AMG (AMG) Q3 2025: Alternatives AUM Jumps 30%, Reshaping Earnings Mix for 2026
AMG’s Q3 marks a turning point as alternative assets under management (AUM) surged by nearly 30%, now representing over half of EBITDA and driving a material shift in the firm’s earnings profile. The quarter’s results reflect a business in transition, with robust inflows and capital deployment in alternatives offsetting ongoing equity outflows. Management’s guidance and tone signal a clear acceleration in earnings power for 2026, underpinned by high-fee, durable strategies and a disciplined capital allocation approach.
Summary
- Alternatives Momentum: Alternatives now contribute the majority of EBITDA, signaling a new phase in AMG’s growth trajectory.
- Capital Deployment Surge: Over $1.5 billion committed to growth investments and repurchases, fueling future earnings leverage.
- 2026 Earnings Setup: Full-year benefit from recent deals and organic flows positions AMG for accelerating earnings growth ahead.
Performance Analysis
AMG delivered a marked improvement in profitability this quarter, driven by a decisive pivot toward alternatives. Adjusted EBITDA grew double digits, reflecting both organic inflows and new affiliate contributions. Net inflows totaled $9 billion in the quarter, with $14 billion in liquid alternatives and $4 billion in private markets, offsetting $9 billion in active equity outflows. Alternatives AUM reached $353 billion, now 55% of run-rate EBITDA, up from less than half a year ago, illustrating the rapid business mix evolution.
Fee-related earnings rose meaningfully on the back of performance and product mix, while economic EPS benefited from ongoing share repurchases. Management emphasized the improvement in aggregate fee rates and margin expansion at key affiliates like Pantheon and AQR, suggesting operating leverage as the mix continues to shift toward higher-fee, longer-duration products.
- Liquid Alternatives Record: Fifth consecutive quarter of positive flows, cumulative $38 billion net inflows since 2024.
- Private Markets Momentum: Continued fundraising success at Pantheon, EIG, and Abacus, broadening the affiliate platform’s reach.
- Equity Outflows Persist: Traditional active equity strategies remain a drag, though partially offset by beta tailwinds and pockets of strength at select affiliates.
The diversification of earnings streams and the scale of recent capital deployment set the stage for a structurally higher earnings base in 2026, with management signaling further upside as new partnerships and strategies mature.
Executive Commentary
"Through the third quarter, across both organic growth and new affiliate investments, AMG has added approximately $76 billion in alternative assets under management, representing an increase of nearly 30% in our total alternative AUM. This increase includes $51 billion in net inflows into alternatives. Today, our affiliates manage $353 billion in alternative AUM, contributing 55% of our EBITDA on a run rate basis."
Jay Horgan, Chief Executive Officer
"In 2025 to date, we have committed approximately $1.5 billion in capital across growth investments and share repurchases, and we continue to be in a strong position to execute on future growth opportunities and return capital to shareholders, given our significant cash generation and strong balance sheet."
Deva Ritchie, Chief Financial Officer
Strategic Positioning
1. Alternatives as Core Earnings Driver
AMG’s strategic pivot toward alternatives is fundamentally reshaping its business model. With alternatives now contributing the majority of EBITDA, management is targeting to push this share even higher, aiming for two-thirds of EBITDA in coming years. This shift is not just about AUM but also about margin profile and fee durability, as alternatives typically command higher, more stable fees and offer performance fee upside.
2. Capital Allocation Discipline and Flexibility
Management’s approach to capital deployment is both aggressive and selective. Over $1.5 billion has been deployed in 2025 across new affiliate investments and share repurchases, with a clear bias toward secular growth areas. The recent monetization of stakes in Peppertree and Comvest, at nearly three times cost, illustrates AMG’s ability to recycle capital and crystallize value. The capital allocation framework remains focused on mid-to-high teens returns, with repurchases as a fallback if attractive deals do not materialize.
3. U.S. Wealth Channel and Product Innovation
The U.S. wealth market is emerging as a major growth vector, with AMG leveraging its distribution and product development capabilities to deliver alternatives to high net worth clients. The strategic collaboration with Brown Brothers Harriman (BBH), a 200-year-old financial firm, to develop structured and alternative credit products is a marquee example. AMG’s scale, seed capital, and permanent capital model make it an attractive partner for independent firms seeking to enter the wealth channel and scale their platforms.
