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Speaker 1: This is mesters in Business with very results on Bloomberg Radio.

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Speaker 1: This week, on the podcast Man, I have an extra

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Speaker 1: special guest. Edwin Conway runs all of alternatives for Black Rocks.

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Speaker 1: His title is Global Head of Alternative Investors, and he

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Speaker 1: covers everything from structured credit, to real estate, to hedge

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Speaker 1: funds to you name it. Uh. The group runs over

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Speaker 1: three hundred billion dollars and he has been a driving

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Speaker 1: force into making this a substantial portion of black rocks

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Speaker 1: nine trillion dollars in total assets. Uh. The opportunity set

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Speaker 1: that exists for alternatives, even for a firm like black

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Speaker 1: Rock that specializes in public markets, is potentially huge, and

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Speaker 1: black Rock wants a big piece of it. I found

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Speaker 1: this conversation to be absolutely fascinating, and I think you

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Speaker 1: will also so, with no further ado, my conversation with

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Speaker 1: black Rocks Head of Alternatives, Edwin Conway. This is Masters

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Speaker 1: in Business with very renaults on Bloomberg Radio. My extra

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Speaker 1: special guest this week is Edwyn Conway. He is the

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Speaker 1: global head of black Rocks Alternative Investors, which runs about

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Speaker 1: three hundred billion dollars in assets. He is a team

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Speaker 1: of over eleven hundred professionals to help him manage those assets.

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Speaker 1: Black Rocks Global alternatives include businesses that cover real estate, infrastructure,

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Speaker 1: hedge funds, private equity, and credit. He is a senior

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Speaker 1: managing director for black Rock. Edwin Conway. Welcome to Bloomberg. Sorry,

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Speaker 1: thank you for having me. So you've been in the

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Speaker 1: financial services industry for a long time. You were a

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Speaker 1: credit Swiss and black Stone and now you're at black Rock.

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Speaker 1: Tell us what the process was like breaking into the industry. Uh,

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Speaker 1: it's an interesting when Verry I grew up in a

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Speaker 1: very small town in the middle of Ireland, um and

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Speaker 1: the breakthrough to the industry was one of more coincidence

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Speaker 1: as opposed to purpose. I enjoyed the game of rugby

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Speaker 1: for many years and through an introduction Whilston University and

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Speaker 1: University College Dublin in Ireland, had a chance to you know,

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Speaker 1: play rugby at a quite a quite a decent level

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Speaker 1: um and get to know people that were across the industry.

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Speaker 1: It was really through an internship and the suggestion, given

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Speaker 1: my focus on business and financing things that you know,

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Speaker 1: the financial services sector may be a great place to

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Speaker 1: traverse and and get to know and literally through rugby

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Speaker 1: connections being part of a good school, I had an

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Speaker 1: opportunity to to to really understand, uh, what this service

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Speaker 1: sector in many respects could provide declients and became absolutely

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Speaker 1: intrigued with this and and what was it my my

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Speaker 1: primary ambition in life to be in the financial services sector?

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Speaker 1: I can definitively say no, But through the circumstance of

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Speaker 1: a game that I love to play and be part of,

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Speaker 1: was introduced to it through an internship and and actually

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Speaker 1: fell in love with them. Quite quite interesting and alternative

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Speaker 1: investments at black Rocks almost seems like a contradiction in terms.

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Speaker 1: Most of us tend to think of black Rock as

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Speaker 1: the giant nine trillion dollar public markets firm best known

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Speaker 1: for E t f s and indices. Alternatives seems to

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Speaker 1: be one of the fastest growing groups within the firm.

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Speaker 1: This was fifty billion dollars just a few years ago.

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Speaker 1: It's now over three billion. How has this become such

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Speaker 1: a fast growing part of black Rock? When you look

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Speaker 1: at the various facets which you introduced at the start party, Um,

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Speaker 1: we've actually been in alternatives will be ad of the

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Speaker 1: years now. Now the scale as you know which you

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Speaker 1: can operate on the beta side of the business start

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Speaker 1: surpasses that on the alpha side. You know, for us

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Speaker 1: throughout the years, this was very much about how can

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Speaker 1: we deliver investment excellence to our clients and performance and

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Speaker 1: therefore going an opportunity somewhere else to explore an an

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Speaker 1: alpha opportunity in alternatives, and I think being so connected

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Speaker 1: to our clients understanding that this pivot was absolutely taking

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Speaker 1: place not only thirty years ago, but in a very

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Speaker 1: pronounced way today. Um, you know, we continue to invest

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Speaker 1: in this business to support those ambitions. You know, they're

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Speaker 1: clearly seeing this as a world that's going through a

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Speaker 1: tremendous amount of transformation and with some of the challenges

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Speaker 1: quite frankly in the traditional asset classes, being able to

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Speaker 1: leverage that black Rock is a black Rock muscle to

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Speaker 1: really explore these alpha opportunities across the various alternative asset classes.

