Publicly-traded asset managers of private markets funds — both private equity and private credit — are bringing in more money than last year—and more money than other asset management firms that are publicly traded, according to new research from global asset management strategy consultant Casey Quirk, a Deloitte business.
“It’s not a new phenomenon for a small set of firms to capture a majority of the flows, but this disparity highlights which categories of firms are thriving in the current environment — most notably, private markets managers,” said Tyler Cloherty, managing director at Casey Quirk. He predicted that as private markets continue to show the strongest growth in revenues, traditional asset managers “will likely intensify their ambitions to expand into the private space.”
Overall, publicly-listed asset managers experienced strong growth from the second quarter of 2023 to the second quarter of 2024, according to Casey Quirk’s survey of 18 publicly traded asset managers with $21 trillion in assets under management. Asset managers’ revenues grew 6 percent during that time period. Their operating expenses grew 6 percent, but compensation only rose 1 percent.
“Managers across the industry have continued to see consistent growth, with revenue increases over the past year arriving at all-time highs,” said Amanda Nelson, principal at Casey Quirk. “With broad financial stability came the opportunity for expansion and development, as we saw an increased pace in non-compensation spending among asset managers, in part reflecting increased acquisition activity and a growing investment in technology, driven in part by AI interest.”
Revenues grew as much as 11 percent for the top quartile of these firms, with the winners in private markets, followed by equity managers and then index providers. Some firms in the bottom quartile, however, showed declines in revenues by as much as 1 percent, according to Casey Quirk. It also found that operating expense growth ranged from a negative 5 percent for the bottom tier to as much as a positive 9 percent for the top firms.
Profits expanded for all but three firms over the past year, and by the second quarter of this year, these asset managers had a median 36 percent profit margin.
That positive trend has occurred despite a slight slowdown in the second quarter of this year, when compared with the first quarter. Revenues grew only 2 percent for these publicly-listed firms during the second quarter while their operating expenses grew 2 percent. Their margins improved only 0.5 percent during the time period.
“Listed firms’ expansion slowed slightly this quarter, likely due to volatility in the markets,” Nelson explained. “Although the longer-term growth story remains positive, we expect a plateauing market environment to begin to weigh on overall revenues as we approach the end of the year.”
