Ares Management Corporation (ARES): A Beacon of Stability in a Volatile Market

In an era of economic uncertainty, few sectors exemplify resilience like alternative asset management. Ares Management Corporation (NASDAQ:ARES), with its $546 billion in assets under management (AUM) as of March 2025, has positioned itself as a leader in navigating market cycles through a diversified, integrated strategy. By combining a global footprint, a track record of performance across asset classes, and strategic acquisitions that amplify its multi-asset advantage, Ares is emerging as a compelling long-term investment. Here's why.

The Power of Diversification: A Multi-Asset Play

Ares' success stems from its ability to aggregate capital across credit, real estate, private equity, and infrastructure—a strategy that insulates it from sector-specific volatility.

. This diversification is critical in today's market, where interest rate fluctuations, geopolitical tensions, and macroeconomic shifts create headwinds for single-asset managers.

For instance, its real estate division, bolstered by the 2024 acquisition of Black Creek Group's U.S. operations, now spans over 30 million square feet of industrial and logistics assets—a sector benefiting from e-commerce growth. Meanwhile, its private equity arm focuses on mid-market firms with durable business models, such as the recent GHX recapitalization, which addresses healthcare supply chain inefficiencies. Such opportunities highlight Ares' knack for identifying secular trends and deploying capital where others cannot.

Consistent Performance Through Cycles

Ares' track record speaks to its ability to deliver returns regardless of market conditions. Over the past decade, it has grown its AUM from $295 billion in 2021 to $546 billion in early 2025—a 79% increase—despite periods of rising interest rates and equity market turbulence. This growth is not merely a function of inflows but also of strong investment performance. For example, its flagship credit funds have outperformed benchmarks in both up and down markets, a testament to its disciplined underwriting and risk management.

The company's second-quarter 2025 earnings report, due on August 1, will likely reaffirm this trajectory. Analysts anticipate updates on its infrastructure debt portfolio, which has become a growth engine, and its ESG-integrated strategies, such as the Ares Private Markets Fund (APMF), which focuses on sustainable investments.

Strategic Acquisitions and ESG Integration: Building a Multi-Asset Moat

Ares has aggressively expanded its platform through acquisitions that enhance its multi-asset capabilities. The 2024 purchase of Black Creek's U.S. real estate business added scale and expertise in logistics, a sector with structural demand. Similarly, its minority stake in the NFL's Las Vegas Raiders exemplifies its willingness to explore alternative opportunities in entertainment and real estate, further diversifying its revenue streams.

Equally important is Ares' integration of ESG principles into its investment processes. The firm now requires ESG risk assessments for all new investments and has committed to aligning $20 billion of assets with the UN Sustainable Development Goals by 2027. This not only mitigates long-term risks but also attracts institutional capital from ESG-focused investors, a demographic driving $40 trillion in global assets.

Valuation: Undervalued Relative to Growth Prospects

Despite its strengths, Ares trades at a discount to peers. As of June 2025, its price-to-earnings (P/E) ratio of 10.5 lags behind Blackstone (BX) at 12.2 and KKR (KKR) at 11.8. . This undervaluation persists even as Ares' fee-related earnings (FRE) growth—driven by rising AUM and higher management fees—outpaces industry averages.

The disconnect likely reflects near-term concerns, such as redemptions in legacy credit funds or geopolitical risks. However, these are cyclical issues, not structural flaws. With $546 billion in AUM and a pipeline of new funds, including its $1.5 billion APMF, Ares is well-positioned to capitalize on the $13 trillion expected to flow into alternatives by 2030.

The Bottom Line: A Long-Term Play with Catalysts

Ares Management is a rare combination of scale, diversification, and execution. Its Q2 earnings will be a key catalyst, offering clarity on AUM growth and FRE margins. Investors should view dips in its stock price—currently around $25, down 12% year-to-date—as buying opportunities.

The firm's multi-asset model, ESG integration, and disciplined capital allocation make it a standout in an industry prone to boom-and-bust cycles. For long-term investors seeking exposure to a manager that thrives in volatility, Ares is a compelling choice.

Investment Thesis:
- Buy Rating: For investors with a 3–5 year horizon, Ares offers a mix of defensive income (its dividend yield of 3.2%) and growth through its expanding AUM.
- Hold Rating: Until the August earnings report clarifies near-term headwinds.
- Key Watchlist: AUM growth in infrastructure and private equity, FRE margin expansion, and the outcome of its ongoing capital returns program.

In a market where certainty is scarce, Ares Management's steady hand and diversified engine make it a rare gem.