Market Views Staying the course amid tariff news and market volatility
The latest headline came late on the night of July 31, when U.S. President Donald Trump signed an executive order to raise tariffs as of August 1, signaling the end of a prolonged pause on duties imposed during “Liberation Day” in April.
Once this goes into effect, there will be markedly higher tariffs for almost every U.S. trading partner. Trump has levied a 15% tariff on a number of major industrialized economies including the European Union, Japan, and South Korea.
“As we began the year, in January and February, you saw exuberance about the new administration in part because of pro-business deregulation,” said Mike Arougheti, Chief Executive Officer of Ares Management Corporation. “You saw people come off the sidelines dramatically and then we took a pause once Liberation Day happened. Now that we’ve digested that news, you’re beginning to feel momentum in the market again. We are seeing increased confidence that the administration is pro-business and wants to see more transaction volume and this will likely be a catalyst for more private markets activity.”
In any environment, Ares continues to stick to our core tenets of finding great businesses and strategies to invest in. Through this consistency, we have been able to grow in terms of AUM, geographic reach and new asset classes. This quarter, we generated double-digit growth (vs. Q2 2024) across key financial metrics, including: 19% organic growth in AUM to $572 billion; 17% growth in fee-paying AUM ($350 billion); 24% growth in management fees ($900 million); and 26% growth in fee-related earnings ($409 million).
Finding the Signal Through the Noise
“You have to try to find the signal through the noise,” said Arougheti. “And when we look at our portfolios around the globe, the fundamental performance is still really strong. There's a lot of liquidity in the markets and there is a lot of pent-up demand to transact. We saw that in June. I think once we got the tax bill done and we saw some certainty about tariffs, the market really picked up. I don't want to say that one headline on one day is going to change that.”
What’s more, in times of dislocation, we are also able to step in as a solutions-oriented liquidity provider, whether it be in direct lending, the secondaries market and beyond.
“I think on the private market side, you have to appreciate that the structure of the capital actually has a timeline on it,” said Arougheti. “So, one of the things that people need to understand is just the weight of money in the private markets requires transaction activity. There’s a desire to get that money back to investors to get the gears moving again.”
He also mentioned that on the corporate side, there is a desire to grow. Since June, M&A activity has picked up significantly. “If June was an indicator of getting more stability here, then I think the third and fourth quarter could be pretty robust.”