Ares Management Corporation (ARES)

Direct lending is the base: the fund lends to a mid-sized business directly, bypassing banks and the bond market. The rate exceeds a bank's because the borrower pays for speed and flexible terms, and regulatory constraints on banks left this niche to non-bank lenders.

Income has two layers: steady management fees on investor commitments and a share of performance. Alongside sit real estate, infrastructure and buyouts. Risks: portfolio quality in a downturn, since these borrowers are by definition riskier than a bank's; and dependence on institutional inflows. A large share of loans carries floating rates, so fund income rises with the policy rate while borrowers' ability to pay deteriorates at the same moment.