The Global Investment Reset: Public vs. Private Market Allocations

Of superstars here. They're models strategies are fairly different. We're gonna hear about they're gonna tell us a little bit about what they think they're right to win is. What their predictions are for the market. So let's get going. So first, I heard another panelist today talk about the age of discernment. And that this is the age of discernment and that the the folks with the right to win are gonna win. But it's gonna be a shakeout. So I'm gonna unpack everyone's right to win. So I'd love to start with you, Karen. Well, first of all, because you all don't know these folks maybe so well as I do, why don't we all go down the line and just tell everybody name organization and quickly, not like a big paragraph, but maybe a sentence on your north star or right to win. Come on. Good to see everyone. I work for Principal Financial Group in the asset management division. We are almost $750,000,000,000 in AUM. And 1,800,000,000,000.0 in AUA. And our right to win is we are an n of one the only truly global retirement investment manager in the world. Nice. Alright. Pierre Fransen, CEO of EQT. We're a publicly listed business out of Stockton. We today manage close to $400,000,000,000 of assets under management across private equity infrastructure, real estate, and and now also secondaries. And we're actually the largest private markets firm in the world outside of The US. So I guess that's our right to win that we can provide access to really attractive returns, what we call Alpha, across all of these strategies. In Asia and and in Europe. And that's actually pretty hard to replicate that type of setup. Katie. Katie. I am so to be here at my hometown of LA. I am the CEO of TCW, which is headquartered right here. We are a global asset management firm, $200,000,000,000 in assets under management. We invest in public credit, private credit, and also public equities. And the right to win for us would be that we privately held, long term oriented, specialist manager that builds highly differentiated exposures versus benchmarks. Peers. Fine. Alright. Mike Freeno. I'm the chair chairman and CEO of of Barring's. We're a $480,000,000,000 asset manager specializing in public and private credit, real assets, and capital solutions. Say, our our differentiation in in terms of right to win is our ownership structure, but we're the only large asset manager on a global basis that's that's owned by mutual. Soon to bring another insurance partner in alongside of us, but we not only a manager of assets, but we'll be a principal alongside our investors. And so I've complete and total line. Them. Great. Love David Gross, managing partner of Bay Capital. We are a broad multi asset class, private investment firm. We have 10 different business businesses, headquartered in Boston, $225,000,000 in assets under management, Right to win, I would say, you know, we're all about operational value creation. That's been really the the ethos and the culture of the firm since we started with a pretty unique model and a lot of energy and resources focused on driving back creation at companies to really deliver some superior return So that's that's our model. See, I told you. I promise you. You're gonna hear different things, different iated styles, differentiated models. Very interesting. So I'm gonna pick on each of you for something that I thought was particularly interesting and might signal the market in terms of, like, what you think is gonna happen in the next five to ten years. Per, I'd like to start with you. You bought Collar Capital not so long ago, and you divested your credit business not so long ago. Tell us why you made those moves and why those signal what you think your what you expect will happen in the next five to ten years. Mhmm. So fun fact, we we did acquire a capital. We announced the transaction beginning of this year, but Jeremy Collar, who's the main shareholder and the founder of of Coler Capital, actually met him at Milken last year here over lunch for his time. To to answer your question, we went public in in 2019. So, like, seven years ago, And the reason we went public is because we thought that this industry is gonna consolidate and that we wanted to have access to a strategic currency to advance our, like, strategic priorities. And at the time, we actually did have a credit credit business and we decided to divest it. And many people questioned that because of the growth also that this asset classes has had. And it wasn't really a view on whether private credit is an attractive asset class or not. It was more just an an honest assessment of what are our capabilities and where can we add real value? You know, what is our DNA? What are we good at? And and ultimately, you know, we're we're we're coming from the active ownership strategy side, and every we do is is is about creating performance, excess performance in in in relation to public indices. So that's why we decided to divest the the private credit business And the obvious question then is, of course, why did we want to enter secondaries? And the reason is that we we see an increasing need from from our investors, from from our clients to engage with them, to help them achieve their strategic portfolio objectives, manage their their their liquidity because of also some of the lack of liquidity, lack of that have come out of the private markets industry. But also because our industry has just become much more mature, much more complex. And we at EQT, we wanna be the most attractive counterparty to investor in the private markets, right, and that strategic counterparty. And that's why it was so important for us to get access also to those secondary capabilities. Interestingly also, now we're actually back into the private credit asset class because capital has one of the largest, I think probably the largest secondary strategies in private credit. And and, of course, the timing is also interesting from that perspective because now we actually do see a real opportunity to produce very attractive alpha outperformance for our clients, for our investors in this asset class. Given some of the market dislocation and dynamics that we're seeing in private credit today. Very interesting moves, obviously, liquidity products, No one can deny that that's a good idea. Katie, he divested of his credit, but you're all about credit. So tell us about your credit strategies and I thought it was interesting that you told me that despite your focus on credit, you haven't invested up in software or SaaS products at all or companies, sorry, at all? Yes. So we we've moved in the opposite direction, but looks like it's been You can have a You need a little Yeah. But I think there's something in the specialization point that you're making that's really important. We've made an investment and a push in into private credit, which means a lot of different things. For us, we have done that through CLOs. We have done that through our direct lending business, which I think is where your software comment comes from, and I'll come back to that. And we've done it by building on our thirty year heritage of securitized investing in the public markets to build build out an