A weaker US dollar has weighed on asset growth for Europe’s alternative managers, despite a sharp rise in fundraising in the first half of 2025.

Analysis by Moody’s Ratings tracked six European alternative asset managers with a combined €631bn (£550.5bn) in assets under management (AUM) at the end of the first half of 2025, up two per cent compared with six months earlier.

Fund inflows rose to €54bn over the period, but currency headwinds from a softer dollar largely offset the gains, as several firms report in the US currency.

Realisation levels were flat at €13bn, while valuations rose overall. Operating profits were unchanged in the year to June 2025 as rising operating costs marginally outpaced growth in recurring fee revenue, Moody’s said.

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Despite this, private credit within alternative asset managers’ portfolios has been growing rapidly in recent years, accounting for 20 per cent of their holdings in the first half of 2025, Moody’s said. In fundraising, €19bn was raised for private credit in the 12 months to mid-2025.

The study found that while private equity remained the largest asset class, making up around 50 per cent of total AUM, private credit has expanded at a faster pace.

“Private credit is growing due to several structural tailwinds,” Will Keen-Tomlinson vice president, senior analyst at Moody’s Ratings told Alternative Credit Investor. “Regulatory constraints have reduced banks’ lending capacity, creating space for alternative managers to step in. Private lenders offer faster execution, greater certainty, and tailored terms, making them attractive to sponsors and borrowers.”

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According to Moody’s, private credit has increased as a share of investors’ portfolios from 16 per cent in 2022 to 20 per cent in the first half of 2025.

The agency said private markets continue to grow as investors rebalance portfolios amid geopolitical uncertainty. Alternative managers are positioning themselves to meet demand for long-term themes including green infrastructure, life sciences, technology and private credit.

Moody’s added that managers are also expanding vehicles such as European Long-Term Investment Funds (ELTIFs) and Long-Term Asset Funds (LTAFs), which invest in illiquid assets such as private debt, as the pool of alternative asset investors widens.

Keen-Tomlinson added: “Many asset managers have expanded their private credit teams, including through acquisitions. Demand is also being driven by the ‘retailisation’ of private assets, supported by favourable regulation and political sentiment. Vehicles like ELTIFs and LTAFs are gaining traction, with insurers and asset managers partnering to offer them through savings products such as unit-linked policies and workplace pensions.”

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