As 2025 dawns, investors and fund managers face an unprecedented wave of regulatory change. Dubbed the “Year of Regulatory Shift,” this period demands more than passive awareness. Firms must adopt strategic adaptation and continuous improvement to safeguard their most critical assets: core holdings. Recognizing potential pitfalls and seizing compliance as a competitive advantage can transform risk into resilience.

2025: A New Regulatory Landscape

The new executive order issued in January 2025 halted pending federal rulemakings and paused recently published rules for comprehensive review. Agencies across the board—SEC, FTC, HHS, and financial regulators—are reevaluating decades-old guidelines and developing fresh standards in technology, data governance, and investor protection.

This suspension is more than bureaucratic housekeeping. It signals a shift toward heightened regulatory complexity and uncertainty, requiring proactive scanning of proposed rules rather than reactive compliance once they arrive.

Identifying the Most Impactful Regulatory Developments

Understanding which rules will move from proposal to enforcement is critical. Key areas of focus in 2025 include:

• SEC and Investment Management: Renewed emphasis on fiduciary duty and investor protection, scrutiny of fund fees, marketing disclosures, and consistency between stated strategies and actual portfolio allocations.
• Healthcare M&A: Expanded Hart-Scott-Rodino disclosures covering ten-year acquisition history, labor market overlap, and detailed financial metrics, significantly raising compliance burdens.
• Financial Sector Oversight: Basel III implementation remains in force, with non-compliance fines averaging $14.82 million per incident. Anti-money laundering and cybersecurity are under intensified review.

Knowing which rulemaking dockets to follow and which comment periods to leverage can prevent surprise enforcement actions.

Understanding Core Holdings and Their Vulnerabilities

Core holdings—industry-leading, stable companies that form the bedrock of a portfolio—are inherently vulnerable to regulatory shocks. Their sheer size and prominence make them immediate targets for enforcement actions and public scrutiny.

For example, a healthcare giant within a core portfolio might face unexpected delays in mergers due to new antitrust thresholds, or a banking leader could incur penalty fees for audit lapses under evolving Basel standards. Such events can reverberate across a fund, imposing volatility and eroding investor confidence.

Defining core holdings with clear criteria—such as market cap, revenue stability, and sector leadership—allows managers to prioritize monitoring efforts where they matter most.

Crafting a Proactive Compliance Framework

Building a compliance engine that anticipates change rather than reacts to it demands a structured approach. Key steps include:

• Regulatory Risk Assessment: Identify applicable laws, assess portfolio exposure by sector, and map upcoming rulemakings with deadlines and comment opportunities.
• Internal Policies and Training: Develop clear guidelines aligned with new regulations and conduct frequent staff training to embed a comprehensive compliance monitoring and auditing mindset.
• Access Controls and Audits: Implement strict access certification for sensitive data and schedule internal audits to detect potential gaps before regulators do.
• Reporting and Documentation: Maintain centralized evidence of policy updates, training logs, and audit results to support swift responses during examinations.

Assign dedicated compliance officers and cross-functional teams to ensure accountability as the regulatory environment evolves.

Benchmarking and Quantitative Insights

Quantitative benchmarks help firms measure their compliance health and justify resource allocation. The cost of non-compliance has risen sharply over the past decade:

Firms that underinvest in compliance face direct financial losses and indirect reputational damage. Conversely, those that embed robust monitoring systems often avoid penalties altogether, preserving capital for strategic growth.

Strategies for Long-Term Resilience

Regulatory scanning should be an ongoing discipline, not a periodic checklist. Leading organizations:

• Leverage technology platforms that aggregate rulemaking updates and automate alert distributions.
• Foster a culture where employees view compliance as a value driver, not a bureaucratic hurdle, by celebrating wins and sharing lessons learned.
• Engage with industry groups and regulators during comment periods to influence outcomes that directly affect foundational core holdings in portfolios.

By making compliance a touchstone of corporate governance, firms can respond swiftly to new mandates and position themselves as trusted custodians of investor capital.

Turning Regulatory Change into Opportunity

While regulatory shifts can unsettle portfolios, they also offer openings to differentiate performance. Managers who act early can:

- Rebalance toward sectors with clearer compliance trajectories. - Leverage improved disclosure standards to deepen investor trust. - Streamline operations by retiring outdated processes exposed by new rules.

Adopting proactive risk management and investing in adaptive infrastructure not only protects core holdings but creates a sustainable edge in a crowded market.

Conclusion: Embrace Vigilance and Adaptation

In the ever-evolving regulatory landscape of 2025, staying ahead requires vigilance, strategic foresight, and a relentless commitment to compliance excellence. By monitoring key developments, reinforcing internal controls, and embedding a culture of continuous improvement, firms can transform regulatory challenges into catalysts for growth.

Your core holdings are the pillars of long-term value. Strengthen those pillars through disciplined oversight and see regulatory change not as an obstacle but as an opportunity to demonstrate resilience and leadership.