Victory Capital's $316B Year-End Marred by Q4 Outflows

SAN ANTONIO, TX – January 13, 2026 – Victory Capital Holdings, Inc. (NASDAQ: VCTR) closed 2025 with a formidable $316.6 billion in total client assets, according to a year-end report released by the firm. However, the headline figure is shadowed by a significant detail that has caught the attention of market watchers: the company experienced long-term net outflows of $2.1 billion during a fourth quarter characterized by broad market strength.

The San Antonio-based global asset manager reported total Assets Under Management (AUM) of $313.8 billion as of December 31, 2025. While these numbers solidify its position as a major industry player, the fourth-quarter client withdrawals present a complex picture for investors to analyze as the company prepares to report its full financial results next month.

An Outflow Puzzle in a Bull Market

The $2.1 billion in net outflows from long-term assets is particularly striking when set against the backdrop of a robust Q4 2025 market. The S&P 500 index climbed 2.7% in the final quarter, contributing to a full-year return of nearly 18% and reaching multiple all-time highs. More impressively, international equities surged, with developed markets rising 4.9% in Q4 and outperforming U.S. stocks for the year by the widest margin since 1993.

This bullish environment, fueled in part by two interest rate cuts from the U.S. Federal Reserve in the fourth quarter, would typically be expected to lift all boats in the asset management industry. Yet, Victory Capital's report reveals a divergence. The firm's total client assets saw a month-over-month decrease, slipping from $317.7 billion at the end of November to $316.6 billion to close out December.

A closer look at the breakdown by asset class reveals where the pressure was felt most acutely. The firm's U.S. Equity categories, including Mid Cap, Small Cap, and Large Cap, all saw their AUM decline from November to December. U.S. Mid Cap Equity fell from $31.0 billion to just under $30.0 billion, while U.S. Small Cap Equity dropped from $12.2 billion to $11.2 billion. This decline in U.S. equity assets is notable in a quarter where large-cap value stocks and even some defensive sectors posted strong gains. Similarly, the firm's Fixed Income AUM also ticked down to $80.5 billion from $80.8 billion, a move that contrasts with a generally stable-to-positive quarter for the broader bond market as the Fed's policy pivot lowered yields.

Shifting Tides in Investor Preferences

While some core categories faced headwinds, the report also highlighted areas of growth that reflect broader shifts in investor strategy. The firm's Global / Non-U.S. Equity assets grew from $30.2 billion to $30.7 billion during December, suggesting Victory Capital successfully captured a portion of the strong investor appetite for international markets. The firm’s "Solutions" platform, which offers multi-asset and customized strategies, also saw a healthy increase, rising from $90.1 billion to $91.2 billion. This may indicate a flight towards more diversified or outcome-oriented products amid underlying economic uncertainties, despite the market's upward trajectory.

Perhaps the most telling trend within the report is the shift in investment vehicles. Victory Capital's Exchange-Traded Funds (ETFs) saw their assets grow from $14.7 billion to over $15.0 billion. In contrast, its larger Mutual Fund and Separate Account businesses both experienced a decline in assets during the same period. Mutual fund assets fell by over $1.2 billion to $172.2 billion.

This pattern is not unique to Victory Capital and mirrors a long-standing, industry-wide migration of capital towards the lower-cost, more transparent, and often more tax-efficient ETF structure. The data suggests that even within a single firm, investors are increasingly favoring ETFs over traditional mutual funds, a trend that poses both a challenge and an opportunity for established asset managers.

Scrutiny Mounts Ahead of Earnings Call

The year-end asset report provides a critical, if mixed, snapshot for Victory Capital. On one hand, the firm commands a massive and diversified asset base. On the other, the Q4 outflows, particularly from its U.S. equity strategies during a bull run, raise important questions about product performance and client positioning. The divergence between the firm's flows and the market's direction suggests the withdrawals may be specific to certain strategies or a reflection of client reallocations away from the firm's offerings.

Investors and analysts will now look to the company's upcoming fourth-quarter 2025 earnings conference call, scheduled for the morning of February 5, 2026, for much-needed context. Management will be expected to provide a detailed explanation for the $2.1 billion in long-term net outflows and address the undercurrents of asset rotation within its product lineup.

Key topics of discussion will likely include the specific drivers of redemptions from its U.S. equity and fixed income funds, whether the outflows were concentrated within institutional or retail channels, and the firm's strategic response. Furthermore, management's outlook on its ability to capitalize on the growth in international investing and the continued demand for ETFs will be under intense scrutiny. How the leadership team frames these results and outlines its strategy for navigating the evolving investment landscape in 2026 will be crucial in shaping investor sentiment for the year ahead.