Ares Stays Cautious on Traditional Alliances Amid Retail Push

Ares Management Corp. has remained cautious about forming partnerships with traditional financial firms to expand its reach into the retail investment market, despite a growing trend among alternative asset managers to collaborate with larger institutions. CEO Michael Arougheti emphasized during the Goldman Sachs Financial Services Conference that he hasn't seen clear evidence that such partnerships improve investment outcomes for clients according to reports. At the same time, other firms like Apollo and Blackstone have announced initiatives to bring private assets to everyday investors through new funds and ETFs.

The 401(k) market has emerged as a key battleground for private-asset managers, with recent regulatory changes under President Donald Trump making it easier to include alternative investments in defined-contribution plans. Arougheti supports this shift, calling 401(k)s a "huge" opportunity for alternatives. However, he cautioned that questions remain about fiduciary duties, suitability for retail investors, and the need for clearer frameworks before private assets become widely accessible according to CEO statements.

Ares' stance comes as the asset management industry evolves rapidly, with traditional players and alternatives firms both vying for a slice of the retail market. Invesco, for example, recently announced a partnership with LGT Capital Partners to expand private market access, highlighting the competitive landscape Ares is navigating. Meanwhile, Ares itself made headlines this week with a major $1 billion securitization via its CLO subsidiary, signaling its continued focus on private credit and debt strategies according to filings.

Why the Standoff Happened

Arougheti's reluctance to pursue partnerships stems from a core belief in delivering value through Ares' existing strategies,

rather than diluting them in joint ventures. He noted that while others see synergy in combining traditional and alternative products, Ares has not been convinced that such combinations consistently benefit investors according to CEO remarks. This stance contrasts with the approach of firms like Apollo and Blackstone, which have formed alliances with Vanguard and others to create new funds that blend public and private assets according to industry analysis.

The CEO also pointed to the broader regulatory environment as a potential enabler but also a barrier. While Trump's administration has made it easier to include non-traditional assets in retirement accounts, Arougheti stressed that legal and ethical issues-such as the suitability of private assets for retail investors-must be resolved first according to financial commentary. Until these questions are addressed, Ares will remain on the sidelines but is prepared to act if the trend gains momentum.

How Markets Reacted

Ares Management's stock price surged in response to recent developments, including its announcement that it will join the S&P 500 index. On Wednesday, the stock jumped 6% as investors celebrated the upgrade, which replaces Kellanova amid its acquisition by Mars Inc. according to market analysis. This move reflects Ares' growing influence in the asset management sector and its increasing appeal to institutional investors.

Meanwhile, other firms in the alternative investment space also saw significant stock price movements. Ares Capital Corporation announced a $1 billion debt securitization through a CLO subsidiary, further demonstrating the firm's strength in private credit according to filings. The deal, structured with floating-rate notes, underscores Ares' ongoing ability to execute complex financial strategies while maintaining strong balance sheet health.

What Analysts Are Watching

Analysts are closely monitoring whether Ares' current strategy will keep it competitive in the evolving private-asset landscape. The firm has shown a willingness to expand its footprint, as seen in its recent acquisition of Redback Boots in Australia, its first foray into the local private equity market according to company news. This move, led by former Credit Suisse executive John Knox, signals Ares' intent to diversify its geographic and industry reach.

At the same time, the broader industry is shifting toward more accessible investment products, particularly in the ETF space. State Street and BlackRock have both launched or announced leveraged loan and outcome-based ETFs, catering to a growing demand for alternative income sources among retail investors according to market reports. Ares has yet to announce any similar initiatives, but Arougheti's comments suggest it is not entirely out of the loop.

Investors and analysts are also watching how Ares navigates the ongoing debates over fiduciary responsibilities when it comes to private assets in 401(k) plans. If the firm decides to pursue partnerships later, it could face a more mature and competitive market than it would have a year ago. For now, however, Ares' CEO remains focused on proving the value of its current approach.