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    ARES
    Earnings call· Jun 2026(Q2 FY26)

    Ares Management Q2 FY26 earnings call ARES

    Jul 31, 2026 Source

    Executive summary

    Ares Management Q2 FY26 — Record Fundraising and Strong Earnings Growth

    Ares Management delivered a strong second quarter, marked by record fundraising and robust earnings growth, driven by the increasing diversification and global reach of its platform. The firm's broad investment capabilities enabled active deployment despite a slower transaction environment, while its Wealth Management platform continued to scale. Management remains confident in achieving its full-year financial objectives, leveraging operating leverage and strategic investments in technology and AI for continued durable growth.

    Highlights

    5

    • Record quarterly fundraising of approximately $36 billion, positioning for future earnings growth.

    • AUM and fee-paying AUM increased 17% year-over-year to approximately $671 billion and $410 billion, respectively.

    • Fee-related earnings (FRE) increased 20% year-over-year to approximately $491 million, at the high end or above long-term target.

    • Realized income increased over 30% year-over-year to approximately $522 million, exceeding long-term target.

    • Quarterly dividend increased by over 20% to $1.35 per share.

    Concerns

    2

    • Non-traded BDC redemption requests from non-U.S. family offices and smaller institutions, totaling approximately $600 million in Q2 (down from $1.2 billion).

    • Slower M&A activity in the market, impacting U.S. Direct Lending deployment, though mitigated by incumbent relationships.

    Guidance & targets

    11
    CategoryTargetConfidence
    Quarterly Dividend
    $1.35 per share
    medium materiality
    High
    Full-year FRE Margin Improvement
    approaching the upper end of 0-150 bps
    high materiality
    High
    Q3 Realized Net Performance Income
    approximately $10 million
    medium materiality
    High
    Full-year FRE Growth
    16% to 20%
    high materiality
    High
    Full-year Realized Income Growth
    20% plus
    high materiality
    High
    Full-year Dividend Growth
    growth
    medium materiality
    High
    H2 Wealth Gross Fundraising
    approximately $8 billion
    medium materiality
    High
    Digital Infrastructure FRE Contribution
    $50 million to $100 million
    high materiality
    High
    Seventh European Direct Lending Fund Launch
    launch
    medium materiality
    High
    Global Digital Infrastructure Fund Closings
    meaningful closings
    medium materiality
    High
    Japan Industrial Development Fund Final Close
    at hard cap, meaningfully above $2.5 billion
    medium materiality
    High

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    Credit
    Fee-paying AUM for the credit segment increased 17% year-over-year.
    FPAUM growth: 17%
    		————
    Secondaries
    Fee-paying AUM for the secondaries segment increased 28% year-over-year.
    FPAUM growth: 28%
    		————
    Credit Equity
    Fee-paying AUM for the credit equity segment increased 27% year-over-year.
    FPAUM growth: 27%
    		————
    Real Assets
    Fee-paying AUM for the real assets segment increased 11% year-over-year.
    FPAUM growth: 11%
    		————
    Other Businesses (Ares Insurance Solutions)
    Fee-paying AUM for other businesses, primarily Ares Insurance Solutions, increased 54% year-over-year.
    FPAUM growth: 54%
    		————

    Operational metrics

    55
    AUM
    $671 billionincreased 17% YoY
    Q2 FY26

    Approximately $671 billion.

    Fee-Paying AUM
    $410 billionincreased 17% YoY
    Q2 FY26

    Approximately $410 billion.

    Dry Powder
    $170 billionincreased 13% YoY
    Q2 FY26

    Record $170 billion of dry powder.

    AUM Not Yet Paying Fees
    $114 billion
    Q2 FY26

    Includes approximately $93 million available for future deployment.

    Potential Incremental Annual Management Fees
    $828 million
    annual

    If deployed, AUM available for future deployment and development assets not yet stabilized, could collectively generate approximately $828 million potential incremental annual management fees.

    Gross Capital Raised
    $36 billionhighest quarter of fundraising in our history
    Q2 FY26

    Approximately $36 billion of gross capital raised.

    Gross Capital Raised
    $66 billion
    H1 FY26

    Approximately $66 billion raised through the first half of the year.