asset backed finance business. I'm Brian Milling, the CIO of our fixed income business is here who's helped us lead that and build it out. And Dylan Ross runs that that business for us in structured credit or AB Private Credit Now also means leverage finance, which people know. It also means IG, and we do all of those things for individuals and institutions. So that's what we do. We've tripled the size of that business over the last few years. I think it's a little prediction of, like, Yeah. Where you see that your private credit isn't going. There's so much noise about private credit. Yeah. Sure. So I'll I'll just pick up on Dora Lendy for a second because I think that's what a lot of the dialogue is at this conference. So something to know about us. It's true we don't know the software, but there's a reason for that in a much bigger and and more important structural story on that. We've done this for twenty six years in the direct lending market, which puts us in a pretty verified group. Most people launch post GFC. So you we've done it through multiple economic and rate cycles. That's important. We have kept leverage the entire time at about three to four. The market's much higher than that. We've been disciplined on pricing. We've had incredibly strong covenants. And extremely demanding documentation. So you could either say that we didn't lend to software companies or that they didn't want our money. Of those things are probably true. But we did end up with with no exposure I'd add to that list we're not overly dependent on the sponsor market. And so the important it's not really software is the the main issue. It's just if you are a disciplined lender, that's gonna get you through this environment as well. I actually think people are focused on the wrong thing just by focusing on software. Every sector is going to go in and out of favor. But if you maintain a disciplined process, if you've done for twenty six years, should be able to manage through that. So I would say kind of what did we see? Because last year, we were here, and we said we think there are gonna be accidents in this asset class. So I will be brief in on what we saw, where we are now, and the opportunity in about sixty seconds. And so could Jen and I both appreciate high economy of words, So in terms of what we saw out there, it was actually not a prediction about the Saaspocola which I mispronounce often, so I may have just done it there. It was actually just the fact that a lot of money was coming into the asset class, and the lending standards were decreasing. And so we just said there's probably be accidents, and we obviously ended up having some. And there became a high sector concentration for people who have done leveraged for a long time. It's very risky to have 20 or 30% of your capital in and single sector. Those were some observations that we we made. In terms of where we are now, we would say that the easy days of just showing up and lending money or over, the beta trade and this is over, People are gonna focus again on the rationalization of the market and discipline. Which leads us to where I'll end in terms of where do we see opportunity You know, we said it was the golden age of private credit. Now people are saying it's radioactive. Like, most things in life, neither of those are true. The truth is somewhere in the center. And, actually, there should be an extraordinary opportunity. Our view. So last year, we said beware. This year, we're saying this is an incredible opportunity for private credit when people are correct lending specifically, when people are heading for the exits, that's where you wanna enter. Opportunities are on new vintage lending. Because you're gonna have a higher base rate. You'll get, you know, better better returns in the coupon because it's less crowded. You're gonna overall get better returns at better terms. That's good for new vintage private credit. And then we can come back to it later if it's interesting, but we see a phenomenon opportunity in rescue finance for some of the reasons that you highlighted around dislocation. This is a very important way to take care of the dis to to take advantage of the dislocation in the market. So, by the way, there is a QR code. If you have questions, I have a little what's it called? IPad. So I can see them if you if you wanna ask anything. Mike. Yep. Have an extremely different business model to everyone else. As I understand it, you've got a huge balance sheet because you've got not one about half So it shouldn't be two. Of course. Yeah. Tell us a little bit about that and how that factors into way you're running the business and also your predictions. Well, ownership structure, again, it's a long term ownership. It's close to perpetual capital. Mean, ownership structure is you can you can have our parent company is a 175 years old. The oldest policyholder or owners of our company is a 104 years old. And she, usually a she when we get to that age, has been a policy holder for ninety plus years. That's a long term longer policy older policyholder than Mass Mutual. I saw him on stage. Is in the nineties or something. Nice. Yours is even, like Just a big So so we we take it. It's how we build the business is for the term. We're we're looking at generational type promises that we make to to our our owners, are ultimately, again, the the policyholders. So the way we build businesses both organically and inorganically as well. And I think there's going to continue to be opportunities from the inorganic stage, whether there's divested We've we've purchased three companies in the last four years to integrate to, I'd say, complement what we do. We look at our portfolio of capabilities on the manufacturing side, and what do we need to build that out, to offer clients for us things we wanna be great at? Don't think that we're not everything to everyone everywhere. Don't have aspirations to be that, and we have a level of scale but but it's not it's not trillions, and and maybe you'll need to be there at this point in time. But we think about it in in terms of generations as we build these businesses is on. And and as I mentioned earlier, we are a buyer alongside our clients. Very few assets that we own and I don't think there's any on the credit, debt, or real asset side. There's some of them are equity business. Or our parent company is not investing alongside all of our clients. So there's complete alignment from that perspective. As we build out and and I think we we have the commitment from them. And then as we bring in our new owner to to continue to be building out businesses for the long term. And we'll be active both in the inorganic and inorganic phase of that. And I I promise to come back to come on. I think it's my last but not least. But Bane, the grand I feel like you're the granddaddy of classic you know, private equity. Of course, you That's a person. I used to diversify your I'll take that as old. They're actually the oldest Mike. But seriously, you diversified your business obviously quite a bit. Where do you see the market going and your rights when in your setup, and how does that all work together? Yeah. So, you know, we started out with this kinda core premise that you could have an