3 Asset Manager Stocks That Stand Out

Key Takeaways

• Increased uncertainty over economic growth and fiscal, tariff, and monetary policies has made asset manager stocks more volatile.
• Pressure on fees for active strategies from passive strategies and growing demand for alternative strategies have defined winners and losers here.
• BlackRock, KKR, and Blackstone have outperformed the market over the past decade.

It’s been a white-knuckle ride for asset manager stocks. Major long-term secular trends, such as declining fees, the explosion of passive investing, and the growth of alternative strategies, have collided with bouts of intense volatility like those seen this past year. Some asset manager stocks have been struggling for years. Franklin Resources BEN has posted an 11% cumulative loss over the past decade, while Invesco IVZ has lost 14.1% over the same period.

But there have also been big winners among businesses that are well-suited to long-term changes in investor preferences. Three such stocks are BlackRock BLK, Backstone BX, and KKR KKR. BlackRock returned 327% over the past 10 years, Blackstone returned 591%, and KKR returned 635%. These US asset managers were the only three of the 12 tracked by Morningstar analysts that managed to beat the 246% return by the Morningstar US Market Index over the same period.

Still, even with the long-term tailwind helping the winners, this year has been a particularly wild ride for asset manager stocks after a strong performance in 2024. By the time US stocks hit bottom on April 8 after President Donald Trump’s major tariff announcement, the stock prices of eight of the 12 asset managers covered by Morningstar had lost more than 20% since the start of 2025. KKR was the hardest hit, dropping 36% over that time.

But since then, asset manager stocks have roared back as the broader market has rebounded, leaving all but two of the 12 firms with better one-year returns than the 21.8% rise achieved by the Morningstar US Market Index. “Market uncertainty has increased the volatility of asset manager stocks,” explains Greggory Warren, senior stock analyst for Morningstar. This time of unprecedented policy uncertainty for global markets and the asset management industry is “the new normal,” he adds. “There is little that asset managers can do to adapt to market volatility. It is what it is.”

Active vs. Passive

The volatility roiling the markets is especially difficult because its effect on the bottom line of most asset managers has been heightened by the rise of index funds. Asset managers’ main source of revenue comes from the fees they earn on the value of their clients’ investments. Fees are usually assessed as a percentage of a firm’s assets under management, leaving a company with three ways to grow its revenue: raising fees, attracting new investors, and expanding the value of its managed assets in rising markets.

Over much of the past decade, traditional asset managers have had to increasingly rely on rising markets to boost their AUM because investors have not only been pulling their money from actively managed mutual funds, especially stock funds, for years but have committed more and more capital to low-cost index funds and ETFs when investing.

“Active equity funds remain in outflow mode, regardless of whether US equity markets are up or down,” says Warren. “Investors are continuing to allocate capital to passive equity index funds and ETFs at the expense of active equity funds, making them a core part of their portfolios.” This has put downward pressure on fees as investors have left active funds for comparably dirt-cheap index funds. Warren says the reason for the move is simple: Active stock funds continue to underperform their index fund counterparts, and investors are content to get market exposure at much lower prices.

According to the 2024 Active-Passive Barometer Report, over the past five years, the majority of actively managed US stock funds across all nine Morningstar style boxes have underperformed comparable passively invested index funds. An even larger proportion underperforms when taking a 10-year view.

Fees

The pressure on fees isn’t exclusive to active funds; index funds and ETFs have seen plenty over the years. According to Warren’s 2024 report on the competitive advantages of the nine traditional asset managers he covers (most of which are heavily tied to traditional stock and bond funds), the asset-weighted average fee among all active funds has fallen from about 0.80% as of the beginning of 2014 to below 0.60% at the start of 2024. Much of this was driven by firms needing to right-size their fees to stay competitive and placate the gatekeepers of retail-advised platforms.

The average expense ratio for index funds also fell from over 0.2% to close to 0.1% over the same period, but this was far more the result of the major players in the industry—BlackRock, Vanguard, and Fidelity—taking advantage of the increased scale of their index funds and ETFs to drive prices lower, cutting out many of the smaller managers without sacrificing too much profitability.

A host of fee cuts from Vanguard earlier in 2025 (on both active and passive funds) makes it unlikely that fee competition will peter out anytime soon. Additionally, the continuous move to cheaper index funds for market exposure and falling fees for both active and passive funds represents an ongoing headwind for the industry.

Alternative Asset Managers

One bright spot for US-based asset managers is alternative assets, also referred to as private capital. Alternative asset managers, who manage private equity, private credit, and other assets outside of stocks and bonds, have managed to dodge the worst of these industry headwinds, and they’ve also had some unique tailwinds. “Fee compression has yet to be an issue for alternative-asset managers,” Warren says. He says that much of this is because alternatives are relatively illiquid, meaning it’s hard for investors to sell and find a different investment. There’s also an “absence of fee competition.”

