Impact of rising interest rates on asset managers: Who wins and who loses?

Translation: Original published in Finnish on 03/24/2026 at 07:30 am EET

Interest rates have skyrocketed in March due to the war in Iran and the tightened geopolitical situation. The 12-month Euribor has risen by around 0.5 percentage points in a short period, and this sudden interest rate spike is also quickly reflected for asset managers. However, the effects are unevenly distributed, depending on the business models of the companies. In this article, we have examined the impact of rising interest rates on various asset managers.

The military crisis is toxic for the entire sector

It is important to remember that the root cause behind rising interest rates—the war in Iran and the resulting geopolitical uncertainty—is in itself toxic for the entire wealth management sector. Asset managers thrive on management fees, which are calculated as a percentage of clients' assets. As the war and rising interest rates weigh on equity and bond markets simultaneously, assets under management (AuM) melt, directly cutting the companies' revenue.

In addition, general uncertainty weakens investors' willingness to take risks. When investors fear the worst, no new money flows into funds, and some investors may withdraw their assets from the market to safe havens. This 'double whammy' – falling asset values and dwindling new sales – is challenging all industry players. In addition, the increase in general market uncertainty typically raises equity risk premiums, which in turn harms the value of companies in the asset management sector—at least in the short term.

In this article, we focus purely on the impact of rising interest rates on different asset managers, as the ongoing war in Iran has a negative impact on all asset managers. However, the change in interest rates creates significant differences between companies, which we will now elaborate on. We also note that there are no guarantees at this stage regarding the sustainability of the interest rate hike, and if the interest rate peak is short-lived, its effects will also be limited. 

What does the rise in interest rates mean in practice?

The clearest impact of rising interest rates on asset managers naturally comes from the increased attractiveness of fixed income products. A higher interest rate level increases the returns of fixed income investments, which in turn supports their new sales. This has been one of the driving themes in the investment market for the past couple of years, as fixed income investing has experienced a true renaissance after the end of the zero-interest rate era, and interest rates have jumped from zero to attractive levels

For alternative investments, such as real estate and private equity investments, rising interest rates are, in turn, toxic. Rising interest rates naturally decrease the value of underlying assets due to higher required returns. It is also clear that rising interest rates will again make it more difficult to execute exits in the pipeline, as buyers' financing costs increase and price expectations diverge. If interest rates were to remain at their current level, it is easy to estimate a temporary slowdown in the revitalized exit activity. This, in turn, makes new sales difficult, as the lack of exits and sluggish capital returns have been a key challenge behind the sluggish new sales of alternatives. Naturally, prolonged exit processes and decreasing valuations also increase the risk related to performance fees.

The increasing demand for fixed income products at the expense of riskier asset classes is weakening managers' product mixes and fee margins across the board. Fixed income management fees are typically significantly lower than those for equity or alternative funds. If investors shift their assets from more expensive products to lower-margin interest rate products, the average fee level for asset managers will decrease. Further, a risk in institutional portfolios is that as the market values of listed shares and fixed income investments decrease, the weight of illiquid alternative investments in portfolios increases. This, in turn, makes it more difficult to make new investment commitments to alternative asset classes.

Significant company-specific differences

Among the listed asset managers we cover, Evli and Mandatum are the clearest beneficiaries of rising interest rates. Both specialize particularly in fixed income investments, and both have seen excellent fixed income sales in recent years. Aktia, as a fixed-income asset manager, also has the preconditions to benefit from rising interest rates, but the company has not been able to capitalize on the opportunities presented by rising interest rates in its new sales in recent years. We also note that Aktia, as a bank, benefits significantly from rising interest rates due to an expanding net interest income.

In our view, the clearest sufferers in this situation are asset managers who are particularly dependent on real estate. Titanium and eQ are most exposed to real estate, where a worsening real estate fund crisis would directly impact their figures. For eQ, a cooling of the exit market would also increase uncertainty regarding performance fees. For CapMan, too, the rise in interest rates is clearly negative, as the company's goal has been to raise significant capital for several of its key strategies during 2026. Naturally, this fundraising becomes more difficult and prolonged if interest rates remain high. The impact on United Bankers is also negative, as the company desperately needs stronger new sales from its key alternative products. However, the company can compensate for this somewhat with the sale of discretionary asset management.

In our view, the impact on Taaleri is neutral, as the increase in Garantia's investment portfolio's running yield offsets negative effects elsewhere. We believe the impact on Alexandria is also quite neutral, as higher interest rates offer it more opportunities in structured products.