The Clouds Parted Over Publicly Traded Traditional Managers — At Least for One Quarter

The corporate performance gap between alternative investment managers and traditional managers didn’t widen this spring, according to Casey Quirk.


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Publicly traded traditional asset managers finally have some things to celebrate.

Active management is making a comeback (57 percent of actively managed mutual funds and ETFs beat their benchmarks over the past 12 months through June) and the companies themselves are performing better, according to a survey by strategy consultant Casey Quirk of 17 publicly traded asset managers with $19 trillion in assets under management.

“It does look like, at least in Q2, things are looking up,” said Amanda Nelson, principal at Casey Quirk, which is owned by Deloitte.

Traditional asset managers had a brutal 2022. Volatile publicly traded equity and debt markets caused their assets under management to decline 17 percent and median revenue to fall 9 percent, pushing profits down 17 percent. Meanwhile, large publicly traded private equity firms and other alternative asset managers saw median AUM growth of 11 percent and median revenue growth of 20 percent. Profits rose 27 percent.

The good news for traditional managers is that the corporate performance gap between them and the alternatives firms isn’t widening in 2023. At traditional managers, median revenue grew 3 percent and median profit grew 12 percent in the second quarter compared to the first.

So far in 2023, alternatives firms are continuing their streak. Their median revenue grew 7 percent and median profit was up 10 percent.


Rising interest rates and volatility have been tailwinds for alternatives firms and headwinds for traditional managers. The alts firms aren’t necessarily doing a better job selling their products. Despite the positive asset and revenue growth, net flows in the second quarter were flat at 0 percent for the median firm in Casey Quirk’s sample. Most of the publicly traded firms had flows with a range of only positive or negative 2 percent, Nelson said.

“Organic growth is the factor that is most correlated with a higher multiple. So it definitely is the one that I think matters the most. I think the interesting thing is that, over the last few years, we’ve seen that organic growth actually is pretty low. It hovered around 1 percent, or relatively flat, suggesting that most of the industry is actually having a hard time generating that organic growth,” Nelson said.

Even during periods when the market was stronger, a lot of firms grew because of capital markets growth, not because they were convincing more investors to choose them, Nelson explained.

“That is certainly one of the challenges that firms are facing now. Without capital markets buoying asset growth the same way they were over the last 10 years, pre-2022, how do you find different areas to go after that will drive growth?” she said.

Firms are considering expanding into new asset classes, new product types, new channels and through mergers and acquisitions. A small uptick in deals can be attributed largely to traditional asset managers acquiring alternatives firms to diversify their revenue and benefit from the growth of other asset classes, according to Casey Quirk.

Public equity markets have also continued to climb throughout the year, helping boost the traditional managers, while many alternatives are having a harder time raising capital.

The bifurcation between the traditional and alternative firms is still stark but “you’re starting to see a more similar experience between those two cohorts,” Nelson said.