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Alternative Market Briefing

Alternative asset managers face valuation headwinds, but investor demand remains elevated

Wednesday, September 24, 2025

Bailey McCann, Opalesque New York:

Share prices for alternative asset managers have faced volatility this year as a result of economic uncertainty, according to new data from Morningstar. Due to stalled recovery in the first half of the year, share prices for most alternative-asset managers have been pushed closer to Morningstar's fair value estimates.

Morningstar says investor demand for alternatives remains elevated, largely as a result of market volatility. However, investors have been slow to fully invest in alternative asset managers. Share prices for US-based alternative- asset managers retreated during the first half of the year, declining 8% on average. This pushed the value of these firms from modestly overvalued territory at the end of 2024 to a slight discount at the end of March 2025 and then fairly valued at the end of the second quarter.

Institutional investors are still working through persistent denominator effect issues in their portfolios which is holding back some investment. Others have opted to maintain larger cash positions rather than investing in specific managers or strategies as a response to ongoing volatility.

For capital flows that are making it to firms, the largest alternative-asset managers have been garnering larger amounts of industry fundraising. Morningstar expects this trend to continue as investors continue to gravitate more to firms with strong brands, better performance, higher levels of AUM, and larger funds. Since the ......................

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