By Emily Russell
When Ares Management went public 11 years ago, alternative asset managers like itself were trading at a discount compared with traditional asset managers.
Michael Arougheti, Ares' CEO, remembers predicting that might change -- and that retail and institutional investors would someday want to buy liquid and illiquid exposures in one place. At, say, a firm like Ares.
"That is now finally coming to fruition," Arougheti told Andy Serwer, Barron's editor at large, in a recent interview in front of a live audience.
The valuations of alternative and traditional asset management firms have flipped. Today, alts are trading around 20 times earnings, while traditionals trade at roughly half that.
"That is a transformational shift," he said, attributing the move, in part, to public equity markets becoming "fully valued."
So investors are turning to to more illiquid asset classes, like the kind Ares deals with: private equity, real estate, infrastructure, and private credit. Soon, that will include regular retirement savers looking to PE for higher returns. In August, the Trump administration paved the way for PE to enter 401(k)s.
Arougheti thinks that is a good thing for his firm and for individual investors. But he shies away from calling it a "democratization" of private investing. "This idea of 401(k)s revolutionizing access is a little bit of a misconception," he said.
Whether they know it or not, many workers have been investing in a diverse array of alternatives for years, he argues. "Most large state [pension] plans and insurance companies, they are all investing in alternatives in large and diversified ways," he said.
And to those who say welcoming PE into retirement accounts will introduce colossal risk into amateur investors' portfolios? Arougheti said that is "fake news."
"There is no reality that I see where lower quality assets find their way to the retail investor because the institutional investor is saturated," he added.
Ares manages nearly $600 billion in assets from offices in more than 20 countries. And yet it is still known -- or lesser known -- as the stepchild to the other PE giants like BlackRock, Apollo, and KPMG. Curiously, Ares trades at a higher valuation than those competitors. It has grown 25% compounded annually for more than 20 years.
"Our peers have changed the business model over time to be insurance heavy or balance sheet heavy, and I think it has gotten a little confusing," Arougheti said. "We focus on keeping it simple, executing on the core strategy."
That said, Ares is dipping its toes into a new assets: Sports teams, specifically. In recent years, Ares has invested in the Miami Dolphins, France SailGP, and Inter Miami CF.
That wouldn't have been possible a few years ago. It used to be that only banks and ultra-wealthy individuals could invest in sports teams, Arougheti said, adding that during the Covid-19 pandemic, ticket sales stopped and teams were hurting for cash. He said that it seemed silly to himself -- and other big-time asset managers -- that a team's pool of resources should be so limited.
Arougheti got involved. "We did a lot of missionary work and a lot of relationship building to allow institutional money to come into these markets," he said. Last year, the National Football League voted to allow private equity investment into team ownership structures.
The multi-trillion dollar sports market is now slowly opening to individual retail investors, so that Everyday Joe can start buying a piece of his favorite team.
"You can own completely non-correlated outcomes relative to a traditional 60/40 portfolio, and have compounded at close to a 15% rate of return for the last 15 years," Arougheti said. "I think that is a really good thing for the investor."
Write to emily.russell@barrons.com
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September 27, 2025 02:30 ET (06:30 GMT)
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