We recently published a list of 10 Cheap Asset Management Stocks to Buy Now. In this article, we are going to take a look at where Victory Capital Holdings Inc. (NASDAQ:VCTR) stands against other cheap asset management stocks to buy now.
The asset management industry plays a crucial role in global financial markets by managing investments for individuals, institutions, and corporations. Asset managers strategically allocate capital across equities, fixed income, real estate, and alternative investments, seeking to optimize returns while managing risk. The industry encompasses various segments, including mutual funds, hedge funds, private equity firms, and wealth management companies, each catering to different investor needs.
Recent research highlights the industry’s robust growth trajectory. According to PwC’s November 2024 Asset & Wealth Management Report, global assets under management (AUM) are expected to reach $171 trillion by 2028, reflecting a 5.9% compound annual growth rate (CAGR). Alternative assets, including private equity, hedge funds, and real estate, are projected to expand at an even faster 6.7% CAGR, reaching $27.6 trillion over the same period. As asset managers seek new growth avenues, tokenization is emerging as a transformative trend. PwC anticipates tokenized products will surge from $40 billion to over $317 billion by 2028, a 51% CAGR, as asset managers—particularly in private equity (53%), equity (46%), and hedge funds (44%)—embrace this innovation to democratize finance and lower investment barriers.
Amid these structural shifts, Deloitte’s 2025 Investment Management Outlook underscores the challenges firms face despite rising AUM in 2023. Revenue growth and profit margins remain under pressure, pushing firms to refine their product diversification strategies and distribution models. Key growth drivers include alternative investments like private credit and hybrid fund structures, as well as AI-driven sales and distribution technologies. Deloitte emphasizes that firms effectively implementing these initiatives will likely outperform competitors, while those failing to adapt may struggle to maintain their market position.
Another notable industry trend, according to Deloitte’s report, is the continued rise of exchange-traded funds (ETFs). Over the past five years, ETFs have attracted over $3 trillion in net inflows in the U.S., reflecting investors’ preference for low-cost, transparent investment vehicles. The majority of AUM in mutual funds and ETFs is concentrated in funds with lower expense ratios, contributing to ETFs’ growing market share at the expense of mutual funds. In 2023, active equity and bond ETFs maintained lower average expense ratios than their actively managed mutual fund counterparts, solidifying their appeal as cost-effective investment options.
In summary, the asset management industry is undergoing a period of transformation, driven by technological advancements, evolving investor preferences, and a shift toward alternative investments. While rising AUM signals strong long-term growth prospects, firms must adapt to shifting market dynamics by embracing diversified product strategies, AI integration, and tokenization.
Our Methodology
To determine the 10 cheap asset management stocks to buy now, we first compiled a list of asset management companies using online screeners and financial media reports. We then narrowed down the selection to stocks trading at a forward price-to-earnings (P/E) ratio below 15 and offering at least 10% upside potential. From this refined list, we further narrowed down 10 top stocks with the highest hedge fund ownership, utilizing data from Insider Monkey’s Q4 2024 hedge fund database. Finally, we ranked the selected stocks in ascending order of their forward P/E ratios, placing those with the lowest valuations at the top.
Note: All pricing data is as of market close on March 19.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
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Victory Capital Holdings Inc. (NASDAQ:VCTR)
Forward P/E: 10.0
Upside Potential: 16%
Number of Hedge Fund Holders: 21
Victory Capital Holdings Inc. (NASDAQ:VCTR) is a diversified global asset manager that provides specialized investment solutions to institutions, financial intermediaries, retirement platforms, and individual investors. Through its 11 autonomous Investment Franchises and a Solutions Platform, the company offers a wide range of investment products.
As of February 2025, Victory Capital Holdings Inc. (NASDAQ:VCTR) managed $176 billion in AUM and had $180 billion in total client assets. The company is in the process of finalizing its acquisition of the U.S. assets of Amundi Asset Management S.A.S., with the deal expected to close by the end of March. This acquisition is intended to broaden the company’s investment capabilities and enhance its U.S. intermediary distribution efforts, reinforcing its position in the asset management industry.
Victory Capital Holdings Inc. (NASDAQ:VCTR)’s strong financial performance has received positive reactions from analysts. On February 20, a BofA analyst raised the company’s price target from $88 to $89, maintaining a Buy rating after the company reported adjusted EPS of $1.45, surpassing expectations. The earnings beat was primarily driven by higher share repurchases and lower taxes, leading the analyst to revise EPS estimates upward for FY 2025, 2026, and 2027. Similarly, on February 10, a BMO Capital analyst increased the price target from $73 to $82, maintaining an Outperform rating. The analyst highlighted Victory Capital’s improving net flows, the strategic and financial benefits of the Amundi U.S. acquisition, and its consistent execution in margin expansion as key factors supporting a positive outlook.
Overall, VCTR ranks 5th on our list of cheap asset management stocks to buy now. While we acknowledge the potential of VCTR to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than VCTR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.