Ares Management Conference Call Summary Company Overview - **Company**: Ares Management (NYSE: ARES) - **Assets Under Management**: Approximately $600 billion - **Core Expertise**: Credit, real assets, secondaries, and private equity - **2025 Performance**: Sustained industry-leading growth momentum with record fundraising, strong deployment, and investment performance [1][5][12] Key Industry Insights Private Credit Market - **Market Sentiment**: Investors are moving away from anxiety regarding private credit, supported by strong fundamentals [5][6] - **Portfolio Performance**: Ares credit portfolios are large, diversified, with non-accrual rates near historic lows; company-level cash flow growing at 10%-12% annually [7] - **Market Strength**: Deployment in Q4 is strong, with pipelines at or near record levels [7][12] Fundraising Dynamics - **2025 Fundraising**: On track for a record year, exceeding $90 billion, with strong demand from institutional and wealth channels [12][13] - **2026 Outlook**: Anticipated strong demand for private credit, with larger flagship funds expected to enter the market [14] Alternative Credit Opportunities - **ABF Strategies**: Ares focuses on both investment-grade (IG) and non-rated asset-backed finance (ABF), with non-rated strategies being more profitable [15][17] - **Market Position**: Ares has raised three of the four largest ABF funds, indicating strong market presence [16] Deployment and Market Activity - **Deployment Overview**: Q3 saw over $40 billion deployed; Q4 is expected to continue this momentum across various segments, including infrastructure and real estate credit [21][22] - **Market Segmentation**: Deployment is broad-based, indicating overall market health, with strong opportunities in asset-backed finance and opportunistic credit [22] Wealth Channel Growth - **Wealth AUM Target**: Increased target to $125 billion by 2028, with consistent quarterly inflows of about $4 billion [23][24] - **Product Evolution**: Introduction of new funds in core infrastructure and sports/media, with ongoing demand for geography-specific funds [25] Direct Lending Insights - **Advisor Demand**: Financial advisors are focusing on durable yield from various asset classes, not solely private credit [26][28] - **Market Dynamics**: Demand for private credit remains stable despite changing interest rates, driven by excess return generation [29] International Market Dynamics - **Distribution Landscape**: About 40% of wealth products come from outside the U.S., with a more fragmented and less concentrated market in Europe and Asia-Pacific [30][33] Strategic Partnerships and Growth - **Partnership Approach**: Ares is cautious about partnerships with traditional managers, focusing on delivering differentiated outcomes for clients [38][39] - **401(k) Market Potential**: Ares supports the inclusion of alternative assets in defined contribution plans but emphasizes the need for investor suitability and fiduciary duty considerations [40][42] Acquisition and Integration - **GCP Acquisition**: Integration is progressing well, with expectations for margin expansion as duplicative infrastructure costs decrease [47][48] - **Secondaries Market Growth**: Ares is expanding into infra secondaries, with significant growth expected in the coming years [49][51] Financial Outlook - **FRE Margin Guidance**: Expected margin expansion in 2026 due to successful fundraising and deployment [54][56] - **Capital Management Strategy**: Ares is considering various options for redeploying free cash flow, including dividends, buybacks, and investments in growth [59][61] Conclusion - Ares Management is positioned for continued growth in the alternative asset management space, with strong fundamentals in private credit, a robust fundraising outlook, and strategic expansion into new markets and product offerings.