Growth Gap Between Traditional Asset Managers and Alternatives Firms Began to Narrow in Q3 2023: Casey Quirk

Private credit continues strong

NEW YORK and STAMFORD, Conn., Dec. 5, 2023 /PRNewswire/ -- According to new research from global asset management strategy consultant Casey Quirk, a Deloitte business, listed traditional and alternatives asset managers saw their growth trends converge in Q3 2023 after multiple quarters of alternatives managers substantially outshining their traditional counterparts. Among alternatives managers, those with more robust private credit platforms tended to perform better as compared to peers without them.

According to Casey Quirk's survey of 18 publicly traded asset managers with $18 trillion in assets under management, traditional asset managers saw 2% median revenue growth, suffered a -3% quarter-over-quarter decline in assets under management (AUM), and 4% median profit growth from Q2 2023 to Q3 2023. Meanwhile, median revenue growth at alternatives managers was flat while median AUM grew 1% median, and median profit growth was 1% from Q2 2023 to Q3 2023, a slowdown from stronger quarter-over-quarter growth numbers earlier in 2023.

"Alternatives managers have outperformed their more traditional counterparts in revenue growth and profitability since Q1 2021, but alternatives managers are now beginning to experience some of the same pain that their traditional counterparts have been feeling for some time now," said Amanda Nelson, principal at Casey Quirk. "Alternatives managers have described a significantly more challenging environment in 2023 than in previous years."

"Within the alternatives space, managers that saw the healthiest financial performance and fastest fundraising were those with strong private credit capabilities," Nelson added.

Overall, asset managers struggled this quarter even amid near-highs in the S&P 500 Index. From Q2 2023 to Q3 2023, the surveyed managers in total saw only 1% median revenue growth and their median AUM shrank by 3%. Year-over-year, however, asset managers saw a stronger 5% median revenue growth and 9% median AUM growth. Net new flows to asset management firms have remained flat at 0% both quarter-over-quarter and year-over-year. Overall 2023 figures may turn positive, according to Casey Quirk.

Asset managers saw expense growth closely tied to revenue expansion, with compensation and non-compensation expense growth increasing at a similar pace. Overall operating expenses grew 1% quarter-over-quarter and 5% year-over-year.

"The slowdown in the markets has created a difficult quarter for managers across asset classes, but the modest growth from the same quarter last year suggests a broad recovery from a challenging 2022," said Scott Gockowski, senior manager at Casey Quirk. "Still, net new flows were flat for most firms, and it's become clear that many investors may continue to hold cash on the sidelines until interest rates begin to taper and fears of a looming recession subside."

Casey Quirk, a business of Deloitte Consulting LLP, is a leading management consultancy that focuses solely on advising asset management firms. Casey Quirk was established in 2002 and acquired by Deloitte in 2016. The organization has advised a majority of the 50 largest asset management organizations worldwide, including eight of the top 10. Casey Quirk provides senior leadership teams with broad business strategy reviews; investment positioning and strategy consulting; market opportunity evaluations; organizational design; ownership and incentive structuring; and transaction due diligence. For more information, please visit www.caseyquirk.com.

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SOURCE Casey Quirk