WEBVTT - Private Market Investing Goes Mainstream 0:00:01.600 --> 0:00:05.680 In his annual letter this year, Larry Fink, CEO of Blackrock, 0:00:06.080 --> 0:00:09.080 said that investors should allocate up to twenty percent of 0:00:09.119 --> 0:00:13.200 their savings into private assets. That advice from the world's 0:00:13.280 --> 0:00:16.960 largest asset manager is quite a departure from the traditional 0:00:17.160 --> 0:00:20.840 sixty to forty stocks and bond portfolio. That kind of 0:00:20.880 --> 0:00:24.800 advice may not have even been possible a decade ago, and. 0:00:24.800 --> 0:00:29.440 It highlights an interesting shift underway in investing where alternative 0:00:29.440 --> 0:00:33.599 assets are slowly becoming more available to the average investor. 0:00:34.440 --> 0:00:38.800 For a long time, these opportunities think infrastructure, private credit 0:00:39.200 --> 0:00:42.240 where the exclusive domain of the super rich and big 0:00:42.280 --> 0:00:47.280 institutions like pension funds and insurance companies. But new products 0:00:47.280 --> 0:00:49.879 and technologies have been opening up this world for the 0:00:49.880 --> 0:00:53.240 average person. This is what some people are calling the 0:00:53.440 --> 0:00:55.160 democratization of investing. 0:00:58.120 --> 0:01:01.840 What's the state of play for this democratization. What are 0:01:01.840 --> 0:01:05.400 some of the new areas of private investment that individuals 0:01:05.400 --> 0:01:08.040 should be aware of, and what are the risks such 0:01:08.040 --> 0:01:12.440 as potentially low returns. You're listening to Asia Centric from 0:01:12.480 --> 0:01:15.960 Bloomberg Intelligence, and today we're speaking with someone who can 0:01:16.000 --> 0:01:19.000 give us a view into how this landscape is evolving. 0:01:19.440 --> 0:01:22.800 We're joined by Stephanie Un, head of Hong Kong for Endows, 0:01:23.319 --> 0:01:26.240 it's an investment platform and advisor to more than two 0:01:26.360 --> 0:01:32.040 hundred and fifty thousand individuals, family officers and institutions across Asia. 0:01:32.200 --> 0:01:35.720 They connect investors to fund managers and they've got more 0:01:35.760 --> 0:01:40.120 than seven billion dollars in client assets under management, including 0:01:40.120 --> 0:01:44.240 four hundred million from private assets. Stephanie, welcome to the show. 0:01:44.480 --> 0:01:45.360 Thanks for having me. 0:01:46.240 --> 0:01:49.120 Stephanie. For listeners, can you give us an idea of 0:01:49.160 --> 0:01:54.800 how endows helps average investors connect with private asset opportunities? 0:01:55.640 --> 0:01:59.760 Sure? So, Endowser's name actually stands for endowment and the 0:01:59.760 --> 0:02:02.320 best sting for all of us. We wanted to help 0:02:02.400 --> 0:02:05.920 individual investors to be able to invest like an institution, 0:02:06.160 --> 0:02:09.040 and we got our inspiration really from the Yale Endowment. 0:02:09.560 --> 0:02:12.160 So for those of you guys know about Yale Endowment, 0:02:12.240 --> 0:02:15.720 probably know their founding CIO David Swinson, one of the 0:02:15.800 --> 0:02:19.079 legendary investors of our times who passed away a few 0:02:19.120 --> 0:02:22.320 years ago, but he was really the pioneer of sort 0:02:22.320 --> 0:02:27.359 of advocating for as allocation and particularly including private assets 0:02:27.360 --> 0:02:31.200 into investors portfolio. He famously talks about how a lot 0:02:31.200 --> 0:02:35.480 of investors overpay for liquidity. So at the founding of Endawas, 0:02:35.520 --> 0:02:37.440 we talked about how there is now kind of this 0:02:37.560 --> 0:02:41.600 increasing interest to help individuals to demoketize into private markets. 