Alternative asset manager Pollen Street Capital has raised €2 billion for its private equity strategy, helped by increased appetite for mid-market deals in Europe https://t.co/v9GYraOhRg ...

John Ciampaglia, Sprott Asset Management CEO, and Jan Van Eck, VanEck and Associates CEO, join Dom Chu on ‘ETF Edge’ on how investors are turning to alternative assets like gold and private credit to get yield and where the sectors are set to go from here. ...

Market Trends & Investment Opportunities - The podcast discusses Bitcoin and gold as alternative assets, comparing their performance and investor sentiment in 2025 [1][2][3][4][5][6] - Gold (GLD) is up 24% year-to-date, trading around $34, while Bitcoin (IBIT) is up 1335% [14] - Over the past year, Bitcoin (IBIT) has surged 61%, gold is up 3946%, and the Vanguard S&P 500 ETF (VO) has increased by 115% [17][18] - Over a five-year period, the Vanguard S&P 500 ETF (VO) is up 94%, and gold is up 867% [20] - Since September 2010, the Vanguard S&P 500 ETF (VO) is up 420%, while gold is up 137% [24][25] - The gold mining ETF (GDX) is down 1076% over the almost 15-year period since 2010, but up 382% over the past year and 412% year-to-date [27][28] Asset Allocation & Investor Sentiment - Financial advisors often suggest allocating 5% or less of a portfolio to gold or Bitcoin as a hedge [6] - The Gold Trust ETF (GLD) has approximately $100 billion in assets, while the Bitcoin ETF (IBIT) has $565 billion [22][23] - The podcast host does not own Bitcoin or the Bitcoin ETF (IBIT), but has owned gold (GLD) in the past and currently owns gold miners [32][33] Investment Vehicles & Considerations - The podcast highlights several ETFs: Bitcoin Trust (IBIT), Gold Trust (GLD), Vanguard S&P 500 ETF (VO), and gold miners ETF (GDX) [4][11][13][26][35][36] - The gold miners ETF (GDX) tends to perform well when gold prices are high, potentially offering share buybacks and dividends [29] - The podcast suggests a diversified portfolio with a small exposure to volatile assets like Bitcoin [34]

Financial Data and Key Metrics Changes - The company has $275 billion in assets under management, with 90% deployed in the U.S. [9] - Spreads have widened back up from their lows by approximately 25 to 50 basis points, indicating a stable pricing environment despite market volatility [20][21] - The company reported strong net inflows even during periods of market panic, demonstrating resilience in retail flows [36] Business Line Data and Key Metrics Changes - The company has three established flagship products: Diversified Core Income Product, Technology Income, and O Rent, with a newly launched Alternative Credit Interval Fund [42][44] - O Rent is noted as the fastest-growing product, significantly contributing to net capital raising [49] - The company is focused on expanding its distribution footprint, particularly in underpenetrated markets like Japan [46] Market Data and Key Metrics Changes - The direct lending market is gaining share as the syndicated loan market experiences volatility, with many borrowers preferring the predictability and partnership offered by direct lending [12][19] - The company is seeing a shift in investor behavior, with retail investors viewing alternative products as a safe haven during market volatility [36][38] Company Strategy and Development Direction - The company aims to focus on income-oriented products and has a strategic approach to acquisitions, targeting firms that align with its culture and operational model [91][92] - The company is expanding into digital infrastructure and alternative credit markets, recognizing the growing demand for these sectors [66][80] - The company emphasizes the importance of maintaining a strong partnership with borrowers, offering predictability and privacy in lending [13][15] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the current economic uncertainty and stickier inflation but views it as a favorable environment for their business model focused on downside protection and stability [4][5] - The company does not anticipate material stress in its portfolio, as it primarily lends to large, durable companies in sectors like software and healthcare [10][11] - Management believes that the private equity market is more resilient due to the availability of capital in the private credit market, which supports ongoing M&A activity [30][31] Other Important Information - The company has integrated its capabilities with Coveris Asset Management to enhance its distribution channels and asset management capabilities [83][85] - The company is exploring opportunities in the retirement market, recognizing its potential for growth in the long term [58][60] Q&A Session Summary Question: How is the balance between the syndicated loan market and direct lending tracking? - The company notes that when the syndicated market is active, borrowers may prefer it, but when it closes, they have no choice but to return to private markets, which benefits direct lending [12][19] Question: What is the view on retail flows and redemption trends? - Management reports strong net inflows and a shift in retail investor behavior towards viewing alternative products as a safe haven [36][38] Question: How does the company view the current M&A environment? - While a less active M&A market is a negative, it can also lead to increased market share for direct lending as liquid markets become less favorable [26][29]

