GCM Grosvenor (NASDAQ:GCMG) Chairman and CEO Michael Sacks told investors at a UBS conference that the firm’s identity as a “solutions provider” is rooted in its heavy emphasis on customized client portfolios, a model he said drives sticky relationships, high re-up rates, and long-duration growth. Sacks also discussed the firm’s recently reported results, its fundraising pipeline entering 2026, expansion in the wealth channel, portfolio exposure to software, and how operating leverage and unrealized carried interest could support longer-term financial goals.
Customized accounts anchor the “solutions” model
Sacks said slightly over 70% of client relationships are structured as customized separate accounts or “funds of one,” where the firm works with clients to define objectives and constraints before implementing portfolios. He described the process as iterative and consultative, with meaningful service components beyond simply offering access to a commingled fund.
Fourth-quarter highlights and a replenished pipeline
Discussing results reported the day before, Sacks said the firm posted a “very good year” and “very good quarter,” highlighting strong investment performance and what he called record fundraising. He said the firm raised $10.5 billion for the year, its best year ever, and also delivered its best quarter ever for fundraising.
Other highlights Sacks cited included:
- Strong performance fees in the firm’s absolute return strategies business
- Positive absolute return flows
- Margin improvement and operating leverage, which he said management had been targeting
Sacks also cautioned against reading too much into the stock’s post-earnings move, noting the shares had fallen ahead of the release amid a “SaaS scare.”
Looking ahead, he said the firm entered 2026 with a pipeline larger than it had at the start of 2025, despite completing significant fundraising during 2025. He characterized the pipeline as diversified across strategies—private equity, infrastructure, real estate, private credit, and hedge funds/absolute return—and diversified across client types and geographies. While acknowledging the potential for quarterly “lumpiness” given the size of certain separate-account wins, Sacks said demand for alternatives had not disappeared during the 2022–2023 slowdown; rather, sales cycles stretched as rates rose and clients assessed portfolios.
He added that the firm reiterated its longer-term targets on the earnings call, including goals tied to fee-related earnings growth from 2023 and adjusted net income by the end of 2028, and said management felt it was “on track.”
Wealth channel expansion remains a strategic priority
Sacks said the firm’s individual investor/wealth channel business represents about 5% of its capital today, but he described the opportunity as large given what he sees as under-allocation to alternatives and less diversification among wealth-channel investors compared with institutions.
He pointed to several recent initiatives:
- A distribution joint venture with Grove Lane, which he said has already added relationships and is being staffed up
- An infrastructure interval fund distributed with CION, which he said is raising capital daily and is expected to grow to a size that could support entry into wirehouse platforms
- A filed registration for a private equity wealth-channel product
- “White label” or “private label” relationships, which he said numbered 11 over the last two years, enabling customized-style offerings for RIAs and advisor groups
- Potential future roles as a sub-advisor within model portfolios
Asked about turbulence in parts of the wealth channel—such as elevated redemptions and slowing gross inflows in some private credit funds—Sacks said that given the firm’s low starting base, the channel is “all upside” for GCM Grosvenor. He acknowledged product preferences can shift among structures (such as tender funds versus interval funds), but said he sees a multi-year “tailwind” for wealth adoption of alternatives and does not foresee it turning into a headwind.
Software exposure, AI disruption, and diversification
On software, Sacks stressed diversification as a “core tenet” across the firm’s verticals, saying no single industry, issuer, manager, or strategy should become an “insurmountable problem” for portfolios. He pegged firm-wide exposure to SaaS businesses at about 4% of total AUM and said SaaS exposure in the credit business is about 6%.
He suggested credit “attachment points” should provide protection within credit portfolios, while equity valuations in SaaS could be more sensitive given historical reliance on revenue-based valuation metrics. He also said the firm believes it has more net long exposure to AI and AI beneficiaries than exposure to SaaS/software, characterizing the firm as “long the disruptors.”
Sacks added that noise around alternatives is recurring and said recent market reactions to AI-related developments have been sharp despite AI’s expected arrival and impact having been widely anticipated.
Operating leverage, carry potential, and growth areas
Sacks reiterated comments that the firm is “long origination and short capital,” explaining that the platform has excess capacity and can deploy more capital with limited incremental impact on margins. He said operating margins have expanded since the firm went public, noting an improvement of “a couple of hundred basis points” last year and stating an expectation for continued expansion through 2028.
On unrealized carried interest, Sacks described it as a “very significant” asset and said carry at net asset value represented roughly 20% of total enterprise value as of Dec. 31. He said carry has been depressed by a weak realization environment, and cited fourth-quarter realized carry as the main area of disappointment versus expectations. Still, he framed realization as “a question of when, not if,” and said management expected a good first quarter in terms of growth of that carry asset based on items already known. He also emphasized a larger pool of “carry at work”—AUM subject to carry in early deployment stages—which he said is multiples of carry at NAV and should, over time, convert into carry at NAV.
Sacks also addressed strategy growth. He called infrastructure growth “quite durable,” citing fundamental demand for projects such as power generation and describing the firm’s diversified approach across direct, co-investments, secondaries, and primaries. On private credit, he said client discussions often center on reallocating within fixed income, which can create room for additional private credit even for investors who consider themselves fully allocated to alternatives.
Finally, on absolute return strategies, Sacks said the business has grown more slowly than private markets in recent years but remains a “great business” that generates substantial fees and cash, supported by strong performance and a “very happy” client base. He said the strategy delivered net inflows last year and argued it should not be valued less attractively than a high-quality traditional asset manager, even if market multiples do not always reflect that view.
About GCM Grosvenor (NASDAQ:GCMG)
GCM Grosvenor is a global alternative asset management firm that specializes in customized investment solutions across a range of private markets and hedge fund strategies. The firm partners with institutional clients—including pension funds, endowments, insurers and sovereign wealth funds—to design and implement portfolios that span private equity, infrastructure, real estate, credit and multi‐strategy hedge fund products. Through its multi‐manager platforms and direct co‐investment vehicles, GCM Grosvenor provides diversified access to opportunities that can enhance returns and manage risk in client portfolios.
Founded in 1971 as Grosvenor Capital Management, the firm has built a track record of sourcing, structuring and monitoring alternative investments on behalf of its clients.
