Portfolio Manager Insights

Why I'm investing in alternative asset managers

Fidelity’s Mark Notkin believes companies focused on alternative investments, including private equity, private credit and other specialized strategies, look particularly attractive.

By: Mark Notkin
Updated: 7/6/2026
  • Asset managers that specialize in alternative investments have become compelling investments in recent years by gathering assets under management and achieving strong financial results, according to Fidelity Portfolio Manager Mark Notkin, who likes the growing market segment for its potential to continue increasing its share of the global asset management industry.
  • “Wealth managers are drawn to private equity, private credit and other nontraditional products for their portfolio diversification benefits and the specialized exposure they can provide,” says Notkin, who co-manages Fidelity Advisor® Leveraged Company Stock Fund with Brian Chang. “Still, alternatives make up only a small percentage of the global asset management market, so I see a long runway for growth.”
  • In helming the domestic equity portfolio focused on companies with high outstanding debt, Notkin prefers businesses with secular growth, competitive advantages, low capital intensity and strong management teams. He believes such firms are often characterized by high profit margins, healthy returns on capital and attractive free-cash-conversion ratios.
  • “In our analysis of this segment, we see attractive valuations, healthy fundamentals and a long runway for growth if the group continues to grow assets and collect management fees faster than other asset managers,” Notkin says.
  • Additionally, Notkin believes alternative asset managers are supported by favorable demographics, particularly the expected large transfer of wealth from baby boomers to younger generations.
  • For these reasons, the fund has favored major players Apollo Global Management and Ares Management, with Notkin and Chang maintaining an optimistic stance despite recent angst stemming from the category’s potential vulnerability to a downturn in private credit.
  • Notkin notes that a couple of high-profile corporate defaults in late 2025 were linked to alleged fraud in the private-credit market. “But so far, we see nothing systemic or widespread,” he says. “We are not alarmed about a downcycle in private credit, which at this point remains largely speculative.”
  • Their confidence partly reflects the fact that Apollo and Ares do not carry alternative investments on their balance sheets, as a bank would. As Notkin notes, “We like that a significant portion of their earnings comes from fees tied to assets they manage,” he adds.
  • He also points out that similar trends in the past have generally been transitory and have had only a limited impact on Apollo, Ares and other best-of-breed alternative asset managers. 
  • “Performance and flows may moderate somewhat, but we remain confident they are well-positioned to outdistance peers, given the strength of their leadership teams and their disciplined underwriting practices,” he concludes.

Securities mentioned were fund investments as of April 30, 2026.

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Fidelity Advisor Leveraged Company Stock Fund (FLENX)

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