Credit Fuels Surge in Inflows, Deployment at Top Four Alts Managers
The four leading alternative asset managers—Apollo, Blackstone, Carlyle, and KKR—experienced a notable increase in inflows and deployment activity in 2024, propelled primarily by their credit strategies, according to a Moody’s Ratings survey of their fourth-quarter performance.
The research revealed that aggregate inflows—spanning asset management and insurance segments—rose 27.5% year-over-year in 2024, despite a 1.5% dip in the fourth quarter. Credit drove the surge, comprising 64% of total inflows and growing 32% year-on-year.
Apollo, bolstered by its insurer Athene, topped credit inflows with $143 billion in 2024, a 35% jump from 2023. Deployment activity surged 79% year-on-year, with credit driving increases ranging from 48% at Carlyle to nearly 90% at KKR.
Fee-related earnings (FRE) for rose 25.2% in 2024, a sharp acceleration from 6.1% growth in 2023. In the fourth quarter of 2024, aggregate FRE surged 45%, according to Moody’s Ratings.
“The strong results reflect the continued, steady growth in management fees but more significantly were large fee-related performance revenue at Blackstone, which was $1.4 billion in the fourth quarter of 2024 compared to $0.2 billion the prior year,” Moody’s said.
“Also, capital markets revenue at KKR was strong and Carlyle, as it has all year, benefited from the change in its compensation model, which applies more compensation to realized carry and less to FRE.”
Moody’s reports that Apollo, Blackstone, Carlyle, and KKR anticipate a supportive operating environment in 2025, though macroeconomic uncertainty from the Trump administration’s tariff policies could disrupt their momentum.
“The global default rate was 4.8% as of January 2025, but we expect the default rate to decline to 2.2% by January 2026, well below the 4.2% long-term average. As it says in the January 2025 default report, the projected decline is ‘underpinned by a resilient economy, healthy corporate fundamentals, and accessible capital markets.’”
However, Moody’s noted that its trends forecast is based only on rated companies.
“The view, according to a special report by Moody’s Analytics, is more pessimistic,” the report added. “Their model, which includes approximately 5,000 companies (about 80%t unrated) indicates default risk is at a post financial crisis high, although the risk is more contained among the direct lenders.”
“However, our revised global macro-outlook has become more pessimistic given policy changes in the U.S. We are expecting the G-20 advanced and emerging economies to expand by 2.5% in 2025 and 2026, down from the 3.2% average over the decade before Covid-19.”