    Wealth Gross Equity Commitments
    $3.9 billionincreased 15% YoY
    Q2 FY26

    Approximately $3.9 billion in gross equity commitments in the second quarter.

    Wealth Gross Equity Commitments
    $8 billion
    H1 FY26

    Approximately $8 billion raised during the first half of the year.

    Wealth AUM
    $76 billionincreased at an annualized rate of more than 25% QoQ
    Q2 FY26

    Finished the second quarter with over $76 billion of AUM in our Wealth products.

    Non-traded BDC Non-accruals
    0.5%
    Q2 FY26

    Very low non-accruals at around 0.5%.

    Non-traded BDC Organic EBITDA Growth (Portfolio Companies)
    13%
    YoY

    Healthy organic EBITDA growth of 13% year-over-year.

    Non-traded BDC Redemption Requests (Core U.S. Individual Investor Base)
    2.5%declined approximately 35% compared to the prior quarter
    Q2 FY26

    Redemption requests totaled only approximately 2.5% of NAV.

    Non-traded BDC Redemption Requests (Non-U.S. Family Offices/Smaller Institutions)
    $600 milliondown from $1.2 billion
    Q2 FY26

    The redemption queue in the U.S. private credit funds is largely concentrated in the hands of family offices and small institutions in the APAC region, with the number cut in half over the last 2 quarters from about $1.2 billion to a little over $600 million.

    Firm-wide Investment Activity
    $36 billioncompared to approximately $27 billion in the prior year period
    Q2 FY26

    Overall investment activity increased meaningfully in Q2 to approximately $36 billion.

    Firm-wide Forward Investment Pipeline
    improved nearly 20% QoQ
    Q2 FY26

    Improved nearly 20% quarter-over-quarter to a new record.

    U.S. Direct Lending Gross Committed Deployment
    $12.4 billion
    Q2 FY26

    Deployed approximately $12.4 billion gross committed during the quarter.

    Digital Infrastructure Data Center Campuses
    7
    Q2 FY26

    Currently executing on 7 large data center campuses.

    Digital Infrastructure Individual Data Center Investments
    22
    Q2 FY26

    Representing 22 individual data center investments.

    Digital Infrastructure Compute Capacity
    1 gigawatt
    Q2 FY26

    Approximately 1 gigawatt of compute.

    Gross Returns - Alternative Credit
    16.4%
    LTM

    Over the last 12 months.

    Gross Returns - Opportunistic Credit
    8.9%
    LTM

    Over the last 12 months.

    Gross Returns - U.S. Senior Direct Lending
    11.2%
    LTM

    Over the last 12 months.

    Gross Returns - U.S. Junior Direct Lending
    8.9%
    LTM

    Over the last 12 months.

    Gross Returns - European Direct Lending
    8.3%
    LTM

    Over the last 12 months.

    Gross Returns - APAC Credit
    19%
    LTM

    Over the last 12 months.

    Gross Returns - Infrastructure Equity
    9.8%
    LTM

    Over the last 12 months.

    Gross Returns - Infrastructure Debt
    7.5%
    LTM

    Over the last 12 months.

    Net Returns - APMF
    6.9%
    Q2 FY26

    APMF generated a net quarterly return of 6.9%.

    Net Returns - APMF
    16.2%
    LTM

    APMF generated a net 12-month return of 16.2%.

    Net Returns - APMF (Since Inception)
    15%
    Since Inception

    APMF generated a net return since inception of 15%.

    Gross IRR - Institutional Secondaries Private Equity Funds (Since Inception)
    26.5%
    Since Inception

    Latest institutional secondaries private equity funds had gross IRR of 26.5% since inception.

    Gross Returns - Corporate Private Equity Strategy
    2.4%
    Q2 FY26

    Corporate private equity strategy generated a gross quarterly return of 2.4%.

    Gross IRR - ACOF VI (Since Inception)
    19.5%
    Since Inception

    ACOF VI continues to perform well with a gross IRR of 19.5% since inception.

    U.S. Direct Lending Non-accrual Levels
    less than 2%flat QoQ
    Q2 FY26

    Non-accrual levels were flat quarter-over-quarter and remain low.

    Portfolio Companies Organic EBITDA Growth
    9%
    YoY

    Evidenced by 9% year-over-year organic EBITDA growth from our portfolio companies.