0:02:41.639 --> 0:02:44.600 But it's actually at the very core the beginning of Endawas, 0:02:44.960 --> 0:02:48.000 we actually really wanted to help clients to allocate like 0:02:48.040 --> 0:02:51.680 an endowment fund, like a Yale endowment, because we believe 0:02:51.840 --> 0:02:55.000 this is the sort of as allocation framework. Actually it's 0:02:55.040 --> 0:02:58.760 a lot more scientific for investors than just speculating and 0:02:58.800 --> 0:03:02.000 punting on stocks. So in Dallas, this is the core 0:03:02.000 --> 0:03:04.239 of our work. How do we help our clients to 0:03:04.440 --> 0:03:08.200 allocate like an endowment fund, and it could be a 0:03:08.240 --> 0:03:12.560 combination of public markets, private markets, alternatives and as sort 0:03:12.600 --> 0:03:15.160 of we mentioned that the intro is really exciting that 0:03:15.480 --> 0:03:18.799 previously a few years when we first started in Dallas, 0:03:19.280 --> 0:03:21.640 we started until I was seventeen. At that time, we 0:03:21.720 --> 0:03:25.040 actually couldn't really offer this yet. But in the past 0:03:25.200 --> 0:03:27.839 kind of eighteen months we've really been able to work 0:03:27.880 --> 0:03:30.480 with a lot of fund managers to enable this to 0:03:30.680 --> 0:03:33.800 really be able to realize this vision that we have 0:03:34.000 --> 0:03:37.040 that helping individual investors to invest like an endowment fund. 0:03:37.320 --> 0:03:39.480 So can you tell us a bit about the private 0:03:39.600 --> 0:03:43.920 asset side. As John mentioned, you have about four hundred million. 0:03:44.240 --> 0:03:47.880 That's you know, a chunk of the seven billion, but 0:03:47.920 --> 0:03:50.880 it's your fastest or one of the fastest growing areas. 0:03:51.320 --> 0:03:53.000 So can you tell us about why that's such a 0:03:53.040 --> 0:03:56.840 fast growing area and sort of why you're seeing a 0:03:56.840 --> 0:03:58.840 lot more investors coming to you for that. 0:03:59.680 --> 0:04:02.680 Yes, so right now in Dallas, we offer our service 0:04:02.720 --> 0:04:06.200 to Hong Kong and Singapore, and as you've rightly mentioned, 0:04:06.280 --> 0:04:08.960 we see alternatives, including private markets and hedge funds the 0:04:09.000 --> 0:04:12.600 fastest growing asset class on our platform. It has tripled 0:04:12.720 --> 0:04:15.400 year on year to close to four hundred million in 0:04:15.520 --> 0:04:18.400 terms of client assets. And I'd say for a lot 0:04:18.480 --> 0:04:20.880 of clients there are a lot of reasons to why 0:04:20.960 --> 0:04:25.839 they consider including private markets and alternatives into their portfolios. 0:04:26.120 --> 0:04:29.680 But I would summarize three big reasons. The first and 0:04:29.720 --> 0:04:33.520 it's also why we advocate our clients to consider most 0:04:33.600 --> 0:04:37.360 important thing, I think it's helping clients to further diversify 0:04:37.400 --> 0:04:41.080 their portfolios. I think all of us have experiences in 0:04:41.120 --> 0:04:44.599 the past couple of years, especially twenty twenty two was 0:04:44.640 --> 0:04:46.840 really something that a lot of people had soul searching 0:04:46.960 --> 0:04:50.440 of the public markets, the correlation of different asset classes. 0:04:50.839 --> 0:04:53.840 The correlation really went up. You have public equities, public 0:04:53.880 --> 0:04:57.960 bonds all went down double digits, so there was quote 0:04:58.000 --> 0:05:00.719 unquote no place to hide. So clients are thinking, Okay, 0:05:01.000 --> 0:05:05.039 how can I further diversify my portfolios to really strengthen 0:05:05.080 --> 0:05:08.400 the resilience. So private markets is a very broad term. 0:05:08.640 --> 0:05:11.960 There are many sub asset classes. You have private equity, 0:05:12.080 --> 0:05:14.800 you have private credit, you have private real estate, and 0:05:14.839 --> 0:05:18.120 increasingly there are different sub asset classes. We see new 0:05:18.240 --> 0:05:22.760 innovations that you can invest in, like intellectual property royalties 0:05:23.279 --> 0:05:27.400 from IP rights. Those are all very interesting asset classes 0:05:27.440 --> 0:05:31.719 that were previously not available for individual investors. These kind 0:05:31.720 --> 0:05:36.560 of sub asset classes do have less correlation to public markets, 0:05:36.920 --> 0:05:40.480 so it really helps and make sense for investors as 0:05:40.520 --> 0:05:44.159 they look to build a more diversified portfolio. And I 0:05:44.160 --> 0:05:47.120 guess the second point I briefly touched upon, it's increasing 0:05:47.200 --> 0:05:50.599 your investment universe. You can invest in things that are 0:05:50.800 --> 0:05:53.000 kind of out of touch if you just dip your 0:05:53.040 --> 0:05:57.240 toes into public markets. Right, the largest private companies we've 0:05:57.279 --> 0:06:00.600 all heard of, the SpaceX, the open AIP. You can 0:06:00.760 --> 0:06:03.520 invest in these companies through the public markets in this 0:06:03.640 --> 0:06:05.960 part of the world. There are also many familiar names, 0:06:06.000 --> 0:06:08.719 the likes of Byedance, the parent of tektok. These are 0:06:08.760 --> 0:06:11.120 all private companies and in fact, if you look at 0:06:11.120 --> 0:06:13.840 the statistics, just look at the US right supposed to 0:06:13.880 --> 0:06:16.760 be the most liquid market in the world already if 0:06:16.760 --> 0:06:20.000 you look at the number of total companies with one 0:06:20.080 --> 0:06:24.279 hundred million US revenue above, actually there are seven times 0:06:24.320 --> 0:06:28.000 more private companies than public markets for clients to invest into. 0:06:28.400 --> 0:06:32.160 And we've also seen this trend. Interestingly, since two thousand, 0:06:32.480 --> 0:06:36.400 the number of public companies has really start to decline 0:06:36.600 --> 0:06:40.920 by almost half. So actually the investable universe for individual 0:06:40.960 --> 0:06:44.560 investors if you just invest in public markets is shrinking. 0:06:44.920 --> 0:06:48.279 And thirdly, obviously very important if you look at historical data, 0:06:48.400 --> 0:06:50.919 no matter how you cut it, and for those of 0:06:51.000 --> 0:06:54.960 us who study finance understand this concept of this illiquid 0:06:55.000 --> 0:06:57.839 premium what Swinson said, a lot of people overpay for 0:06:57.920 --> 0:07:02.680 liquidity by investing into private markets. Historically you've seen in 0:07:02.800 --> 0:07:06.599 every of these subasset classes it does offer investors higher 0:07:06.680 --> 0:07:10.880 risk adjusted returns. So, on top of those two reasons 0:07:10.880 --> 0:07:15.320 that I mentioned about sort of potentially harnessing higher potential, 0:07:15.400 --> 0:07:20.080 higher adjusted returns. Obviously it's also something very attractive to investors. 0:07:20.080 --> 0:07:23.280 So I'd say many, many reasons, but those three reasons 0:07:23.320 --> 0:07:26.920 are most compelling for a lot of investors to consider. 0:07:27.400 --> 0:07:29.480 In private asset space. I mean, how much money do 0:07:29.520 --> 0:07:33.040 I need to have as a retail investor to invest 0:07:33.080 --> 0:07:35.440 in something? And are we talking about things like you know, 0:07:36.000 --> 0:07:39.000 toll roads in Brazil that pension funds invest in, or 0:07:39.080 --> 0:07:43.440 are these different assets? Like who is actually able to 0:07:43.480 --> 0:07:44.040 invest in this? 0:07:44.880 --> 0:07:49.760 So we talked about democratization of private assets, but in 0:07:49.800 --> 0:07:54.520 our industry is still very highly regulated industry. For a 0:07:54.560 --> 0:07:57.560 lot of these private markets funds, even though we've quote 0:07:57.600 --> 0:08:02.080 unquote democratized, there's still privy to what we call professional 0:08:02.080 --> 0:08:05.720 investors or credit investors, so people with a certain net worth. 0:08:06.200 --> 0:08:09.160 And even though we've worked very hard, for example, in Dallas, 0:08:09.160 --> 0:08:12.040 we work very hard without for manager partners to lower 0:08:12.080 --> 0:08:16.760 the investment minimum. Generally the investment minimum for these assets 0:08:16.840 --> 0:08:21.200 are at one hundred thousand US dollars or above. But 0:08:21.360 --> 0:08:23.800 the saving grace is. 0:08:23.400 --> 0:08:25.040 Not quite democratization yet. 0:08:25.360 --> 0:08:28.280 It's still not main street, it's literally. 0:08:30.840 --> 0:08:34.880 But everything is on a relative level. So historically even 0:08:34.960 --> 0:08:37.000 the lowest, lowest if you go to a private bank. 0:08:37.080 --> 0:08:39.800 Let's say you're quote unquote ultra high networth individual. The 0:08:39.920 --> 0:08:43.320 lowest probably it's two to three million US. So on 0:08:43.360 --> 0:08:45.680 a relative basis, from two to three million US to 0:08:46.040 --> 0:08:48.480 one hundred thousand, it's gone down quite a bit if 0:08:48.480 --> 0:08:51.960 you do the math. But what's more interesting is historically 0:08:52.200 --> 0:08:56.559 that two three million, it's just into one single product 0:08:56.559 --> 0:08:59.200 in Dallas, and a lot of our clients, our core 0:08:59.240 --> 0:09:03.640 client base, are fluent clients, early high network clients. What 0:09:03.640 --> 0:09:07.840 would realize what they want? It's that beta exposure into 0:09:07.880 --> 0:09:11.280 private markets. So I've never had access to private credit. 