Ares Management (NYSE:ARES) executives highlighted record fundraising, investment activity, and fee-related results for 2025 while outlining what they described as improving transaction conditions and multiple earnings tailwinds entering 2026, according to the firm’s fourth quarter and year-end earnings call held Thursday.
Management also announced a higher shareholder payout, declaring a first quarter 2026 common dividend of $1.35 per share on the company’s Class A and non-voting common stock, representing a 20% year-over-year increase. The dividend is scheduled to be paid March 31, 2026, to shareholders of record as of March 17.
Assets, fundraising, and deployment reached new highs
For fundraising, Ares reported a record $113 billion for 2025, including a record $36 billion in the fourth quarter. Arougheti noted the firm exceeded its prior fundraising record “by such a wide margin” despite not having its two largest private credit campaign funds in the market.
Investment activity also accelerated in the second half after what management described as a brief pause around April tariff announcements. The firm posted a record $46 billion of fourth-quarter deployment and $146 billion of gross deployment for the year, up 37% from 2024. Ares ended the year with $156 billion of dry powder, CFO Jarrod Phillips said.
Fundraising mix: credit led, with strength in real estate, secondaries, and wealth
Within credit, Arougheti said Ares raised more than $65 billion across six strategies in 2025. In the fourth quarter, the credit group raised over $18 billion, including over $12 billion from U.S. and European direct lending strategies.
- Opportunistic credit: The third fund raised an additional $1.2 billion in Q4, bringing commitments to just under $7 billion at year-end. Management anticipates a final close at the end of Q1 2026, “over” the prior vintage’s $7.1 billion.
- Alternative credit (ABF/Pathfinder): Arougheti said the firm launched its third closed-end commingled alternative credit fund in January and expects to complete fundraising by the end of the summer “if not sooner,” at a level similar to the prior vintage of $6.6 billion. Roughly half of LPs in the prior fund—representing $3.5 billion—elected to extend the investment period by two years.
- Future direct lending flagships: Arougheti said Ares expects to launch its fourth U.S. Senior Direct Lending Fund later in 2026, with a potential first close in the fourth quarter, and its seventh European Direct Lending Fund in early 2027, depending on deployment pace and other fundraising activity.
Real estate fundraising totaled more than $16 billion for 2025, including over $7 billion in Q4. Highlights included $4 billion raised in real estate debt and $1.3 billion of additional commitments for the firm’s 11th U.S. value-add fund, bringing that vehicle to $2.3 billion versus a $2 billion target. Ares said it expects to reach the fund’s $3.1 billion hard cap in the first half of 2026.
In infrastructure, Ares raised about $3 billion in Q4 and more than $7 billion for the year. Management said the open-end core infrastructure fund stood at over $2.5 billion of assets inclusive of flows since year-end. Arougheti also pointed to the firm’s inaugural $2.4 billion data center fundraise in 2025 and said Ares expects to raise “significant additional capital” for digital infrastructure equity in 2026. Data center exposure was described as just under 2% of total AUM at year-end.
Secondaries fundraising totaled $12.9 billion in 2025, with AUM up 45%. The firm held a final close for its inaugural credit secondaries fund, raising nearly $1 billion in Q4 and reaching $4 billion in total equity commitments; Ares said total investment capacity exceeds $7 billion when including anticipated leverage in related vehicles.
In the wealth channel, Ares said equity flows into semi-liquid products totaled $16 billion in 2025, with $14 billion of net flows, driving wealth AUM to over $66 billion at year-end, up 69% year-over-year. Arougheti said January 2026 equity inflows were about $1.2 billion and that the firm expected a similar amount in February, adding that Ares expects 2026 equity inflows to meet or exceed 2025 levels.
Financial results: records in fees and FRE; margin improvement outlook
Phillips said Ares set new records across management fees, fee-related earnings (FRE), realized income, and after-tax realized income per share. Management fees were a record $994 million in Q4 and $3.7 billion for the full year, increasing 27% and 25%, respectively, versus comparable periods, driven by growth in fee-paying AUM.
Fee-related performance revenues (FRPR) were $171 million in Q4, and full-year FRPR increased 30% year over year. Phillips cited increased contributions from secondaries products and a contribution from the firm’s diversified non-traded REIT for the first time since 2022. He added that Ares sees potential for “significant growth” in FRPR from both non-traded REITs if the real estate market continues to recover, noting the diversified REIT has surpassed its high-water mark and the industrial non-traded REIT was within 2.5%. Phillips said that if the REITs had not faced high-water marks in 2025, they would have recognized $79 million in gross FRPR based on their returns.
FRE totaled a record $528 million in Q4 and rose 30% for the full year, with Q4 FRE growth of 33% year over year. FRE margin was 41.7% for 2025, slightly above 41.5% in 2024 and in line with prior guidance. For 2026, Phillips said Ares expects FRE margin to land at the high end of its annual target range of 0–150 basis points of improvement, citing GCP integration efficiencies, the data center business shifting from a negative FRE contributor to a positive one, and continued AUM growth.
Performance fees and portfolio commentary, including software exposure
Net realized performance income was $102 million in Q4, and $169 million for the full year. Phillips said Ares expected to realize $52 million “this upcoming week” for Q1 and had visibility on about $50 million more from European-style funds, keeping the firm on track with earlier guidance of $200 million in realized net performance income across Q4 and Q1 2026. For full-year 2026, Ares continues to expect European-style net realized performance income of about $350 million, which Phillips said would more than double 2025 levels.
Net accrued performance income on an unconsolidated basis increased by about $102 million, or 10%, to $1.1 billion at year-end; about $984 million (or 89%) was in European-style funds. Phillips also said the firm could potentially realize a “modest portion” of its $123 million net accrued carry balance in American-style funds, most likely in the second half of 2026, if the private equity transaction backdrop continues to improve.
Arougheti also addressed investor questions about software exposure amid market volatility. He said software investments represent about 6% of total AUM and less than 9% of private credit AUM (inclusive of real asset lending but excluding liquid credit), with exposure primarily in senior secured loans. Later in Q&A, he said software was about 12% of direct lending and 8.7% of private credit. He emphasized lower loan-to-value ratios in software (in the high-30% range versus mid-40% for the rest of the portfolio), minimal ARR loan exposure (less than 1% of global direct lending), and non-accruals in software “close to zero,” while arguing that AI-driven disruption could also create opportunities for Ares’ opportunistic credit, secondaries, and digital infrastructure businesses.
About Ares Management (NYSE:ARES)
Ares Management Corporation (NYSE: ARES) is a global alternative asset manager that provides investment solutions across credit, private equity and real estate. The firm originates and manages capital across a range of strategies including direct lending, syndicated and special situations credit, private equity buyouts and growth investments, and real estate equity and debt. Ares serves institutional investors, insurance companies, pension funds, sovereign wealth funds, and high‑net‑worth clients through both commingled funds and bespoke managed account structures.
Within credit, Ares offers strategies spanning leveraged loans, structured credit, opportunistic and distressed debt, and specialty finance, with an emphasis on underwriting, portfolio construction and active asset management.
