7 Best Private Equity Stocks for 2024

Investing in private equity stocks offers public market investors a pathway to tap into the lucrative alternative asset management sector, which historically captures higher yields than traditional public equities through leveraged buyouts, private credit, and venture capital. While the phrase "7 best private equity stocks for 2024" points back to a specific retrospective evaluation window, the underlying principles of selecting top-tier alternative asset managers remain consistent: prioritize firms with predictable fee-related earnings, robust balance sheets, massive assets under management, and diversified revenue streams across real estate, infrastructure, and private credit.

Understanding how to navigate this asset class requires examining major publicly traded alternative asset managers—often referred to as publicly traded private equity (PE) firms. Unlike traditional operating corporations, these enterprises generate revenue primarily through management fees charged on assets under management (AUM) and performance fees, known as carried interest, realized upon the successful exit of portfolio companies.

Understanding Publicly Traded Private Equity

Before analyzing individual equities, it is essential to distinguish between private equity funds themselves and the publicly traded corporations that manage them. Individual accredited investors typically access private equity through closed-end funds requiring steep capital minimums and multi-year lock-up periods. Conversely, retail and institutional investors can purchase shares of management companies on major public exchanges.

Fee-Related Earnings vs. Carried Interest

The financial health of a private equity stock rests on two primary pillars:

1. Fee-Related Earnings (FRE): This represents the stable, predictable revenue generated from a percentage of management fees minus associated operating expenses. FRE acts as the bedrock for dividend distributions and reliable baseline valuations.
2. Carried Interest (Performance Fees): This is the share of profits distributed to the general partner once portfolio companies are sold or taken public above a certain hurdle rate. While lucrative during bull markets and high-exit environments, carried interest can be volatile and difficult to forecast quarter over quarter.

Shift Toward Private Credit and Wealth Channels

In recent years, the private equity industry has undergone a structural evolution. Traditional buyout strategies have been complemented by massive expansions into private credit, infrastructure, and real estate lending. Furthermore, top-tier managers have aggressively targeted individual high-net-worth investors through non-traded Business Development Companies (BDCs) and interval funds, unlocking a vast, stable pool of retail capital.

Key Metrics for Evaluating Private Equity Stocks

When analyzing alternative asset managers, standard valuation metrics like simple Price-to-Earnings (P/E) ratios often fail to capture the underlying business model. Analysts rely on alternative frameworks:

• Assets Under Management (AUM): Total capital managed by the firm, split between fee-earning AUM and non-fee-earning AUM (committed capital waiting to be deployed).
• Distributable Earnings (DE): The cash earnings available for distribution to shareholders, combining net realized performance fees, fee-related earnings, and net realized investment income.
• Fee-Related Earnings Margin: A measure of operational efficiency, demonstrating how much of the management fee revenue translates directly into profit before factoring in volatile performance fees.

7 Major Publicly Traded Private Equity and Alternative Asset Stocks

The following publicly traded alternative asset managers represent the dominant pillars of the private equity landscape. Each offers distinct exposure to private equity buyouts, private credit markets, real estate, and global infrastructure.

1. Blackstone Inc. (BX)

Blackstone remains the undisputed titan of the alternative asset management industry. Managing over $1 trillion in total assets, the firm spans private equity, real estate, credit and insurance, and hedge fund solutions. Blackstone’s primary competitive advantage lies in its sprawling distribution network targeting private wealth channels, allowing it to raise billions of dollars through perpetual capital vehicles even when institutional fundraising environments face macro headwinds.

2. KKR & Co. Inc. (KKR)

KKR is renowned for pioneering the leveraged buyout model and has successfully transformed into a diversified global investment powerhouse. A major catalyst for KKR's recent growth has been its full acquisition of Global Atlantic, an insurance company that provides a reliable, captive source of permanent capital. This integration allows KKR to deploy insurance float directly into its proprietary private credit and infrastructure strategies.

3. Apollo Global Management (APO)

Apollo stands out for its specialized focus on yield-driven strategies, particularly private credit and hybrid value investing. Through its retirement services subsidiary, Athene, Apollo generates immense amounts of fixed-income-like assets that it manages in-house. This structure provides Apollo with high predictability in its fee-related earnings, insulating it somewhat from the cyclicality of traditional equity markets.

