Bloomberg Audio Studios, podcasts, radio news. Jenny, wonderful to see you again.

Bloomberg Audio Studios, podcasts, radio news. Jenny, wonderful to see you again.

I mean, there's a lot going on in the market, just a couple of things here and there, I think, Yeah, So, how do you see the role of traditional money actually changing with alternatives and how do you see it evolving in the next couple of years.

I mean, there's a lot going on in the market, just a couple of things here and there, I think, Yeah, So, how do you see the role of traditional money actually changing with alternatives and how do you see it evolving in the next couple of years.

Well, look, I think there's some trends that are obviously going to just continue right. One is alternatives, and you know, you look at I think a lot of this the growth and alternatives actually comes from kind of the two thousand and eight financial crisis. So one, you know, with banks not changing the capital requirements around banks. Banks really want to preserve their capital for their biggest and best clients, and so it created this opportunity for private credit to step in. I think that honestly, low interest rates were probably one of the things that fueled private equity, but also a bit of the environment where I think less and less people will less and less companies want to go public. And I don't think that trend changes. I don't think I don't think there's a lot of people going Boy, I'd really like to be a public company CEO these days, and I think in a time where you have all these great technological advances like AI, where companies need to invest in the technology that may not pay off for years, it's really hard with the pressure of cordingly earnings, and so in some cases transforming a company ends up being better in the structure of private equity. So I think like that trend is here. I think I'm a big fan of blockchain. I think that's going to open up new investment opportunities and kind of interesting things. I always say that eventually your financial advisor is going to report your portfolio in three ways.

Well, look, I think there's some trends that are obviously going to just continue right. One is alternatives, and you know, you look at I think a lot of this the growth and alternatives actually comes from kind of the two thousand and eight financial crisis. So one, you know, with banks not changing the capital requirements around banks. Banks really want to preserve their capital for their biggest and best clients, and so it created this opportunity for private credit to step in. I think that honestly, low interest rates were probably one of the things that fueled private equity, but also a bit of the environment where I think less and less people will less and less companies want to go public. And I don't think that trend changes. I don't think I don't think there's a lot of people going Boy, I'd really like to be a public company CEO these days, and I think in a time where you have all these great technological advances like AI, where companies need to invest in the technology that may not pay off for years, it's really hard with the pressure of cordingly earnings, and so in some cases transforming a company ends up being better in the structure of private equity. So I think like that trend is here. I think I'm a big fan of blockchain. I think that's going to open up new investment opportunities and kind of interesting things. I always say that eventually your financial advisor is going to report your portfolio in three ways.

They're going to say, here's your investment.

They're going to say, here's your investment.

Return, here's the impact you have, and by the way, here the loyalty programs that you've gotten from your tokenized equity ownership that have now tied loyalty programs to it. So that's where I think things ultimately evolve.

Return, here's the impact you have, and by the way, here the loyalty programs that you've gotten from your tokenized equity ownership that have now tied loyalty programs to it. So that's where I think things ultimately evolve.

So on blockchain and bitcoin does change significantly under a trumpet restoration.

So on blockchain and bitcoin does change significantly under a trumpet restoration.

Oh for sure.

Oh for sure.

And again I always make sure you separate bitcoin from blockchain.

And again I always make sure you separate bitcoin from blockchain.

Okay, bitcoin different deal.

Okay, bitcoin different deal.

And you know, I was a skeptic of it initially, but a couple of things people said to me. One somebody who lived in Israel, said, my parents and grandparents had their money taken away by the government. They will always keep a portion of their savings in bitcoin. And then I had actually an employee who lived in the Middle East and said, if I say the wrong thing, I can have my accounts frozen. So I always keep a percentage of my earnings in bitcoin, and obviously in the kind of key because they can keep it protected. So if you grow up in a society where you feel your money safe, you think that doesn't make any sense and why should this external currency come in. But if you actually think that there's a lot of the world that would like that safety and control, you can see where bitcoin has a lot of opportunities. And then blockchain is again, it's a technology. It's a technology. It's going to do a lot of really good things in financial services. A lot of toll takers take a piece of a transaction that can eliminate it and so it's going to create more efficiencies.