0:09:11.320 --> 0:09:15.240 I've never get access to private equity, not necessarily like 0:09:15.360 --> 0:09:19.000 a professional institutional investor looking for alpha, like I am 0:09:19.080 --> 0:09:24.120 looking at manager a vintage twenty and twenty that's the 0:09:24.160 --> 0:09:27.160 best performing. But for a lot of clients it's their 0:09:27.200 --> 0:09:30.200 first double into the asset class. They're okay with just 0:09:30.240 --> 0:09:34.360 getting the beta, higher potential of res adjustice return. So 0:09:34.520 --> 0:09:37.120 we were actually launching a lot of these what we 0:09:37.200 --> 0:09:41.400 call funnel funds. So one hundred k US dollars, you 0:09:41.559 --> 0:09:45.480 get a portfolio of private equity managers the likes of 0:09:45.520 --> 0:09:49.320 your black Row, your ares, your KHR, and all into 0:09:49.480 --> 0:09:52.680 one portfolio with your one hundred K check. So yes, 0:09:52.760 --> 0:09:56.360 i'd agree it's not yet sort of average investor yet, 0:09:56.400 --> 0:10:01.880 but at least to a certain lower tier. Now you 0:10:01.960 --> 0:10:06.439 can get a diversified exposure to these blue chip names 0:10:06.600 --> 0:10:09.920 which I started out my career investment banking. These are 0:10:10.040 --> 0:10:12.400 gps that I used to cover. I would really never 0:10:12.480 --> 0:10:15.360 imagine that I could become an investor in these funds. 0:10:15.480 --> 0:10:17.480 So I think as a step. 0:10:17.360 --> 0:10:22.720 Towards this, Asia Centric is produced by Bloomberg Intelligence. We're 0:10:22.760 --> 0:10:26.600 more than five hundred experienced analysts and strategists work around 0:10:26.640 --> 0:10:29.760 the clock to bring you timely, world class research. Our 0:10:29.800 --> 0:10:34.320 coverage spans two hundred market industries, currencies, commodities, and industries, 0:10:34.559 --> 0:10:37.400 as well as over two thousand equities and credits. To 0:10:37.480 --> 0:10:41.120 learn more about Bloomberg Intelligence, visit BI go on the 0:10:41.160 --> 0:10:44.480 Bloomberg terminal. If you like what you're hear, don't forget 0:10:44.520 --> 0:10:48.320 to subscribe and shair. What type of returns do you 0:10:48.360 --> 0:10:52.120 think investors should be expecting in the private space? 0:10:52.640 --> 0:10:56.440 Yeah, because in recent years the returns haven't necessarily been 0:10:56.440 --> 0:10:58.600 as high as you know five six years ago. 0:11:00.040 --> 0:11:02.440 So I'd say, going back to what I mentioned when 0:11:02.559 --> 0:11:06.400 we advise clients to consider private markets. The number one 0:11:06.440 --> 0:11:10.640 reason I always share with clients it's diversification, not necessarily 0:11:10.720 --> 0:11:15.160 the returns, because no one can really guarantee the returns. Yes, 0:11:15.200 --> 0:11:18.480 we look at historical numbers, the likes of private equity, 0:11:18.559 --> 0:11:22.800 the likes of private credit. Historically the numbers have been 0:11:22.880 --> 0:11:25.960 higher than public markets. But you never know at what 0:11:26.120 --> 0:11:29.720 cycle you invest, And for example, in private equity, I'm 0:11:29.720 --> 0:11:31.760 sure a lot of us are familiar with the term 0:11:32.040 --> 0:11:36.520 different vintages, right, different vintages could also at different times 0:11:36.520 --> 0:11:40.240 where you invest could also have a big impact on 0:11:40.280 --> 0:11:44.360 your ultimate returns. So no matter how you cut the data, 0:11:44.720 --> 0:11:49.040 there's definitely higher resuggested returns. And going back to what 0:11:49.160 --> 0:11:52.920 John you mentioned earlier, I also find it super interesting 0:11:53.040 --> 0:11:56.360 for Larry Think to have mentioned that fifty to thirty 0:11:56.640 --> 