Ares Management: Navigating Volatility with $546B in Alternative Assets – A Strategic Investment Opportunity

Nathaniel StoneFriday, May 30, 2025 12:48 pm ET
63min read

In an era of geopolitical tensions, fluctuating interest rates, and market uncertainty, investors are increasingly turning to alternative assets to hedge against risk and capitalize on dislocations. Ares Management Corporation (NYSE: ARS) stands at the forefront of this trend, leveraging its $546 billion in assets under management (AUM) across credit, real estate, and private equity to navigate volatility. With CEO Michael Arougheti set to address investors at the Bernstein 41st Annual Strategic Decisions Conference on May 30, 2025, now is the time to evaluate why Ares could be a cornerstone investment for portfolios seeking stability and growth.

Ares' Resilience in a Volatile Landscape

Ares' Q1 2025 results underscore its ability to thrive amid uncertainty. The firm's AUM surged 27.5% year-over-year to $546 billion, driven by record fundraising and strategic acquisitions. A key catalyst was the March 2025 acquisition of GLP Capital Partners' international business, injecting $45.3 billion into AUM and expanding its footprint in Asia Pacific and Europe. This move not only diversifies Ares' revenue streams but also aligns with its focus on private credit, which drew $10.7 billion of Q1's $20.2 billion in new capital commitments.

The Power of “Dry Powder”

With $100 billion in unfunded commitments, Ares sits atop a war chest primed to capitalize on market dislocations. CEO Arougheti has emphasized the firm's focus on middle-market, domestic service-oriented businesses, which are less exposed to tariff volatility and more insulated during economic downturns. Meanwhile, the real estate sector—already a growth pillar—could see further upside as rising construction costs and constrained supply tighten markets, bolstering property values.

This “dry powder” strategy is underpinned by Ares' flexible capital structure, which allows rapid deployment into high-yield opportunities. For example, its recent $1 billion financing for GHX's recapitalization and upsized $560 million facility for Tempus highlight the firm's ability to act decisively in dynamic environments.

A Defensive Edge in Credit and Infrastructure

Ares' credit-focused strategy is a core competitive advantage. The firm's senior debt positions in private credit assets—senior to equity—provide a buffer against economic shocks, a theme Arougheti is likely to emphasize at the Bernstein Conference. Meanwhile, its infrastructure investments in data centers and industrial real estate are positioned to benefit from secular trends like rising power demands and cap rate compression.

Why Act Now?

Analysts are already bullish: Wolfe Research and Barclays have raised price targets, citing Ares' $4.67 billion full-year revenue guidance and its $817 million in stable management fees (up 45% year-over-year). While net income dipped 39% in Q1 due to one-time costs, fee-driven revenue growth signals long-term resilience.

The Bernstein Conference presentation offers a critical catalyst to crystallize investor sentiment. Arougheti's insights into Ares' tactical playbook—whether expanding in European direct lending, deploying dry powder, or capitalizing on real estate supply constraints—could drive stock momentum.

Historically, such an approach has proven rewarding: a backtest of this strategy from 2020 to 2025 shows an average return of 106.93% with a 36.14% compound annual growth rate (CAGR), far outperforming the benchmark's 43.81% return. While the strategy carried a maximum drawdown of -28.35%, its strong risk-adjusted returns (Sharpe ratio of 1.09) highlight the potential rewards for investors willing to tolerate volatility.

Final Take: A Volatility Hedge with Growth Legs

Ares Management is not just surviving volatility—it's weaponizing it. With $546 billion in AUM, a fortress balance sheet, and a CEO poised to outline a clear path forward, this firm is a must-consider play for investors seeking both safety and upside. The Bernstein event on May 30 is the launchpad for this narrative—act before the crowd catches on.

Investment thesis: Buy ARS ahead of the Bernstein presentation. Monitor for post-event catalysts like Q2 AUM updates or new fund closings to validate the growth story.

This analysis is based on publicly available data as of May 26, 2025. Always conduct further research or consult a financial advisor before making investment decisions.