And you know, I was a skeptic of it initially, but a couple of things people said to me. One somebody who lived in Israel, said, my parents and grandparents had their money taken away by the government. They will always keep a portion of their savings in bitcoin. And then I had actually an employee who lived in the Middle East and said, if I say the wrong thing, I can have my accounts frozen. So I always keep a percentage of my earnings in bitcoin, and obviously in the kind of key because they can keep it protected. So if you grow up in a society where you feel your money safe, you think that doesn't make any sense and why should this external currency come in. But if you actually think that there's a lot of the world that would like that safety and control, you can see where bitcoin has a lot of opportunities. And then blockchain is again, it's a technology. It's a technology. It's going to do a lot of really good things in financial services. A lot of toll takers take a piece of a transaction that can eliminate it and so it's going to create more efficiencies.

It's going to open up investment opportunities.

It's going to open up investment opportunities.

Jenny, do you think that there'll be a catalyst for companies to want to go public again or is it just private all the way? Is this, you know, the trend for the next five ten years.

Jenny, do you think that there'll be a catalyst for companies to want to go public again or is it just private all the way? Is this, you know, the trend for the next five ten years.

So I actually think it used to be you go venture, private equity, IPO, public markets, I actually think so I think that stays, and we see it where people are just waiting a lot longer going to go public. But at some point people want that liquidity and monetize it, and the private markets aren't yet that liquid there's some amount, But I actually think what you're starting to see is public companies being taken private because they we invest in a company, invest in it and they have three trillion dollars in assets by financial advisor platform.

So I actually think it used to be you go venture, private equity, IPO, public markets, I actually think so I think that stays, and we see it where people are just waiting a lot longer going to go public. But at some point people want that liquidity and monetize it, and the private markets aren't yet that liquid there's some amount, But I actually think what you're starting to see is public companies being taken private because they we invest in a company, invest in it and they have three trillion dollars in assets by financial advisor platform.

Right, they need to invest in it.

Right, they need to invest in it.

It is hard as a public company to make those kind of investments and stay of the street. Hey, by the way, this is going to impact earnings for the next eighteen months. So they become private, right, And so they were taken private by bank capital, and then they'll go public, I think again, So I think there's going to be this new cycle of pulling people off, doing the investment that needs to happen, whether it's AI investments or whatever, and then going public again.

It is hard as a public company to make those kind of investments and stay of the street. Hey, by the way, this is going to impact earnings for the next eighteen months. So they become private, right, And so they were taken private by bank capital, and then they'll go public, I think again, So I think there's going to be this new cycle of pulling people off, doing the investment that needs to happen, whether it's AI investments or whatever, and then going public again.

But do you have a concern on valuations in private markets? I mean, this comes over and over again, but we haven't really seen anything. Maybe real estate wan a bit ugly, but there's nothing huge.

But do you have a concern on valuations in private markets? I mean, this comes over and over again, but we haven't really seen anything. Maybe real estate wan a bit ugly, but there's nothing huge.

Yeah, I mean I actually one of the concerns, you know, investment grade and even some non investment grade of private credit is trading at the same spreads as traditional fixed income, Like you get no premium for ill liquidity. That worries me, that kind of thing I think. I mean, fixed income markets are priced for perfection at the moment, so you know, you always have to pick your spots. There's we have a huge secondaries business. I think that they've deployed this current fund with about twenty six percent average discount. There's been seventy percent deployed. And you know what I say is it's not that the valuations are wrong of the private equity. It's that there's not a lot of supply to create liquidity in that market because there's not a lot of secondaries. But that gives you a little bit of a pricing element.

Yeah, I mean I actually one of the concerns, you know, investment grade and even some non investment grade of private credit is trading at the same spreads as traditional fixed income, Like you get no premium for ill liquidity. That worries me, that kind of thing I think. I mean, fixed income markets are priced for perfection at the moment, so you know, you always have to pick your spots. There's we have a huge secondaries business. I think that they've deployed this current fund with about twenty six percent average discount. There's been seventy percent deployed. And you know what I say is it's not that the valuations are wrong of the private equity. It's that there's not a lot of supply to create liquidity in that market because there's not a lot of secondaries. But that gives you a little bit of a pricing element.