0:12:01.640 twenty allocation. And we've ran some numbers, including us including 0:12:01.640 --> 0:12:05.400 a lot of platforms for individual investors. I'm not talking about, okay, 0:12:05.440 --> 0:12:08.560 making one specific bet on one private equity fund or 0:12:08.559 --> 0:12:12.360 private credit fund. If you're looking at diversification and you 0:12:12.559 --> 0:12:16.520 include a more kind of diversified private markets, you have 0:12:16.600 --> 0:12:19.000 a bit of private equity, a bit of private realist 0:12:19.080 --> 0:12:22.079 at a bit of prior credit into your portfolio and 0:12:22.440 --> 0:12:25.480 kind of include it in your sixty to forty portfolio. 0:12:27.120 --> 0:12:29.680 If we're not looking at okay, you just happen to 0:12:30.080 --> 0:12:32.480 invest in the top tier managers. But if you get 0:12:32.480 --> 0:12:37.240 the general average returns overall, it improves against a sixty 0:12:37.240 --> 0:12:39.840 to forty by one hundred to one hundred fifty basis point, 0:12:40.160 --> 0:12:43.960 and it helps kind of lower the volatility also by 0:12:44.000 --> 0:12:47.960 twenty to thirty percent. So I think that's really interesting 0:12:48.200 --> 0:12:51.440 and for Larry think right for him about fifteen twenty 0:12:51.559 --> 0:12:54.559 years ago to make that big bet on ice shares 0:12:54.760 --> 0:12:59.319 and really revolutionized and popularized index investing, for him to 0:12:59.440 --> 0:13:02.680 really say, okay, the next thing is private markets. I 0:13:02.720 --> 0:13:07.200 think it's it's quite powerful, and we are seeing a 0:13:07.240 --> 0:13:10.640 lot of these trends that he mentioned coming together. 0:13:10.520 --> 0:13:13.719 And for the benefit of the listeners, Alarry thinks suggested 0:13:13.720 --> 0:13:17.040 that you should invest fifty percent in stocks, thirty percent 0:13:17.280 --> 0:13:20.680 in fixed income or bonds, and twenty percent in private assets. 0:13:20.920 --> 0:13:23.040 And I just got to ask, I mean, not to 0:13:23.240 --> 0:13:25.120 put you up against Larry, I think, but do you 0:13:25.240 --> 0:13:28.000 think that that twenty percent or that mix that John 0:13:28.120 --> 0:13:30.839 just mentioned with twenty percent to private assets. Do you 0:13:30.840 --> 0:13:31.800 think that's the right one? 0:13:32.280 --> 0:13:36.840 So Eden, Dallas, we never give out any like sort 0:13:36.880 --> 0:13:39.960 of okay, everyone should follow the same rule, because we 0:13:40.120 --> 0:13:43.959 do think personal investing is something very personal to your 0:13:44.000 --> 0:13:48.880 own circumstances. So for us, we definitely remind our clients 0:13:48.880 --> 0:13:52.800 that there are reasons to why private markets historically has 0:13:52.880 --> 0:13:56.520 only been sort of investable by institution investors or had 0:13:56.600 --> 0:14:00.960 now worth individuals because it is indeed illiquid. So we 0:14:01.080 --> 0:14:04.400 definitely would not advise our clients to invest their liquid 0:14:04.440 --> 0:14:08.000 pocket or their sort of raining day money into private markets. 0:14:08.040 --> 0:14:11.000 That's really not right. So it really depends on you 0:14:11.040 --> 0:14:13.840 look at your needs, You look at your current wealth, 0:14:14.200 --> 0:14:17.600 how much of that wealth you can park away that's 0:14:17.720 --> 0:14:21.040 for long term investing, And it most importantly has to 0:14:21.240 --> 0:14:25.040 be matched against your risk appetite. Because finance one oh 0:14:25.120 --> 0:14:27.120 one higher returns, you have to take higher risks, so 0:14:27.360 --> 0:14:31.280 it is slightly more risky, particularly less liquidity in terms 0:14:31.320 --> 0:14:35.920 of these investments. So I'd say for each individual investor, 0:14:36.360 --> 0:14:39.440 it really depends. It could be as low as new 0:14:39.600 --> 0:14:43.600 I cannot afford to take any illiquid risk, or to 0:14:43.680 --> 0:14:46.720 five percent, or to ten percent or to twenty percent. 