Investment Landscape - The investment landscape is shifting towards alternative assets as both retail and institutional investors seek better yields and diversification [1] - Traditional asset managers such as BlackRock, Vanguard, and State Street are expanding their offerings in alternative assets [1] Analyst Expertise - The analyst has over 20 years of experience in quantitative research, financial modeling, and risk management, focusing on equity valuation, market trends, and portfolio optimization [1] - Previous experience includes a role as Vice President at Barclays, leading teams in model validation, stress testing, and regulatory finance [1] - The analyst collaborates with a research partner to provide high-quality, data-driven insights, emphasizing rigorous risk management and long-term value creation [1] Research Focus - The research emphasizes macroeconomic trends, corporate earnings, and financial statement analysis to deliver actionable investment ideas [1]

Core Viewpoint - The asset management industry is experiencing growth driven by a shift towards higher-yielding investment vehicles, deregulation, and the adoption of tokenized assets, positioning BlackRock and Blackstone favorably to capitalize on these trends [2][25]. Group 1: BlackRock (BLK) - BlackRock has a total AUM of $11.58 trillion as of March 31, 2025, and has expanded through acquisitions, including a 75% stake in SpiderRock Advisors and a deal for HPS Investment, which has nearly $148 billion in AUM [4][5]. - The company has achieved a five-year CAGR of 9.2% in AUM from 2019 to 2024, with continued growth in Q1 2025, supported by its iShares unit and ETF operations [5][6]. - BlackRock's GAAP revenues have seen a CAGR of 7% over the last five years, with ongoing momentum in Q1 2025, bolstered by strategic acquisitions and a diversified product suite [6][25]. - The Zacks Consensus Estimate for BlackRock's revenues indicates a year-over-year growth of 11.83% for Q2 2025 and 10.40% for the current year [7][17]. - BlackRock is considered a stronger investment for 2025 due to its diversified growth strategy, robust AUM expansion, and consistent revenue and earnings growth [25][26]. Group 2: Blackstone (BX) - Blackstone has a total AUM of $1.17 trillion as of March 31, 2025, with available capital of $177.2 billion, positioning it to capitalize on market dislocations despite near-term headwinds [11][12]. - The company is focusing on key sectors such as digital infrastructure and life sciences, with growth opportunities in India and Japan [12][13]. - The Zacks Consensus Estimate for Blackstone's revenues shows a year-over-year growth of 8.88% for Q2 2025 and 2.83% for the current year [16][17]. - Blackstone faces challenges from tighter credit markets and geopolitical uncertainties, which may hinder its near-term growth prospects [14][26]. - Despite a higher return on equity (ROE) of 19.84% compared to BlackRock's 15.57%, Blackstone's deployment challenges and market conditions make it a less compelling buy for 2025 [20][21][26].

Core Insights - Three alternative asset managers are increasing their dividends, indicating a strong commitment to returning capital to shareholders in a volatile market environment [3][12]. Industry Overview - Over the past 20 years, alternative assets have grown from 6% to 15% of global assets under management (AUM), with expectations of continued growth at around 10% annually through 2029 [2]. Company Summaries KKR & Co. Inc. - KKR announced a 5.7% increase in its quarterly dividend, bringing the annual dividend to $0.74, resulting in a dividend yield of 0.6% [3][4]. - The company has a diversified portfolio with credit strategies (38%), real assets (26%), and private equity (33%) [5]. - KKR aims to reach $1 trillion in AUM by 2030 and has grown its AUM by 15% and annual adjusted net income (ANI) by 37% over the last 12 months [6]. Apollo Global Management - Apollo increased its dividend by over 10% to $2.04 annually, yielding approximately 1.42% [8][10]. - The company primarily focuses on credit investments, which constituted around 88% of its nearly $600 billion in fee-bearing capital [9]. - Apollo reported record fee-related earnings of $559 million in Q1 2025 and significant AUM inflows [9][11]. Blue Owl Capital - Blue Owl raised its dividend by 25%, resulting in an annual dividend of $0.90 and a yield of 4.59% [12][14]. - The company has raised its quarterly dividend eight times since going public in 2021, with credit strategies making up 51% of its $273 billion AUM [15]. - Blue Owl's strategy includes taking minority ownership in other private equity and hedge fund companies, allowing it to benefit from their profits [16].

