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Top Q3 2025 Asset Management Trends & Market Analysis
Market uncertainty has increased the volatility of asset manager stocks.
As the financial landscape continues to evolve, so do the challenges and opportunities for asset managers.
Rising uncertainty about the markets tied to fiscal, tariff, and monetary policies—as well as economic growth—has whipsawed the equity and credit markets for much of the year. Most traditional asset managers continue to be hampered by outflows from actively managed funds—making them reliant on market gains to drive assets under management growth.
When you’re up-to-date on the key asset management industry trends, it can help you stand out in a competitive market and show your value. Our latest Q3 2025 Asset Manager Pulse report explores the traditional and alternative asset management spaces, market conditions, top industry picks, and more.
US Equity Markets Continue to Outperform Other Categories
Secular headwinds persist, while cyclical headwinds wax and wane.
The US equity markets have waxed and waned with the expected direction and magnitude of changes in short-term interest rates since the start of 2022, and we’re far from the end of that cycle.
The timing and magnitude of future rate cuts will affect the markets, with our current forecast implying a federal-funds range of 2.25%-2.50% by the end of 2027, relative to 4.25%-4.50% in May 2025. That said, the Fed will continue to focus on inflation, which could spike in the next year if policies like tariffs, deportations, and cuts to government programs drive prices higher.
Fee Pressures Could Become a Long-Term Issue
While the traditional asset managers we cover have not seen management fees decline as much as the rest of the industry the past decade, average asset-weighted expense ratios for the industry have started to decline at a slower rate than they had been. Meanwhile, fees for our coverage have started to come down at a higher rate than past periods.
Having been historically priced below average industry rates for active funds, there had been less pressure on firms in our coverage to lower their fees—but that looks to have shifted. Vanguard’s decision earlier this year to cut fees on around a fourth of its mutual funds and exchange-traded funds only adds to their woes.
Fee pressures have become elevated in our coverage and are expected to be a long-term issue for the group.
Our latest report on European asset management trends also finds traditional asset managers struggle against margin compression in the EU, while private market asset managers have benefited from high investor demand in private equity.
Alternative Fund Returns Have Been More Muted the Past Couple of Years
Market uncertainty has stalled alternative-asset manager business recovery.
Most alternative fund performance took off because of a combination of strong equity market returns and a more favorable fundraising, deployment, and realization cycle.
While fund returns pulled back during 2022-23, it was with a lag owing to the use of mark-to-model valuations by alternative asset managers, which can help smooth returns for private market segments during more volatile markets. Coming into 2025, we had envisioned more positive results than were seen during 2023-24, but the uncertainties created by tariff and fiscal policies are likely to keep returns more muted.
US stock performance has largely rivaled private equity performance the past five years, but other alternative categories continue to outperform.
Private Credit Fundraising Has Been Larger Focus for Alternative Managers
Although private equity is the largest alternative-asset category and leads fundraising efforts in terms of capital raised at the strategy level, it has been less of a priority for the seven firms we track. Most of these firms have focused more on private credit fundraising instead, with the group overall accounting for 90% of total capital raised in the segment during the past five years.
The private equity segment is expected to this year with $6.9 trillion in fee-earning AUM and $2.5 trillion in dry powder. The next largest segment, real estate/real assets, should close out the year with $2.37 trillion in fee-earning AUM and $920 billion in dry powder.
Meanwhile, private credit should have $1.4 trillion in fee-earning AUM and $600 billion in dry powder at the end of 2025.
Chart shows private credit capital raised, in US billions from Q1 2020 to Q2 2025.
More-Stable Fees and Better Growth Rates
Fundraising gains and increased deployments gradually lifted results during 2024. We expect more headwinds in 2025 as increased uncertainty tied to fiscal, tariff, and monetary policies, as well as economic growth, limit deployments.
Management fee rates have been stable for most alternative managers, despite mixed fund returns and weaker organic growth over the past few years. Much of this is due to the long-dated nature of most products and the absence of fee competition.
Go Deeper With More Asset Management Industry Insights
In a constantly changing asset management industry, it’s important for asset managers to stay ahead of the game and make strategic decisions. Gaining insights into shifting market dynamics, strategies for addressing fee pressures, and analysis of the top opportunities and risks facing asset managers today can put you ahead of the curve. To gain a more comprehensive understanding of the forces shaping the market, download the full Q3 2025 Asset Manager Pulse.
