Ares Management Corporation

ARES · NYSE · USD

Can Ares keep raising record capital across a broadening platform, or does slower U.S. private credit demand and retail redemption pressure cap how fast fee-paying assets grow?

Last 4 earnings calls · through Q2 FY2026

Bull case

  • Fundraising breadth beyond credit

    The bull case is that Ares raises capital across many strategies and geographies, so growth no longer depends on one flagship credit fund coming to market.

  • Institutional demand for private credit

    Institutions remain under-allocated to private credit and are narrowing their manager lists, which the bull says lets Ares raise successor funds faster and larger.

  • Committed capital converts to fees

    Because a large block of capital is already raised but not yet invested, deploying it should lift management fees without requiring any new fundraising.

Bear case

  • Retail credit redemptions

    The bear case is that redemption requests in the non-traded BDC show individual investors souring on private credit, which could slow the wealth channel that drove recent growth.

  • Wealth flows are procyclical

    Wealth money can reverse when confidence falls, and management itself now concedes those flows may be more cyclical than the industry had assumed.

  • Slower sponsor deal activity

    Direct lending deployment depends on private equity sponsors closing deals, and management reports a sharp drop in middle market transaction activity during the quarter.

  • Performance fees are unpredictable

    Carried interest swings with exits and fund returns, so realized income is far harder to forecast than the recurring management fees that fund the dividend.

Bull and bear points

Growth & Execution

In short: Fundraising is at record levels across many funds, while U.S. direct lending waits on a slow deal market.

Bull · 3

  • Record fundraising is spread across many funds and regions

    Roughly 70% of this year's capital came from outside the four largest credit fund families, so growth is less dependent on a single flagship product. Management expects another record fundraising year.

    Q2 FY2026 call

  • Capital raised but not yet invested supports future fees

    Uninvested commitments and unfinished development projects turn into management fees as they are deployed. Management sizes that pipeline at roughly $828 million of potential annual fees.

    Q2 FY2026 call

  • Digital infrastructure moves from small to quantified

    A year ago data centers were described as just under 2% of assets and a future contributor; management now guides to $50 million to $100 million of fee-related earnings from the business in 2027 and beyond.

    Tone shiftQ4 FY2025 → Q2 FY2026
Bear · 2

  • U.S. direct lending volume follows a frozen deal market

    Middle market M&A fell sharply in the first quarter, which management says slowed U.S. direct lending. Deployment there recovers only as sponsors return to the market.

    Q1 FY2026 call

  • Ares now reworks share classes after dismissing redemption worries

    Management earlier called the redemption story overdone and not a broad rejection of alternatives; it now describes new lockups, regional queues and redemption penalties for future share classes.

    Tone shiftQ1 FY2026 → Q2 FY2026

Profitability & Financial Strength

In short: Fee-related margins are expanding, while carried interest stays lumpy and the share count keeps rising.

Bull · 2

  • Margin guidance moves from flat to the top of the range

    Management previously expected full-year fee-related earnings margins only at or slightly above the prior year because of the GCP deal; it now expects to reach the upper end of its annual expansion range.

    Tone shiftQ3 FY2025 → Q2 FY2026

  • Management fees are the largest and steadiest revenue line

    Management service revenue of $1.0 billion in the second quarter made up 70% of segment revenue and grew 14.2% year on year, giving Ares a recurring base that does not depend on exits.

    Filed financials
Bear · 2

  • Carried interest fell even as management fees grew

    Carried interest revenue dropped 20.5% year on year to $263 million, showing how much of realized income depends on the timing of asset sales rather than on the size of the asset base.

    Filed financials

  • Share count growth dilutes per-share results

    Diluted shares rose 23.8% from FY2022 to FY2025, so part of the growth in total earnings is spread across more shares and does not reach each individual share.

    Filed financials

Market Position

In short: Ares is a scaled consolidator in private markets, while much of its fee base sits in one publicly traded fund.

Bull · 2

  • Institutional consolidation directs allocations to the largest managers

    Large investors are narrowing their manager lists, and management says Ares is increasingly treated as a strategic partner across strategies, which supports both fundraising and fee levels.

    Q2 FY2026 call

  • Software loans sit in the systems companies cannot replace

    An outside review graded 86% of the software portfolio as low risk from AI disruption, which matters because software is the exposure investors have questioned most this year.

    Q1 FY2026 call
Bear · 2

  • A single publicly traded fund supplies a large share of fees

    Ares Capital's management fee is a significant part of total management fees, so weakness at that one vehicle, whether from asset values or its own fundraising, flows straight into Ares's revenue.

    10-K, filed 2026-02-25

  • BDC borrowing is capped by the Investment Company Act

    Funds organized as business development companies may borrow only while maintaining at least 150% asset coverage, which limits how much leverage those vehicles can use to lift returns.

    10-K, filed 2026-02-25