Financial Data and Key Metrics Changes - Ares Management reported a year-over-year growth in management fees of 18%, with fee-related earnings (FRE) increasing by 22% and after-tax realized income per share of Class A common stock growing by 36% [5][24]. - The company declared a quarterly dividend of $1.12 per share, representing a 20% increase over the same quarter last year [3][4]. - Total assets under management (AUM) reached $546 billion, marking a significant milestone as the company crossed over $5 trillion in total AUM for the first time [6][24]. Business Line Data and Key Metrics Changes - Fundraising activities were robust, with over $20 billion in gross new capital commitments, the highest level for first-quarter fundraising on record [6][14]. - Deployment activities also saw strong performance, with over $31 billion deployed in the quarter and a gross to net deployment ratio of 49% in private credit strategies [6][9]. - The company experienced significant inflows across various strategies, with over 45% of quarterly fundraising coming from outside the credit group, including real estate, infrastructure debt, and private equity [14][15]. Market Data and Key Metrics Changes - The market environment has been characterized by increased volatility and uncertainty, particularly following geopolitical events and tariff announcements [7][20]. - Despite these challenges, Ares has maintained a record amount of dry powder, with $142 billion of available capital, which positions the company well to capitalize on market opportunities [9][36]. - The company noted that over 72% of total AUM is in credit-related products, with more than 92% of these being senior loans, indicating a defensive positioning in the current economic climate [12][20]. Company Strategy and Development Direction - Ares Management aims to leverage its flexible private market strategies to gain market share during periods of volatility, emphasizing its asset-light business model and focus on third-party client interests [10][36]. - The integration with GCP International is progressing well, with expectations of realizing significant synergies and enhancing vertically integrated capabilities in real estate [23][24]. - The company is optimistic about growth opportunities in real estate, particularly in response to anticipated increases in construction costs due to tariffs, which may constrain supply [14][20]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current economic uncertainty, citing a strong investment pipeline and the ability to invest opportunistically across various strategies [20][36]. - The company remains optimistic about 2025 and beyond, highlighting its resilience during challenging market conditions and the strength of its diversified investment strategies [36][37]. - Management noted that while M&A activity may slow, there are still significant opportunities in direct lending and credit markets, with expectations of continued strong performance in these areas [20][66]. Other Important Information - The company reported a significant increase in fee-related performance revenues, totaling $28 million, up from $4 million in Q1 2024, driven by strong fund performance [26][27]. - Ares Management's corporate loan portfolios are performing well, with strong credit quality and low loan-to-value ratios, indicating a solid foundation for future growth [32][40]. - The company is actively engaged with new partners in the reinsurance sector, expanding its reach in both the U.S. and APAC regions [23][24]. Q&A Session Summary Question: What do you expect for the remainder of 2025 regarding private credit quality? - Management highlighted that 96% of their Global Credit exposure is in senior loans, with low loan-to-value ratios, indicating a strong position against defaults and non-accruals [40][42]. Question: Can you discuss the momentum in wealth management and product growth? - Management noted record capital gathering in wealth management, with a broadening distribution network and new product offerings, maintaining strong inflows despite market turbulence [50][52]. Question: What is the outlook for FRE margin expansion? - Management remains optimistic about achieving zero to 150 basis points of margin expansion, citing ongoing integration efforts and synergies from GCP [56][59]. Question: How does the M&A backdrop affect deployment strategies? - Management indicated that even with subdued M&A activity, they have demonstrated the ability to invest across various strategies, particularly in opportunistic credit and secondaries [62][66]. Question: What is the opportunity set in Europe for private credit? - Management observed increased investor appetite for European products, with a modest acceleration in deployment and a favorable competitive position in the market [78][80].

