Goldman Sachs Americas Asset Managers: Discount on Alts Not Warranted by Fundamentals
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Alternative asset manager equities have continued to underperform following earnings, declining an average of 9% quarter-to-date. The group now trades at a next-twelve-months price-to-earnings ratio of 21 times, falling below the three-year median of 25 times. Most stocks are trading at or below Liberation Day valuation multiples, with HLNE, OWL, and ARES exhibiting the most significant discounts. Despite prevailing market concerns regarding software exposure, volatility, and private credit, Goldman Sachs argues that actual operational data and the 2026 growth outlook do not justify such steep valuation discounts.
Fundraising reached near-record levels of $259 billion in the fourth quarter of 2025, bringing the full-year total to over $970 billion, a 20% year-on-year increase. Deployment activity also hit a record $181 billion, and realization pipelines are building momentum. Fee-paying assets under management grew 3% sequentially and 17% year-on-year, driving organic management fee growth of 15% in 2025. Management fee growth is projected to accelerate moderately in 2026.
The primary near-term risk identified is wealth direct lending, specifically non-traded business development companies, which experienced approximately 5% redemption rates recently. Nevertheless, the broader fundamental outlook remains robust. The group currently trades at 21.5 times implied 2027 fee-related earnings, representing a price-to-earnings-growth ratio of just 1.2 times. Based on twelve-month target prices, Goldman Sachs identifies the greatest upside potential in CG, KKR, TPG, HLNE, and STEP, all offering prospective returns exceeding 30%.