Brookfield’s Fee Outlook vs. Margin Trajectory and 2027 Fundraising Forecasts Clash

Date of Call: Aug 5, 2026

Financials Results

• Revenue: $808 million in fee-related earnings (FRE), up 20% YOY
• EPS: $0.50 per share in FRE, up 20% YOY; $0.44 per share in distributable earnings (DE), up 15% YOY
• Gross Margin: 57% for the quarter and 58% over the last 12 months

Guidance:

• Fundraising expected to be very significant in H2 2026, with record year expected to be far exceeded, balanced across flagships, complementary equity strategies, debt strategies, and insurance inflows.
• FRE growth trajectory expected to remain rock solid into 2027, with accelerated growth continuing.
• Carry realization from some strategies expected earlier than previously forecasted, pulling forward into the next few years.
• 2027 fundraising will be strong due to final closes of private equity and infrastructure flagships and launches of real estate and credit flagship funds.
• Fee trajectory remains strong, though Q4 2026 growth may be reduced quarter-over-quarter due to lapping a strong prior year period.

Business Commentary:

Record Fundraising and Strategic Partnerships:

• Brookfield Asset Management achieved record fundraising of $77 billion in the second quarter, with fee-bearing capital reaching $672 billion, up 19% over the last 12 months.
• This was driven by strong momentum in flagship strategies and the addition of the $40 billion Just Group mandate, enhancing their insurance capital management.

AI Infrastructure Strategy:

• The company's AI infrastructure strategy is gaining momentum, with a focus on integrating the AI value chain, including data centers, power generation, and compute.
• Partnerships with major players like Bloom Energy and sovereign initiatives demonstrate the strategic positioning in the AI ecosystem.

Financial Performance and Growth Expectations:

• Fee-related earnings increased 20% year-on-year to $808 million, with distributable earnings up 15% to $707 million.
• Growth is attributed to strong fundraising and performance across diverse business segments, positioning Brookfield for a record year in 2026.

Credit Business Expansion with Oaktree:

• The acquisition of Oaktree has expanded Brookfield's credit platform, enhancing capabilities in asset-backed finance and real asset finance.
• The integration allows for more effective sourcing and underwriting, leveraging combined capabilities to deliver across market cycles.

Leadership and Market Positioning:

• Brookfield's leadership in AI infrastructure is underscored by its ability to raise capital at scale and form strategic partnerships with hyperscalers and governments.
• The company's integrated capabilities across digital infrastructure, energy, and strategic relationships solidify its position as a key player in the AI build-out.

Sentiment Analysis:

Overall Tone: Positive

• "Similar to last quarter, we expect 2026 will be a record year for Brookfield, and not by a small margin. Reinforcing this, the second quarter was exceptional by almost any measure: record fundraising..." "We are entering the second half of the year with record results, exceptional strategic momentum, limited exposure to the areas causing the most concern, and meaningful exposure to where capital should continue to flow. We are positioned not simply to navigate this environment, but to outperform through it."

Q&A:

• Question from Bart Dziarski (RBC Capital Markets): Unpack the fundraising outlook for the back half of the year, including key drivers.
  Response: Expect significant capital raising throughout H2 2026, balanced roughly equally across flagships, complementary equity strategies, debt strategies, and insurance inflows, supporting landing well into record territory.

• Question from Cherilyn Radbourne (TD Cowen): Update on credit landscape depth for AI financing and Oaktree's opportunity set for 2027/2028.
  Response: Credit markets are robust; capacity exists for AI build-out. Oaktree integration is underway, with upside from broader Brookfield distribution and multi-asset programs. Flagship timelines are being pulled forward due to deployment and demand.

• Question from Ken Worthington (J.P. Morgan): Is AI infrastructure investing getting crowded? How important are partnerships for scaling given substantial capital being raised?
  Response: Competition exists, but demand for Brookfield's AI fund remains strong due to differentiators in energy, digital infrastructure capabilities, and focus on full AI value chain (not just data centers). Strategic partnerships are important for origination and scaling.

• Question from Alex Blostein (Goldman Sachs): How will the AI boom benefit Brookfield's fee growth over 12-18 months?
  Response: AI infrastructure is the largest and fastest-growing theme, driving fee growth beyond the dedicated AI fund across real estate, credit, and energy strategies, with large deal sizes also driving incremental capital markets and transaction fees.

• Question from Craig Siegenthaler (Bank of America): How does the Oaktree consolidation affect potential for S&P 500 inclusion given U.S. headcount mix?
  Response: Business is well-positioned with strengthening U.S. presence; plans to provide S&P with an updated submission shortly, believing reclassification is warranted.

• Question from Michael Brown (KBW): Characterize the product suite today and future, and provide update on strategic partnerships including AllianceBernstein.
  Response: Private wealth remains a significant growth vertical with net inflows. Product suite to grow at 30%-50% CAGR via new products and distribution. AllianceBernstein partnership is a step into the 401 market, with more similar partnerships expected.

• Question from Michael Cyprys (Morgan Stanley): How do you see AI compute evolving and the right long-term vehicle for data centers?
  Response: Compute is currently constrained, enabling attractive long-term contracts. Focus is on scaling a flagship AI infrastructure fund first; multiple dedicated vehicles expected over time as deployment grows.

