Continued global economic recovery is expected to bolster the asset and wealth management industry in 2015. While certain macroeconomic developments such as European sovereign debt issues, emerging market volatility, and the changing regulatory environment will continue to challenge the industry, our 2015 outlook is positive. We anticipate inflation in developed economies will remain low, U.S. interest rates will increase moderately, and expansionary monetary policies will fuel equity markets. In our view, these factors will favor large managers able to exploit scale and efficiency to provide clients with sophisticated investment solutions.
Deutsche AWM’s 2015 strategic directives, supported by solid achievements in 2014, position us well to benefit from industry trends. Building on the progress made in 2014 in implementing core transformation projects, performance is projected to further improve this year driven by both efficiency gains and revenue enhancement. In 2014, Deutsche AWM recorded an income before income taxes of € 1 billion. In 2015, the division expects to show significant improvement against 2014 performance and to achieve our target of growth of income before income taxes to € 1.7 billion by year-end. We will strive to maintain the momentum of this growth by delivering high quality services to our clients and sustainable platform efficiencies.
Our geographic footprint strategy is to continue enhancing capabilities in select markets to further growth, particularly by leveraging Deutsche Bank Group’s global reach. In particular, we remain focused on benefiting from emerging market growth, where wealth creation is rapidly increasing the demand for asset and wealth management services. Our focused strategy also entails selective business portfolio optimization in 2015.
In line with our goal of increasing the number of ultra-high-net-worth (UHNW) relationships by 50 % between 2012 and 2015, we will continue to expand our UHNW business globally over the coming year. This is an especially attractive opportunity, as UHNW is growing faster than other wealth segments. Our global coverage model and integrated client service teams are crucial for continued success serving these sophisticated clients. The Key Client Partners (KCP) desks, which provide access to cross asset class, cross-border investment opportunities and financing solutions, will further benefit our most sophisticated UHNW client relationships in 2015.
In 2015, we expect a further shift in investment preferences, with flows favoring alternatives (hedge funds, private equity, real estate, and commodities) for their consistent, risk-adjusted returns and passive products (ETFs) for their relatively low fees. As a result, we anticipate asset inflows in alternatives and passive products to outpace other asset classes in 2015. Another key trend we expect to continue, specifically in developed markets, is the increase in demand for retirement products, driven by demographic trends, and for outcome-oriented solutions.
The conversion in the passive business to physical replication exchange-traded funds (ETFs) will be completed in 2015 and solidify Deutsche AWM’s position as one of Europe’s largest direct replication ETF providers. We expect that these existing products and new launches in 2015 to be a growth driver of our assets under management. The success of the new physical ETFs offering will depend in part on sustained client demand for physical passive investments.
Increasing our collaboration with other divisions across Deutsche Bank Group remains a priority in 2015. We view these relationships as a significant opportunity; ongoing collaborations include PBC distributing DWS funds in Germany and CB&S assisting wealthy clients with their corporate financing requirements. Furthermore, we will continue to leverage the strengths of our active investment platform (i.e. in fixed income and dividend equity funds) to provide clients with attractive services.
In 2015, technology and operations improvements initiated in 2014 will be fully implemented, equipping Deutsche AWM with a state-of-the-art IT infrastructure to serve its wealth and asset management clients. For example, the successful roll out of our wealth platform will be used in 2015 to bring significant improvements in terms of efficiency and functionality. Modest incremental investment will be made for targeted platform improvements in 2015 as well. Overall, a broad set of initiatives comprise our strategy for geographic and operational footprint optimization. Financial performance in 2015 for Deutsche AWM will rely on successful delivery of these projects. Growing assets under management and improving return on new assets will also be critical to achieving our goals. To realize these targets, we will continue to leverage our integrated coverage model and expand our product offering.