#New York #Deloitte #Asset Management #Casey Quirk

Shifting Strategies in Asset Management for 2024

The landscape of asset management is experiencing notable shifts, evidenced by the latest findings from Casey Quirk, a leading global asset management strategy consultant that recently released their research for year-end 2024 results. The report details how publicly traded asset managers are increasingly collaborating with private market firms to navigate economic challenges and enhance their asset management strategies.

Key Findings

The data reveals that publicly listed asset managers have engaged in a series of acquisitions and partnerships specifically aimed at expanding their capabilities in private markets. This move is largely in response to the need to defend fee structures and grow assets under management (AUM). Casey Quirk surveyed 21 independent asset management firms, overseeing a substantial $24 trillion in AUM, and highlighted crucial trends that emerged during the year.

• - Revenue Performance: Despite the asset managers experiencing a noticeable increase in revenue growth from Q4 2023 to Q4 2024, this uptick was primarily derived from market capital appreciation rather than genuine organic asset inflows. Reports indicate that the median organic growth for these managers was only 0.1% over the year, exhibiting a reliance on external market factors rather than internal growth strategies.

• - Fee Growth: The research highlighted a 9% median growth in management fee revenue, with alternative managers significantly outperforming their traditional counterparts. Alternative managers saw their Fee-Related Earnings (FRE) increase by a remarkable 19% in contrast to the 9% growth in revenues experienced by traditional managers.

• - Assets Under Management: While AUM rose by 12% for the median firm, it markedly lagged behind the broader S&P 500, which enjoyed a growth of 25%, and a balanced portfolio of 60% stocks and 40% bonds that rose by 16%. Illustrating the pressure on traditional managers was their barely positive organic growth of just 0.1%, underlining the importance of market appreciation for their revenue.

Expanding Platforms and Costs

2024 witnessed many asset management firms undertaking significant expansions into their platforms. Mergers and acquisitions slowed to a flat trend compared to the previous two years, even though firms were actively extending their capabilities within private markets, stressing the ongoing struggle to secure permanent, long-term capital.

Additionally, operational expenses rose by an average of 7% across median firms, with non-compensation expenses overtaking the growth of compensation costs. This development suggested a gradual alignment in spending trends, indicating a potential stabilization could occur after the peaks observed in 2022 and 2023.