Ares Management (NYSE: ARES) has retreated roughly 34% from its 52-week high, yet a closer look at its private credit franchise and first-quarter 2026 results raises a question any long-horizon portfolio manager should sit with: does the price move reflect a genuine deterioration in the business, or a sentiment-driven overshoot?
The sell-off has been driven by anxiety around private credit broadly, fears over business development company redemptions, and a reported 41% decline in middle-market mergers and acquisitions activity in Q1 2026. Each of those pressures is real. The question is how much of each is already priced in, and how structural the firm’s insulation from them actually is.
Ares Management Private Credit: The Numbers Behind the Noise
The Q1 2026 results offer some context. Management fees grew 22% year on year, and the firm’s fee-related earnings (FRE) margin expanded to 42.4%. According to Alternative Credit Investor, total assets under management (AUM) rose to $644.3 billion in the first quarter of 2026, an increase of 18% year on year, with $422.6 billion of that attributable to private credit. That scale matters: it reflects the depth of institutional demand the firm has cultivated, and it gives the business a degree of fee stability that smaller alternatives managers cannot match.
Perhaps the most concrete milestone from the quarter: management fees surpassed $1 billion for the first time, and Yahoo Finance reports that the firm declared a quarterly dividend of $1.35, more than 20% higher than the prior-year period. For income-focused investors in a SIPP or ISA, a dividend growing at that pace is worth examining, even if past growth rates offer no assurance of future distributions.
Locked Capital and Undeployed Dry Powder
One structural point in Ares’s favour is the composition of its AUM. Approximately 85% sits in locked or long-dated vehicles, which means investors cannot simply redeem when credit markets become unsettled. That insulates fee revenue from the kind of rapid outflows that can destabilise an asset manager’s income stream during periods of stress. It is worth noting, of course, that locked capital also means less flexibility: if performance disappoints over a multi-year period, investors have limited recourse until lock-up periods expire.
There is also a forward-looking element to the valuation case. Undeployed AUM stands at $79.4 billion, a figure that, if and when put to work, could add meaningfully to after-tax realised income. The firm’s own guidance points to a 16-20% FRE compound annual growth rate over its stated horizon. Guidance, however, is management’s view of a range of outcomes, not a forecast investors should treat as fixed. A protracted slowdown in M&A activity or a widening of credit spreads could delay deployment and compress that trajectory.
How Does This Fit a Balanced Portfolio?
For investors in or approaching retirement, the appeal of a large alternatives manager like Ares Management has always been predicated on the durability of its fee streams rather than its share price momentum. The business does not behave like a traditional equity in most respects: the locked-capital model, the institutional client base, and the long-dated fund structures all reduce the correlation of earnings to short-term market moves.
That said, the share price itself is not locked. A 34% drawdown is a sequence-of-returns risk for anyone who bought near the highs, and investors sitting on unrealised losses should consider whether their time horizon and risk tolerance remain aligned with the position. For those in accumulation phase with a five-to-ten-year horizon, the combination of AUM growth, fee resilience and dividend expansion may warrant attention. For those in drawdown, the volatility is a reason for caution, not urgency.
The next test for the thesis will be whether undeployed capital can be put to work as M&A activity recovers and whether the firm’s fundraising momentum, which management describes as record-setting through Q1 2026, is sustained in subsequent quarters.
