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.”
Great Britain’s energy system operator has warned of potential “tight days” this winter.
The National Energy System Operator (Neso) indicated that imported electricity from Europe could be used “when required” to power homes and businesses.
This outlook follows the publication of the latest winter energy reports by Neso and National Gas, after a rise in the price cap led to a surge in costs.
Neso stated on Thursday that electricity margins, reflecting the cushion of spare power supply, have risen to their strongest level since 2020.
However, it added that there could still be some “tighter periods”, which might need support from the energy industry.
“We expect a sufficient operational surplus throughout winter, although there may still be tight days that require us to use our standard operating tools, including system notices,” the report said.
System notices are how the grid operator informs the wider energy industry that electricity supply has not matched demand, allowing for production to increase if needed.
Early data from electricity firms and forecasters has suggested that “tight days” are most likely to take place in early December or mid-January.
Neso added that imports will be available when needed to help cover demand, supported by “adequate electricity supply across Europe”.
Deborah Petterson, director of resilience and emergency management at Neso, said: “A resilient and reliable energy supply is fundamental to our way of life.
“At Neso, we are looking at the upcoming winter and can report that this year’s winter outlook sets out the strongest electricity margins in six years.
“It is critical that we continue our work with the wider energy industry to prepare for the coming months to build on this foundation and maintain our world-leading track record of reliability.”
Meanwhile, the latest analysis from National Gas indicated that Great Britain has enough gas supply capability to meet peak demand.
It indicated supply can meet demand, “even accounting for unforeseen network outage scenarios”.
The gas network operator said gas demand is expected to be 3 per cent lower than last winter, easing pressure on supply.
It said high-demand days are still expected, but it stressed that it is “confident” the market will operate as needed.
Glenn Bryn-Jacobsen, director of energy systems and resilience at National Gas, said: “As we head into winter, we remain confident in the resilience of our gas system and our ability to meet Britain’s energy needs during periods of peak demand.
“The energy landscape is evolving, with a growing reliance on imports and the continued decline of UK continental shelf supplies.
“Meeting these challenges requires a coordinated, forward-looking approach, and we’re working closely with government, industry, and regulators to develop the right solutions that safeguard security of supply for the future.”
But the report from National Gas shows a fall in Britain’s gas storage capabilities, thanks to the Rough storage site off the coast of Yorkshire no longer storing gas, which means there is an increased reliance on importing liquified natural gas (LNG) to plug the gap in times of high demand.
The facility in the North Sea is the largest of its kind in the UK, but owner Centrica has stopped filling it with natural gas amid concerns over its financial viability.
The Rough site comprises about half of Britain’s storage capacity, and acts as a buffer when the weather is especially cold and demand for gas spikes.
Centrica has long warned it will be decommissioned without government support to allow investment in the site.
Mumbai: Gold and silver prices fell in early trade on Thursday, on the Multi Commodity Exchange (MCX), as investors booked profits after both metals hit record highs in the previous session.
At around 9:15 am, MCX Gold December futures were down 0.34 per cent at Rs 1,22,789 per 10 grams, while MCX Silver December futures slipped 0.75 per cent to Rs 1,48,738 per kg.
In Wednesday’s session, gold futures for December delivery had touched an all-time high of Rs 1,23,450 per 10 grams, and silver had hit a fresh peak of Rs 1,50,282 per kg.
Gold prices have seen a sharp rally this year, with domestic spot prices jumping more than 50 per cent so far.
The surge has been driven by global political and economic uncertainties, expectations of interest rate cuts by the US Federal Reserve, a weaker US dollar, strong central bank buying, and robust inflows into gold exchange-traded funds (ETFs).
Experts believe that despite some short-term volatility and profit booking, gold prices will continue to rise in the coming months.
They expect gold to surpass Rs 1,25,000 per 10 grams by the end of 2025, supported by rate cut hopes and concerns related to US trade tariffs.
“By year-end, gold on the MCX could move towards Rs 1,25,000–Rs 1,28,000 per 10 grams, while silver could test Rs 1,55,000–Rs 1,60,000 per kg, assuming the US Federal Reserve delivers one or two rate cuts and the dollar remains under pressure,” market experts added.
“Gold broke above $4,000 per ounce — up 53 per cent year-over-year — as investors sought safe havens amid the government shutdown and policy uncertainty,” analysts added.
The Dollar Index rallied to 98.90 due to political instability in France and Japan, which pressured commodities.
Oil fell 0.67 per cent to $62.13 per barrel as Trump announced progress on the ceasefire and inventories exceeded expectations, easing geopolitical risk premiums, as per the experts.
Business
Gold & silver price prediction today: Will MCX Gold, MCX Silver hit fresh highs? Here’s the outlook for gold, silver rates – The Times of India
Gold and silver price prediction today: Gold and silver prices are exhibiting bullish momentum, reaching new highs, says Abhilash Koikkara, Head – Forex & Commodities, Nuvama Professional Clients Group. He shares his views on gold and silver:
MCX Gold Price Outlook:
Gold has surpassed the crucial psychological mark of $4,000, signaling strong bullish momentum and renewed investor confidence in the precious metal. This uptrend is supported by the pattern of higher highs and higher lows, indicating sustained buying interest and a robust technical structure. The rally in gold can be attributed to global economic uncertainty, rising geopolitical tensions, and continued interest from central banks diversifying their reserves away from fiat currencies. Additionally, expectations of lower interest rates and persistent inflation concerns have further boosted gold’s appeal as a safe-haven asset.On the MCX front, gold prices have shown remarkable strength, trading well above the ₹1,22,000 mark. The momentum remains positive, with the next potential target seen around ₹1,27,000, provided prices sustain above the immediate support level of ₹1,20,000. Any minor dips towards this support zone are likely to attract fresh buying interest from traders and investors. Overall, the outlook for gold remains optimistic in both international and domestic markets, with the bullish sentiment expected to continue in the near term. As long as prices hold above key support zones, gold is likely to maintain its upward trajectory, reflecting ongoing global demand and macroeconomic tailwinds.
MCX GOLD Trading Strategy:
- CMP: 122000
- Target: 127000
- Stop Loss: 120000
MCX Silver Price Outlook:
COMEX Silver is on the verge of reclaiming the $50 mark, a level last seen in 2011, marking a significant milestone in the ongoing bullish momentum. The metal’s resurgence reflects strong investment demand, robust industrial use—particularly in solar panels and electric vehicles—and a renewed interest in precious metals as a hedge against inflation. If silver successfully breaches the $50 resistance, the next potential targets lie at $56 and subsequently $60, which would reaffirm the long-term bullish trend. The recent price action highlights growing confidence among investors as silver continues to outperform many other commodities.On the MCX front, silver prices have maintained strong upward momentum, currently trading well above the ₹1,43,000 support level. If this level continues to hold, prices have the potential to rally towards ₹1,56,000 in the near term. The overall trend remains positive, supported by global cues and firm demand from both industrial and investment segments. Any corrective moves are likely to be short-lived, as long as silver sustains above its key support zones. With bullish technicals and strong fundamentals, silver appears poised to continue its upward journey, potentially testing multi-year highs and reaffirming its strength in the global precious metals space.
MCX SILVER Trading Strategy:
- CMP: 148000
- Target: 156000
- Stop loss: 143000
(Disclaimer: Recommendations and views on the stock market and other asset classes given by experts are their own. These opinions do not represent the views of The Times of India)
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