Affiliated Managers

Affiliated Managers Group ended June 2026 with a record $942.4 billion in long-term assets under management, or AUM, and reported a 29.9% year-over-year increase in second-quarter revenue, with adjusted EBITDA margins increasing 480 basis points to 49.3%.

Why it matters: Poor equity fund performance, greater competition from private capital funds, and higher operating costs all weighed on AMG's ability to generate positive flows during 2019-24, but things have really improved this past year. Second-quarter net inflows of $12.9 billion marked the fifth straight quarter of positive flows for the firm after several years of dismal levels of outflows. AMG's annualized organic AUM growth rate of 5.9% during the June quarter was better than the negative 1.9% average annual rate the firm generated during 2021-25, and the positive 4.5% rate generated on an annualized basis in the second quarter of 2025. Flows remained in negative territory, though, for the firm's equity platform ($14.5 billion in outflows), while outflows from AMG's multi-asset segment ($1.5 billion) also offset the gains coming from the firm's private markets ($7.8 billion in inflows) and liquid alternatives ($21.1 billion) units.

The bottom line: With the firm ending June 2026 with $942.4 billion in AUM, up 6.8% sequentially and 22.2% year over year, managed assets are 15.8% above their level at the end of 2021 (before the Fed began raising rates to combat inflation). We are encouraged by the continued improvement in flows on the private capital side of the business, even though they are still being offset by traditional equity outflows. We expect to raise our $330 per share fair value estimate for no-moat-rated AMG by around 5% after incorporating the company's second-quarter results into our valuation model. Our expectation is that flows will likely continue to be positive and that more and more of the firm's annual EBITDA will come from its higher-margin alternatives business.

That said, there has been some consternation of late about AMG's reliance on tax-alpha/tax-aware strategies through its AQR affiliate, which has helped fuel the ramp-up in inflows we've seen in AMG's private markets business over the past few years. The US Treasury Department is taking a closer look at funds that allow wealthy investors to reduce or defer substantial tax liabilities. 

Up until this quarter, we did not have a good sense of how much of AQR's AUM was tied directly to tax-alpha/tax-aware strategies, noting that the firm has a multitude of long-only (strategies: styles, enhanced, adaptive, relaxed constraint, 3-alpha, portable alpha, multi-asset, and commodities) and alternative (strategies: long/short equity, equity market neutral, global macro, trend-following, merger arbitrage, convertible arbitrage, event driven, ESG solutions, and diversified) strategies along with its tax-alpha/tax-aware platform. 

AQR also provides investment solutions to clients via SMAs, private funds, CITs, open-end mutual funds, and UCITS. Based on what we could see in Morningstar Direct (which captures a lot of retail information but falls short with institutional and private wealth data), roughly 15% of AQR's managed assets are in open-end funds, another 11% are in SMAs, and 7% are in CITs—none of which are tied to tax-alpha/tax-aware strategies. 

So, taking those figures into account, that would eliminate about a third of AQR's AUM and drop AMG's exposure to around 15% of its AUM—assuming the rest of AQR's AUM comes from tax-alpha/tax-aware strategies, which we believe is unlikely. So, even if we were to assume that these strategies account for half of AQR's AUM, we're talking about maybe 10% of AMG's AUM being exposed (and a slightly higher amount of revenue share—as these types of strategies are likely to have higher fees than long-only funds, being more comparable with their alternative offerings). 

With AMG's affiliates in revenue-sharing agreements with the holding company, we came into the quarter assuming that 10%-15% of AMG's earnings might be reliant on tax-alpha/tax-aware strategies. Management clarified this for us during the call, though, noting that just 10% of the company's earnings are currently tied to its tax-alpha/tax-aware platform. 

AQR recently stated that the Treasury Department remains in an information-gathering stage, with no immediate plan for guidance, adding that its strategies are designed to comply with applicable rules and regulations. So, what happens from here is anybody’s guess. The worst-case scenario would be that the Feds ban all of these strategies and make the firms running them unwind their existing funds/accounts. We feel that this is highly unlikely.

The best-case scenario is that nothing is done. Again, highly unlikely. While increased regulation is never seen as a good thing, if the Feds do establish proper parameters for these types of funds/accounts, and AMG/AQR are operating within the lines, then there might be some added cost to maintain regulatory compliance, but no big decline in AUM in the near to medium term. 

With second-quarter average AUM up 25.0% year over year to $920.9 billion, AMG reported a 29.9% increase in revenue to $641 million, as the ongoing mix shift to private markets has lifted the firm's realization rate and lifted the contribution from performance fee income to top-line growth. 

As for profitability, AMG's second-quarter adjusted GAAP operating margins of 30.4% were up 710 basis points from 23.3% in the year-ago period, with compensation, selling, general and administrative, and other costs accounting for a smaller percentage of revenue in the June quarter when compared with the year-ago period. 

