Ares Management Corp (ARES)
Ares Management Corp (ARES) is a diversified alternative asset manager based in Los Angeles that provides investment solutions across credit, private equity, real estate, and infrastructure to institutional and high-net-worth investors globally.
What the company does
Ares Management operates as an alternative asset manager with a multi-strategy platform focused on delivering returns primarily through debt and equity investments. Its core business involves raising capital from institutional investors, pension funds, endowments, insurance companies, and ultra-high-net-worth individuals, then deploying that capital across distinct asset classes. The company structures its operations around complementary investment strategies: direct lending and bank loans, private equity, real estate, and infrastructure.
The firm functions as an intermediary that sources deals, performs due diligence, manages portfolios, and eventually exits or harvests returns, returning capital plus fees to its limited partners. This model depends on the ability to identify undervalued or overlooked investment opportunities, manage risks effectively, and generate returns above public market benchmarks.
How it makes money
Asset managers earn through two primary channels: management fees and performance fees (often called “carried interest”). Management fees are typically a percentage of assets under management or committed capital, paid annually by limited partners regardless of returns. Performance fees are usually earned when the fund achieves returns above a specified hurdle rate, typically ranging from 15–20% of profits above that threshold.
Ares also earns from advisory, consulting, and transaction fees related to arranging capital raises, managing financing, and facilitating portfolio company exits. The company’s revenue is linked directly to the size of its asset base and its ability to raise new capital from investors. As asset managers grow their AUM and expand into larger or more complex deals, economics improve through scale.
Investor base and capital raising
A critical aspect of Ares’ business is continuous capital raising. The firm regularly launches new funds with specific mandates—a senior loans fund, a private equity fund, a real estate opportunity fund, or an infrastructure fund—then markets them to pension plans, university endowments, insurance companies, and family offices. Success depends on track records: demonstrating that prior funds have outperformed benchmarks, returned capital on schedule, and managed downside risk effectively.
The firm’s largest limited partners include CalPERS, teacher retirement systems, major insurers, and a diverse base of institutional investors. Large commitments from institutional sources provide stable, long-term capital, whereas high-net-worth individuals and family offices add diversification to the investor base but typically require higher customization and reporting.
Where it sits in its industry
Ares competes in a crowded landscape of alternative asset managers. Larger, diversified competitors include Blackstone, KKR, Apollo Global Management, and Carlyle. Ares differentiates itself through a focus on credit and debt strategies, which often generate steadier cash flows than pure equity bets. The firm also pursues mid-market deals and secondary strategies that are less capital-intensive but highly profitable for managers.
Real estate and infrastructure are growth vectors for the industry. As pension funds and insurance companies increase allocation to real assets (partly to hedge inflation and diversify away from equities), managers with scale in those areas gain advantage. Ares’ long tenure in these sectors gives it deal flow, operational expertise, and established relationships.
Cyclicality and market risk
Alternative asset managers are exposed to multiple risks. Economic downturns reduce returns on portfolio companies, which can hurt both management fees (if AUM contracts) and, more dramatically, performance fees. Credit strategies perform unevenly: senior loans hold up better during stress, but private equity and levered real estate can suffer significant drawdowns.
Interest rate environment matters: higher rates increase financing costs for leveraged deals, reduce valuations, and may slow fund performance. Conversely, falling rates can accelerate exit multiples and realized returns. Credit availability, loan spreads, and default rates all affect the returns available to the manager and, by extension, its fee-earning AUM.
Market dislocations create opportunities for alternative managers to deploy capital at attractive pricing and generate alpha, but prolonged bear markets can slow capital raising as prospective investors become risk-averse.
How to research it
The company files detailed annual reports (10-K) and quarterly reports (10-Q) with the SEC. These filings disclose AUM trends, fund performance, fee rates, and expense structure. Earnings calls provide management commentary on capital raising, deployment pace, and portfolio performance.
For deeper analysis, review the company’s annual letter to shareholders, which often highlights strategy evolution and market positioning. Industry publications covering private equity, credit, and asset management offer broader context on competitive dynamics. Third-party data on alternative manager performance can help benchmark Ares’ track record against peers.