Why your nest egg is Apollo's 'single biggest opportunity' for growth

• Apollo Global Management has been investing big in non-bank loans.
• Helping fund that growth has been growing demand for retirement products, said CEO Marc Rowan.
• Here's Rowan's case for why your nest egg is the next frontier for the alternative asset manager.

There's been a lot of attention on Apollo Global Management's booming lending business, which the firm projects will double in size to $1.2 trillion in five years.

Helping to fund those loans is Apollo's retirement business, which Apollo CEO and cofounder Marc Rowan sees as the investment firm's "single biggest opportunity" for future growth.

In a conference call to discuss third-quarter earnings, Rowan said Apollo's insurance affiliate Athene had become an industry leader in annuities, or insurance products used in retirement, to generate regular income. Athene saw $20 billion in inflows during the third quarter and $77 billion over the last year, which helped drive a 16% year-over-year growth in assets under management to $733 billion.

Rowan said he sees continued growth in that sector, aided by the company's efforts to provide new and improved retirement products, including tools to guarantee income for life.

"The notion of simplification and getting to guaranteed lifetime income, I believe, to be the North Star for where we would like to go," Rowan said on the call. "But this notion of rethinking the product set, I believe to be the single biggest opportunity in front of us, and that is what is baked into our five-year plan over the next few years."

The opportunity stands to become even bigger, Rowan said, if regulators open up 401(k)s and other tax-deferred retirement accounts to investments led by alternative asset managers like Apollo.

"Should we get access to 401(k) through broad-based reform or regulatory change or regulatory encouragement, I believe that would be upside not just for us, but for the entire industry," he said.

Rowan has been a major proponent of Australia's retirement model, which was opened up to private assets around forty years ago in a process called superannuation. Rowan said that plans with private assets, which can access the compounding effects of private equity, have 40% to 60% better outcomes than those just with public assets.

"I do envision a day when we will be talking about 60-40 portfolios that are comprised of public and private," Rowan said.

This would be a huge shift from the current regime, where much of American retirement savings are in publicly traded stocks or bonds. But to Rowan, a retirement system where between $12 trillion to $13 trillion of American's wealth is in 401(k)s that are largely invested in the S&P 500 makes little sense.

"I jokingly say sometimes, we levered the entire retirement of America to Nvidia's performance," Rowan said last month. "It just doesn't seem smart."

The Trump administration opened some 401(k) investing to private equity in 2020, suggesting that a Trump victory could help fuel the alternative industry's expansion efforts. Rowan hasn't endorsed a US presidential candidate.