0:14:47.200 --> 0:14:51.560 But I'd say probably unlikely one hundred percent. There must 0:14:51.840 --> 0:14:53.680 there has to be a bit of your wealth that 0:14:53.720 --> 0:14:56.400 you need to keep it liquid, So I'd say twenty 0:14:56.440 --> 0:15:02.000 percent ballpark generically sounds right, but obviously each individual you 0:15:02.000 --> 0:15:03.400 should do your own whole work. 0:15:04.080 --> 0:15:07.240 Why now, like private equity has been around for a while, 0:15:07.280 --> 0:15:10.480 saying with infrastructure, private credit is a little bit new, 0:15:10.560 --> 0:15:12.960 but hedge fund's investing has been around for a long time. 0:15:13.760 --> 0:15:16.320 What's open the market to retail investors. 0:15:16.640 --> 0:15:21.800 There's definitely that pull and push factor. So, as I mentioned, 0:15:21.800 --> 0:15:23.800 in the past couple of years, we have had a 0:15:23.840 --> 0:15:27.800 bit of volatility in the markets, and very famously, I 0:15:27.840 --> 0:15:31.360 think in the industry people would know there's this denominator effect. 0:15:31.520 --> 0:15:35.680 So historically these private markets and alternative investments have only 0:15:35.720 --> 0:15:39.360 been accessible to institutional investors. And in the past couple 0:15:39.400 --> 0:15:42.880 of years, for example, during COVID, the public markets really 0:15:42.960 --> 0:15:46.200 dropped a lot. And because of that denominator. In fact, 0:15:46.240 --> 0:15:49.160 a lot of large institutions how they invest. They have 0:15:49.200 --> 0:15:54.040 a mandate and I target let's say thirty into private markets, 0:15:54.120 --> 0:15:57.280 forty percent into public equities, and then the rest in 0:15:57.360 --> 0:16:01.080 public bonds. And because when the public market bit dropped. 0:16:01.560 --> 0:16:05.400 The private market bit is overexposed. It's really out of 0:16:05.440 --> 0:16:08.920 wack of their target as allocation, so they have to sell. 0:16:09.440 --> 0:16:12.760 And a lot of them fund managers, when they realize 0:16:12.800 --> 0:16:16.600 their historical target clients need to all suddenly have to 0:16:16.640 --> 0:16:20.120 sell all facing this problem, they need to find other 0:16:20.200 --> 0:16:24.640 pockets of capital to take this demand. And this is 0:16:24.720 --> 0:16:27.120 kind of the push factor. The pull factor is what 0:16:27.200 --> 0:16:30.640 I mentioned. For a lot of individual investors, they're also 0:16:30.760 --> 0:16:34.480 realizing there is this meriage for them to double their 0:16:34.560 --> 0:16:38.560 tolls into as allocating into private markets. Of the three 0:16:38.600 --> 0:16:43.360 reasons that I mentioned, and sort of these two factors 0:16:43.360 --> 0:16:47.120 coming together, the industry realized, oh, there is that business 0:16:47.120 --> 0:16:51.080 case that need to help enable individual investors to be 0:16:51.120 --> 0:16:53.280 able to get access to that. So I'd say there 0:16:53.280 --> 0:16:57.400 are two very important things that really help enabled individual 0:16:57.400 --> 0:17:01.640 investors to gain access. One is the or the proliferation 0:17:01.920 --> 0:17:07.200 of what we call evergreen semi liquid funds green semi 0:17:07.240 --> 0:17:12.240 liquid funds. So historically for private markets, the only way 0:17:12.280 --> 0:17:16.120 you can invest is what we called a close ended fund. 0:17:16.560 --> 0:17:20.520 So what big institutions, the softeign, well funds, the insurance company, 0:17:20.880 --> 0:17:24.480 what they had to commit to a manager. It's Okay, 0:17:24.560 --> 0:17:27.200 I'll give you money and it gets locked up by 0:17:27.600 --> 0:17:30.800 five to seven years, and you invest in market companies. 0:17:31.000 --> 0:17:34.000 In the next five to seven years, I cannot redeem 0:17:34.080 --> 0:17:37.479 the capital, and in five to seven years you promise 0:17:37.600 --> 0:17:41.280 to help return the capital. And there's also a nuance 0:17:41.359 --> 0:17:44.640 that you commit a capital and then depends on when 0:17:44.800 --> 0:17:48.840 the investment opportunity arise, then they would do capital calls. 0:17:49.119 --> 0:17:52.520 So that's kind of the traditional what we call locked 0:17:52.560 --> 0:17:56.320 up structure close ended fund that you're completely locked up 0:17:56.359 --> 0:18:01.080 for five seven years. I think for institutions, you have 0:18:01.640 --> 0:18:06.119 professional teams to manage your cash flows, and it's accepted 0:18:06.560 --> 0:18:10.080 that approach for a lot of individual investors. So our 0:18:10.240 --> 0:18:13.240 circumstances changed, we might change jobs, we might be out 0:18:13.240 --> 0:18:16.080 of jobs, we might enter into a different life stage. 