Michael Arougheti Talks Tariffs, China | Bloomberg Talks

Yeah, look, we try to stay above the politics and just think about where the markets are going and how it affects capital flows in our business. I think the good news generally from an Ares perspective is the businesses that we invest in tend to be middle market service companies that have their customer base in local currency, local market. So we don't really invest in a lot of companies that make things or have to grapple with supply chain issues or tariffs. So I think in terms of the first order impacts, we're pretty unaffected. Obviously the longer that these trade imbalances go on and the trade war goes on, it affects everybody just in terms of the economic impact and that's what we're keeping an eye out for. But so far we're just kind of in a wait and see mode and hopefully we'll get some information in the next week or two that'll give some people some clarity.

Yeah, I'm not sure I agree with that. The reality is most middle market companies are insulated from some of the large cross-border impacts of the tariffs and I could craft an argument that they're actually more protected in some respects from some of the issues that we're grappling with. That being said, if we start to head into a recessionary environment, they'll bear the brunt of it. So again, it could break either way and we're just going to have to react to what the market gives us.

Look, we invest money on behalf of institutions and individual investors all over the globe. We have a large business in the Asia-Pacific region. You know, part of our business is benefiting in terms of people allocating to other regions of the world where we have capability and capacity. Our industrial logistics business is actually benefiting from some of the changes we're seeing around the global supply chain, nearshoring and reshoring and China plus one. So, there's always going to be puts and takes. The reality is very few investors, US dollar investors have been investing into the China market over the last many years. So we're not really seeing that significant amount of disruption.

Yeah, we were fortunate. Last year we had a record year of fundraising. We pulled in about $93 billion of new AUM. This first quarter, we just had earnings yesterday. We added another $20 billion to the dry powder pile. We have about $145 billion to invest. I think what we're doing differently from a positioning standpoint is number one, we have a broad diversified global business. So, I just think that we're giving investors a lot of choice as to where they want to play and what risks they want to take. As probably one of the pioneers or leaders in private credit, we're one of the few managers that actually has a track record that goes back 20, 30 years where people can see how we've performed through cycles. And then as we often talk with investors, if you look at our private credit strategies today broadly across real assets and corporate, we're generating 12 to 15% rates of return right now. So on a relative value basis, I think with this amount of uncertainty on the forward path of earnings valuations, I think most investors are just finding it frankly easier to take shelter in the credit markets and make those kind of low to mid-teens returns without having to worry about that equity risk premium.