StepStone Group (STEP) investor relations material

Market trends and LP behavior

• Public pension LPs are at or above policy targets, slowing deployment, while insurance and family offices remain active, with insurance allocations around 7% and family offices opportunistic.

• Distributions to LPs have halved over the past three years, with yields dropping from 20-22% to 11-13%, making distribution rates a key focus for LPs.

• Deployment is up 10% year-over-year in dollar terms, but deal count is down, reflecting a focus on higher-quality, larger companies.

• Realizations and distributions are improving, but yields remain a concern due to expanding net asset values.

• Approximately $40 billion in committed but undeployed capital is expected to be invested at an $8-9 billion annual run rate.

Growth strategies and product innovation

• Managed accounts have a 90% re-up rate at 120% of prior size, driving over 100% growth in that segment.

• Commingled funds are targeting nearly $20 billion in the current fiscal year, with $9 billion already raised.

• Wealth management is a major growth engine, expanding from $500 million to over $20 billion AUM in five years.

• Flagship products like SPRING and SPRIM offer diversified access to private markets, with SPRING showing under 1% redemption and strong performance from sectors like AI, energy, defense, and healthcare.

• Infrastructure and credit products are seeing increased demand, with a focus on diversification and low redemption rates.

Wealth management and retail channel outlook

• Wealth platform emphasizes ease of use, diversification, and education, with most strategies requiring no accreditation and simple purchase processes.

• Model portfolios and interval fund structures are positioned for long-term growth, especially as retail allocations to privates remain low.

• The 401(k) market, with nearly zero private market allocation, is seen as a major future opportunity.

• Internationally, Australia and Mexico are advanced in private market adoption for retirement, with the UK market also showing progress.