Management fee rates for publicly traded alternative investment firms are expected to fall as firms continue to diversify their business lines into lower-yielding credit and real estate funds, and permanent capital vehicles, rating agency Fitch Ratings reported Friday.
Management fees at publicly traded alternative investment firms rose 9.1% for the trailing 12 months ended Sept. 30, from the same period in 2017. Carlyle Group, KKR & Co., Apollo Global Management and Ares Management's management fees grew by double digits in the year ended Sept. 30 as robust fundraising outpaced exits, Fitch said.
Fundraising should remain strong in 2019 "as investors seeking higher yields in a low-interest-rate environment are broadly interested in the space," Fitch said. However, the amount of uninvested capital, or dry powder, is also rising because exits and investment opportunities are slowing due to higher valuations.