In an environment of slower economic growth and elevated uncertainty, traditional fund managers are weathering the storm, according to Fitch Ratings.
In a new report, the rating agency said the credit strength of traditional investment managers is proving resilient despite turbulent economic and financial market conditions, driven by intensified geopolitical risks and “steep increases” in global tariffs.
The fund managers’ credit profiles “benefit from generally low leverage, sound profit margins, limited credit risk exposure and mostly resilient assets under management,” it said, noting that they have adapted their businesses to face ongoing pressure on industry margins.
Looking ahead, Fitch said it expects increased merger and acquisition activity and other joint ventures in the sector as fund managers “look to scale up established strategies and broaden franchises into new strategic growth areas.”
For the industry overall, assets under management and fee revenues remain under pressure “due to fierce competition and changing business mixes, but Fitch expects fee-earning EBITDA margins to remain sound due to flexible cost bases,” it said.
“Net new money flows and investment valuations are likely to remain under pressure into 2026, although [fund managers] catering to high-net-worth individuals have generally had more resilient net inflows than those focused on mass retail clients,” it noted.