Business
How Ares is capitalizing on the ‘retail revolution’ in alternative assets
A version of this article appeared in CNBC’s Inside Alts newsletter, a guide to the fast-growing world of alternative investments, from private equity and private credit to hedge funds and venture capital. Sign up to receive future editions, straight to your inbox.
At Ares Management’s analyst day last month, the alternative asset manager quietly bumped up its three-year fundraising targets by 25%.
CEO Michael Arougheti told CNBC the change was due to better-than-expected momentum among individual, wealthy investors.
A recent survey by State Street found that the “retail revolution” will drive more than half of the private market flows in the next few years, a seismic shift from traditional sources of fundraising, which historically comprised institutional investors. Ares has been one of the key beneficiaries of the trend, having offered different types of vehicles for retail for more than two decades.
“What’s changed now is the quality of the product, the scale of the product – the investment that we’ve made in servicing the products,” Arougheti said in an interview.
Ares has 185 people in 10 offices globally who are working on product development and client education, he said. The firm already has more than $50 billion in assets under management from semiliquid vehicles targeted at retail. Arougheti said Ares’ market share of the retail segment is approaching 10%.
As the momentum for retail allocation in alternatives builds, some have cautioned that managers will funnel weaker deals toward individual investors, while reserving better assets for institutional investors. A recent paper by Harvard University found that there’s a performance disadvantage among funds sold more broadly, which the author said, “raises the possibility that products with poor performance are being channeled to investors who are less wealthy and less financially sophisticated.”
“This narrative of weaker products being reserved for retail is just not true,” Arougheti said, adding that only the largest managers with the “highest quality” deals have enough scale to build their wealth platforms.
“We actually allocate our investments based on available capital, and so a lot of the investments that are finding their way into our institutional client portfolios are also finding their way into our wealth product,” Arougheti said. “And so they’re growing together.”
Ares had about $572 billion in assets under management as of the end of June, with two-thirds in credit. The firm has investments in more than 3,000 middle-market companies.
As for the value proposition – why individual investors would be so interested in alternatives right now, especially when public equities have returned so much in recent years – Arougheti said he thinks it’s a response to the increasing concentration in the liquid securities.
“It’s actually pretty difficult to navigate a diversified portfolio in the public markets,” Arougheti said. “They’re looking for diversified and noncorrelated equity exposure, so private equity, real estate, etc.”
The retail revolution that Ares is so bullish on doesn’t even account for the potential opening up of 401(k) retirement accounts for greater allocation toward alternatives, which could bolster the firm’s AUM targets even more. But Arougheti was somewhat skeptical about how quickly this market would move the needle for the industry.
“I actually don’t think we’ll see change in behavior until there’s a change in regulation,” he said.
“And the challenge with that – that sector – which is almost to the disadvantage of the end client, is it’s very, very fee-sensitive, and the narrow definition of fiduciary duty is cost, not what my unit of return delivered for that cost,” Arougheti said. “So, almost by definition, structurally, the market is not geared to alts, where fees are higher, but you pay for a much higher net return. So until you give the plan sponsors that comfort that they’re free of litigation risk for having not pursued their fiduciary duty, I think it’s going to be hard.”
Still, as the industry evolves toward the masses, Arougheti encouraged a rethinking of the term “alternative.”
“There’s nothing ‘alternative’ about what we do anymore, right?” he said. “The biggest misconception is that somehow or another, the private markets are creating investment exposures that otherwise wouldn’t exist, that we’re creating demand for capital that otherwise wouldn’t exist, as opposed to just understanding this is the natural evolution and innovation in the capital markets that we’ve seen for generations.”
