Alternative Asset Managers Outshine Traditional Counterparts, Per Casey Quirk Survey

According to new research from global asset management strategy consultant Casey Quirk, a Deloitte business, alternatives asset managers had “strong median revenue and profit growth from the second quarter of 2022 to the second quarter of 2023,” while their traditional asset management counterparts saw negative numbers over the same time period.

The survey of 17 publicly traded asset managers with a combined $19 trillion in assets under management, revealed that alternatives asset managers had 14% median revenue growth and 17% median profit growth year-over-year from Q2 2022 to Q2 2023. Meanwhile traditional firms were in the red. They shrank 3% for median revenue growth and 21% for median profit growth over the same period.

Overall, Casey Quirk says firms are still recovering from a challenging 2022. Second quarter 2023 results are lower versus Q2 2022 as public asset managers saw significant declines in the final two quarters of 2022. Median revenue growth was 0% and profit growth was down 15% over the previous year.

“We continue to see a strong divergence in the profitability and revenue growth of alternatives firms versus their more traditional counterparts,” said Amanda Nelson, principal at Casey Quirk. “This is a trend we’ve seen developing over the last several years and it’s not letting up. In fact, it’s contributing to the uptick in M&A activity we’re witnessing with traditional firms buying private equity or private debt shops, lifting out teams, or seeking partnerships, for instance.”

However, the survey shows quarterly results were “robust” versus Q1 given strong capital markets. Alternatives firms had 7% median revenue growth and 10% median profit growth versus traditional firms at 3% revenue growth and 12% profit growth. But despite positive asset and revenue growth, net flows were flat at 0% for the median firm in Casey Quirk’s sample. Cost growth across the industry slowed to 2% quarter-over-quarter, with compensation growth flat. However, year-over-year cost growth increased to 8% with compensation growth at 11%.

“The second quarter of this year was definitely stronger for asset managers than the first, largely due to capital markets increases,” said Scott Gockowski, senior manager at Casey Quirk. “But cost growth, including compensation, continues to tick up as managers increase human capital and technology spending. Managing these cost increases wisely will be a key strategy for managers that want to be most successful.”

Casey Quirk, a business of Deloitte Consulting LLP, is a management consultancy that focuses solely on advising asset management firms. Casey Quirk was established in 2002 and acquired by Deloitte in 2016.

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