Ares Management Navigates Tariffs with Resilience and Growth

Amid rising geopolitical tensions and trade disputes, Ares Management (ARES) has emerged as a standout performer in the alternative asset management sector. CEO Michael Arougheti’s assertion that tariffs have left the firm “pretty unaffected” underscores its structural advantages and strategic adaptability. Let’s unpack how Ares is weathering the storm—and why investors might want to take notice.

Financial Resilience in a Volatile Environment

Ares’ Q1 2025 results highlight its ability to thrive even as tariffs and geopolitical risks roiled markets. Key metrics include:
- Fee-Related Earnings (FRE) rose 22% year-over-year to $367 million, driven by robust management fees (+18% to $818 million).
- Total Assets Under Management (AUM) surged 27% to $546 billion, fueled by $20 billion in new capital commitments—the highest first-quarter level in its history.
- After-tax realized income per share jumped 36%, reflecting strong performance across credit and real estate portfolios.

These figures paint a picture of a company leveraging its scale and diversified strategies to outpace macroeconomic headwinds.

Why Tariffs Haven’t Derailed Ares’ Engine

Arougheti emphasized that tariffs pose minimal direct risk to Ares’ core businesses:
1. Credit Portfolio Strength:
- Over 96% of Ares’ $546 billion AUM is in senior loans, which sit atop capital structures, shielding them from defaults.
- Nonaccrual rates remain ultra-low at 1.5% of cost, with no expectation of spikes even amid trade disruptions.
- Private equity firms, which hold equity stakes below Ares’ senior loans, have strong incentives to support portfolio companies.

1. Real Estate Upside:
2. Nontraded REITs delivered 2.4% net returns in Q1, benefiting from supply-constrained markets.

3. Tariffs may indirectly boost real estate values by raising construction costs and limiting new supply, aligning with Ares’ focus on infrastructure and logistics.

4. Geographic Diversification:

5. European private credit markets are booming, with Ares raising $630 million for a semi-liquid product in Q1.
6. The firm’s global reach insulates it from regional trade disputes, as only 14% of corporate loan portfolios involve international supply chains.

Strategic Moves to Capitalize on Volatility

Ares isn’t just weathering storms—it’s turning them into opportunities:
- Record Capital Deployment: Over $31 billion deployed in Q1, with a 49% gross-to-net ratio in private credit, highlighting efficient capital use.
- Dry Powder Power: $142 billion in available capital (including $99 billion in non-fee-paying AUM) positions Ares to pounce on dislocations.
- Wealth Management Growth: Ares’ semi-liquid funds attracted $3.7 billion in equity commitments, even as public markets wavered.

Challenges and Risks

Not all is smooth sailing. The integration of GCP International, which added $45 billion to AUM, caused a modest margin drag due to its slightly lower FRE margins. However, CFO Jarrod Phillips expects synergies to drive 0–150 basis points of margin expansion over time.

The Bottom Line: Ares’ Resilience Justifies Optimism

Ares’ performance defies the gloom often tied to trade tensions. With $20 billion in record fundraising, a 27% AUM surge, and a 20% dividend hike, the firm is proving its model works in any climate.

Investors should note:
- Structural Safety: Senior loans and low nonaccruals limit downside.
- Growth Catalysts: $142 billion in deployable capital and European expansion fuel future upside.
- Valuation: GuruFocus estimates a potential 15% downside if FRE growth stalls, but Ares’ record suggests this is unlikely.

Conclusion: Ares is Built for Turbulence

Ares Management’s Q1 results underscore its status as a recession-resistant powerhouse in alternative assets. With trade wars and tariffs dominating headlines, its focus on senior credit, real estate resilience, and global diversification positions it to outperform peers. The data is clear: Ares isn’t just “unaffected”—it’s thriving. For investors seeking stability and growth, this firm is worth a closer look.

Final Takeaway: Ares’ structural advantages, record fundraising, and $142 billion dry powder make it a compelling play on both current volatility and long-term growth.