Blue Owl Capital

Blue Owl exited June 2026 with $190.6 billion in fee-earning assets, up 1.2% sequentially and 7.4% year over year. Despite fundraising efforts being down, due to private credit market concerns, the firm still pulled in slightly more than we had forecast.

Why it matters: Blue Owl continues to generate positive flows, despite rising concerns about private credit, with its mix of alternative products benefiting from the ongoing demand for nontraditional investment products The firm picked up $7.6 billion from fundraising efforts during the second quarter, below its quarterly run rate of $9.2 billion over the previous eight quarters but still better than our expectations for $6 billion to $7 billion. While we still expect the negative perceptions attached to the private-credit market, and Blue Owl in particular, to continue to be a drag on fundraising and overall results, we have lessened the drag that we previously forecast on the company.

The bottom line: While increased uncertainty about the equity and credit markets tied to fiscal, tariff, and monetary policies, as well as economic growth, and increased concerns about the private credit market have pressured the businesses and share prices of most of the alternative asset managers, we envision more stable market conditions over time boosting Blue Owl's private market activities. Given our revised expectations for fundraising, deployments, realizations, and fee-earning assets under management, as well as the effects of the time value of money, since our last update, we've raised our fair value estimate for narrow-moat Blue Owl to $11 per share from $10. The company's shares are slightly undervalued right now relative to our fair value estimate.

For more insight into the trends and other issues affecting the alternative-asset managers, which influence our long-term forecasts for firms like Blue Owl, please see our latest Industry Pulse, "US Alternative-Asset Managers: 2026 Q2," which was published on June 30, 2026. 

We also have a broader industry primer available for all of the US-based asset managers in our annually updated Industry Landscape, "US Asset Managers," which was last published on Dec. 18, 2025. 

On top of that, our special report, "Financial Services Observer: US-Based Alternative Asset Manager Moats Remain Solid; Largest Firms Should Continue to Capture Bigger Share of Market," published on Dec. 2, 2025, provides deeper insight into the seven alternative asset managers we cover, including our take on Blue Owl.

We've raised our fair value estimate for Blue Owl Capital to $11 per share from $10 to reflect revised expectations and the effects of the time value of money since our last update. Our fair value estimate implies price/earnings multiple of 12.4 and 11.3 times our estimates for distributable earnings during 2026 and 2027, respectively. For some perspective, during the past five years, the company's shares have traded at an average of 22.8 times trailing earnings on an adjusted basis, with the highest (lowest) multiple during that period being 31.7 (10.2) times. We use a 21% US statutory corporate tax rate and an 11.5% (8.5%) cost of equity (WACC) in our valuation.

Consistent with other alternative-asset managers, we view fundraising, deployments, realizations, fee-earning AUM, base management fee levels, realized performance fees, and compensation costs as key drivers of our valuation. Total fundraising during 2025 was $42.0 billion, above full-year fundraising efforts of $27.5 billion in 2024. Inflows of $16.6 billion during the first half of 2026 set the firm up for $30 billion-$35 billion in fundraising this year. We expect the company to raise $30 billion-$40 billion in new capital annually during 2026-30, owing to fundraising headwinds we foresee for the alternative credit markets.

Blue Owl deployed $32.2 billion of capital during 2025, above full-year deployment efforts of $28.0 billion in 2024. First-half deployments of $10.7 billion in 2026 put the firm on pace to be well below last year's deployment levels. We expect Blue Owl to put $15 billion-$25 billion to work annually during 2026-30. As for realizations, the firm has not historically disclosed these details, but distributions have averaged $6.7 billion annually for the past five years and will likely average between $15 billion and $20 billion during 2026-30 (having been $16.7 billion in 2025).

Blue Owl ended July 2026 with $319.0 billion in total managed assets, with fee-related AUM increasing 7.4% year over year to $190.6 billion. Over the next four and a half years, we expect Blue Owl's fee-earning and total AUM to reach $281.7 billion and $479.2 billion, respectively. We expect to see modest levels of fee compression, with base management fee revenue increasing at a 7.5% CAGR during 2026-30, while realized performance and incentive fees will continue to be constrained, with total revenue expected to increase at a 6.2% rate annually on average.

Compensation costs have averaged 46.7% of revenue the past few years, and we see these expenses averaging 48%-50% of annual revenue during 2026-30. Distributable earnings (which removes the effects of unrealized activity) are likely to average $1.6 billion annually during our five-year forecast. Our current 2026 and 2027 EPS estimates of $0.88 and $0.89, respectively, are based on our expectations for aftertax realized income of $1.4 billion and $1.5 billion.

We project a bull-case fair value estimate of $17 per share and a bear-case valuation of $7 per share. Our upside case implies a P/E multiple of 15.4 and 13.9 times our 2026 and 2027 estimates for distributable earnings, respectively. This scenario assumes rising equity markets, solid capital-raising efforts, and improved realization levels, with the net result being a 13.2% (11.6%) CAGR for base management fees (total revenue) during 2026-30, with distributable earnings coming in 20%-25% higher than our base case.

Our downside scenario implies a P/E multiple of 10.6 and 9.5 times our 2026 and 2027 distributable earnings estimates, respectively. In this case, we assume weaker equity market returns, lower capital-raising activity, and lower realizations, with the net result being a 0.5% (negative 0.2%) CAGR for base management fees (total revenue) during our five-year forecast period, with distributable earnings coming in 20%-25% lower than in our base case.

