. Because banks will have more stringent capital requirements, asset management firms can step in and fill any opportunity gaps being left by banks.
Speaking at a TTP rooftop event in New York that we hosted, Paul H. Simpson, Vice Chairman at Broadridge, our closest strategic partner, said, “If you take asset managers or areas where operations and service are needed, LiquidX provides the workflow and the technology, and Broadridge can step in and help on that.”
How LiquidX Can Support Asset Managers Getting into Trade Finance
The asset management sector is one we’ve seen massive growth from in the last 4 years.
One of the reasons for this is that we can handle an entire, end-to-end trade finance program for asset management firms without the need for them to increase headcount.
Our software is also ideal for asset managers who want to monitor trade finance investments within their larger portfolio. This way, you can track invoices and data involved in funding this asset class and when to expect a return on the capital invested.
Here’s what you can benefit from when you partner with LiquidX:
- Trade finance software that can take in any invoice format (e.g., XLSX, PDF, etc.), and use that as workable data downstream across the trade lifecycle.
- Trade: Automatically digitizes assets in the front office.
- TradeHub: Manages portfolio risk with ease.
- TradeOps: Make significant back office savings; up to 50% savings compared to in-house back office software.
- InMatch: Can handle reconciliation challenges for asset managers.
- Includes the advantages of a deep partnership with Broadridge (NYSE: BR), a trusted global fintech leader. Broadridge is LiquidX’s largest committed investor and strategic operational services provider for payment processing, account reconciliation, and global operational scalability.
Everything we offer meets the needs of asset managers in the working capital monetization market. Our software handles tens of billions of dollars worth of transactions every year, and we’re working with some of the world’s largest asset management firms and banks.
Here’s another great reason to work with us! In 2024, Global Business & Finance Magazine awarded LiquidX with three awards for the second year in a row:
- Best Digital Solutions For Global Trade, United States 2025
- Best Technology Vendor Of The Year, United States 2025
- Best Fintech For Trade, United States 2025
Asset managers: Get a demo of our trade finance solutions. Find out why 100+ financial sector firms trust us to deliver multi-billion dollar trade finance programs.