✦ Alternatives and Private MarketsNarrow moat

Morgan Stanley (MS) — the future bets

Morgan Stanley is using its advisers to sell private funds that index providers cannot copy, and performance fees have risen tenfold since 2022.

The largest product bet is alternatives: private equity, private credit, real estate and similar funds that charge more and cannot be copied by an index. Morgan Stanley lists "Alternatives, Private Markets" first among its wealth growth opportunities1. It puts its alternatives investable capital at about $120 billion in 2020 and about $270 billion in 20252.

IM performance-based income and other ($M)432022139202323420244572025Morgan Stanley Forms 10-K FY2023 and FY2025, Investment Management
Tenfold in three years.

Investment Management's Alternatives and Solutions category, which the firm reports as one line, held $852 billion of assets under management in June 20263. The firm said 2025 equity outflows were offset by higher net inflows in the Alternatives and Solutions asset class4.

Performance fees show the early payoff. Performance-based income and other revenue in Investment Management was $43 million in 2022, $139 million in 2023, $234 million in 2024 and $457 million in 202556.

The logic is to use the wealth channel as distribution. Advisers with $5,715 billion of client assets7 can place private funds with clients who would not buy them directly.

The firm also names the "Institutionalization of Wealth", including family office, outsourced chief investment officer and tailored lending services, as a growth area8. Private funds fit that agenda, because the wealthiest clients are the ones most able to hold illiquid investments.

The Alternatives and Solutions category had higher net inflows in 2025 that offset continued equity outflows9. Investment Management's long-term net flows were $34.4 billion in 202510, nearly double 2024's $18.0 billion, most of them into this category rather than into traditional funds.

The risk is that private funds are illiquid and their returns uncertain. Should performance-based income fall back toward $150 million in a normal year, the alternatives push would be shown to depend on a few good vintages.

Moat trajectory: Widening

Alternatives capital ~$120bn (2020) to ~$270bn (2025).

The number that tests this moat
Reported
IM Alternatives and Solutions AUM, latest quarter
$852bn (June 2026)

The home of the higher-fee products; a shrinking total would mean the push to alternatives had stalled.

Source: Morgan Stanley Q2 2026 financial supplement ↗
References
  1. ReportedMorgan Stanley lists "Alternatives, Private Markets" first among its wealth growth opportunities.
    Morgan Stanley strategic update, The Integrated Firm: Executing on a Higher Plane, Form 8-K exhibit 99.3 - ROTCE 2016-2025, firmwide goals, five-year Wealth Management aggregates and wallet share. — 2016-2025 · publ. 15 January 2026 · source ↗
  2. ReportedIt puts its alternatives investable capital at about $120 billion in 2020 and about $270 billion in 2025.
    Morgan Stanley strategic update, The Integrated Firm: Executing on a Higher Plane, Form 8-K exhibit 99.3 - ROTCE 2016-2025, firmwide goals, five-year Wealth Management aggregates and wallet share. — 2016-2025 · publ. 15 January 2026 · source ↗
  3. ReportedInvestment Management's Alternatives and Solutions category, which the firm reports as one line, held $852 billion of assets under management in June 2026.
    Morgan Stanley second-quarter 2026 financial supplement, Form 8-K exhibit 99.2 - Wealth Management metrics, Investment Management assets under management and flows, regional revenues. — Q2 2026 · publ. 15 July 2026 · source ↗
  4. ReportedThe firm said 2025 equity outflows were offset by higher net inflows in the Alternatives and Solutions asset class.
    Morgan Stanley Form 10-K for fiscal 2025 - financial highlights, income statement, balance sheet and business description. — FY2025 · publ. 19 February 2026 · source ↗
  5. ReportedPerformance-based income and other revenue in Investment Management was $43 million in 2022, $139 million in 2023, $234 million in 2024 and $457 million in 2025.
    Morgan Stanley Form 10-K for fiscal 2025 - segment results, revenue lines and regional net revenues. — FY2025 · publ. 19 February 2026 · source ↗
  6. ReportedPerformance-based income and other revenue in Investment Management was $43 million in 2022, $139 million in 2023, $234 million in 2024 and $457 million in 2025.
    Morgan Stanley Form 10-K for fiscal 2023 - segment results for 2021-2023, Wealth Management metrics for 2021-2023, the block-trading settlements, and 2023 charges. — FY2023 · publ. February 2024 · source ↗
  7. ReportedAdvisers with $5,715 billion of client assets can place private funds with clients who would not buy them directly.
    Morgan Stanley Form 10-K for fiscal 2025 - Wealth Management metrics: client assets, flows, channels, deposits and adviser loans. — FY2025 · publ. 19 February 2026 · source ↗
  8. ReportedThe firm also names the "Institutionalization of Wealth", including family office, outsourced chief investment officer and tailored lending services, as a growth area.
    Morgan Stanley strategic update, The Integrated Firm: Executing on a Higher Plane, Form 8-K exhibit 99.3 - ROTCE 2016-2025, firmwide goals, five-year Wealth Management aggregates and wallet share. — 2016-2025 · publ. 15 January 2026 · source ↗
  9. ReportedThe Alternatives and Solutions category had higher net inflows in 2025 that offset continued equity outflows.
    Morgan Stanley Form 10-K for fiscal 2025 - financial highlights, income statement, balance sheet and business description. — FY2025 · publ. 19 February 2026 · source ↗
  10. ReportedInvestment Management's long-term net flows were $34.4 billion in 2025, nearly double 2024's $18.0 billion, most of them into this category rather than into traditional funds.
    Morgan Stanley fourth-quarter and full-year 2025 earnings release, Form 8-K exhibit 99.1. — FY2025 · publ. 15 January 2026 · source ↗
Sources
Generated September 26, 2026