A Chicago-based alternative asset management firm that builds customized investment portfolios for big institutions like pension funds, sovereign wealth funds, and endowments, investing in private equity, real estate, and hedge funds. Founded in 1971 by Richard Elden as Grosvenor Capital Management, it pioneered the first fund of hedge funds in the United States. The "GCM" in its name simply stands for Grosvenor Capital Management, and it went public in 2020 via a Cantor Fitzgerald-backed SPAC.
Management fees rose 13% to $114.8M, the fastest growth in over a year, as Fee-Paying AUM climbed 6% to $78.1B.
Management fee growth accelerated sharply, lifting even as fell. Revenue rose 12% to $134.3 million and widened to 26.4% from 16.1% a year ago, driven by a 13% increase in management fees and a 5% decline in employee compensation. The $9.8 billion pipeline of contracted not-yet- suggests the acceleration has room to run, but incentive fees remain tied to the pace of private markets fund exits.
Key takeaways
Management fees rose 13% to $114.8 million, the fastest growth since at least Q1 2025, as climbed 6% during the quarter to $78.1 billion on $2.5 billion in contributions and a $3.3 billion market value increase.
rose 84% to $35.5 million and widened 10.3 points to 26.4%, as employee compensation fell 5% to $71.2 million — an $8.7 million drop in more than offset a $3.9 million increase in equity-based compensation.
Section summaries
Management's Discussion and Analysis
Management fees grew 13% YoY in Q2 2026 to $114.8M, driven by capital raising and deployment, while total FPAUM rose 6% to $78.1B.
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Total operating revenues increased 12% to $134.3M in Q2 2026, primarily from a $12.8M rise in management fees across private markets and absolute return strategies.
Private markets strategies management fees grew 12% to $66.9M, driven by higher specialized fund and customized separate account fees from capital raising and deployment.
Incentive fees rose 8% to $18.3 million, but the mix shifted: fell 8% to $13.6 million on lower investment realizations from private markets funds, while performance fees rose to $4.7 million from $1.4 million a year ago.
attributable to the company fell 38% to $9.6 million from $15.4 million a year ago, as the prior-year quarter included a $10.1 million non-cash gain from remeasuring the tax receivable agreement liability that did not recur.
The company voluntarily prepaid $65.0 million on its Term Loan during the first half of 2026, reducing to $362.0 million and cutting quarterly to $4.9 million from $6.8 million a year ago.
The Contracted, Not Yet pipeline stood at $9.8 billion, up from $8.7 billion a year ago, providing visibility into future management fee growth as these commitments activate.
What changed
The 13% management fee growth rate resolves the question raised in Q1 2026, when fees grew just 1% and the watch item was whether the $9.8 billion pipeline would begin converting. The acceleration was driven by both private markets (up 12%) and absolute return strategies (up 11%), reversing the 5% decline in private markets fees seen in Q1 2026.
fell 8% to $13.6 million, a second consecutive quarterly decline after the 42% drop in Q1 2026, confirming that private markets fund exit activity remains subdued — a risk flagged in every prior filing since FY 2022.
fell again, extending the trend that began in 2023 and has been the primary driver of returning to and staying in positive territory. The Q2 2026 decline of $8.7 million was larger than the $6.8 million drop in Q1 2026.
The $65.0 million Term Loan prepayment made in Q1 2026 reduced to $362.0 million, the lowest level since before the 2024 amendment that increased borrowings to $438.0 million. fell to $4.9 million from $6.8 million a year ago, addressing the concern flagged in prior filings.
What to watch
Whether the 13% management fee growth rate is sustainable in Q3 2026, given that the $9.8 billion Contracted Not Yet pipeline must continue converting into Fee-Paying AUM to maintain the pace.
The level of realizations in Q3 2026, given the 8% decline this quarter and the company's dependence on private markets fund exit activity for incentive fee .
Whether the run-rate of remains at the lower Q2 2026 level, as it directly determines whether the 26.4% is sustainable.
The impact of the new AI risk factor disclosure on operations and compliance costs, given the company's stated integration of AI tools into legal, compliance, and client services functions.
Absolute return strategies management fees increased 11% to $42.5M, benefiting from higher returns and capital raising.
Employee compensation and benefits decreased 5% to $71.2M, as a $8.7M drop in more than offset a $3.9M increase in equity-based compensation.
reached $78.1B as of June 30, 2026, up 6% during the quarter, with contributions of $2.5B and a $3.3B market value increase.
The company voluntarily prepaid $65.0M on its Senior Loan during H1 2026, and had $139.6M in cash plus $50.0M in available credit as of quarter-end.
Quantitative and Qualitative Disclosures About Market Risk
In the normal course of business, we are exposed to a broad range of risks inherent in the financial markets in which we participate, including price risk, interest-rate risk, access to and cost of financing risk, liquidity risk, counterparty risk and foreign exchange-rate risk.…
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In the normal course of business, we are exposed to a broad range of risks inherent in the financial markets in which we participate, including price risk, interest-rate risk, access to and cost of financing risk, liquidity risk, counterparty risk and foreign exchange-rate risk. Potentially negative effects of these risks may be mitigated to a certain extent by those aspects of our investment approach, investment strategies, fundraising practices or other business activities that are designed to benefit, either in relative or absolute terms, from periods of economic weakness, tighter credit or financial market dislocations.
Our predominant exposure to market risk is related to our role as general partner or investment manager for our funds and the sensitivity to movements in the fair value of their investments, which may adversely affect our investment income, management fees, and incentive fees, as applicable.
Based on the floating rate component of our Senior Loan and excluding any impact of interest rate hedges as of June 30, 2026, we estimate that a 100 basis point increase in SOFR would result in increased interest expense of $3.6 million over the next 12 months.
There have been no material changes in our market risks during the three months ended June 30, 2026. For additional information, refer to our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 and our Quarterly Reports on Form 10-Q for the quarterly periods through June 30, 2026.
From time to time, we are a defendant in various lawsuits related to our business. We do not believe that the outcome of any current litigation will have a material effect on our Condensed Consolidated Statements of Financial Condition or Condensed Consolidated Statements of Inc…
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From time to time, we are a defendant in various lawsuits related to our business. We do not believe that the outcome of any current litigation will have a material effect on our Condensed Consolidated Statements of Financial Condition or Condensed Consolidated Statements of Income (Loss).
In the normal course of business, we may enter into contracts that contain a number of representations and warranties, which may provide for general or specific indemnifications. The Company’s exposure under these contracts is not currently known, as any such exposure would be based on future claims, which could be made against us. We are not currently aware of any such pending claims and based on our experience, we believe the risk of loss related to these arrangements to be remote.