    Management Fees
    $1 billionincreased 14% YoY
    Q2 FY26

    Management fees were over $1 billion for the quarter, with no catch-up fees.

    Total Revenues
    increased 17% from the prior year period
    Q2 FY26

    Including FRPR and other fees, total revenues increased 17%.

    Part 1 Fees
    $154 millionup 20% from the prior year period
    Q2 FY26

    Part 1 fees totaled approximately $154 million.

    Fee-Related Performance Revenues (FRPR)
    $41 millionincreased 143% compared to the prior year period
    Q2 FY26

    Fee-related performance revenues totaled approximately $41 million.

    Fee-Related Earnings (FRE)
    $491 millionincreased 20% YoY
    Q2 FY26

    Fee-related earnings were approximately $491 million.

    Year-to-date FRE Margin
    42.3%approximately 100 bps above the prior year period
    YTD

    Year-to-date FRE margin was 42.3%.

    Realized Net Performance Income (Q2)
    $51 millionmore than 3x the amount generated in the prior year period
    Q2 FY26

    Generated approximately $51 million of realized net performance income during the quarter.

    Realized Net Performance Income (YTD)
    $126 millionup 119% compared to approximately $58 million in the prior year period
    YTD

    Year-to-date realized net performance income was approximately $126 million.

    Realized Income
    $522 milliongrowth of 31% YoY
    Q2 FY26

    Realized income totaled approximately $522 million for the quarter.

    After-tax Realized Income
    $468 millionincreasing 27% YoY
    Q2 FY26

    After-tax realized income was approximately $468 million for the quarter.

    After-tax Realized Income Per Share
    $1.29growth of 25%
    Q2 FY26

    After-tax realized income per share of Class A and nonvoting common stock was $1.29.

    Tax Rate
    13.7%
    Q2 FY26

    Our tax rate for the quarter was 13.7%.

    AUM in Perpetual Capital or Long-dated Funds
    84%
    Q2 FY26

    84% of our AUM was in perpetual capital or long-dated funds.

    Management Fees from Perpetual Capital or Long-dated Funds
    94%
    Q2 FY26

    94% of our management fees were generated by those sources.

    G&A Expenses from AGM
    $9 million
    Q2 FY26

    The second quarter included approximately $9 million of expenses associated with this meeting.

    NDAs Signed
    up about 35%
    QoQ

    The number of NDAs that we've signed is up about 35% quarter-over-quarter.

    New Deals Logged
    30%
    QoQ

    The number of deals we've logged is slightly behind at 30%.

    Promote Giving Pledged Assets
    $44 billion
    current

    15 different asset managers with more than $44 billion of pledged assets.

    Promote Giving Estimated Charitable Contributions
    $300 million to $350 million
    over the next decade

    Estimated $300 million to $350 million of charitable contributions over the next decade.

    Industry KPIs

    4
    MetricValueDetails
    Fundraising inflows$36 billionUSD
    Performance revenue$51 millionUSD
    Fee related earnings$491 millionUSD
    Deployment realizations$36 billionUSD

    Product announcements

    7
    ProductTypeDetails
    Evergreen core product (U.S. Senior Direct Lending)launch
    Seventh European Direct Lending fundroadmap
    Global digital infrastructure fundlaunch
    Japan industrial development fund (Fifth)milestone
    Global co-mingled real estate debt fundlaunch
    Next real estate secondaries fundroadmap
    Integral fund solutionsroadmap

    Deals & partnerships

    1
    GCPIntegration of GCP international into Ares, including Japan business, global logistics platform, and digital infrastructure development.

    Significant progress on Japan business (institutional development fund, data center fund), global logistics platform (now Marq Logistics), and digital infrastructure development. Realized both revenue and expense synergy.

    Risks & headwinds

    2
    Slower transaction environment / M&A activity

    slower transaction environment

    Mitigation: Depth of global institutional platform drove record fundraising; broad-based global investment capabilities enabled active deployment; deployment improved sequentially compared to Q1 due to incumbent relationships (75% of Q2 deployment).

