Ares Management quietly raised its three-year fundraising targets by 25% due to strong momentum from individual wealthy investors. A State Street survey predicts the “retail revolution” will drive over half of private market flows, benefitting Ares. Ares has $50 billion in retail assets under management and claims nearly 10% market share in the retail segment.

Concerns have been raised that weaker deals will be funneled to individual investors, but Ares CEO Michael Arougheti refutes this claim, stating that only the largest managers with high-quality deals can build wealth platforms. Ares manages about $572 billion in assets, with two-thirds in credit investments in over 3,000 middle-market companies.

Arougheti believes individual investors are turning to alternatives due to increasing concentration in liquid securities. He anticipates potential growth in 401(k) retirement accounts allocation towards alternatives could boost AUM targets. However, he notes regulatory changes are needed to shift behavior towards alternatives, highlighting the challenge of fee sensitivity and fiduciary duty definitions.

Arougheti challenges the notion of alternatives, stating that there is nothing truly “alternative” about private markets, as they represent natural evolution and innovation in capital markets. He emphasizes the need for a shift in industry perception towards the masses.

Read more at CNBC: Ares CEO Michael Arougheti on ‘retail revolution’ in alternative assets