4. Brookfield Asset Management (BAM)

Brookfield Asset Management operates as a pure-play manager focusing on real assets: renewable power, infrastructure, private equity, real estate, and credit. BAM was spun off as a distinct asset-light manager from its parent company, Brookfield Corporation. Investors looking for exposure to essential global infrastructure and secular decarbonization trends frequently gravitate toward BAM for its predictable cash flows and steady dividend yield.

5. The Carlyle Group (CG)

Carlyle boasts a distinguished history in global private equity, government affairs, and corporate buyouts. While historical transitions in executive leadership introduced periods of strategic reassessment, Carlyle maintains deep institutional relationships and strong sector expertise in healthcare, aerospace, and technology. The firm continues to emphasize scaling its fee-related earnings and expanding its private credit and wealth management footprints.

6. Ares Management Corporation (ARES)

Ares is a premier player in the direct lending and middle-market credit space. As regulatory pressures and banking consolidation have caused traditional commercial banks to pull back from corporate lending, Ares has captured substantial market share. Its credit-heavy portfolio provides high visibility into cash flows, making it a favorite among investors seeking consistent distribution growth backed by floating-rate lending models.

7. Blue Owl Capital (OWL)

Blue Owl represents a differentiated model in the alternative asset landscape, focusing heavily on perpetual capital vehicles, direct lending to middle-market software and tech-enabled businesses, and General Partner (GP) strategic capital. By acquiring minority equity stakes in other private equity and venture capital firms, Blue Owl secures diversified cash flows tied directly to the management fees of its industry peers.

Advantages and Risks of Investing in PE Stocks

Investing in publicly traded alternative asset managers provides distinct portfolio benefits, but it also carries unique systemic risks that every investor must weigh.

Core Benefits

• High Operating Margins: Once alternative asset managers scale their infrastructure, incremental fee-earning AUM drops straight to the bottom line with minimal capital expenditure.
• Secular Tailwinds: Institutional allocators—such as pension funds, sovereign wealth funds, and endowments—continue to increase their target allocations toward alternative assets to escape low public market yields.
• Dividend Yields: Many alternative asset managers distribute a high percentage of their distributable earnings directly to shareholders via variable or base-plus-variable dividend policies.

Inherent Risks

• Market Sensitivity: While management fees provide a baseline, carried interest and overall valuation multiples contract during broad economic recessions or prolonged bear markets in public equities.
• Illiquidity of Underlying Assets: If macroeconomic conditions restrict exit opportunities (such as a frozen IPO market or weak M&A activity), realization events slow down, delaying the payment of performance fees.
• Regulatory Scrutiny: Increased attention from regulatory bodies regarding private credit valuations, fee disclosures, and systemic financial risk can introduce compliance overhead and compliance costs.

Frequently Asked Questions

How do publicly traded private equity stocks make money?

Alternative asset managers generate revenue through two main mechanisms: management fees charged as a fixed percentage (typically 1% to 2%) of assets under management, and performance fees (carried interest), which represent a share of the investment profits generated when portfolio assets are sold above agreed-upon return thresholds.

What is the difference between investing in a PE fund and a PE stock?

Investing directly in a private equity fund requires high capital minimums (often $5 million or more) and locks up capital for 10 or more years. Purchasing a publicly traded private equity stock allows retail or institutional investors to buy shares through a standard brokerage account with complete liquidity, capturing a share of the management company's profits rather than the fund's underlying assets.

Are private equity stocks good for dividend income?

Many alternative asset managers offer attractive yields. However, because a portion of their earnings comes from variable performance fees (carried interest), their dividend payouts can fluctuate quarter to quarter compared to traditional utility or consumer staple stocks.

How do high interest rates affect private equity firms?

High interest rates increase the cost of debt used in leveraged buyouts, which can moderate deal volume and lower valuation multiples for new acquisitions. Conversely, higher rates benefit private credit divisions and direct lending strategies by increasing the yields generated on floating-rate loans.

Conclusion and Next Actions

Investing in alternative asset managers provides public market investors with direct exposure to the growth of private markets, private credit, and global infrastructure. When building a position in this sector, examine the balance between stable fee-related earnings and volatile carried interest, prioritize firms with strong retail distribution channels and perpetual capital vehicles, and ensure your portfolio aligns with your risk tolerance regarding macroeconomic and interest rate fluctuations.