So what does that mean that you'll do for actually Franklin Templeton in terms of risk taking and to take advantage of these new trends, do you change the company at the margins?

So what does that mean that you'll do for actually Franklin Templeton in terms of risk taking and to take advantage of these new trends, do you change the company at the margins?

Well, we had to, right, so we've done ten acquisitions in the last five years, and those acquisitions have been focused on really capabilities that we didn't have. I mean, our job is to provide our clients with choice across the full risk spectrum and then deliver it in different vehicles which are appropriate to whatever the client's looking for. And so we recognize that, Look, this alternatives trend isn't going away. You see more and more institutions and right now we're really nascent as far as the wealth channel the average person's access to that, but you could see that trend and you could see the excess returns in there by the better players. I mean, there's a big dispersion in the top performer and the bottom performers the alternatives, and so we recognize. So today we're a top ten alternatives manager. So that was most people think of us as really just traditional equity and fixed income, but we're actually quite large in the alternatives.

Well, we had to, right, so we've done ten acquisitions in the last five years, and those acquisitions have been focused on really capabilities that we didn't have. I mean, our job is to provide our clients with choice across the full risk spectrum and then deliver it in different vehicles which are appropriate to whatever the client's looking for. And so we recognize that, Look, this alternatives trend isn't going away. You see more and more institutions and right now we're really nascent as far as the wealth channel the average person's access to that, but you could see that trend and you could see the excess returns in there by the better players. I mean, there's a big dispersion in the top performer and the bottom performers the alternatives, and so we recognize. So today we're a top ten alternatives manager. So that was most people think of us as really just traditional equity and fixed income, but we're actually quite large in the alternatives.

So it's again about being creating choice.

So it's again about being creating choice.

We also filled in some other product gaps that we had, and then now it's going to be about delivering those capabilities appropriately to clients. And so if you look at today with the wealth channel only having about five percent allocation alternatives, that number you talk to big distributors.

We also filled in some other product gaps that we had, and then now it's going to be about delivering those capabilities appropriately to clients. And so if you look at today with the wealth channel only having about five percent allocation alternatives, that number you talk to big distributors.

I think that number is probably.

I think that number is probably.

Closer than fifteen percent, which will mean some clients will be zero and some will be thirty. But as it's fifteen percent, what's the best way to deliver it? Well, if you have a lot of money, if you're a high at worth, that might be in direct investments in those alternatives, but it also might be a managed to count with a sleeve or a portion of that mutual fund or use its fund that has an allocation of the alternatives, right, And that way it creates a certain amount of liquidity that's important for a lot of people.

Closer than fifteen percent, which will mean some clients will be zero and some will be thirty. But as it's fifteen percent, what's the best way to deliver it? Well, if you have a lot of money, if you're a high at worth, that might be in direct investments in those alternatives, but it also might be a managed to count with a sleeve or a portion of that mutual fund or use its fund that has an allocation of the alternatives, right, And that way it creates a certain amount of liquidity that's important for a lot of people.

I mean, do all these changes change the fee structure?

I mean, do all these changes change the fee structure?

So look, the biggest probably pressure on the fee structure on the traditional markets.

So look, the biggest probably pressure on the fee structure on the traditional markets.

Was of course passive, right.

Was of course passive, right.

I think in the alternatives, it's really important to understand the best top performing private equity manager's top quartel outperform bottom quartile by twenty percent a year. Okay, top quartile versus bottom in real estate was ten percent a year about and private credit was five percent a year. The top quartel performers are over subscribed and so they are not feeling any feed pressure. Right, It's about people continuing to make sure they can come up with liquidity. It's why there's a secondary business because if there's a call for that top manager to start a new fund, you don't want to be left out. My worry is who's on sale. It's the bottom who's going to have the feed pressure. It's the bottom quartile performing. And we have trained so many people to think only about fees that as we start to introduce alternatives and things like into retirement programs, and if it's just fees, the lower performing guys are going to be ones who cut their fees. And you're better off being in the public markets than you are to be in a poor performing alternative manager.

