Speaker 1: This is Bloomberg Business Week with Carol Messer and Jason
Speaker 1: Kelly on Bloomberg Radio. She does very much so and
Speaker 1: also have some great ideas when it comes to looking
Speaker 1: at the markets. Emiletti is back without still atted to
Speaker 1: have our senior portfolio manager at Wells Fargo Asset Management
Speaker 1: five nine billion in assets under management based in Nominee Falls,
Speaker 1: Wisconsin in our Bloomberg Interactor Broker studio here and y'k.
Speaker 1: Nice to have you here, Happy New year, Thank you,
Speaker 1: same to you. What do you win back? When you
Speaker 1: make your rounds and you're talking to clients and stuff,
Speaker 1: what do they want to know? What do they ask you?
Speaker 1: Most often? Most people want to know when is the
Speaker 1: bull market going to end? I mean that's kind of
Speaker 1: the most widely feared um probably topic, right because as
Speaker 1: good as things have been, people worry about when is
Speaker 1: it going to end? Does that mean everybody? Because for
Speaker 1: so long we talked about money on the sidelines? I mean,
Speaker 1: did people finally ultimately well just think I never Mr
Speaker 1: Peanut com it was good. No, I promised you it
Speaker 1: wasn't you it was, But I mean I do wonder
Speaker 1: about did people finally come into the market or is
Speaker 1: there still a lot of hesitation by investors. There still
Speaker 1: is a lot of hesitation and a lot of money
Speaker 1: on the sidelines. When you look at money flows, a
Speaker 1: lot of money came into money markets, a lot of
Speaker 1: money still flowed into bond funds, fixed income, but not
Speaker 1: a lot of money flowed still into the equity markets
Speaker 1: even last year. And so the you know, kind of
Speaker 1: supply demand really as you looked into the equity space
Speaker 1: still maybe hasn't been met, which is maybe you know,
Speaker 1: part of the reason that's driving this market even higher.
Speaker 1: Is it going elsewhere? That to private markets? Jason, I
Speaker 1: think about how much we talk about the you know,
Speaker 1: we're just talking about private equity planning to raise even
Speaker 1: more money U this year. Is that where it's going.
Speaker 1: Certainly clients have institutional clients have allocated more money to investments,
Speaker 1: and so I think that is, you know, clearly an allocation.
Speaker 1: And what about this whole active management question. I mean,
Speaker 1: we love talking to you about this because you're obviously
Speaker 1: a big believer in it, You do it, uh, And
Speaker 1: yet we live in a world that is increasingly passive,
Speaker 1: I feel like across all of our lives. But that's
Speaker 1: a separate we'll deal with that separately. They sex exactly, Um,
Speaker 1: but I do wonder how people are responding to the
Speaker 1: message around active, especially as you said at the top,
Speaker 1: when they're like, well, when is this bull market gonna end?
Speaker 1: I'm making money pretty easily. Yeah, So you know, it's
Speaker 1: a really great question. And I look, active manager part
Speaker 1: of the reason why the money flow has been so
Speaker 1: great too passive, is because active managers have struggled to
Speaker 1: keep up. And when you look at UM internally Wells
Speaker 1: Fargo Asset Management, eight percent of our strategies are of
Speaker 1: our active strategies have outperformed their benchmarks within the last
Speaker 1: three years. So over the last three years, so I
Speaker 1: feel like that's a that's a significant portion of our
Speaker 1: active strategies outperforming. I think we've kind of answered the
Speaker 1: question that active managers can find areas of the market,
Speaker 1: and some of them by substantial amounts. Right. The magnitude
Speaker 1: in general has been just under two percent, but we
Speaker 1: have managers in en that outperformed their benchmarks by ten percent,
Speaker 1: by some by four percent, right, significant amounts and are
Speaker 1: the outperforming of the broader market. Which is why I
Speaker 1: think at this point everyone's like, okay, let me just
Speaker 1: go for that so called diversified basket and just throw
Speaker 1: it in that way. You're saying yes, yes, yes, you know.
Speaker 1: And again they're across all different strategies and across different benchmarks,
Speaker 1: and so it's a depending on where you're allocating your
Speaker 1: dollars in a lot of different passive spaces. Are active
Speaker 1: managers in those spaces, the majority of them have done
Speaker 1: well over that longer time period. But I think you know, look,
Speaker 1: we just put out our investment insight piece yesterday, and
Speaker 1: the one thing that we also recognize is clients care
Speaker 1: about what's going on today. They care about what's going
Speaker 1: to happen over the next quarter, the next year. But
Speaker 1: as investors, we're looking at which companies are innovating for
Speaker 1: the next three to five years. And you know, now
Speaker 1: in my current position too, as heading up all of
Speaker 1: the active teams, what we want to make sure we're
Speaker 1: doing is investing in the innovation for our teams. And
Speaker 1: so when you look at active management, we know that
Speaker 1: there's a lot of tools that you can place in
Speaker 1: the hands of active managements, in the hact of hands
Speaker 1: of active managers and make them even better, such as
Speaker 1: so we've developed an internal tool we call Casper, and
Speaker 1: what it does is, over the last three to five years,
Speaker 1: it's looked at the way that I've managed money, that
Speaker 1: other portfolio teams have managed money, and it starts to
Speaker 1: suggest ideas for you know, your portfolio, and it learns
Speaker 1: basically from some of the activities that you've done over
Speaker 1: the past years and from your investment strategies. And from that,
Speaker 1: what we've done and what I've seen is some of
Speaker 1: the ideas that end up on our watch list as
Speaker 1: a bottom up stock selector are sometimes ending up on
Speaker 1: the list of that that this tool is helping us provide.
Speaker 1: And those are names you might not have otherwise thought
Speaker 1: of because you just wouldn't have seen it in from
Speaker 1: that sort of twist of the prison. Possibly not. But
Speaker 1: then we're also looking at external tools that will help
Speaker 1: our managers build inefficiencies right, that can help with natural
Speaker 1: language processing, that can help table stitch, go back, you know,
Speaker 1: multiple quarters, and pull together in income statement things that
Speaker 1: we don't need our analyst wasting time doing so. I
Speaker 1: think you know, when you look at the returns of
Speaker 1: you know, quant managers, they've been somewhat disappointing because there's
Speaker 1: a lot of people doing them. If you combine the two,
Speaker 1: you can even get better outcomes. And I think that's
Speaker 1: what you know. We're to take away layers, to takeaways
Speaker 1: maybe waste of time and trying to figure out things.
Speaker 1: It's amazing where it's all going. And thank you, so
Speaker 1: nice to see you again. An Lettie. She's head of
Speaker 1: active Equity at Wells Fargo Asset Management based in the
Speaker 1: Nominee Falls, Wisconsin. In our New York studio,