NEW DELHI: Govt on Saturday significantly increased export duties on diesel and aviation turbine fuel to dissuade oil refiners from exporting these fuels and to ensure adequate availability in the domestic market amid ongoing tensions in West Asia. The ministry of finance issued a series of notifications hiking the export duty on diesel by more than 150% – from Rs 21.5 per litre to Rs 55.5 per litre – with immediate effect. The levy on ATF, or jet fuel, was increased from Rs 29.5 per litre to Rs 42 per litre. The export duty on petrol continues to be nil. Under the revised structure, the special additional excise duty on high-speed diesel has been raised to Rs 24 per litre, while the road and infrastructure cess now stands at Rs 36 per litre, which means a large chunk will now flow to the Centre. Govt said these duties are not meant to boost revenue, but to stop fuel exporters from taking undue advantage of price differences. The Centre had, on March 27, imposed an export duty of Rs 21.5 per litre on diesel and Rs 29.5 per litre on ATF in a bid to check windfall gains, as fuel was in short supply in international markets due to a squeeze on energy supplies amid the military conflict and export curbs imposed by China. It had also slashed excise duty on diesel and petrol to shield consumers and oil companies from the impact of high crude prices. Retail prices of automobile fuels in India have not increased despite high volatility in the international crude market, while only a small part of the international price pressure has been passed on to domestic flights. The windfall tax on exports of diesel and ATF helps the Centre partly offset the impact of the excise duty cut. On March 27, govt had estimated revenue gains from export duties at around Rs 1,500 crore in a fortnight. The further hike in export duties is likely to lead to higher revenue gains. In a statement, the ministry of petroleum had said, “At a time when international diesel prices have surged sharply, the levy is designed to disincentivise exports and ensure that refinery output is directed first tow-ards meeting domestic demand.“
A convoy of vans, lorries, tractors, and even a limousine took part in a slow moving protest around the town centre on Saturday afternoon.
Source link
Stock markets are as turbulent as they have ever been. Those not used to seeing their wealth jump and plunge from day to day might well be wary of trying them out for the first time.
But by investing for the longer term, investors who pick a stocks and sharesISA will almost certainly do better than those who play it safe by holding savings in cash – and they will never pay tax on any earnings.
The average stocks and sharesISA account is worth over £65,000, significantly higher than the typical cash ISA, which holds less than £13,500.
“With UK inflation elevated at around 3 per cent over the past year, it’s not a great time to be sitting on cash, especially given that over the past 12 months, the average stocks and sharesISA grew around 11 per cent, compared to an average return of 3.48 per cent for cash ISAs,” explained Dan Moczulski, eToro UK’s managing director.
With the new tax year’s allowance now in effect – worth £20,000 per person – we asked five experts to pick one fund they would be willing to buy into themselves.
While not recommendations for everybody, they offer food for thought, as well as better diversification and lower risk than buying individual company shares.
Scottish Mortgage FTSE 100
Annabel Brodie-Smith, communications director of the Association of Investment Companies (AIC)
Brodie-Smith is going for the Scottish Mortgage FTSE 100 investment trust managed by Baillie Gifford.
This company invests around the world in exciting private companies like SpaceX and Revolut, as well as public-listed companies like Meta, Nvidia and ASML.
Get a free fractional share worth up to £100.
Capital at risk.
Terms and conditions apply.
ADVERTISEMENT
Get a free fractional share worth up to £100.
Capital at risk.
Terms and conditions apply.
ADVERTISEMENT
They are aiming to invest in the companies shaping the future – a mix of technology, healthcare, consumer services and more. The trust currently trades on a 5 per cent discount and has low charges of 0.31 per cent. This is an investment trust for long-term investors with a high appetite for risk.
This fund went up 27 per cent in the last year and is up 68 per cent over five years.
iShares Over 15 Years Gilts Index Fund (UK)
Alan Miller, CIO at SCM Direct
This fund tracks the FTSE Actuaries UK Conventional Gilts Over 15 Years Index and is therefore a fund investing solely in sterling-denominated UK government bonds, with a minimum remaining maturity of 15 years. It holds 27 gilts, has net assets of £2.95bn, and carries a Morningstar Gold medal.
There are no performance fees and a charge of just 0.1 per cent a year.
Miller says: “One of the most compelling opportunities in the market is hiding in plain sight: UK government bonds.
“Here’s the number that stops people in their tracks: 4.95 per cent compounded over 10 years is a 62 per cent return before charges, backed entirely by the UK government and sheltered from tax inside an ISA.”
Gilt yields are close to multi-decade highs. Locking in a yield to maturity of nearly 5 per cent inside an ISA wrapper, where all income and gains are tax-free, is exceptional by historical standards, and at an ongoing charge of just 0.1 per cent per annum, virtually nothing is lost to fees.