I think in the alternatives, it's really important to understand the best top performing private equity manager's top quartel outperform bottom quartile by twenty percent a year. Okay, top quartile versus bottom in real estate was ten percent a year about and private credit was five percent a year. The top quartel performers are over subscribed and so they are not feeling any feed pressure. Right, It's about people continuing to make sure they can come up with liquidity. It's why there's a secondary business because if there's a call for that top manager to start a new fund, you don't want to be left out. My worry is who's on sale. It's the bottom who's going to have the feed pressure. It's the bottom quartile performing. And we have trained so many people to think only about fees that as we start to introduce alternatives and things like into retirement programs, and if it's just fees, the lower performing guys are going to be ones who cut their fees. And you're better off being in the public markets than you are to be in a poor performing alternative manager.

And I also want to ask about outflows. So you have been a tough spot because of LEMCO.

And I also want to ask about outflows. So you have been a tough spot because of LEMCO.

What happened, Well, it's there's never much upside to talking about government investigation publicly. So you know, look, you know it's a difficult situation.

What happened, Well, it's there's never much upside to talking about government investigation publicly. So you know, look, you know it's a difficult situation.

It's it's was.

It's it's was.

You know, one one person, uh, and you know we're cooperating with the government on it. I think the most important thing is we still have a lot of clients invested in Western asset management, and so we have been made sure that we insulated the investment team from a lot of what's going on with the investigation, so that we can ensure that they're managing clients money and staying focused on that. And so that's been you know what has been important for us to do.

You know, one one person, uh, and you know we're cooperating with the government on it. I think the most important thing is we still have a lot of clients invested in Western asset management, and so we have been made sure that we insulated the investment team from a lot of what's going on with the investigation, so that we can ensure that they're managing clients money and staying focused on that. And so that's been you know what has been important for us to do.

Will you fold it closer into the business.

Will you fold it closer into the business.

So our model has always been and it's and I think all the way back to when Franklin acquired Templeton was look at, if you're in the asset management business, what are you buying when you acquire a company. You're buying people in their investment process. So don't destroy value by suddenly going in and messing with it. So we leave the investment team to be very much independent, and then we take things like the fund administration, some of the client service and we tend to bring those things in technology and those things. In the case of Western the other thing you can't do in the asset management business is do a hostile takeover because people can walk out the door, right, It's not like a lot of other types of businesses. And so in that they negotiated a five year standalone so they really have run independently as a company. And so we are now in the process of looking what does it make sense to bring in We've hired compliance folks to take a look at and obviously continue to enhance the policies and procedures within there. We also, of course took a look more broadly at all the rest of the Franklin's investment teams to ensure that we're confident with all the policies and procedures. And you know, well, the answer is, we do what makes good common sense with each So they're all slightly different.

So our model has always been and it's and I think all the way back to when Franklin acquired Templeton was look at, if you're in the asset management business, what are you buying when you acquire a company. You're buying people in their investment process. So don't destroy value by suddenly going in and messing with it. So we leave the investment team to be very much independent, and then we take things like the fund administration, some of the client service and we tend to bring those things in technology and those things. In the case of Western the other thing you can't do in the asset management business is do a hostile takeover because people can walk out the door, right, It's not like a lot of other types of businesses. And so in that they negotiated a five year standalone so they really have run independently as a company. And so we are now in the process of looking what does it make sense to bring in We've hired compliance folks to take a look at and obviously continue to enhance the policies and procedures within there. We also, of course took a look more broadly at all the rest of the Franklin's investment teams to ensure that we're confident with all the policies and procedures. And you know, well, the answer is, we do what makes good common sense with each So they're all slightly different.

We usually let the CIO define.

We usually let the CIO define.

A bit of what that is, and I go back to Mutual Series today has the traders sitting on the desk, Templeton says, I prefer to use the global trading platform.

A bit of what that is, and I go back to Mutual Series today has the traders sitting on the desk, Templeton says, I prefer to use the global trading platform.

So it's what makes sense for that investment team.

So it's what makes sense for that investment team.