operational approach to businesses, get involved, and and, you know, change and revenues and and globalize businesses and support them and we'd like the notion that you could then, you know, kind of apply that model across asset classes, across the Catholic stack. Our first business that we got into actually was was private credit and CLOs. Where we can kinda leverage that same knowledge and and approach in looking at a business that maybe we could invest in in a buyout context, but then we could we could invest in the debt. Public equity, venture capital, real estate. And as I mentioned, we have 10 businesses, most of all. The core approach is, you know, a value added mentality. And then there might be dislocation or under management or an opportunity to reposition things that may have. The resources to do that you can be a a strong agent in the in the governance process that that private market supports. We have some 200 people that are dedicated, you know, folks who go in and and drive companies, this is not just in our private equity business, but even in minority context, we might do a structured equity deal that will contribute resources even though we're only a minority owner. Because we wanna, you know, drive that inflection. Our venture capital business has, you know, significant talent team that helps augment support, you know, growth full, growth full businesses. And so and this is something I think has been enduring through through cycles, and and maybe has created some of the you know, the balance when you're in tough tougher market cycles and you have a lot of headwinds. This could be the extra you know, a couple 100 basis points of growth or cost reduction of cash flow that can get you to a pretty good outcome. And, honestly, an interesting market environment so you get some growth tailwind, could be a massive massive amplifier. What do you think? I mean, private equity is one of the businesses that folks think will fundamentally change or be more business in the next five to ten years. What do you think? It sounds like you're saying sticks to what we know, and it'll all work out. Yeah. The good thing is it's not monolithic. So there's, you know, different segments are in different phases. And so if you go outside The United States, I think you find you know, what's kind of what we saw in The US, maybe, you fifteen years ago in the case of Europe, maybe thirty years ago in places like like Japan. And so there are opportunities to kind of really reenter these interesting penetration curves and then apply that playbook. But in more competitive markets like The United States, listen, it it it's about advancing the capabilities that you have. And so going much more deeply in terms of vertical capability, in terms of bringing together you know, different disciplines. And so combining early stage, you know, life sciences with later stage health care, combining operating businesses with hard asset businesses like in aerospace and defense where those capabilities are required to to bring them together. And, obviously, I won't you know, gun jump the discussion on AI, but that's it's We'll get there. It's an incredible and fundamental Yes. Accelerant to all forms of, you know, value creation and multidiscipline that have been referencing. And so at the time when you have more competition, would agree with you there's some macro headwinds and volatility that you know, make it more difficult to to invest and some disruptive forces. But the flip side is we have more tools. We have more areas where we can drive the next level of growth that we're not even close to available ten ten, twenty years ago. That's setting. Yeah. So we'll hit AI on the head now beside some data. So wanna make sure I let them all go. Just one one reflection on what David said on private equity, which I think might might be of interest to this audience. You know, during my twenty years in the industry, every time there's been a slowdown in deal making or a little bit of macroeconomic headwinds, the model gets challenged. Right? But, fundamentally, a very, very attractive ownership model. And actually, during times of uncertainty and volatility and a little bit of headwind, You know, if the industry just focuses on the basics, namely, building and developing better companies, that is the perfect time to generate outperformance. Okay. So Come on. Talk to us. You have a very different view of the market given where you're at. Give us some predictions and tell us Sure. I was thinking as my colleagues were chatting, I should have been in the middle. Because we have two panelists whose who are aligned to private credit Yeah. Who are aligned to private equity, The good news is You're the bucket in the middle. No. Well, because I could go left and talk about credit because we do a lot of it. Could go right, talk about equity. Because our structure and our experience allows me to have an unbiased opinion on both. And that's powerful. That's important. Because, ultimately, the outcome matters and and outcomes should drive the decision point. So my view of this is is is you know, the non engineered private credit is real. If you're a student of investments never in the history of investments, you have had questions and stress in credit, without stress in equity. They are two sides of the same coin. One side doesn't show up. The analogy I could give you is is even nature behaves this way. Dark clubs gather. It will always rain. They don't go away. They don't step. And so the fact is is is private credit has gone through a period where it grew a lot. And it's going to go through its natural credit cycle. That is the nature of credit. So what's your weather report? Is it downpour, a tsunami, just kinda cloudy? It's a good question. You know? It's a it's an interest profession to be a weatherman these days, particularly the But experience tells us I don't know if it will be a downpour. But with the clouds that are real, and I think there's probably going to be more stress on the equity side But until that credit cannot clear. That's where I would leave you with it. And and just from my seat, because we do this around the world, And one of the benefits we have is I not only think in terms of public and private or private credit and private equity, I also think in terms of public equity and public credit because those things inform your viewpoint And where I see this is is private credit for a lot of people went from zero risk to the low risk. And people are worried about it. It's still low low risk. It's not high risk. It's real risk. So I think that's the issue that there will be more write downs. But people have been earning a lot of spread in this asset class for many years. So the ten year track record would look pretty good. The five year would look good. The one and three year would not look so good. Yeah. And then eventually, it'll recover and the private equity track records very soon will be negative. And that's the nature of cycles. Somebody wants to Yeah. I was just saying we talk about public and private, you've governed it. Mean, these are two sides. The same coin at the end of the day. What's happening in the the private markets and public? They're coming together closer. If