Apollo Global Management Inc. Chief Executive Officer Marc Rowan said the best investors operate in places such as Singapore and the United Arab Emirates, contending US institutions have become too focused on benchmarks.
At the start of his career, Rowan “thought the single best investors in the world were in the US,” he said in an interview Tuesday with David Rubenstein at the Economic Club of Washington, D.C. “That’s no longer the case.”
Apollo and other private equity firms have turned to the Middle East, Asia and wealthy individuals to raise funds, as institutional investors remain over-allocated to the asset class. Deal-making evaporated last year due to higher interest rates. In turn, distributions to institutional investors fell, keeping them from committing money to new funds.
Rowan said Tuesday that institutional investors in both the US and Europe have become beholden to benchmarks. “Benchmarks force you to do the same thing that everyone else is doing because you don’t want to be outside the norm,” he said.
Moreover, he said, “Family offices are where all the great things in the investment marketplace are happening today.”
For its part, Apollo fell short of a $25 billion target for its 10th flagship private equity fund last year, raising about $20 billion. The firm has pushed to tap wealthy individuals with a variety of strategies, including its flagship equity replacement strategy called Apollo Aligned Alternatives.
The Apollo CEO’s profile has risen recently beyond the private equity universe. He’s spoken out in support of Israel, demanding the resignation of leaders of his alma mater, the University of Pennsylvania, over their responses to allegations of antisemitism on campus.
Rowan told Rubenstein, who hosts a show on Bloomberg TV, that he’d serve if the president of the US asked him to chair the Federal Reserve, become Secretary Treasury or take another position. He said he doesn’t identify as a Republican or Democrat.
“We are in a very confusing time politically, but at the same time, when the dust settles from this election, something tells me we will need as a country to turn our attention to the fiscal disorder of our house,” he said.
The US economy is in “reasonable shape” due to the need to build infrastructure, semiconductor plants and electric vehicle manufacturing, which will create jobs, Rowan said. The financial markets “march to the beat of their own drummer,” driven by the Fed, liquidity, interest rates and money flow, he said.
“We can get financial market corrections without corrections in the real economy,” he said. “I think that’s where we’re heading.”
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