How do you find the right acquisition? Was it a tough I mean, you know, have been one of the most inquisitive.

How do you find the right acquisition? Was it a tough I mean, you know, have been one of the most inquisitive.

Yeah, yeah, So I always say it's kind of the three season look at investment. Bankers will tell you why it's a great price and a great strategic fit, but they'll never talk about the culture and the paper, and that is what determines whether a deal makes it or not. And so the thing that we look for culture I say it's the three seas. How quickly when you're talking to the team, do they talk about clients right? Pretty important clients, you know? Do they collaborate with each other? Do they actually seem to like each other? And you can see a lot of dynamics on that. And then the third do they have a mindset of continuous improvement?

Yeah, yeah, So I always say it's kind of the three season look at investment. Bankers will tell you why it's a great price and a great strategic fit, but they'll never talk about the culture and the paper, and that is what determines whether a deal makes it or not. And so the thing that we look for culture I say it's the three seas. How quickly when you're talking to the team, do they talk about clients right? Pretty important clients, you know? Do they collaborate with each other? Do they actually seem to like each other? And you can see a lot of dynamics on that. And then the third do they have a mindset of continuous improvement?

Right?

Right?

And especially a time like now with all theechnological innovation that's going on, if you don't have a mindset of saying, how should we be thinking?

And especially a time like now with all theechnological innovation that's going on, if you don't have a mindset of saying, how should we be thinking?

I mean, how should investment team think about AI?

I mean, how should investment team think about AI?

I don't know that nobody knew it has the answer, but if you are not thinking about it, you're going to be left behind.

I don't know that nobody knew it has the answer, but if you are not thinking about it, you're going to be left behind.

And so did they have that mindset?

And so did they have that mindset?

How are you thinking about AI? So?

How are you thinking about AI? So?

I the type and I love perplexity and all the all the media guys hate it because it's Look, I can't remember last time I googled something. I go to to you know, the either Chatchipete claud or perplexity. I forced myself to use it because you have to use it.

I the type and I love perplexity and all the all the media guys hate it because it's Look, I can't remember last time I googled something. I go to to you know, the either Chatchipete claud or perplexity. I forced myself to use it because you have to use it.

Usually.

Usually.

What happens with technological innovation is the first thing that people do is they make more efficient what they do today because that's all we can imagine is what we do today.

What happens with technological innovation is the first thing that people do is they make more efficient what they do today because that's all we can imagine is what we do today.

But as you start to get better.

But as you start to get better.

At the tool, and so we rolled out Microsoft Copilot very broadly in the firm because we want people to use the tool, then they will start to come up with the next idea. You know, when when the iPhone came out, we said, oh, this is cool to it's a you know, a a phone, a media flashlight, a camera. But what Apple was doing was they were unleashing the innovation of people.

At the tool, and so we rolled out Microsoft Copilot very broadly in the firm because we want people to use the tool, then they will start to come up with the next idea. You know, when when the iPhone came out, we said, oh, this is cool to it's a you know, a a phone, a media flashlight, a camera. But what Apple was doing was they were unleashing the innovation of people.

That is what AI is going to do, and we won't see it and you know for a little while.

That is what AI is going to do, and we won't see it and you know for a little while.

Today from an investment standpoint, it's all the picks and shovels. It's the you know, the navidis and the cloud services. But the real investment opportunity is understanding which firms in each sector actually start to make it be a differentiator and it'll be very hard for the others in that sector to catch up. And so I think, you know, part of an investment process is asked, what are you doing now.

Today from an investment standpoint, it's all the picks and shovels. It's the you know, the navidis and the cloud services. But the real investment opportunity is understanding which firms in each sector actually start to make it be a differentiator and it'll be very hard for the others in that sector to catch up. And so I think, you know, part of an investment process is asked, what are you doing now.

We have a strategic.

We have a strategic.

Partnership with Microsoft that we announced where Microsoft's actually made us a strategic partner because some of the things that we had laid out they said, are really challenging from a technical standpoint, and they wanted to be involved. They're actually providing US resources to build it.

Partnership with Microsoft that we announced where Microsoft's actually made us a strategic partner because some of the things that we had laid out they said, are really challenging from a technical standpoint, and they wanted to be involved. They're actually providing US resources to build it.

