Ares Management Corporation (Ares) is currently navigating a shifting landscape in the investment management industry, particularly regarding retail partnerships aimed at enhancing access to retail investors through 401(k) plans. During a recent appearance at the Goldman Sachs Financial Services Conference, CEO Michael Arougheti articulated the firm’s deliberate choice to avoid joining the wave of collaborations between alternative asset managers and traditional investment houses.
Arougheti highlighted that many firms pursuing these partnerships are banking on the assumption that mass-market clients desire hybrid products that integrate both traditional and alternative exposures. However, he expressed doubt about whether such alliances genuinely improve investment outcomes for end-investors. Ares has engaged in numerous discussions concerning potential partnerships but remains unconvinced that co-manufactured products will provide real value to consumers. "If the world goes that way, I think we’ll be able to participate," he noted, but emphasized that Ares would approach these opportunities with caution and selectivity.
This statement comes at a time when competitors are making aggressive strides to capitalize on the retail market. For instance, Apollo and State Street recently launched a private-credit exchange-traded fund (ETF), while investment giants like Blackstone, Vanguard, and Wellington are preparing to introduce a multi-asset fund designed for retail savers with private-markets exposure.
The 401(k) market presents a significant growth opportunity for Ares, especially following regulatory changes during the Trump administration that enabled defined-contribution plans to include non-traditional assets. Arougheti underscored Ares’ support for facilitating private investments within 401(k) structures. However, he cautioned that outstanding fiduciary responsibilities, suitability concerns, and oversight questions must be addressed before the channel can expand effectively.
In conclusion, while the evolving landscape presents lucrative opportunities, Ares Management's strategic rationale remains grounded in providing genuine value to investors rather than following the trend of partnership proliferation. As the firm continues to evaluate its position, the broader market may watch closely to see how Ares ultimately chooses to engage with the 401(k) landscape and whether it will adapt its strategy in response to industry pressures.