Adjusted EBITDA margins (based on AMG's calculations) increased 480 basis points to 49.3% from 44.5% in the year-ago period. Total reported adjusted EBITDA of $316 million for the second quarter was well above the midpoint of management's projected range of $290 million to $305 million for the period. 

Management also expected second-quarter economic earnings per share to be between $7.60 and $8.01, assuming an adjusted weighted average share count of 26.7 million for the quarter. AMG reported second-quarter economic earnings per share of $8.29, well above the FactSet consensus estimate of $7.90 per share and our own internal estimate of $8.00. 

For more insight into the trends and other issues affecting the traditional and alternative asset managers, which influence our long-term forecasts for firms like AMG, please see our latest Industry Pulses, "US Traditional Asset Managers: 2026 Q2," which was published on June 24, 2026, and "US Alternative-Asset Managers: 2026 Q2," which was published on June 30, 2026. We also have a broader industry primer available for the US-based asset managers in our annually updated Industry Landscape, "US Asset Managers," which was last published on Dec. 18, 2025.

We've increased our fair value estimate for Affiliated Managers Group to $360 per share from $330 to account for revised near-term expectations for AUM, revenue, and profitability since our last update. Our new fair value estimate implies a price/earnings multiple of 9.7 times our 2026 adjusted earnings estimate and 8.4 times our 2027 estimate. For some perspective, the company's shares have traded at an average of 9.0 (9.2) times trailing earnings on an adjusted basis during the past five (10) years, with the highest (lowest) multiple during the past decade being 14.9 (4.2) times. We use a 21% US statutory corporate tax rate and a 10.1% (8.6%) cost of equity (weighted average cost of capital) in our valuation.

AMG exited June 2026 with $942.4 billion in managed assets, up 22.2% year over year. Second-quarter net inflows of $12.9 billion marked the fifth straight quarter of positive flows for the firm after several years of dismal inflows, with AMG's annualized organic AUM growth rate of 5.9% in the June quarter far better than the negative 1.9% average annual rate the firm generated during 2021-25. Flows did, however, remain in negative territory for the firm's equity platform ($14.5 billion in outflows), as inflows into private markets ($7.8 billion) and liquid alternatives ($21.1 billion) lifted second-quarter results. AMG also reported outflows (of $1.5 billion) from its multi-asset funds.

AMG has struggled for years to overcome perennial outflows from its long-only equity operations, with flows into its private markets and liquid alternatives offerings, and has finally made the shift this past year as alternative inflows have picked up while equity outflows have diminished. We expect this trend to continue somewhat in the near term, allowing AMG to maintain positive flows. That said, we also see the possibility that more volatile equity and credit markets could increase outflows from the firm's equity operations in the near- to medium-term.

Our current forecast has AMG generating average annual organic AUM growth in a range of negative 1% to positive 4% (negative 2% to positive 2% when including realizations) during 2026-30, with managed assets overall increasing at a mid-single-digit rate on average annually. Our current forecast projects net revenue to grow at a 5.9% CAGR during 2026-30. As for operating profitability, we envision adjusted EBITDA margins in the range of 43% to 49% during 2026-30 (compared with an average of 46.8% during 2021-25 and 51.9% in 2025).

We project a bull-case fair value estimate of $558 per share and a bear-case valuation of $216 per share. The key factors affecting our scenario analysis include the extent and duration of the investment outperformance by AMG's affiliates, the ability of its global distribution platform to generate positive flows, and the size and number of deals the firm does going forward.

Our upside scenario implies a P/E multiple of 12.0 and 10.4 times our 2026 and 2027 adjusted earnings estimates, respectively. In this scenario, revenue grows faster than in our base case, as both organic and acquisition-related growth are driven by stronger markets and greater demand for the strategies offered by AMG's affiliates. The net result is a 12.7% CAGR for revenue during 2026-30. We also assume that adjusted EBITDA margins push past 50% of revenue during our forecast period.

Our downside case implies P/E multiples of 7.8 and 6.7 for 2026 and 2027, respectively. In this scenario, revenue grows at a much slower rate than in our base case, as both organic and acquisition-related growth are stymied by much weaker markets and heavier competition for assets than we are forecasting in our base case. The net result is a negative 0.1% CAGR for revenue during 2026-30. This scenario also assumes adjusted EBITDA margins drop down closer to 40% of revenue.

We believe the asset management business can be conducive to establishing economic moats, with switching costs and intangible assets being the most durable sources of competitive advantage. Although the switching costs might not be explicitly high, inertia, the uncertainty of achieving better results by moving from one manager to another, and the potential tax consequences of selling a fund with significant gains tend to keep investors in place.

