Top trends in asset management earnings calls for the first quarter of 2024

Key Trends and Headwinds Shaping the Asset Management Landscape

Asset managers are facing a competitive fundraising environment, shifting retirement income needs, continued private credit demand, and economic headwinds that are shaping the landscape for the industry. According to Bloomberg transcripts from first-quarter earnings calls in early May, several key trends and challenges have emerged.

One major trend is the democratization of alternative investments, with multi-billion-dollar asset managers launching innovative new products to attract capital from non-traditional sources. These products cater to retail investors and include strategies such as retail private equity funds and tokenized funds. By expanding their addressable market to individual investors, asset managers are seeing significant growth potential in the alternatives space.

Another key trend is the impact of longer lifespans on retirement planning. Retirement services are expected to drive growth in the asset management sector as the need for guaranteed retirement income and lifetime income rises globally. Asset managers are launching personalized retirement solutions and lifetime income products to tap into this growing market opportunity.

Private credit demand also continues to be strong, with investor appetite increasing for both non-investment-grade and investment-grade strategies. The current macroeconomic environment of higher rates is driving demand for opportunistic credit as high-quality assets seek liquidity solutions. Larger asset managers are leveraging their existing relationships to meet borrower needs and are seeing significant inflows and deployments in corporate, insurance, and real estate debt businesses.

However, there are also headwinds facing asset managers, such as the reopening of the IPO markets being a crucial catalyst needed to reignite realization activity within private equity. Factors like rate uncertainty and bid-ask spreads on asset values are cited as challenges for asset managers moving forward. A gradual recovery of the IPO market is expected, with executives noting that realizations will be market dependent in the coming year.

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