The large U.S. alternative asset managers enjoyed a strong first quarter, but trade policy uncertainty is weighing on the outlook for the year ahead, Moody’s Ratings reports.
The rating agency said that the four big U.S. alt managers — Apollo Global Management, Blackstone Group, Carlyle Group and KKR & Co. — reported strong aggregate earnings growth in the first quarter, amid positive trends in net inflows, capital deployment and investment exits.
In the first quarter, the firms’ aggregate fee-generating assets under management (AUM) was up 4% from the previous quarter, and up 11% on a year-over-year basis, Moody’s reported — with these gains driven by “good growth” in private credit investments. Blackstone saw growth in private equity, and KKR recorded growth in real assets.
Against the backdrop of rising AUM, fee-related earnings were also up 15.5% year-over-year, and aggregated earnings net of performance fees rose 12%.
However, Moody’s said that tariff-related policy uncertainty has “dampened the outlook,” for the firms, amid weaker growth expectations for both the U.S. and the global economy.
“We expect the pace of growth to slow in [the second quarter] given market uncertainties,” it said.
In particular, it expects the heightened uncertainty to continue to discourage mergers and acquisitions by disrupting the ability of companies to plan strategy and investment.
“While the management teams of all four companies noted on their earnings calls that tariffs will have limited direct impact on their earnings results, we believe the uncertainty around the constantly evolving U.S. trade policies will continue to constrain M&A deal activity,” it said.