0:18:16.280 --> 0:18:18.600 Five to seven years is a really long time. It's 0:18:18.680 --> 0:18:22.679 quite difficult for individuals to be able to commit to 0:18:22.760 --> 0:18:26.119 a close ended vehicle for five to seven years and 0:18:26.200 --> 0:18:29.160 to manage that what we call quote unquote capital calls. 0:18:29.400 --> 0:18:32.640 So when you get a capital call kind of email 0:18:32.680 --> 0:18:35.159 from your fund manager, they'll be like, you committed to 0:18:35.160 --> 0:18:38.399 write a check of X dollars and now I've identified 0:18:38.400 --> 0:18:40.879 an investment opportunity. You need to wire the money to 0:18:40.920 --> 0:18:43.480 meet in two weeks. If you have an investment team 0:18:43.560 --> 0:18:46.000 or treasury team, yes you can do that. For individual investors, 0:18:46.119 --> 0:18:47.720 you might be on holiday, you might be busy on 0:18:47.720 --> 0:18:51.400 something is very difficult. So the industry realized that the 0:18:51.640 --> 0:18:55.480 closed ended funds quite difficult for individuals to quote unquote 0:18:55.520 --> 0:18:59.080 use as a vehicle. A fund manager that's very prominent 0:18:59.160 --> 0:19:02.320 in kind of an innovator in the space, it's Partners Group, 0:19:02.520 --> 0:19:06.159 Swisserland based private equity manager who first started this what 0:19:06.200 --> 0:19:09.879 we call semi liquid open ended vehicle. When was that 0:19:10.200 --> 0:19:12.280 it should be about more than ten years ago, but 0:19:12.320 --> 0:19:15.359 it really only proliferated in the past couple of years. 0:19:16.440 --> 0:19:21.439 Very interesting evergreen vehicle, meaning so usually for private closed 0:19:21.520 --> 0:19:23.719 ended funds it only has like a fun life of 0:19:23.760 --> 0:19:27.320 five to seven years. Once it's done investing, it's wine down. 0:19:27.760 --> 0:19:30.520 But for evergreen, you don't have that. It's it's evergreen, 0:19:30.560 --> 0:19:34.840 it's always there, it's always okay to take client moneies. 0:19:35.160 --> 0:19:38.560 And when I say semi liquid, it's not fully liquid. 0:19:39.040 --> 0:19:43.520 Usually the managers understand individuals they need some sleeves of 0:19:43.720 --> 0:19:48.160 pocket of liquidity. So all these semi liquid vehicles. They 0:19:48.240 --> 0:19:53.720 usually allow individuals to have some redemption kind of liquidity 0:19:53.840 --> 0:19:56.919 on an intermittent basis, maybe on a quarterly basis, but 0:19:57.000 --> 0:20:00.840 they do have gates because the underlying you're investing in 0:20:01.280 --> 0:20:04.359 liquid assets. But they would then make sure that a 0:20:04.560 --> 0:20:09.080 pocket of the underlying fund invests in some more liquid 0:20:09.119 --> 0:20:13.520 assets to be able to honor these redemptions. So semi 0:20:13.520 --> 0:20:18.120 liquid evergreen vehicles have really been proliferated and it's much 0:20:18.160 --> 0:20:21.600 better investment vehicle for a lot of investors. And a 0:20:21.640 --> 0:20:26.080 lot of these evergreen vehicles are also very diversified mixed 0:20:26.119 --> 0:20:30.320 vintages instead of previously for closed ended funds, you have 0:20:30.440 --> 0:20:33.360 to pick. You might have very professional teams for professional 0:20:33.400 --> 0:20:37.280 investors to pick the right vintage. So semil the quid funds, 0:20:37.359 --> 0:20:41.280 it's definitely one and then the second bid. It's technology, 0:20:41.440 --> 0:20:45.240 So thanks John for the introduction. For example, for in Dallas, 0:20:45.400 --> 0:20:48.399 we are a hybrid platform where a lot of clients 0:20:48.440 --> 0:20:53.040 can use our platform online and we serve over two 0:20:53.119 --> 0:20:56.920 hundred and fifty thousand clients and for us, we can 0:20:57.000 --> 0:21:00.240 act as a aggregator for a lot of these fund managers. 0:21:00.560 --> 0:21:04.760 So the managers we work with the likes of black Raw, KKR, CARLA. 