you look at a 2 to $3,000,000,000 private club deal, if you wanna talk about the corporate side of things, When I started this business, that was a massive syndicated deal. And so we're seeing this this evolution. And I think the asset owners who are looking for financing are gonna go where the most attractive financing will be, whether that's ease of execution, maybe in the private market, whether it's the tighter spreads if they wanna go to the public market, you're gonna see things go go back and forth and and and capital will flow where it can get the the best returns. I think to say that there's an it's inherently good or bad to be in the public and is is a bit of a mistake because, ultimately, the performance of these and whether we go through periods of volatility and and redemptions and liquidity ultimately, if the collateral holds up, the investments are sound, the asset class has has sustainability. And I think we've proven that certainly on the on the leverage lending side. Through many decades and many cycles. But I think our view is that these will continue to come closer to together, and it just gives more asset owners more opportunity to to on how they finance their their whether it's a company their assets, etcetera. Let's talk there's AI in the question, obviously, because none of us can deny that will be major transformation. I just wanted to ask a quick question of all of you, and then we can have a discussion. And the question goes something like this. What is your prediction in one to ten, one being one year, ten being ten years? How many years will it take for fundamental change the industry, meaning complete transformation in the world. One to ten. Mhmm. Come on. So I think the question is what would be the change in business? How long will it take? How long it'll take? So let me decompose what a business is. A business is is capital and cheapest. You're supposed to be you can't. I can't. But I'm I'll be give you the answer because there is a to the question. It's a deeper question. A business is capital and people. On a scale of one to 10, we sit today where we feel like it's nine out of 10 on 10 capital because of the advent of technology, and we feel like it's two out of 10 on people. In ten years, those numbers will reverse. Like, are you a one to two year guy? Or a ten year guy? Like, will it take one to two years to feel this fundamental chain? Will it take ten years? I think are already feeling the fundamental change in the capital and the technology impact. I think in a few years, we will start feeling that change on the people's side. It goes one to three. Yeah. Okay. Yeah. I'm in a similar camp. Right? So the today are already incredibly powerful, but we can't really yet as an industry, realize of full potential of them because of the limitations terms of what our organizations can absorb. So, like, as the CEO of EQT, what I'm really focused on is making sure that that that we now build those AI capabilities now in the near term so that we can Mhmm. Can can can can harness, you know, and then realize the potential of the technology. How many years to fundamentally A couple of years. Two. Yep. Okay. Three or four months. Alright. To three years. I think the technology is is is there or will be there much before the behavioral changes will take place in many of our business. But I think it's two to three years. I'm gonna go with four, you know, maybe because everyone said three. In the sense that, listen, I think it's incredibly powerful and transformative set of technologies, but it's bumping up against situation where, you know, humans have been using the same tools, the same to solve the same challenges in organizations for quite a long time. And so I think there is an adoption question. I think there's there's a a pretty complicated process of really rethinking and, in some ways, reimagining business processes and then link to things like pricing, models and revenue models and the like. And, you know, we're all gonna like all new with our organizations. We've all got you know, a thousand projects going on right now. It's incredibly dispersed. We're gonna sort through which ones work and do it and try to consolidate those, learn from it. See if we can codify those into agents with some network, and then ultimately translate it into, you know, how we go to market And, you know, I guess that takes some that takes some time. And then when you start to see the real disparity between winners and losers here, and I think this will create winners and losers in two terms of who can execute this Most effectively, then you're gonna see a real acceleration because folks are gonna have to catch up. Others are gonna gain more market share. You're gonna see some some shakeout. But, you know, to me, that's nontrivial process and cycle to occur. So I'm going on a a slightly longer end of the scale here. Does anyone have a use case that you think is absolutely fascinating? Fascinating happening within one of in your business or one of your portfolio companies that is really, like, wow y? You wanna share it? A lot of them all to be. There's so many use cases around, you know, personal productivity and and and cost and the like. But the one that really struck me because, you know, at the end of day, am looking for things that are gonna have a positive long term impact. You know, we are a business that is the dominant software provider to police stations. And they have an incredibly difficult time, you know, connecting disparate sources of information to really help the front end, which is like the patrol person. And now with AI enabled tools that connect traffic cameras, that connect maps and bring some intelligence to crime fighting. There are examples where they can you know, there's a hit and run And, typically, it would take a patrol person a lot of time to figure out where are their cameras, gotta go back, research it, seeking out where the car could go. And now at the fingertips with this software, and and the the databases that the AI driven tool can connect to, it will all happen in a manner of of minutes. And they can track the car and there are specific examples in the police department where they've actually stopped these crimes in a matter of, you know, thirty minutes. That might have never actually been solved. To me, that's like a demonstrable Yeah. Impact on, you know, how things are done that, you know, we we can kinda look at and say, wow. That that's a that's a tool. That's a real time, you know, activity that would not have been possible before. So I love that example. Very powerful Great. Enhancing the software. That's great. So if your son or daughter came to you and said, I wanna go into finance, but, you know, they're gonna graduate in the next couple years. Would you tell what would you would would your answer be impacted with what you know of AI? Would it not? I just wanna go Yeah. Katie. Was I was actually thinking of a cassette or breakfast that we had Monday. Would I deep Dina was at our PCW leadership, my president of Meta. President of Meta, I'm a friend of ours. And we're talking about AI, and we all know it's gonna be transformational. So and we are heavily invested in this. At TCW, we're very we we are