5 min read
Morningstar’s Q2 2024 US Asset Managers Industry Pulse Study
Revenue growth and profitability are recovering as AUM levels have improved, and this has been fully reflected in company share prices.
Key Takeaways
Outlook for Traditional Asset Managers
Expectations for moderating inflation and lower short-term rates have lifted US equity markets
![Line graph showing benchmark performance of stocks, bonds, and commodities from Q1 2020 to Q1 2024.](/content/cs-images/v3/assets/blt9415ea4cc4157833/blt3469b0fd537560c7/6660af28bad22fd6aba672cf/Benchmark_Performance_of_Major_Asset_Classes.png?format=webp&auto=webp&disable=upscale&width=null)
US stocks have risen 28% in the past six and a half months, lifting the AUM levels of most managers.
Fund flows, AUM growth, and share price performance track market returns
![Line graph showing AUM and market values versus key market and industry benchmarks from Q1 2020 to Q1 2024.](/content/cs-images/v3/assets/blt9415ea4cc4157833/blt6b0345d5e9ad360a/6660b958dbfae90ac70faccd/US_Asset_Manager_AUM_and_Market_Values.png?format=webp&auto=webp&disable=upscale&width=null)
Share prices tend to track the main equity market indexes more closely than changes in AUM.
Fee compression continues to be an issue
![Line graph showing quarterly annualized realization rates from Q1 2020 to Q1 2024.](/content/cs-images/v3/assets/blt9415ea4cc4157833/bltab3518a974c5485c/6660b96c451725a0ed7a6ed7/Quarterly_Annualized_Realization_Rates.png?format=webp&auto=webp&disable=upscale&width=null)
Both Invesco and Franklin Resources have seen their fees decline more than the group average and actively managed funds overall.
Outlook for Alternative Asset Managers
Mark-to-model valuations is helping smooth fund performance
![Bar graph showing cumulative return of alternative segments from Q1 2020 to Q1 2024.](/content/cs-images/v3/assets/blt9415ea4cc4157833/blt477e61ffb5767c4c/6660af26bad22f1d99a672cb/Return_of_Alternative_Segments.png?format=webp&auto=webp&disable=upscale&width=null)
Using mark-to-model valuations helps smooth returns for private-market segments during more volatile markets like we saw during 2022-23.
Private capital fundraising is already on pace to surpass 2023 levels
![Bar graph showing capital raised by the five largest alternative-asset managers and all others from 2020 to 2024.](/content/cs-images/v3/assets/blt9415ea4cc4157833/bltcc8b93fe93c4f7ec/6660af26a3c3fe20cb4d31c6/Capital_Raised_by_Largest_Alternative-Asset_Managers.png?format=webp&auto=webp&disable=upscale&width=null)
Private equity continues to lead fundraising efforts for alternative- asset managers.
Alternative-asset managers are sitting on significant amounts of dry powder
![Bar graph showing dry powder held by largest alternative-asset managers from 2020 to Q1 2024.](/content/cs-images/v3/assets/blt9415ea4cc4157833/blt77a156012b58c3aa/6660af2685966b050c718aac/Dry_Powder_Held_by_Largest_Alternative-Asset_Managers.png?format=webp&auto=webp&disable=upscale&width=null)
The five largest publicly traded alternative-asset managers have increased their share of both total capital invested and dry powder since the pandemic.