0:21:04.880 --> 0:21:09.359 Historically they serve the largest institution investors and they don't 0:21:09.359 --> 0:21:11.320 want to have to build out an army to do 0:21:11.400 --> 0:21:16.200 KYC on individual investors checking AML. So working with tech 0:21:16.200 --> 0:21:19.000 platforms like ourselves to be able to connect with us 0:21:19.320 --> 0:21:23.280 and we act as an aggregator and also personalizing that 0:21:23.480 --> 0:21:27.720 advice for clients to make sure their funds are properly distributed. 0:21:28.000 --> 0:21:30.200 It's also the reason. Yeah, so when we talk. 0:21:30.040 --> 0:21:33.400 About technology, we're literally talking about a platform. 0:21:33.000 --> 0:21:35.919 Like in Dallas, including yes, definitely including in Dallas. 0:21:36.000 --> 0:21:36.240 Yeah. 0:21:36.440 --> 0:21:39.560 So I think for a lot of fund managers historically 0:21:40.040 --> 0:21:44.800 they don't want to touch individuals because it's difficult to 0:21:45.640 --> 0:21:48.320 have to educate all your average show one by one 0:21:48.359 --> 0:21:50.879 in terms of what is private equity, what is private credit. 0:21:51.240 --> 0:21:55.639 But through platforms like in Dallas, we help become the aggregator. 0:21:55.800 --> 0:21:59.720 We use technology, use AI to help personalize that advice 0:21:59.800 --> 0:22:03.400 to make sure that the right allocation, the right advice 0:22:03.480 --> 0:22:06.239 gives to the right kind of end client. So that 0:22:06.400 --> 0:22:10.440 gives confidence to these managers that oh, as she don't 0:22:10.480 --> 0:22:12.040 have to worry that I have to deal with the 0:22:12.080 --> 0:22:14.639 two hundred and fifty thousand clients I have I just 0:22:14.720 --> 0:22:17.160 have to deal with in daoas and they can help 0:22:17.200 --> 0:22:20.680 me connect me to these individual pools of capital. 0:22:21.320 --> 0:22:23.920 How do you use AI? You just mentioned that, I 0:22:23.960 --> 0:22:25.200 think it's interesting. 0:22:25.240 --> 0:22:28.680 So, I mean AI is something that's been around for 0:22:29.040 --> 0:22:32.240 a really long time, and I think what recently been 0:22:32.359 --> 0:22:35.679 exploded it's jen ai. But for us at En Dallas, 0:22:36.160 --> 0:22:38.600 AI is really two things to what we call the 0:22:39.320 --> 0:22:42.880 two E'SE one is efficiency and then the other one 0:22:43.000 --> 0:22:47.040 is experienced And in this circumstance, I think most interesting 0:22:47.200 --> 0:22:51.639 it's personalizing that advice to individuals because going back to 0:22:51.680 --> 0:22:55.680 John's question, right, we don't think every client should get 0:22:55.800 --> 0:22:59.400 twenty percent as an allocation to power markets is really 0:22:59.400 --> 0:23:03.560 different for everyone's circumstance. So how do I use AI 0:23:03.840 --> 0:23:07.640 to ask the right questions to understand what exactly is 0:23:07.680 --> 0:23:11.639 the right as allocation to our clients. We're constantly embedding 0:23:11.680 --> 0:23:17.040 these elements onto our platform through interactions with clients to 0:23:17.320 --> 0:23:20.040 help them come up to the right allocation. 0:23:20.840 --> 0:23:23.120 Right, so it would be like a chatbot or. 0:23:23.359 --> 0:23:26.600 Yes, including a chatbot as well as for our human 0:23:26.600 --> 0:23:31.600 client advisors, we also have AI bots that help very 0:23:31.680 --> 0:23:36.240 quickly go through all the alternatives and product information to 0:23:36.320 --> 0:23:39.760 be able to generate, let's say, answers comparisons for our 0:23:39.760 --> 0:23:45.440 clients because a lot of these alternatives it's actually much 0:23:45.480 --> 0:23:49.520 more complicated than say a money market fund and equity fund. 0:23:49.840 --> 0:23:53.199 We don't have a standardized fact sheet. So actually a 0:23:53.240 --> 0:23:57.040 lot of these AI tools actually really helps us to 0:23:57.200 --> 0:24:01.440 break down these very sophisticated documents. And it's really difficult 0:24:01.440 --> 0:24:04.439 for our clients to read these documents. So how do 0:24:04.560 --> 0:24:08.080 we leverage technology to help break down the knowledge barrier 0:24:08.119 --> 0:24:11.240 to help clients to be able to understand and absorbed 0:24:11.320 --> 0:24:13.880