invested directly in AI, which we can come on to. We're also very overweight powered. Generation. Across private and public markets, credits and equity. And she was talking a little bit about power because, obviously, that's the big constraint to all these hyper scalers for several, but power is one of them. This country needs to generate 250 gigawatts of power over the next couple of years. That's equivalent to the annual production of Germany's brands together. It's a big number. It's trillions of dollars of capital. And she also said, because there's this fear around job displacement, which I think you're getting out, something I think about a lot too. We also need 500,000 electricians annually. And I only know now from the employment numbers that there's a mismatch of college graduates for your college graduates come getting into the market. We're hiring them. We're all gonna hire less people The use case here is that we have amazing long on human beings and investing, truly. I think that you have to be able to ask the right question. Of these models. They have to be able to anticipate a future that's different than the past. And humans have an edge of that. They could use all of this technology to run more efficiently We're all gonna hire less analysts. That's true. Sad for the people who just graduated from college, you know, yeah. But it made me think. To answer your question, electricians, that is a good job to have. We do have a mismatch here and, like, I'm not making light of it. This is gonna be hard for society to go through because this is gonna be highly disrupted, and we absolutely are gonna have a mismatch education level, job availability, how people are trained and we're gonna have to it's gonna create a lot of stress on society that we have to work through. But it is also gonna create jobs at a level and a pace that we just we don't even understand what the future industries are gonna be, so there's that category. And then there's a category of what we need to build the physical infrastructure to enable this revenue And our kids may be doing very different jobs than we may aspire for them to do very different jobs than what our parents aspire for. But if they said, mom or dad, wanna go with them finance, Yeah. Knowing what you No. Say go be an electrician. I was just gonna say, you know, finance. Out that electrician. Well So, mister Jenna, I think there was a similar question last year, and I'll him. So I think the question last year was what advice you give your child who graduates college And and my viewpoint, that was unreputed. It was I would recommend you go into sales. And my logic was, That was a year ago. A year ago. And my logic was when you're young, you are very long optimism. And you're very short experience And going into sales is the fastest path to get that into each you. Human relationship. And so I was gonna so I like your answer. Which is when you're in sales, you hear a lot of noes. Gives you experience and judgment. But your optimism and enthusiasm keeps you going. And I'll bring it back to as I've been thinking about the topic of AI, because what AI does is it's by nature, artificial intelligence You will have a lot of intelligence around you. And my view is as intelligence goes up, the thing you need more that AI can do is relationships. So you would still say going to Go into finance, but double down on building relationships. Because intelligence will be matched relationships be. I have a very similar view. Okay. Also, an view. If I think about my own career, I started twenty five plus years ago at Morgan Stanley as an analyst at the tasks that I had to do back then So, you know, that I have to do today Yeah. And how many years took me until I got to do the really value add and fun stuff. So I would say absolutely. I would encourage people to now, you know, join the financial industry or the private equity, private markets. Career. Because they'll if they do it right, they'll they'll know, much much quicker get to a point where they can do really value at work. But then the focus has to be on getting that that real experience working with companies, with assets, with management teams. And, also, I say, really don't shy away from the tricky situations. The complex situations. That's when you learn the most And those type of experiences are also the least likely to be replaced by models going forward. Because they will require a real judgment contract. And and just to add, I think if you ask me to choose between public and private markets, would say go to private markets because the nature of private markets is you you can't really trade with someone on a Bloomberg terminal You have to have a relationship to whether you're doing a credit deal or an equity deal, and it will teach you that relationship better because the alpha in private markets is a relationship It's not a trade. So interesting. Anyone down there wanna talk? No. I'll just add. I think the the skills that are that are valued certainly by most probably most of our companies ours, but we'll still be valued in the future too. The the the analytical side is gonna be taken away by by the machines. Some point, and that that's gonna be less. Right? But the the ability to interpret what it means, the ability to think in it with innovation, the ability to understand how companies operate, how markets operate, the softer skills of things, I still think are going to be to be valid. We'll have fewer people doing the analytics around this. And then you'll have to be able to take that information and do something with it, which is what I think most of us in the industry, our most valued people are those that do it. They're the ones crunch the numbers and spit it off. Us an they're saying, what do you do with this answer? You've gotten this now. Would you position this company different? How would you evolve your product mix? How would you structure this team Right. The the more behavioral type of thing? But I think we'll still be still be valuable. I wouldn't encourage people to to shy away from it. But the understanding of statements and how they translate into a the actual confident of it rather than just getting an answer and saying, here's here's what the team is doing. Maybe I don't know what to do. I still think we'll be be valued in in the future. I I would just my my kids, they're they're seven, nine, and 11, so they have a long time. Four kids until they until they figure out that. But on this one, like, if I wasn't advising them to be an electrician because perhaps double the size of the grid by then anyway, I do think, like, you the ability to when we drop them off at school in the morning, I always say to them, ask good questions, which goes to what you're saying. Like, this a lot of this can be replaced by models, but you still have to have the cognitive ability to ask the right questions. Absolutely. And going back to this, like, how you prepare people for this world, it may be, and I I sit on the board of the university, that actually, we need to train people differently in college. And what's actually kind of interesting about it is that, like, we we do need to give less undergraduate business or financial quality training, and it's better