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.”
Business
UP hikes minimum wages across categories amid Noida protest: What workers will now earn – The Times of India
The Uttar Pradesh government on Tuesday approved an interim hike of around 21% in minimum wages for workers in Gautam Buddh Nagar and Ghaziabad, following large-scale protests by thousands of factory workers in Noida. The fresh minimum wage structure introduced across worker categories, will be taking effect retrospectively from April 1. The agitation, which had been intensifying over several days, saw an estimated 40,000 to 45,000 workers assemble at nearly 80 to 83 locations across the Gautam Buddh Nagar commissionerate, including key industrial hubs such as Sector 62, Phase-2, Sector 63, Sector 60, Sector 84 and parts of Greater Noida. The revised wages were finalised by the high-powered committee and received approval late on Monday night. Gautam Buddh Nagar District Magistrate Medha Roopam said, “The wage increase has been done by the high-powered committee… The decision was approved by CM UP late last night.”
Breakdown: Who gets what
Gautam Buddh Nagar and GhaziabadThese regions have seen the sharpest revision:
- Unskilled workers will now be paid Rs 13,690 per month, up from Rs 11,313.
- Semi-skilled workers will receive Rs 15,059.
- Skilled workers will earn Rs 16,868 per month.
Other municipal corporation areas
- The new monthly wages stand at Rs 13,006 for unskilled workers.
- Semi-skilled workers will now earn Rs 14,306 every month.
- Skilled workers will be paid Rs 16,025.
In other districts
- Unskilled workers will now get Rs 12,356 per month.
- Semi-skilled workers will earn Rs 13,591.
- Skilled workers will see Rs 15,224 per month.
Additionally, Uttar Pradesh CM Yogi Adityanath has urged employers to ensure timely wage payments, provide appropriate overtime compensation, and guarantee weekly offs, bonuses and social security benefits, while also maintaining safe working conditions, especially for female workersThe wage revision comes after widespread protests by factory workers in Noida on Monday, where thousands raised demands for better pay and working conditions. Clashes broke out in parts of the district during the demonstrations, after which the government set up a committee to step in and facilitate discussions between workers and employers.The government said that it had assessed all feedback and objections before finalising the revision, aiming for the “balanced and practical” outcome.As per the official statement, the committee is working to resolve the issue through dialogue and coordination while considering measures to address industries dealing with global headwinds, including rising input costs and falling exports, even as workers’ demands on wages, overtime, safety and working conditions remain “relevant and important.”It further added that an interim wage revision linked to indexation is under consideration, and that the process for final wage determination will be taken up based on recommendations of a wage board to be formed soon.At the same time, the government rejected as “fake and misleading” social media claims suggesting a uniform minimum wage of Rs 20,000 per month, clarifying that no such order has been issued and that work on fixing a national “floor wage” is still underway at the central level.
Crude prices fall back below $100 a barrel as markets hope an agreement can be reached between the two sides.
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Broad-based rally fuelled by de-escalation hopes as investors turn optimistic about global peace
KARACHI:
The Pakistan Stock Exchange (PSX) opened on a distinctly bullish note as a renewed whisper of global calm set the tone for trading on Tuesday. The benchmark KSE-100 Index surged sharply in early hours, reflecting a wave of optimism among investors. At 9:39am, the index was hovering around 164,322.07, with gains of 3,730.74 points or 2.32%. It was then trading at 164,782.58, advancing with 4,191.25 points, or 2.61% at 12:34pm.
The rally follows growing expectations of a possible resumption of diplomatic talks between the United States and Iran, reviving hopes of de-escalation in a conflict that has shaken global financial markets.
The shift in sentiment comes in stark contrast to the previous session, where the market endured heavy losses amid failed negotiations and a spike in oil prices, triggering widespread panic selling across sectors.
Today, however, investors appear to be pricing in a different narrative – one where diplomacy may yet prevail. The prospect of renewed dialogue has eased concerns over supply disruptions and runaway energy prices, both critical variables for Pakistan’s import-heavy economy.
Read: PSX plunges over 6,600 points as US-Iran talks end without deal
Early gains were broad-based, led by index-heavy sectors such as automobile assemblers, cement, commercial banks, fertiliser, oil and gas exploration companies, OMCs, power generation and refinery, as participants moved to rebuild positions after the recent sell-off.
The sharp rebound underscores the market’s sensitivity to geopolitical signals, where even tentative progress towards peace can ignite strong bullish momentum.
Despite the upbeat start, analysts caution that volatility may persist, with much depending on whether diplomatic efforts translate into concrete outcomes. “Investors are optimistic about the likely resumption of talks between the US and Iran,” AKD Securities Director Research Mohammed Awais Ashraf told The Express Tribune.
Timely affirmation from Saudi Arabia and Qatar to bridge the gap in external financing to be created by the payment of UAE $3.5 billion this month and higher imports due to elevated oil prices have also helped to uplift the sentiment, he added. This is also likely to help in the timely approval of a $1.2 billion disbursement from the International Monetary Fund (IMF) after the approval of its executive board, Ashraf predicted.
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UP hikes minimum wages across categories amid Noida protest: What workers will now earn – The Times of India
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