Apollo Global Management plans to expand its retail business with the goal of offering broader stock replacement strategies as well as alternative investment products traditionally offered to high net worth individuals, Apollo CEO Marc Rowan said during Thursday’s first-quarter earnings call.
Apollo reported $513 billion in assets under management as of March 31, up 13% from $455.5 billion at the end of the previous quarter and up 11% from $461 billion twelve months ago of $50 billion in inflows from its wealth management business and $40 billion in inflows from Athene, the retirement savings business acquired in January. Athene had $218 billion in assets under management as of March 31, which is included in Apollo’s total assets under management.
Apollo plans to launch one or two new retail strategies each quarter over the next 18 to 24 months. That includes an untraded real estate income vehicle, Apollo Realty Income Solutions, which Apollo registered with the SEC in April, co-president Scott Kleinman said during the earnings call.
“I could see a day in the not too distant future where a (small) client’s portfolio isn’t 10% or 15% alternatives, but 50% alternatives, alternatives in the sense of an alternative to publicly traded stocks and Bonds,” Mr Rowan said.
To offset lower expected returns in stock and bond portfolios due to economic factors such as interest rate hikes and stock market volatility, “most clients can afford to take some liquidity risk across their portfolio,” he said.
To date, alternative investment firms have “repurposed” existing products for the retail channel to institutional fees, Mr Rowan said.
“The next phase of this is products that are created specifically for this (retail) marketplace” that are diversified and semi-liquid, do not have a J-curve, which represents the initial underperformance of a private fund, and have no double fees and no capital calls said Mr Rowan. “We think that’s where this market is headed,” he added.
Apollo reported a GAAP net loss of $870 million for the quarter ended March 31, reflecting unrealized losses on reinsurance assets related to retirement benefits resulting from rising interest rates.