to be in philosophy, or it's better to be in language arts, you're really learning to think broadly and to ask important questions. I mean, we could really have to think about the way that people study and the way that we develop people differently if the base level of knowledge is gonna be is gonna be done by compute. Fascinating. I love this discussion. But I'm gonna go back to asset allocation. Let's talk about outside The United States. A lot of you run global businesses. I know you have a big business in Asia. Do you. I heard someone on the panel today talk about the alpha outside The US, and that seemed to be an unpopular topic in the I think it's much more popular. Who wants to dive into outside The US? We got a cat star. So we're good, he's had a large funds in Asia. Right? We're focused on Asia? Tell us about that. Yeah. So we're a big big investor across Asia. We're a big investor in Europe as well. And and I'd say if if I look at the opportunity set in particular in in our active ownership strategies in in those regions compared to here in The US Yeah. There's just a higher share of undermanaged assets. Right? And and so not exactly. Yeah. Exactly. And I sure David will want to comment on that well. Yes, please. We so so and if if you have this set up, the right presence across this job, is to unlock those opportunities. And then you can apply that hands on value creation tool, Vauxhall. Our AI capabilities to drive real change in in those type of businesses. That's when we actually can create material outperformance versus the public market. Mhmm. And from that perspective, I would say that Asia and also Europe are relatively speaking for the private equity asset class more more more attractive Anyone else wanna jump in? I agree. In addition to the just the raw opportunity that exists in these markets where efficiency and margin levels are not the same. But, again, you know, private. Credit, certainly private credit. The more special areas are are lower level of penetration. And so, again, we're just seen the movie before, and we're gonna watch it again, and it's gonna be interesting growth. Yet we live in an incredibly interconnected world. So, you know, for for workers of business in The United States, need to have a But particularly with all the tensions you see now around deglobalization, At first, we thought this was gonna really constrain our global activities, rather it opened up a whole new leg of helping come to this nanny to realign another supply chains. The notion of reshoring and kind of relearning manufacturing here in the in The US, which you can do. But you've got to study from the Chinese, from the Japanese, from the Koreans around some of these things particularly in the technology and the component area. And this is not just in in manufacture. We see this now at the pharmaceuticals and Mhmm. You know, the great know importance place on controlling supply chains and having those technologies and APIs be here in The United States. But this is trends happening around the world. All countries want sovereignty over, you know, critical critical industries. They're all investing significantly. Into defense and rearmament and the like. And so if you've got a global foot footprint, you can see these common trends. You can build the idea knowledge about it. You can help companies in each country realign and be competitive around that. Even if levels of global trade may not be what they used to. However, the people forecasting global trade was going to, you know, go down, and you'd see changes in the you know, bilateral trade to The US and China. Empirically, hasn't happened. So I do think globalization is a tough thing to Yeah. To constrain. But regardless, being able to think global, interconnected, and support businesses locally, I think this is a huge opportunity for, you know, for private capital. I'll do it real quick. I I this is why we build businesses that are that are global in nature. Everything we do wanna do across all geographies and and and building buying businesses and building businesses and have a J adjacency and tangential pathways into other markets is The US is the deepest capital markets. Obviously, financed itself not only with banks, but with all sorts of other pools of capital. Other regions less so. But it they'll get there. And you think of the securitization market, whether it's it's in all sorts asset backed or you could look at sort of corporates, the rest of the world is not nearly at the level, but it's going to come over time. And I think having the capabilities and building out that to be able to offer investors because capital is efficient, It will go where the best opportunities are when regulation's permitted. And so I think just being able to build capabilities and build a a global financing system that will all allow capital to go in the right spot and be able to support growth of businesses in all regions is really what we're trying to to focus more on. And, of course, in parts of Asia also, not only do you get get access to opportunities where you have relatively speaking, a big opportunity to have more impact, to drive more value creation but you also get like the economic growth tailwinds that you might not have in many other parts of the world, for instance, in India, some of demographic tailwinds, and there are other markets like that all across Asia. Mhmm. So Jen, we have a very large Asia business, and and, you know, our team is here. Over the last few days, I've talked to a lot of clients. And I think you have to appreciate a couple of things that I'd highlight, and then put myself in investor shows, the ratio, which is what ultimately matters. One, so many of us are US companies, and we work with US we don't you have to appreciate what a blessing that is. A couple of reasons. We have one of the highest performing markets in the world. We are the center of innovation in the world. We have a reserve currency that we doesn't make us think about other issues. And very honestly, with geopolitics, we have been insulated from all the issues around energy. It is very tough and very complicated for a nation investor. Today. They don't they have to think about FX that many of us don't have to worry about. They have to think about the impact of what energy does to their portfolios, their countries, and their businesses. So it's a more complicated thing. And I will tell you at the end of it, I will tell you an Asian investor is becoming smarter today than a US investor. Because they are feeling the risk and the volatility better than most Us. So, A, I Have A Lot Of Respect For That. They Teach Us A Lot. And I Wish In America, we spend more time with them. To understand how the world really operates because it makes us better an investor. I'll I'll add a perspective on the whole longest thing. Maybe just talk about public. I know a lot of people are very excited about private markets, v r two, obviously. But the largest, most liquid tan, if you will, from an investing perspective is the public markets and of course, the public fixed income markets. And from a global perspective, for actually most of my career, because race work headed to zero around zero and zero valves, for a lot of my