4. Affiliate Engagement and Operating Leverage
AMG’s model of minority investments in partner-owned firms, such as Pantheon and AQR, allows it to catalyze growth while preserving affiliate independence. Strategic engagement—ranging from new product launches to business development—magnifies affiliate success and drives incremental earnings. The firm’s ability to actively support affiliates in scaling and diversifying their offerings is a competitive differentiator, especially as performance fees and carry potential in alternatives become more material.
Key Considerations
AMG’s Q3 marks a clear inflection in its earnings profile, but investors should weigh the underlying drivers and sustainability of this shift. The company’s evolving business mix, capital allocation, and product innovation are all in focus as AMG aims to maintain its growth trajectory.
Key Considerations:
- Business Mix Evolution: Alternatives’ share of EBITDA is rising, but traditional equity outflows remain a structural headwind.
- Performance Fee Upside: Growing alternatives AUM and product breadth increase future performance fee and carry potential, though timing can be volatile.
- Capital Return Commitment: Share repurchases have accelerated, with full-year buyback guidance raised to at least $500 million.
- Pipeline Visibility: Management’s active dialogue with new affiliates and focus on secular growth areas suggest a robust deal pipeline into 2026.
- Fee Rate and Margin Expansion: Mix shift toward higher-fee, longer-duration strategies is incrementally expanding margins at key affiliates.
Risks
AMG’s reliance on alternatives for growth increases sensitivity to market cycles, performance dispersion, and fundraising trends. Ongoing outflows in traditional equities could weigh on aggregate AUM, while performance fee realization remains inherently unpredictable. Integration risk from new affiliate partnerships and the potential for increased competition in alternatives—especially in the U.S. wealth channel—should also be monitored.
Forward Outlook
For Q4 2025, AMG guided to:
- Adjusted EBITDA of $325 million to $370 million, including $75 million to $120 million in net performance fees.
- Economic earnings per share between $8.10 and $9.26, with a share count of 28.9 million.
For full-year 2026, management signaled:
- Meaningful increase in both adjusted EBITDA and economic EPS, driven by full-year contributions from recent investments, organic alternatives growth, and capital allocation strategy.
Management emphasized the structural earnings lift from alternatives mix, margin expansion at affiliates, and the potential for incremental upside as new partnerships mature. Guidance does not yet reflect contributions from recently announced deals expected to close in late 2025 and early 2026.
Takeaways
AMG’s transformation into an alternatives-centric asset manager is accelerating, with implications for earnings durability, capital deployment, and long-term growth.
- Alternatives Now Anchor Earnings: The rapid shift in business mix is driving higher fee rates, margin expansion, and more durable earnings streams, offsetting legacy equity headwinds.
- Capital Allocation as a Growth Lever: AMG’s disciplined yet aggressive investment and buyback program is structurally boosting EPS and providing flexibility to navigate market cycles.
- Future Watchpoint—Execution in U.S. Wealth and New Partnerships: The pace and success of new affiliate onboarding and product innovation, especially in the U.S. wealth channel, will be key to sustaining growth and realizing full earnings potential.
Conclusion
AMG’s Q3 results validate its strategic pivot to alternatives, with material earnings impact already visible and a robust setup for 2026. The firm’s disciplined capital allocation, affiliate engagement, and product innovation are positioning it to capture secular growth in alternatives, though execution and market risk remain central watchpoints.
Industry Read-Through
AMG’s results underscore the accelerating shift across asset management toward alternatives and solutions-oriented products, especially for private clients and wealth channels. The record flows into liquid alts and private markets, coupled with strategic partnerships like BBH, signal intensifying competition for distribution, innovation, and scale in alternatives. Traditional equities continue to face structural outflows industry-wide, while firms with differentiated capital formation and product development capabilities are best positioned to win incremental share. The playbook AMG is executing—pivoting to alternatives, leveraging affiliate partnerships, and aggressively deploying capital—reflects the broader industry imperative to move beyond legacy models and capture secular growth in high-fee, scalable strategies.