Increased market volatility—like we’ve seen this year and during 2022-23, when the Fed was raising short-term rates—hasn’t left the alternative asset industry unscathed, though. “While fundraising picked up for non-credit-related alternative segments in the fourth quarter of 2024 and first quarter of this year, firms have struggled to deploy this capital, especially as tariff- and policy-driven headwinds have increased market uncertainty,” writes Warren. “We expect much of this excess capital to be deployed as the year progresses, but we still envision the industry with more dry powder at the end of 2025 than at the end of last year, with the biggest providers of alternative investments holding a larger share.”

That said, these funds are significantly less pressured by rising index funds and falling fees than most traditional managers. They’ve also benefited from having products that are in higher demand, much like index funds and ETFs are relative to active funds.

Three Standouts

While volatility clouds the picture for asset managers in the near term, over the long run, things have been much clearer. Just three stocks in the sector have beaten the market over the past decade: index fund titan BlackRock and alternative asset managers Blackstone and KKR.

Each has avoided the downdraft associated with declining fees. BlackRock has benefited from the shift to passive products, while Blackstone and KKR have not had to deal with those headaches, benefitting from increased demand for alternative products from their core institutional clients and the retail-advised channel.

The Stocks to Watch

BlackRock

While the growth in passively managed funds has undercut more active ones, it’s been a boon to BlackRock, which has returned 34.8% in the past year, the fourth-highest return of the 12 US-based asset manager stocks covered by Morningstar. According to BlackRock’s most recent earnings release, more than two-thirds of its $12.5 trillion in managed assets at the end of March 2025, and nearly half its annual revenue, came from passive products sourced through its ETF platform and institutional index fund offerings, offering it a consistent tailwind from the move to index funds.

“Over the next five years, we expect an expanding ETF market, improved active fund operations, growth of its multi-asset and alternatives platforms, and ongoing technology efforts to drive growth,” says Warren. The company also has one of the largest active asset-management businesses in the United States, accounting for 25% of the firm’s AUM and 44% of base fee revenue.

Warren says that since BlackRock shares’ dismal performance in 2022, when both stock and bond markets collapsed, the company has benefited from the rally in the equity markets, with total AUM levels recovering to pre-2022 levels well ahead of its peers. He also believes the firm should navigate current market uncertainties better than its peers, given its heavier focus on passive products and its growing alternative asset platform. It is also the only one of the nine traditional US-based asset managers that Morningstar covers with a wide economic moat.

Blackstone

“Blackstone remains our top pick among the alternative asset managers we cover, despite all firms in the space benefiting from the tailwind provided by heightened demand for alternative products,” says Warren. The stock is up 32.1% in the past year, roughly in the middle of the pack for asset managers. “We consider Blackstone to be the preeminent alternative-asset manager, with $1.167 trillion in total managed assets, including $860 billion in fee-earning AUM, at the end of March 2025.”

While BlackRock has benefited from ongoing demand for low-cost passive products, with its index fund-heavy slate of products holding its own, Blackstone and other alternative managers have benefited from largely avoiding the trends afflicting traditional asset managers. Another factor helping Blackstone is that it is broadly diversified across its business segments. Private equity accounts for 26% of fee-earning AUM and 32% of base management fees, while real estate accounts for 34% and 37%, credit and insurance 32% and 24%, and multi-asset investing 8% and 7%.

With customer demand for alternatives expected to stay elevated and investors in alternative assets looking to limit the number of providers they use, Warren says large-scale players like Blackstone are well-positioned to gather and retain assets.

KKR

KKR has also benefited from the tailwinds enjoyed by the alternative asset management industry. The stock is up by 30.9% over the past year, also around the middle of the pack for US-based asset managers covered by Morningstar. “KKR has built a solid position in the alternative-asset management industry, using its reputation, broad product portfolio, investment performance track record, and a cadre of dedicated professionals to not only raise capital but to maintain its reputation as one of the go-to firms for institutional and high-net-worth investors looking for exposure to alternative assets,” explains Warren.

KKR’s size, with $664 billion in assets under management as of March 2025, also helps, putting it behind Blackstone but still among the largest names in the industry. This has helped it outperform the only other US-based alternative asset manager covered by Morningstar, Carlyle Group. Warren says Carlyle is “smaller than it needs to be to be competitive with the bigger names” in alternative asset management, and that it “will likely continue to trail these firms.”

Warren continues: “The biggest alternative-asset managers have been generating a bigger share of annual fundraising, especially in private credit. We expect this trend to continue as investors have gravitated more to firms with greater levels of AUM and larger fund offerings.”