How do you think about trade and tariffs? So Donald Trump will be inaugurated January twentieth, I mean, are you expecting more deregulation? What does it mean for asset managers? Or is it inflationary because of the specter of terriffs.

How do you think about trade and tariffs? So Donald Trump will be inaugurated January twentieth, I mean, are you expecting more deregulation? What does it mean for asset managers? Or is it inflationary because of the specter of terriffs.

Well, so on the tariff front, I always say, you know, like remember Trump is a he's a deal maker, right, So if you're the deal maker, the first thing you want to do is express your position of power. So the greatest way to express how to say, I'm going to do all these trade tariffs on all these you know countries, and then you start there and then you negotiate what you want. So you think about it and say, what does he want? You know, in the case of Mexico, he'd like help on immigration. Actually, he probably really does want to reduce the amount of FDI investment.

Well, so on the tariff front, I always say, you know, like remember Trump is a he's a deal maker, right, So if you're the deal maker, the first thing you want to do is express your position of power. So the greatest way to express how to say, I'm going to do all these trade tariffs on all these you know countries, and then you start there and then you negotiate what you want. So you think about it and say, what does he want? You know, in the case of Mexico, he'd like help on immigration. Actually, he probably really does want to reduce the amount of FDI investment.

From China that's increased.

From China that's increased.

I think in twenty eighteen it was like two hundred and seventy million. Now it's just under six billion. So you know, he'll probably want some help there. As they're re shuffling their supply chain Europe. You know, he'd probably like some help from a military investment on he'd probably like some help on you know, the attacks on some of the big tech companies.

I think in twenty eighteen it was like two hundred and seventy million. Now it's just under six billion. So you know, he'll probably want some help there. As they're re shuffling their supply chain Europe. You know, he'd probably like some help from a military investment on he'd probably like some help on you know, the attacks on some of the big tech companies.

So he'll use that as his negotiation.

So he'll use that as his negotiation.

Now, there are going to be tariffs, and with China, I think China's it's just going to be tough. But remember China has just responded with now saying they're not going to export a bunch of minerals that are critical to the US. We have to remember the US needs China and China needs the US. So there has to be a reasonable approach on both sides, and I think that will happen over time. But tariffs tend to be inflationary.

Now, there are going to be tariffs, and with China, I think China's it's just going to be tough. But remember China has just responded with now saying they're not going to export a bunch of minerals that are critical to the US. We have to remember the US needs China and China needs the US. So there has to be a reasonable approach on both sides, and I think that will happen over time. But tariffs tend to be inflationary.

Do you worry about emerging markets? You're very embedded in a lot of the emerging markets that could be the biggest losers in this.

Do you worry about emerging markets? You're very embedded in a lot of the emerging markets that could be the biggest losers in this.

Yeah, they can't. I mean they've been pretty savvy.

Yeah, they can't. I mean they've been pretty savvy.

You figure out places where there's growth opportunity one either you know, China plus one supply chain. I know that Trump has said that he's going to go after and try to reduce some of that, but that's very real and it's helping different markets. You can look at some you know, take in India, look at India's going to grow just from domestic They could just get their domestic economy continue to go.

You figure out places where there's growth opportunity one either you know, China plus one supply chain. I know that Trump has said that he's going to go after and try to reduce some of that, but that's very real and it's helping different markets. You can look at some you know, take in India, look at India's going to grow just from domestic They could just get their domestic economy continue to go.

It's going to be a great opportunity.

It's going to be a great opportunity.

Fifty six percent of the population under the age of twenty five. So you know, you have to pick your markets. We like Korea, Thailand in certain sectors the consumer or in Thailand we think is a good opportunity. So you know, it just depends and you have to figure those out. That's why I like active investing.

Fifty six percent of the population under the age of twenty five. So you know, you have to pick your markets. We like Korea, Thailand in certain sectors the consumer or in Thailand we think is a good opportunity. So you know, it just depends and you have to figure those out. That's why I like active investing.

There you go always a pitch. There's what about deregulation. Is it going to be good for.