career, there really wasn't a lot of dispersion across global fixed income market. And now that's that's very different. And so there's new norm amount of dispersion to take advantage of in global fixed income markets at the level, the corporate level. Securitize is mostly a US opportunity. If Europe wants to have AI, it's gonna become a European opportunity, we're hopeful that they'll have the regulation and the interest from asset owners to do that. So I I do think it is especially in the last few years, and I think it will persist. We're seeing a lot more interesting divergence dispersion and opportunities to take advantage of in global fixed income market. Just as with just take emerging markets debt, you know, that whole on the equity side too, but in debt has changed much. These are countries that are actually doing the opposite of The US. They're delevering, and you could get an opportunity to invest in companies that are actually improving their balance sheet and pick up very attractive yield what what relative to what's available in US markets. You get European credit, which is still a good credit quality on the sovereign side, and pick up excess yield relative to US markets. And with the central banks, our acting differently now, and clearly, there's ways to take advantage of that duration for perspective. So global fixed income is fun again. There's a lot to do. Many ways to take advantage of of the dispersion. And I'll I'll just, you know, end by saying, I think, also, not US investor, at the margin They they know there's so many great things about The US. Come on, all that they're all true. It's the most dynamic capital, all true. It's also true that they already own a lot of them. They have 70% of their equities in US equities. They have some of these pension funds have 14% of their equity in three or four US companies. And on the fixed income side, they already own a lot of treasuries. So so we are observing the marginal dollar of non US investors, also looking to away from The US into this global opportunity set. And finally, yes, you can take advantage of this by doing a dedicated EMD allocation which we highly recommend. You could take advantage of it by diversifying into global fixed income. And I think US managers, and we're doing some of this ourselves, in our core plus portfolios, which are to a US ad benchmark, Historically, people just hunted off benchmark maybe for higher yielding assets. Non IG assets. We do some of that too. You can add some global opportunity into those portfolios too. So active management loves this version. We have a lot more of it now. Just Yeah. We're we're building on what? What Katie said, what we're seeing in the private markets in in in our business and the dialogues with with investors is that most of them absolutely do not challenge or question the economic growth outlook for The US or the innovation drive in this economy. But given just some of the uncertainty volatility also around FX rates, they just wanna they're just rethinking like, portfolio diversification. And the reality is that most people in the private markets are significantly over allocated US dollar based assets from actual both US investors and also non US investors. Right? So that's a little bit of dynamic that we're seeing, which is why people also want to allocate today more capital in the private markets too. Non used dollar based opportunities. Mhmm. Anything else on the global topic? I would just ask you all an question. If you were an LP, and forget about what else you own, Like, you're an LP Where should an like, what's your best idea? Like, where would you put your money as an LP? P each one of you? Kamal. I would say real estate The asset class, we didn't talk about it. Yeah. Okay. I wanna say anything more. And I'll tell you what, two and two and three pieces that I gave you. Every asset class, goes through cycles. That's fact. You want to invest when things are coming out of a low point in the cycle. And sell when they're at top. Real estate is at the bottom of cycle, not just in The US. Outside The US, in many places too. That's fact number one. Number two is is if you look at the nature of real estate we talk a lot about data centers as well, the space has expanded. Yeah. There are very few asset classes that as in totally expand and create opportunity set, yet there are fewer managers who operate in it. Fewer investors who have allocation to it. So that's creates a natural alpha in the asset class. And then the third reason I would tell you is because of the history of real estate, there's always been a natural exit option through REITs. Or in the debt market through other securitizations. This asset class allows you to enter and exit in an intelligent way. So that would be my case for where I would put my money I love it. Pear, where do you put your money? This is, of course, a trick question. Right? The the alpha generation cape opportunity across all of our strategies. But I know. We've spoken a lot about in the chat. Let's have a look it. We've spoken a lot about the opportunity outside of The US. Spoke a lot about private equity. Yeah. But you mentioned real estate. So clearly, I have to mention the incredibly attractive risk reward that we're seeing right now in infrastructure. Okay. Give them, you know, the need to build out all of the physical AI related infrastructure that we have ahead of us And and so to be able to invest into that and into some of the energy that that power all of these data centers I believe, is is just a very attractive proposition. Think you gave us some great ideas, but Katie, now you're an LP. Okay. But your arms I think just one moment I'm on public markets. There's a lot of, to state the obvious, uncertain things. Happening in the world right now. We've all had to listen to people talk about them for two days, we don't need to rehash them. But there's some pretty severe left tailed risks that we're waking up and leading up about every morning. And in investing, you have to live in a world of probabilities. I think the public markets, both equity and credit, are currently pricing in a 0% probability of things. Going wrong. And that's not good pricing. I don't think equity risk premium should be negative. And I don't we don't think credit spreads should be as tight as they are. So my recommendation would be to really make a massive improvement upon beta And so in the equity market, I would say, pick a secular theme where you could get diversification away from the index, and we talk about power. We have the ETF for that, PWRD. So I'll leave it at that. There you go. Okay. That's going on. Alright? And then in the fixed income markets, we're securitized, and and where we can think we have good value. We can pick up some carry. Be conservatively positioned. And our team led by Brian has a tremendous track record of when something breaks. And we think there's a non zero probability of that happening. We did this last year around Liberation Day. Need in and buy a lot of credit. And then on the the the private side, I already we already said, we're just new vintage Anything where people are running for the exits is obviously the time to get involved. And so Okay. I'd say they'll start you