Financial Data and Key Metrics Changes - In Q1 2025, the company reported a year-over-year growth in management fees of 18%, FRE growth of 22%, and after-tax realized income per share of Class A common stock growth of 36% [6][25][32] - The total AUM reached $546 billion, marking a significant milestone as it crossed over $5 trillion for the first time [7][25] - The company declared a quarterly dividend of $1.12 per share, representing a 20% increase over the same quarter last year [4][5] Business Line Data and Key Metrics Changes - Fundraising activities reached over $20 billion in gross new capital commitments, the highest level for Q1 fundraising on record [7][15] - The private credit strategies saw a gross to net deployment ratio of 49%, with capital deployment in drawdown funds increasing nearly 20% over the previous quarter [7][9] - The company experienced strong performance across various strategies, with significant inflows in real estate, infrastructure debt, secondaries, and private equity [15][17] Market Data and Key Metrics Changes - The company noted a shift in market conditions due to increased volatility and uncertainty, particularly following the announcement of tariffs and geopolitical events [8][22] - Despite market challenges, the company maintained a record amount of dry powder, with $142 billion available for deployment [9][12] - The European direct lending business saw a 20% year-over-year increase in deployment, indicating a modest acceleration in the European market [82] Company Strategy and Development Direction - The company aims to leverage its asset-light business model and flexible private market strategies to capitalize on market dislocations [10][11] - A focus on credit-related products is emphasized, with over 72% of total AUM in credit-related assets, primarily senior loans [12][22] - The integration with GCP International is progressing well, with expectations of realizing significant synergies in the coming months [24][76] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about navigating current economic uncertainties, citing a strong investment pipeline and the ability to invest opportunistically [22][37] - The company anticipates slower M&A activity until more certainty regarding tariffs and economic conditions is established, but sees potential for enhanced investment opportunities [22][23] - Management highlighted the resilience of the business model during past market dislocations, reinforcing confidence in future performance [10][37] Other Important Information - The company reported a significant increase in fee-related performance revenues, totaling $28 million, a substantial rise from $4 million in Q1 2024 [27] - The effective tax rate on realized income was reported at 8.1%, with expectations of a lower range of 8% to 12% for the remainder of the year [32] Q&A Session Summary Question: What is the outlook for private credit quality given potential negative GDP growth? - Management indicated that 96% of exposure in the Global Credit business is in senior loans, with low loan-to-value ratios, suggesting limited risk of defaults [40][42] Question: Can you discuss the momentum in wealth management and product growth? - Management noted record capital gathering in wealth management, with a broadening distribution network and new product offerings [50][51] Question: What is the outlook for FRE margin expansion? - Management remains optimistic about achieving zero to 150 basis points of margin expansion, despite some drag from GCP integration [58][59] Question: How is the pipeline for M&A and deployment in the current market? - Management highlighted the ability to invest across various strategies even in a subdued M&A environment, with significant dry powder available for opportunistic investments [63][67] Question: What are the opportunities in the European market compared to the U.S.? - Management noted an increase in investor appetite for European products and a modest acceleration in deployment in Europe [80][82]

Financial Data and Key Metrics Changes - The company's assets under management (AUM) ended the quarter at $1,540 billion, a decrease from the prior quarter due to long-term net outflows at Western Asset and negative market impacts [18][19] - Adjusted operating income was $377.2 million, a decrease of 8.6% from the prior quarter, primarily due to compensation expenses and the impact of Western [28][29] Business Line Data and Key Metrics Changes - Long-term inflows increased by 9% quarter over quarter, with gross sales increasing across all asset classes [19] - Multi-asset and alternatives generated a combined $9.7 billion in positive net flows, while equity long-term inflows were $38.9 billion, despite equity net outflows of $5.4 billion primarily in growth strategies [20][21] - Fixed income net outflows were $30.5 billion, but excluding Western, there were net inflows of $2.8 billion in multisector, munis, stable value, and high yield strategies [20][21] Market Data and Key Metrics Changes - The institutional unfunded pipeline increased by $2.3 billion to $20.4 billion during the quarter, the highest level since 2022 [6] - The company noted a shift in global market dynamics, with several foreign markets outperforming US indices for the first time in years [9][10] Company Strategy and Development Direction - The company aims to help clients navigate market volatility and benefit from emerging trends, emphasizing a diversified approach to asset allocation and portfolio construction [5][6] - There is a focus on growth in alternative assets, ETFs, and digital assets, with significant investments in these areas [22][30] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding global equity markets, citing uncertainty tied to US growth and tariff impacts [11][12] - The company anticipates that increased market volatility may spur interest in secondary private equity offerings and alternative credit businesses [16][17] Other Important Information - The company has offices in over 30 countries, with approximately 30% of AUM in countries outside the US [9] - The ETF business saw its fourteenth consecutive quarter of positive net flows, attracting $4.1 billion during the quarter [25][26] Q&A Session Summary Question: Guidance on fiscal year expenses given market movements - Management expects effective fee rates to remain around 38 basis points for the third quarter, with expenses projected to be flat compared to 2024 [36][39] Question: Estimate for base fee organic growth rate including Western - Management noted that long-term net flows excluding Western were about $7.4 billion, with positive flows in fixed income and alternatives [44][45] Question: Update on fixed income strategies and Western's health - Western experienced $10 billion in outflows but also had $5 billion in gross sales, indicating ongoing institutional interest [78][79] Question: Insights on international business contributions - The company reported positive momentum in gross sales across all regions, with AUM of approximately $470 billion outside the US [90]