Apollo Global Management said it is on track to increase its assets under management to $1 trillion by 2026, with plans to grow its AUM to $1.5 trillion in five years, according to a presentation at its Investor Day on Oct. 1.
Apollo had $696 billion in assets under management as of June 30.
Apollo executives speaking at Investor Day see four routes to growth: a $75 trillion (in 10 years) global industrial renaissance including, energy transition; $45 trillion retirement sector opportunity, including pension buyouts, annuities and defined contribution plans; $150 trillion individuals of all wealth categories; and $50 trillion for rethinking public and private assets, which includes mixing public and private assets in fixed income and eventually equity portfolios.
“If we are really successful, our business will be twice the size in five years... and we will still not be relevant in the scale of the big asset managers,” said Marc Rowan, Apollo’s co-founder and CEO.
Over the next 10 years, Apollo executives expect a total addressable market for the energy transition to be between $30 and $50 trillion, for example.
Defined contribution plans
Through subsidiary Athene, Apollo plans to offer new defined contribution plan strategies as well as guaranteed life income and tax-advantaged products.
Retirement is driven by fixed income, particularly high-grade fixed income with yield, Rowan said.
For defined contribution plans, Apollo and Athene expect to embed annuities and private market assets in target-date funds, according to the presentation.
There were about $15 trillion in defined contribution plans in the U.S. and Europe in 2023. Most of the 401(k) plans have been in daily liquid strategies mostly invested in the S&P 500 for 50 years, Rowan said.
“Why? We don’t know,” he said. “We will fix this.”
Private markets
Rowan said he foresees not only offering fixed-income replacement but also equity replacement products. He said the entire retirement industry was built on private capital being part of institutional investors’ alternatives portfolios. That mindset, which might have been true 40 years ago, is that private assets are risky and public market assets are safe.
If an investment is risky, then investors put it in a smaller bucket, demand higher returns and watch it closely to ensure against exposure, concentration and variability risk, Rowan said.
“What if we’re wrong. What if private is both safe and risky, and public is both safe and risky,” Rowan said.
If that is true, then everything investors know about portfolio construction “makes no sense,” he said.
“Today, we are getting exposure to the bigger bucket called fixed income,” which is 50% larger than alternatives and it is all investment grade, guided by rating agencies, Rowan said.
“I do not think replacement stops in the fixed-income bucket. I think it will eventually go to the global equity bucket,” Rowan said.
