At Ares Management’s recent analyst day, the global alternative asset manager quietly raised its three-year fundraising target by 25%, signaling growing confidence in the expanding pool of individual and high-net-worth investors.

CEO Michael Arougheti told CNBC that the upward revision was driven by stronger-than-expected momentum from retail investors—a trend reshaping how capital flows into private markets.

According to a survey by State Street, more than half of all private market inflows in the coming years are expected to come from individual investors rather than traditional institutional sources such as pension funds or endowments. This shift marks a fundamental transformation in the industry’s structure. Ares, with over two decades of experience offering investment vehicles tailored to retail clients, is emerging as one of the key players riding this wave.

“What’s really different today,” Arougheti explained, “is the quality and scale of our products, as well as the investments we’ve made in client education and servicing.”

The company has dedicated 185 professionals across 10 global offices to product development and investor education. Ares currently manages over $50 billion in assets through semi-liquid funds aimed at individual investors, with its market share in the retail alternatives space nearing 10%.

Despite the optimism, some critics have expressed concerns that fund managers might direct lower-quality deals to retail investors while keeping the best opportunities for institutional clients. A Harvard University study recently found that broadly marketed funds tend to underperform, suggesting that less sophisticated investors might be receiving weaker products.

Arougheti dismissed that concern. “This narrative about retail investors getting weaker deals is simply false,” he said. “Only the largest, most capable managers with access to top-quality investments can build platforms that serve both institutional and individual clients effectively.”

He emphasized that Ares allocates investments based on available capital rather than investor type. “Many of the same assets in our institutional portfolios also appear in our wealth management products,” he said. “They’re growing together.”

As of the end of June, Ares managed approximately $572 billion in assets, two-thirds of which were in credit, with investments spanning more than 3,000 middle-market companies.

When asked why individual investors are increasingly drawn to alternative assets—especially after strong public market returns in recent years—Arougheti pointed to concentration risks. “It’s becoming harder to maintain a diversified portfolio in public markets,” he said. “Investors are looking for exposure that’s diversified and uncorrelated—through private equity, real estate, and similar strategies.”

One factor not yet fully reflected in Ares’s outlook is the potential inclusion of alternative assets in 401(k) retirement plans, which could significantly expand access for individual investors. However, Arougheti remains cautious about how quickly that change could happen.

“I don’t expect a major shift until regulations evolve,” he said. “The 401(k) market is highly fee-sensitive, and fiduciary duty is often defined narrowly as minimizing cost rather than optimizing net return. That structure makes it challenging for higher-fee alternative products to gain traction, even when they offer stronger performance.”

Still, Arougheti believes the entire discussion around “alternative” investing needs a redefinition.

“There’s really nothing ‘alternative’ about what we do anymore,” he said. “Private markets aren’t creating new or artificial demand for capital—they’re simply the next step in the natural evolution of global finance. What we’re witnessing is innovation and maturity in the capital markets that’s been building for generations.”