There you go always a pitch. There's what about deregulation. Is it going to be good for.

I think well, I think he's expressed.

I think well, I think he's expressed.

I mean, here's you know, it's only the last time we saw president that was already in power was Grover Cleveland. So Trump's been in power, We've seen what he's done. He has said that he wants less regulation. He did that his first term, so I think we would expect to see that and I think that tends to be good for businesses, good for equities.

I mean, here's you know, it's only the last time we saw president that was already in power was Grover Cleveland. So Trump's been in power, We've seen what he's done. He has said that he wants less regulation. He did that his first term, so I think we would expect to see that and I think that tends to be good for businesses, good for equities.

You have a lot of fixed income.

You have a lot of fixed income.

I mean, I don't you know, there's talk about independence of the FED, which he's now walked back on.

I mean, I don't you know, there's talk about independence of the FED, which he's now walked back on.

Well, it's interesting because if you actually do a bottoms up earnings projection for next year on the SMB five hundred, it's like fourteen and a half. It's slightly higher than that, so that these are companies who are projecting their earnings being up right. So they're looking at a lot of the tailwinds that are going on in the US economy. You know, whether they're over zealous about what interest rates ultimately do, who knows, But you know, I think there that it seems to be very positive for equities, and I think the good story in twenty twenty four is that the equity markets broadened out as far as the returns.

Well, it's interesting because if you actually do a bottoms up earnings projection for next year on the SMB five hundred, it's like fourteen and a half. It's slightly higher than that, so that these are companies who are projecting their earnings being up right. So they're looking at a lot of the tailwinds that are going on in the US economy. You know, whether they're over zealous about what interest rates ultimately do, who knows, But you know, I think there that it seems to be very positive for equities, and I think the good story in twenty twenty four is that the equity markets broadened out as far as the returns.

So what's the best way if I gave you like a three million, how do you deploy those three millions?

So what's the best way if I gave you like a three million, how do you deploy those three millions?

Well, if you could afford the illiquidity risk. Okay, So I'm just gonna tell you two that I love right now. One is secondaries. Just again, because you had six trillion deployed in private equity, and you've had about one hundred and fifty billion deployed secondaries and maybe another one hundred and fifty billion raised.

Well, if you could afford the illiquidity risk. Okay, So I'm just gonna tell you two that I love right now. One is secondaries. Just again, because you had six trillion deployed in private equity, and you've had about one hundred and fifty billion deployed secondaries and maybe another one hundred and fifty billion raised.

And we thought that it would dry up once the equity markets came.

And we thought that it would dry up once the equity markets came.

But the reality is, you know, when the IPO market has slowed down, people need liquidity, and so they're going to secondary managers and the returns we're seeing some of the best discounts that we've seen in the history of it. And the second one is actually real estate debt. And here's why most of the regional banks were the big lenders in the real estate market. And the reality is the office. If you're not a great a office. I think a lot of the real estate people would say, we're still not sure we've seen the bottom yet. But what you see a lot of the bankers saying is, hey, don't hand me the keys back. I'll give you a good term rolling it forward. But that means that they're not lending to the new developers out there, and so we're seeing that there is a real opportunity so Benefits. Street Partners are a private credit manager actually has about nine billion in real estate debt that we're having conversations with Clarion Partners, our real estate team real estate manager saying, hey, if we end up taking over any of these properties, we'd love to talk to you about how to think about monetizing it and maximizing return, and in it they identified that there's this real opportunity because as these regional banks have stepped back, you can't just be a private credit manager and say, oh today I'm a real estate expert. You actually have to have that expertise. So we think that's another really interesting So those are two i'd say.

