After a Trump Order, Private-Markets Managers Blackstone and Ares Get Set to Woo Small Investors

Blackstone and Ares Management are preparing to bring small investors’ money into private markets. (Michael Nagle/Bloomberg)

Key Points

• Blackstone and Ares Management are developing new products to attract individual investors, including those in 401(k) retirement plans.
• President Trump’s order in August gave federal agencies six months to consider new rules to lower barriers for small investors in private markets.
• Ares Management raised its 2028 financial targets, aiming for $17 billion in fundraising and over $125 billion in assets under management.

The big alternative-asset managers Blackstone and Ares Management told analysts last week how they’re limbering up to chase small investors.

Ares had an analyst “teach-in” that opened with a discussion of its “wealth” channel—one industry name for individual investors—and the semiliquid investment vehicles those clients prefer, such as interval funds and target-date funds.

Blackstone chatted with a Morgan Stanley analyst on the timing of 401(k) products for employee retirement plans.

This is going to be a year of product innovation, wrote Morgan Stanley’s Michael Cyprys in his Friday report on a conversation with Blackstone CFO Michael Chae. After intense lobbying and campaign contributions, the private-fund industry has the backing of President Donald Trump. He ordered federal agencies to lower barriers to fundraising from small investors. Private managers need the money, since their traditional large investors have slowed their contributions.

Blackstone gets 20% to 30% of new money coming into the private-wealth channel, Cyprys notes. With collaborators Vanguard Group and Wellington Management, it is cooking up new products for 401(k) retirement savers and for affluent investors whose income or assets already qualify them for private funds.

In Trump’s August order, he gave the U.S. Department of Labor and the U.S. Securities and Exchange Commission six months to consider new rules that would allow individuals to put money into private markets. Around that February 2026 deadline, Cyprys expects the agencies to propose regulations, foll0wed by the required periods for notice and comment.

Blackstone tells him the biggest resulting opportunities will be in target-date 401(k) funds whose long-dated glide paths suit the longer time scales of private equity, credit, and infrastructure.

Cyprys has a Buy on Blackstone and thinks its $175 stock can get to $200, within a year.

The Thursday analyst meeting of Ares was a review of the firm’s preparations for growth. Ares is best known for private lending and manages $572 billion, including some $50 billion from the wealth channel, but CEO Mike Arougheti told analysts that the meeting aimed to highlight opportunities in real estate, asset-based lending, secondary markets for private equity, and wealthy individuals.

“What is striking is that while each of these businesses is relatively small compared to Ares’ direct lending business, they are all pretty big and scaled businesses that can grow rapidly,” wrote Oppenheimer analyst Chris Kotowski, in his Monday report on the meeting.

The real estate unit at Ares has grown from about 200 people in 2001 to nearly 750 today, said Kotowski. “You got a sense that there were thoughtful executives driving the growth plan,” he said. “It doesn’t happen by itself; it requires management.”

The Ares executive in charge of wealth products, Raj Dhanda, says that its target market is broadening beyond the world’s $14 trillion held in family offices and high-net-worth individuals, to the $13 trillion held by the “mass affluent,” including some $4 trillion in target-date funds.

Along with private credit and equity products for the wealthy, Ares has offerings in data infrastructure and in funding sports and entertainment businesses. Its fundraising in all those categories will set a record this year.

In tallying those growth initiatives, Ares announced what Oppenheimer’s Kotowski says was the only real news at the meeting. The company raised its financial targets for 2028. It now hopes to raise $17 billion that year, instead of $12 billion. That would bring its assets under management to more than $125 billion, instead of $100 billion, while lifting that year’s management fees to $800 million.

“We didn’t change any estimates or valuation target as a result of the meeting,” wrote Kotowski, “but we walked away with greater confidence that the company’s very ambitious long-term growth targets can be achieved.”

Still, Kotowski has discipline and, much as he admires Ares, he finds its $163 stock fairly valued at 26 times his forecast for 2026 earnings.

“Our neutral stance on the shares was driven purely on valuation, and we would become more positive on the shares in the event of a pullback in valuation,” he says.

Write to Bill Alpert at william.alpert@barrons.com