He adds: “Boring has rarely looked this good. It’s the kind of deal most active fund managers can only dream of offering.”
This fund is basically flat over the last year and up 9 per cent over five years. That’s because interest rates have been very low – as they are now higher, it should fare better from here.
Man Income
Paul Agnell, head of investment research, AJ Bell
Of the Man Income fund, Agnell says: “The fund’s pragmatic and analytical managers, Henry Dixon and Jack Barrat, invest in undervalued UK companies across the market cap spectrum, which are paying a yield at least in line with the market. In order to avoid value traps, the managers also look at a firm’s cashflow and assets.”
So, the team seek out undervalued and unloved companies, of which the UK market continues to present opportunities.
Their investment process centres on identifying two types of stocks: those trading below their replacement cost (what it would cost today to replace a company’s assets and operations) that are also cash generative, and those where the market appears to be undervaluing profit streams.
The fund has made an excellent start to 2026, up over 10 per cent in the first two months alone and was up 28 per cent over 2025. Banks were a key contributor over 2025, led by Lloyds, but with strong contributions also coming from Barclays and Standard Chartered.
The charge on the Man Income fund is 0.9 per cent.
Murray International
Philippa Maffioli, Blyth-Richmond Investment Managers
Murray International aims to blend global diversification with a solid income stream. The yield is around 3.5 per cent.
Maffioli says: “I like Murray International’s focus on dependable cashflows and sensible valuations, rather than chasing the highest yield. It also isn’t tied to the UK market, so you’re spreading risk across regions and currencies.”
Day-to-day decisions now sit with Martin Connaghan and Samantha Fitzpatrick, but the approach remains consistent: sustainable income with long-term growth potential. If you reinvest the dividends, it can be a strong compounding option over time.
It charges fees of 0.5 per cent. It is up 36 per cent in the last year and up 60 per cent over five years.
Pantheon Infrastructure Plc
Jonathan Moyes, head of investment research, Wealth Club
Pantheon Infrastructure Plc aims to provide investors with some diversification away from global stock markets while providing the potential for attractive equity-like returns over the longer term.
The FTSE 250 trust co-invests alongside some of the world’s leading infrastructure managers. Its portfolio includes large-scale data centres, gas distribution networks, US renewable energy and storage developers, as well as one of Europe’s leading temperature-controlled logistics and transport businesses.
Moyes says: “These assets are prized for their mission-critical nature and long-term contracted revenue streams. Nonetheless, shares in Pantheon Infrastructure change hands at an attractive 13 per cent discount to net asset value.”
That means the shares in the fund are valued more highly than the actual fund, which means easy wins – if that discount narrows. Trusts’ valuations do not always do so, while others might trade at a premium – in other words, more than the sum of their parts.
Investors should note this is a high-risk investment and should form part of a diversified portfolio. The trust has total ongoing charges of 1.29 per cent. The fund is up 30 per cent in the last year, but is too new for a five-year view.
Depending on which investment platform you use, and like any other fund, there may also be share dealing costs, so look to minimise those where you can so they don’t eat into your long-term returns.
When investing, your capital is at risk and you may get back less than invested. Past performance doesn’t guarantee future results.
Freshman guard Isaiah Johnson commits to transfer to Texas
Denver Pioneers win 3rd NCAA men’s hockey title in 5 years
‘Batman’ star John Nolan passes away at 87 as fans mourn his loss
-
Entertainment1 week agoJoe Jonas shares candid glimpse into parenthood with Sophie Turner
-
Tech1 week agoOur Favorite iPad Is $50 Off
-
Sports1 week agoUConn Final Four run could trigger a $50M furniture giveaway for Massachusetts-based Jordan’s Furniture
-
Business1 week agoGold prices in Pakistan Today – April 3, 2026 | The Express Tribune
-
Entertainment1 week agoBlake Lively reacts to harassment claims dismissal against Justin Baldoni
-
Business1 week agoVideo: Why Is the Labor Market Stuck?
-
Politics1 week agoIran can sustain Strait of Hormuz closure for years, will cut US military logistics: Official
-
Entertainment1 week agoBarbie Ferreira reveals where she stands with ‘Euphoria’ girls after exit