For the industry overall, the average narrow retention rate, which does not include exchange redemptions, has been 75% or higher annually during much of the past three decades. Including exchange redemptions, the rate has been just over 70%. Firms offering niche products with significantly higher switching costs—like retirement accounts, funds with lockup periods, and tax-managed strategies—have tended to hold on to assets longer.

In AMG's case, the firm's average annual retention rate was 81% (81%) during 2021-25 (2016-25), well above the industry average. That said, during the same time frame(s), the company's organic growth rate averaged a negative 3.2% (negative 3.4%) with a standard deviation of 3.5% (3.9%), which meant the firm was struggling to consistently compensate for investor redemptions and realizations with new flows into its products.

With the company likely to do a slightly better job over the next five years, we believe AMG has (at best) an average switching cost profile when compared with the industry and our peer coverage group, mainly as it has not taken full advantage of its above-average retention rate for its long-term funds.

We believe that the traditional asset managers can improve on the switching cost advantage inherent in their business with organizational attributes (such as product mix, distribution channel, and geographic reach) and intangible assets (such as strong and respected brands and manager reputations from a record of generating above-average investment performance relative to peers).

While the barriers to entry are not significant for the industry, the barriers to success are extremely high, as it takes time and skill to put together a long enough record of investment performance to start gathering assets and build the scale necessary to be competitive. This has meant the larger, more established asset managers in the industry have tended to have an advantage over smaller players, especially when it comes to gaining cost-effective access to distribution platforms.

That said, we do not think the cost advantage moat source applies to the traditional asset managers—except in the case of index fund and ETF providers—as scale does not always confer better-than-average operating profitability, and the industry tends to behave as an oligopoly when it comes to pricing.

Competition for investor capital can be stiff and has traditionally centered on investment performance. Although institutional investors and retail gatekeepers are exerting pressure on pricing, competition based on price has been rare, aside from what we've seen in the US market for exchange-traded funds. While compensation remains the single-largest expense for most traditional asset managers, supplier power has been manageable as many firms have reduced their reliance on star managers and have tied manager and analyst pay to both portfolio and overall firm performance.

Asset managers that have demonstrated an ability to gather and retain investor assets during different market cycles have tended to produce more stable levels of profitability, with returns exceeding their cost of capital for longer periods. While the more broadly diversified asset managers are structurally set up to hold on to assets regardless of market conditions, firms with solid product sets across asset classes (built on repeatable investment processes), reasonable fees, and singular corporate cultures dedicated to a common purpose have done a better job of gathering and retaining assets.

Affiliated Managers Group, in our view, does not have an economic moat. Unlike most traditional asset managers, AMG does not involve itself directly in the management of investments. Instead, it acquires equity stakes in successful boutique asset managers, receiving a fixed percentage of revenue in return. These affiliates continue to operate independently, with AMG providing strategic, operational, marketing, and distribution support. Essentially, AMG has little control over its affiliates, including their investment strategies and performance.

The arrangement also leaves most of the benefits that typically come with running an asset-management business to accrue to the managers that AMG buys, with the company not even generating the typical cost synergies created by most mergers and acquisitions (since it purchases equity stakes as opposed to entire operations). That said, we think the firm's proficiency at investing in and maintaining relationships with well-respected boutique asset managers has provided AMG with at least one unique competitive advantage.

Having initiated its strategy of buying equity stakes in boutique asset managers in the early 1990s, AMG has been working with and adjusting its business model for nearly 30 years. In that time, the firm has built out a target investment universe that includes around 2,000 investment management firms (each with more than $5 billion in AUM), including a select grouping of 100 core prospects, creating a pipeline of potential investments where AMG is generally viewed as the "buyer of choice" by the owners of these boutique asset managers.

AMG's affiliate model provides it with a diverse product mix offering exposure to value and growth equity strategies, emerging-market equities, fixed-income, and alternatives.

Performance has improved for AMG's liquid alternatives (40% of EBITDA), with 92%, 91%, and 93% of assets beating benchmarks on a 3-, 5-, and 10-year basis, respectively, at the end of March 2026.

AMG's private markets performance (20% of EBITDA) has hung in there despite the market volatility, with an IRR of 65% for its latest vintage and 75% for its last three vintages at the end of the June quarter.

AMG's more traditional equity performance (35% of EBITDA) has stumbled, with just 43%, 45%, and 62% of assets beating their benchmarks on a 3-, 5-, and 10-year basis, respectively, at the end of the second quarter of 2026.

AMG's strategy is heavily reliant upon organic growth from its existing cadre of affiliates as well as successful new investments in boutique asset managers.

As AMG increases in size, it will need to make larger investments (or increase the number of deals it does) to move the needle, increasing the risks associated with its strategy.