Unlike more traditional asset managers like Invesco and T. Rowe Price, which focus on traditional asset classes like equity, fixed-income, balanced, and money market funds, alternative-asset managers like Blue Owl deal with less-liquid alternative investments like private equity, credit alternatives, real estate/real assets, and hedge funds. Even so, we think that the alternative-asset managers, much like the traditional asset managers, benefit from switching costs (the core moat source) and intangible assets, which include organizational attributes—such as product mix, distribution channel strength, and geographic reach—and true intangibles—like strong and respected brands and manager reputations.

We have assigned Blue Owl a narrow Morningstar Economic Moat Rating. We believe the company has built a solid position in the industry, using its reputation, broad product portfolio, investment performance track record, and cadre of dedicated professionals not only to raise massive amounts of capital but also to maintain its reputation as a go-to firm for institutional and high-net-worth investors looking for exposure to alternative assets. Blue Owl is the seventh-largest stand-alone alternative-asset manager in the world with $319.0 billion in total managed assets, including $190.6 billion in fee-earning AUM, at the end of June 2026.

While Blue Owl operates with scale in each of its segments—credit strategies ($158.1 billion in total AUM and $97.2 billion in fee-earning AUM), private equity ($71.5 billion/$41.4 billion), and real estate/real assets ($89.4 billion/$52.0 billion)—the firm would, in our view, benefit from further diversification away from its heavy concentration in alternative credit. The company currently derives 51% (58%) of its fee-earning AUM (base management fees) from credit strategies, 27% (17%) from real estate/real assets, and 22% (25%) from private equity. Of the $158.1 billion in total AUM that Blue Owl had in its global credit operations at the end of June 2026, close to three-quarters came from direct lending.

On a fee-earning AUM basis, the firm's exposure was slightly less, with direct lending (at 35% of firmwide fee-earning assets) accounting for the largest part of its credit offerings, with alternative credit (4%), investment-grade credit (9%), liquid credit (2%), and other credit funds (1%) accounting for the rest. Even so, we suspect that direct lending is a large contributor to base management fees, given the higher-coupon issuances in these funds are generating higher returns for the firm.

Much like its peers, Blue Owl has built out a large base of employees—including in-house executives, consultants, and advisors—with decades of industry experience that can successfully revitalize a company through cost-cutting, acquisitions, or other strategic maneuvers, increasing the chances of producing a successful private equity or real estate investment. These attributes provide Blue Owl with the ability to not only gather but retain assets in various market conditions, as well as a means of differentiating itself from peers.

While the barriers to entry are not particularly 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 even more time to build the scale necessary to be competitive (exemplified by the fact that BlackRock is the only legitimate traditional asset manager of size competing in the private markets, even though most of our traditional asset manager coverage has been focused on building out alternative asset offerings during much of the past decade).

On the switching cost front, alternative-asset managers like Blue Owl (unlike its traditional brethren) have not had to rely heavily on investor inaction to keep annual retention rates high, as the products they offer tend to have lockup periods, preventing investors from redeeming part or all of their investment for a prolonged period. These types of arrangements have allowed Blue Owl to post an annual retention rate of more than 90% on average over the past five years. That said, we expect competition for new investor capital—which has traditionally centered on manager reputation, fund size, and investment performance—to only increase, especially with more traditional asset managers like BlackRock increasing their exposure to alternatives and showing a willingness to be more flexible on fees.

During the past four calendar years, Blue Owl (which went public in May 2021) produced adjusted returns on invested capital that were 125 basis points below our estimated WACC for the company. Still, we expect the firm to expand its level of excess returns to something closer to 50 basis points over our cost of capital estimate during the next decade, owing to the level of interest that exists for alternative assets and the potential for the retail market to open up gradually to the alternative asset managers. We've also modeled Blue Owl to address their scale disadvantage by being more acquisitive during 2026-35. This should lead to adjusted returns on invested capital of 9.0% on average annually relative to our cost of capital estimate of 8.5% for the firm.

That said, we believe the negative perceptions attached to the private-credit market, and Blue Owl in particular, which had to admit to meaningful losses in its Blue Owl Capital Corp II private-credit fund last November when it tried to merge it with its larger publicly traded private-credit fund, Blue Owl Capital Corporation, and then blocked redemptions from the fund earlier this year, will be a drag on results in the near- to medium term. On top of that, we envision increased competition from peers (including more traditional managers like BlackRock) being more problematic for a firm of its size and scale, with limited diversification in its product portfolio.

Blue Owl Capital, with $190.6 billion in fee-earning AUM at the end of June 2026, has been a go-to firm for institutional and high-net-worth investors looking for exposure to alternative assets.

The company's increasing scale, diversified product offerings, long track record of investment performance, and strong client relationships have left it well positioned for a variety of market conditions.

Customer demand for alternative assets has increased, and Blue Owl could benefit from strengthening demand from high-net-worth individuals or successful expansion of retail products.

Problems with its Blue Owl Capital Corp II private-credit fund have weighed on the company's stock price and could limit its ability to raise capital in the future in this segment of the alternatives market.

Private equity and real estate/real assets are both highly cyclical and heavily reliant on market-timing and exits to generate incentive income.

A prolonged downturn in the credit and/or equity markets could leave potential investors in Blue Owl's funds with limited liquidity and large commitments to other funds, making it difficult for the firm to raise new capital.