But the reality is, you know, when the IPO market has slowed down, people need liquidity, and so they're going to secondary managers and the returns we're seeing some of the best discounts that we've seen in the history of it. And the second one is actually real estate debt. And here's why most of the regional banks were the big lenders in the real estate market. And the reality is the office. If you're not a great a office. I think a lot of the real estate people would say, we're still not sure we've seen the bottom yet. But what you see a lot of the bankers saying is, hey, don't hand me the keys back. I'll give you a good term rolling it forward. But that means that they're not lending to the new developers out there, and so we're seeing that there is a real opportunity so Benefits. Street Partners are a private credit manager actually has about nine billion in real estate debt that we're having conversations with Clarion Partners, our real estate team real estate manager saying, hey, if we end up taking over any of these properties, we'd love to talk to you about how to think about monetizing it and maximizing return, and in it they identified that there's this real opportunity because as these regional banks have stepped back, you can't just be a private credit manager and say, oh today I'm a real estate expert. You actually have to have that expertise. So we think that's another really interesting So those are two i'd say.

Go for and Jenny. In terms of interest rates, are we higher for longer given all of the uncertainty out there?

Go for and Jenny. In terms of interest rates, are we higher for longer given all of the uncertainty out there?

I'd say with the US deficit, I don't see how in the debt, I don't see how.

I'd say with the US deficit, I don't see how in the debt, I don't see how.

That you you can't.

That you you can't.

You obviously have you know, a pretty robust economy, all those things. I mean, But I think most people think the federal cut in December, I think it's something like the eighty seven percent likelihood or something, But afterwards it's maybe two more. But then I don't think I think it's higher for longer. And again I think people are underestimating the risk of or not the risk because the US is still going to be the reserve currency and you're still going to be able to always finance it because there doesn't seem to be another, you know, option, But at what price does it crowd out other investments.

You obviously have you know, a pretty robust economy, all those things. I mean, But I think most people think the federal cut in December, I think it's something like the eighty seven percent likelihood or something, But afterwards it's maybe two more. But then I don't think I think it's higher for longer. And again I think people are underestimating the risk of or not the risk because the US is still going to be the reserve currency and you're still going to be able to always finance it because there doesn't seem to be another, you know, option, But at what price does it crowd out other investments.

I don't think that's a twenty twenty.

I don't think that's a twenty twenty.

Five problem, maybe not even a twenty twenty six problem.

Five problem, maybe not even a twenty twenty six problem.

But at some point this becomes an issue.

But at some point this becomes an issue.

But this is what a diversification away from US dollar reserves.

But this is what a diversification away from US dollar reserves.

Well, like I said, I don't think it's a twenty twenty five or twenty twenty six problems. So I think it's it's somewhere further down the road, but I do think it.

Well, like I said, I don't think it's a twenty twenty five or twenty twenty six problems. So I think it's it's somewhere further down the road, but I do think it.

Keeps the rates up a little bit.

Keeps the rates up a little bit.

Final question, you're what's your priority for twenty five.

Final question, you're what's your priority for twenty five.

I think, for you know, we we.

I think, for you know, we we.

Did these ten acquisitions and now it's about digesting and finding opportunities. Like this real estate credit example, you know, came because two CIOs we're having a conversation just to try to gain some insights from each other, and they're like, we see this dislocation in the market. Like one of the key things that we do is twice a year we bring all our CIOs together, both from public and private side, to just get to know each other. I always say the dinner is more important than any topic because as they get to know each other and they get curious and they're comfortable asking questions. I mean, it was really fun to be sitting there watching the value Guy and the Growth Guide debate the valuation of Navidia, both in their in their core. I always think one's a pessimist and one's an optimist, but in their core, their view and what that is. That makes for healthier investment teams to have that kind of access and we can provide that three sixty view of capital markets to all our investment teams, which I don't think you get in most other firms.

Did these ten acquisitions and now it's about digesting and finding opportunities. Like this real estate credit example, you know, came because two CIOs we're having a conversation just to try to gain some insights from each other, and they're like, we see this dislocation in the market. Like one of the key things that we do is twice a year we bring all our CIOs together, both from public and private side, to just get to know each other. I always say the dinner is more important than any topic because as they get to know each other and they get curious and they're comfortable asking questions. I mean, it was really fun to be sitting there watching the value Guy and the Growth Guide debate the valuation of Navidia, both in their in their core. I always think one's a pessimist and one's an optimist, but in their core, their view and what that is. That makes for healthier investment teams to have that kind of access and we can provide that three sixty view of capital markets to all our investment teams, which I don't think you get in most other firms.