Goldman Sachs raises alternative asset manager stock outlook on fee growth

Investing.com - Goldman Sachs said alternative asset manager stocks remain attractive heading into the second half of the year despite year-to-date declines, citing stabilized earnings and compelling valuations.

The sector rallied 19% on average quarter-to-date but remains down 17% year-to-date, Goldman Sachs said in a note. Earnings revisions stabilized following second-quarter results, with 2026 and 2027 fee-related earnings revisions up 3% on average. The firm said next-12-month price-to-distributable-earnings multiples net of stock-based compensation average 19 times, a 16% discount to five-year averages.

Goldman Sachs pointed to record second-quarter fundraising with broadening capital inflows beyond credit, re-acceleration in wealth flows, and mostly robust investment performance. The firm said the sector benefits from increasing exposure to artificial intelligence financing, which could boost management fees and capital markets revenue.

The firm expects management fees to accelerate to about 15% on average across the group from 2026 to 2028, with NYSE:TPG, NASDAQ:STEP and NYSE:ARES expected to deliver the fastest growth at 18% to 20%. Goldman Sachs said management fee growth trajectory will become a more critical factor for relative performance within the group.

Goldman Sachs sees the most share price upside over the next 12 months at NYSE:TPG on its conviction list, NASDAQ:STEP, NYSE:CG, NYSE:HLNE and NYSE:KKR. The firm said deal activity levels are starting to recover and it sees meaningful potential for performance-related earnings acceleration into 2027.

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