• Question from Dean Wilkinson (CIBC): Clarification on AllianceBernstein collaboration regarding existing target date solutions and deployment cadence.
  Response: A new product is being created (credit from AllianceBernstein, real assets from Brookfield) to distribute in 2027, designed to be deployed through other target date providers, with incremental growth expected.

• Question from Dan Fannon (Jefferies): Context on sustaining momentum into next year given strong 2026 fundraising.
  Response: 2027 fundraising will be very strong due to final closes and new launches, though likely not as big as 2026. Fee trajectory remains solid, with potential upside from earlier carry realization.

• Question from Mario Saric (Scotiabank): Will 2027 growth remain above five-year investor day forecast?
  Response: Core growth trajectory remains strong and in line with long-term targets, with potential upsides from public market vehicle outperformance.

• Question from Crispin Love (Piper Sandler): How are you protected if too much digital infrastructure capacity is built, and what are key risks/mitigation?
  Response: Protect via discipline: only build against secured long-term revenue constructs, focus on best projects/markets/counterparties, ensuring return of and on capital without recontracting or terminal value risk.

• Question from Jamie Goins (NBCCM): Evolution of fee rates in credit business post-Oaktree acquisition and ability to expand.
  Response: Oaktree inclusion won't dramatically impact fee rates; modest mix impact in Q3. Combination is expected to drive significant earnings growth and operating leverage in the credit business.

Contradiction Point 1

Fee Outlook and Margin Trajectory

Contradiction on margin trajectory and fee rate impact post-Oaktree integration, affecting financial performance expectations.

Jamie Goins (NBCCM) - Jamie Goins (NBCCM)

2026Q2: The primary expectations are for significant earnings growth... which will drive profit growth more than fee rate changes. - [Connor Teskey](CFO)

"With the Oaktree acquisition closed, what is the credit business's fee rate evolution and likelihood of sustaining/expanding them?" - Michael Brown (UBS)

2026Q1: Operating leverage is expected across all businesses, supporting margin growth on an apples-to-apples basis going forward. No fee rate compression is being seen... - [Hadley Peer Marshall](CFO)

Contradiction Point 2

Fundraising Outlook for 2027

Contradiction on the expected scale of 2027 fundraising relative to 2026, impacting investor outlook on growth momentum.

Dan Fannon (Jefferies) - Dan Fannon (Jefferies)

2026Q2: 2027 fundraising will be very strong but likely not as large as 2026. - [Connor Teskey](CFO)

What is the outlook for sustaining momentum and product launches next year given strong 2026 fundraising driving FRE growth? - Alexander Blostein (Goldman Sachs)

2026Q1: The outlook for 2026 is incredibly positive, with expectations for a significant record year in fundraising. - [Connor Teskey](CFO)

Contradiction Point 3

Characterization of AI as a Net Positive and Firm-Wide Software Exposure

Contradictory statements on AI's impact and direct exposure to software, affecting strategic emphasis and risk assessment.

Alex Blostein (Goldman Sachs) - Alex Blostein (Goldman Sachs)

2026Q2: AI infrastructure is the largest and fastest-growing theme at Brookfield. The benefit extends... supporting growth in real estate, credit, and energy strategies. - [Connor Teskey](CEO)

How will the AI boom impact Brookfield Asset Management's management fee growth and capital markets opportunities in the next 12-18 months? - Michael Brown (UBS)

2025Q4: AI is a strong net positive for Brookfield, validating its focus on digital infrastructure and power. Firm-wide exposure to software is very minimal: <1% in private equity, none in credit... and underweight in opportunistic credit. - [Connor Teskey](CEO)

Contradiction Point 4

Expected Impact of Oaktree Acquisition on Credit Business Fee Rates

Contradiction on whether the acquisition will significantly affect fee rates, influencing the credit business outlook.

Jamie Goins (NBCCM) - Jamie Goins (NBCCM)

2026Q2: The Oaktree acquisition is not expected to dramatically impact fee rates. There may be a 'modest mix issue' in Q3 due to the acquisition. - [Connor Teskey](CEO)

How have fee rates in the credit business evolved post-Oaktree acquisition, and what is the likelihood of sustaining or expanding them? - Alexander Blostein (Goldman Sachs)

2025Q4: Three announced acquisitions (Oaktree, Just Group, and Q4 credit acquisitions) will add $200 million of incremental annualized FRE growth. - [Conor Teskey](CEO)

Contradiction Point 5

Fee Rate Trends and Credit Business Outlook

Contradiction on whether fee rate increases are a broad trend or an isolated event, affecting the strategic view on the credit business.

Jamie Goins (NBCCM) - Jamie Goins (NBCCM)

2026Q2: The blended fee rate is trending up marginally. - [Bruce Flatt](CEO), [Hadley Peer Marshall](CFO)

How have fee rates in the credit business evolved since the Oaktree acquisition, and what is the likelihood of sustaining or expanding them? - Sohrab Movahedi (BMO Capital Markets)

20251107-2025 Q3: Blended fee rate is trending up. - [Bruce Flatt](CEO), [Hadley Peer Marshall](CFO)