in general. Just I agree with the real estate conversation. We're seeing a lot of attractive opportunities. Would say, actually, in Japan, there's some things going on in that market right now that are some off market transactions, which make it very, very attractive. But I think it may be gone on on a similar vein that was just spoken about. I think asset backed finance in the right part of the capital structure, of course, with the right collateral backing it, there's a lot of opportunity for what we'll call mezzanine and hybrid structure. I think there's gonna be outsized returns given there, but you've got to you've got to if if if you can pick up a a premium for illiquidity and then a a premium for complexity that you're willing to roll up your sleeves and understand that you've got the right liability. Structure where you don't need that, I think that's gonna be an incredibly attractive area. But it it it means getting the collateral side of it right. We've seen instances where that's been wrong. But if you've got the collateral right, you can structure a lot of things around it. There's a lot of demand. In the insurance market for the top part of those capital structures. There's less demand as you move down into those, and I think some of those hybrid structures are gonna create a lot of opportunity for people. It's it's actually a version of what you said. It's different. I better the better Not Japan. That was know? I think that hybrid capital, flexible capital is gonna be a really, really interesting place where to go. First of it's it's a bit of an underappreciated asset class, kinda sits between two more established worlds in terms of equity and credit, but I but I and Katie said, you know, I think there is a little bit too much, you know, up into the right thinking right now. I think we've become a little bit of nerve to the notion that we've not really had a a regular business cycle in some of those, you know, theories of the economy that have serviced all the passenger a bit, you know, broken now. And there's gonna be a period of enhanced dislocation even if all the the growth curves go in the way we think they will in the long term, it's gonna be a rocky it's gonna rocky period. That's where this flexible capital in quite well because you know, you can structure things to match upside and downside with buyer and seller that you know, make deals come together. We're seeing some of that now. Clearly with DPI trades and with corporates who have you know, some assets that are underappreciated, they can't take them publicly. And, you know, captain, which is a pretty itching you know, avenue to get some liquidity or get the money to invest in other areas. And Google fashioned distress. You know, one day, we'll come back and become you know, entry in place to be. So, you know, I think that's something that's a lot of you know, right now, and I I'd be over for that. Anyone disagree with any of these? Great ideas? Just curious. Disagreement is good. May be hard to glad it makes a good pound too. Yeah. Just asking. Yeah. Yeah. Okay. So we've got about four minutes left, and I always like to end with something I call check this out. I mean, I was gonna ask you all just you know, I wanna give you all credit that been incredibly volatile. It's very hard to leave right now. I give you all credit. Your platforms are amazing. But you're all obviously readers and consumers of information and travelers all over the world. Tell the audience something you're obsessed with, and it doesn't have to be about finance. It could be a Netflix show. It could be a book. It could be a podcast. Are you obsessed with right now that you're telling your friends and your colleagues to check out? Anyone wanna go first? I'll go I'll go first. If anyone's not gone to it, proper Texas rodeo, I strongly suggest Yeah. I saw Jen on the big screen and she was just talking to Fort Worth Radio and stopped show a few months ago. She was there in full full gala, but it it's fun. I love You haven't done anything yet. I suggest you struggle with me. I'm not a fancy night. I kinda like to be a playmate on TV. That is a great one. But that's for a Texas, he's gonna love that. Okay. Okay. What did you learn from doing that? Oh, there's, like, culture down there in there. Is, and I'm sure Houston's got everyone too. I'm gonna go you know, for, I think you're from Sweden. Hope I like it your thumb here. I'm gonna go the voyage. Is is everyone ever What's that? Oh, yeah. Ava Voyage. No. Fascinating, you know, virtual reality creation of, you know, a band you can't go see and using all the digital technologies to bring you right upfront there. Live. I couldn't agree if you've not seen the average voyage experience in London. It's It's it's amazing. It's amazing. And you're sweet. I I really like that. You guys are sweet. I mean, that's a great suggestion. I had to go before you, bro. Really? Anyone else? Kamal? You asked obsessed, so I wanna say the word obsessed. But I'll bring it back to you know, we all use AI in a different way. So one of the things I have been experimenting should say, is is you kind of always go back to pay a few your childhood that you Yeah. Don't remember. And you know, I've been experimenting with going back and listening to music. When I was younger. I sometimes don't remember or I know the lyrics too, but the tune stay in your head. It's wonderful. To go back and ask questions whether you do it through Spotify or something else, and think at the ultimate end of this, in my mind, is all want happiness. And I'll leave you with this. I think AI can give you happiness. If you ask the right question. I totally agree. I have one more idea of it. Yeah. If you're in London for the upper voyage periods, I'd also highly recommend you if if you're there, if you happen to be there, July to go to Google and then you can get a a ticket. It's an Go to what? To so proud I've done most of these things. Is there one last thing you wanna mention? You got it last minute. Yeah. No. I I might have go and find it with AI. I think we are gonna continue to seek highly unique experiences. You asked about traveling in new places. Think Rodeo is such a good example because you don't have figured you're kind of immersed in something completely new You haven't experienced it to subculture, and I think it's good to keep exposing yourself to that. A big traveler like you, so I would say that destination I'm most obsessed with is I went there for my a while ago, and we're planning a trip now to take the kids back. Wow. And I'm long, as I on human ingenuity, and I'm very long on experiences. That's been a good trade for a while, but I think it will persist. And I think going to really unique places and pushing yourself to think differently, it helps me do my job better and expand So I'm long on Antarctica. Antarctica. That's the one experience in this time I had not experienced. You have there? No. Dying. Could put that on the list. Amazing. Great. Well, what's great about ending the panel on this note is leading an organization right now. No joke. It's treacherous. And the fact that you all take a little bit of time to have fun and experience things makes me happy. Thank you so much for coming.