    Non-traded BDC redemption requestsnext 2 to 3 quarters for stasis

    redemption requests primarily coming from a small number of non-U.S. family offices and smaller institutions, totaling approximately $600 million in Q2 (down from $1.2 billion); core U.S. investor redemption requests totaled only approximately 2.5% of NAV and declined approximately 35% compared to the prior quarter.

    Mitigation: Roughly 95% of investor accounts electing to stay in the fund; new share classes will be offered with features like lockups, redemption penalties, and regional redemption queues to protect against future outsized redemptions. The current non-U.S. redemption queue is working its way through the system and is now below the 5% quarterly satisfaction level.

    What to watch in Q3 FY26

    5

    Non-traded BDC redemption queue normalization

    next 2 to 3 quarters
    Currentapproximately $600 million
    Targetstasis / further reduction

    Why it matters

    Indicates stabilization of the wealth channel and reduces potential capital outflows.

    So assuming that those 2 trends hold, and I have no reason to believe that they won't, that would probably mean that you get back to stasis in the next 2 to 3 quarters is my guess.

    Q&A highlights

    6

    What's driving accelerating institutional demand for private credit, when will private wealth demand return, and will these channels behave countercyclically?

    Institutional demand is accelerating due to under-allocation and opportunity for excess returns in a less competitive environment. Wealth channel grew YoY, with strong demand for diverse products. Non-traded BDC redemptions are concentrated in non-U.S. family offices, with core U.S. investor redemptions declining. Expects stasis in 2-3 quarters.

    “I still think it's early days to know exactly how these will play over time, but there is a risk that some of the wealth flows could be more pro-cyclical than people thought they were, which is why we continue to index aggressively into the institutional market.”

    asked by Craig Siegenthaler · answered by Michael Arougheti

    2 min read7 chapters

    Detailed Narrative

    01

    Record Fundraising and Diversification

    Ares achieved a record $36 billion in gross capital raised in Q2, bringing H1 total to $66 billion, and remains on track for another record year. This fundraising was highly diversified, with approximately 70% of capital raised outside the four largest credit fund families and across 90 different funds and vehicles, demonstrating increasing global reach and institutional investor consolidation.

    02

    Wealth Management Platform Momentum

    The Wealth Management platform delivered solid investment performance, raising approximately $3.9 billion in gross equity commitments in Q2, an increase of 15% year-over-year. Wealth AUM grew at an annualized rate of over 25% quarter-over-quarter to $76 billion, with Ares ranking #2 in TTM gross fundraising through June, driven by diverse product offerings like the Evergreen Core infrastructure product.

    03

    Strategic Deployment and Pipeline Growth

    Firm-wide investment activity increased meaningfully to $36 billion in Q2, up from $27 billion in the prior year, with the forward investment pipeline improving nearly 20% quarter-over-quarter to a new record. This indicates a stronger second-half outlook for deployment across strategies, including U.S. Direct Lending, which saw improved sequential deployment despite slower M&A.

    04

    Digital Infrastructure Expansion

    Ares is experiencing tremendous demand for capital to finance digital infrastructure development, with its Ada Infrastructure platform executing on 7 large data center campuses representing 22 individual data center investments and approximately 1 gigawatt of compute capacity. This vertically integrated model is expected to contribute $50 million to $100 million in FRE by 2027 and beyond.

    05

    GCP Acquisition Integration Success

    The integration of GCP has been highly successful, with significant progress across its Japan business, global logistics platform (now Marq Logistics), and digital infrastructure development. The acquisition has proven culturally, strategically, and financially accretive, with earn-out objectives expected to be met, reflecting strong performance and synergy realization.

    06

    AI and Operational Efficiency

    Ares is actively deploying AI across its operations and portfolio companies to drive efficiency gains and margin improvement. This includes productivity AI for repeatable functions like RFPs and KYC, and leveraging proprietary data for better origination and portfolio management decisions, with early indications pointing to significant value accretion.

    07

    Ares Charitable Foundation and Promote Giving

    The Ares Charitable Foundation has committed over $68 million in grants since 2021 to advance economic mobility. Additionally, the Promote Giving initiative, established by Ares and its Pathfinder funds, has expanded across the industry, with 15 asset managers pledging over $44 billion in assets, projected to generate $300 million to $350 million in charitable contributions over the next decade.

    AI-generated summary of the company’s earnings call. Not investment advice.