Johnson Associates projects year-end incentives to be higher across almost all sectors.

Projections: Traditional asset management boosted by market appreciation and active ETF inflows. Hedge funds rise on inflows and strong performance. Investment banking higher led by equities trading and debt underwriting. Small to mid-sized illiquid alternatives flat to up modestly while largest funds up more despite fundraising challenges. Geopolitical issues largest risk variable into year-end.

Alternatives are a strategic priority for many financial services firms

• Many firms, including those who did not traditionally offer alternatives, continue building out alternatives strategies
  ▪ Institutional and retail investor demand for alternatives growing
• Alternatives have higher fee levels and provide diversifying revenue streams
• Private credit “hottest” sector within alternatives
• Private credit proliferation across multi-strat alternatives, traditional asset managers, large banks, and insurance companies
• Banking regulation shifted momentum to private credit firms
  ▪ Some major banks have formed partnerships with alternatives firms to scale direct lending capabilities
• Compensation pressures as talent market highly competitive

The full report can be read here

Source: Johnson Associates