Managers of alternative investment strategies experienced the highest growth in assets under management in the year ended June 30 among 25 publicly held money managers, Pensions & Investments' analysis of second-quarter earnings reports showed.
In what analysts and money management CEOs called a tough quarter, private equity and private credit managers also dominated AUM growth in the quarter.
KKR & Co. LP's assets increased 28.8% for the 12 months, to $191 billion, and was up 8.5% for the quarter. It attributed the year-over-year growth to $40 billion of new capital raised.
In rank order by AUM growth for the year ended June 30, KKR was followed by The Carlyle Group, up 23.5% to $210 billion; J. The Blackstone Group LP, 18% to $439 billion; Ares Management LP, up 16.7% to $121 billion; and Apollo Global Management LLC, rising 16.2% to $269.5 billion.
Carlyle Group said in its earnings statement that its private equity AUM of $81.2 billion as of June 30 was a new peak for the firm, an increase of 49.5% from the end of the second quarter 2017.
The second quarter of 2018 was "a challenging quarter for the industry," one in which many publicly held asset managers experienced weak inflows and "fee rates that missed expectations," said Michael J. Cyprys, executive director and a research analyst specializing in coverage of brokers and asset management in New York-based Morgan Stanley's institutional securities division.
Morgan Stanley has "a positive view on alternative investment managers," however, because these firms are in a "better position relative to traditional managers to benefit from secular trends" among asset owners to increase private market investment and consolidate investments with fewer managers, Mr. Cyprys said.
Higher performance fees typical of private equity and credit strategies also benefit alternative managers, putting them on an "upward trajectory" compared to traditional managers, he added.