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Speaker 1: And in our mind wasn't imperative, um, And the imperative

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Speaker 1: really from the firm's perspective, and you look at our

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Speaker 1: purposes to serve those clients, so the need was coming

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Speaker 1: from them, The necessity to have alternatives in their whole

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Speaker 1: portfolio was was very Uh, it was very much growing

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Speaker 1: in prominence. And you know, it's taken us thirty years

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Speaker 1: to build this journey, and I think very quite frankly,

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Speaker 1: we're far from being done. As you look at the industry,

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Speaker 1: that demand is going to continue to grow. So I

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Speaker 1: think you could expect to see from us a continued

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Speaker 1: investment in the space because we don't believe you can

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Speaker 1: live without alternatives in today's world. That's really that's really interesting.

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Speaker 1: So so let's dive a little deeper into the product

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Speaker 1: strategy for alternatives, which you are responsible for a black rock.

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Speaker 1: Our audience is filled with potential investors. Tell them a

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Speaker 1: little bit about what that strategy is. So we're i think,

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Speaker 1: as you mentioned, were an excessive three billion today, um.

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Speaker 1: And you know, when we started this business, it was

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Speaker 1: less about you know, building a moat around private equity

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Speaker 1: or real estate. I think Larry Things and Rob Campedo's

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Speaker 1: vision was how do we build a platform to allow

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Speaker 1: us to be relevant to our clients across the various

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Speaker 1: alternative asset classes, but also within the within the confines

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Speaker 1: of what they are permitted to do on a year

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Speaker 1: by your basis, so to always be relevant, um, irrespective

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Speaker 1: of where they are on their journey from respect of

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Speaker 1: liabilities demands from liquidity demands for returns. So we took

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Speaker 1: a different approach I think vary to most. It was

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Speaker 1: around how do we scale into the business across Like

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Speaker 1: you said, real estate equity and debt, infrastructure equity in

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Speaker 1: debt and we think of that as the real assets

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Speaker 1: platform of our business. And you take our private equity

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Speaker 1: capabilities both in primary investing, secondary, etcetera um and then

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Speaker 1: you have private credit and a very significant hedgehunt platform.

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Speaker 1: So we think all of these have a real role

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Speaker 1: and and depending on clients liquidity needs and and risk appetite,

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Speaker 1: our goal was to over the years really build into

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Speaker 1: this to allow us solve for these challenging needs that

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Speaker 1: our clients have. I think it's an industry right and

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Speaker 1: over the many years that alternatives have been in existence,

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Speaker 1: this has been about return enhancement initially, I think fundamentally

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Speaker 1: the changes around the receptivity to the role of alternatives

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Speaker 1: and a client's portfolio has really changed. So we've watched

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Speaker 1: it vary. From this is we are in the pursuit

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Speaker 1: of a very total return or absolute return type of

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Speaker 1: an objective to now resilience and our portfolio, yield an income,

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Speaker 1: and so things that probably weren't perceived as valuable in

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Speaker 1: the past. Because your traditional asset classes will play a

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Speaker 1: more profound role. UM alternatives have stepped up in many

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Speaker 1: respects in the needs to provide more than just total return.

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Speaker 1: So we're taking the approach of how do you have

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Speaker 1: a more holistic approach to this, how do we really

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Speaker 1: build a global multi alternatives capability UM and and try

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Speaker 1: to partner and I think that's the important word for us,

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Speaker 1: try to partner with our clients in a way that

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Speaker 1: we can deliver that our performance, but delivered in a

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Speaker 1: way that probably our clients haven't been used to in

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Speaker 1: this industry before because unfortunately, but as we know, it

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Speaker 1: has had its challenges with regard to secrecy, transparency, and

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Speaker 1: so many other aspects. Now we need to help the

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Speaker 1: industry mature and and really that was our audition. What

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Speaker 1: our clients needs first, build around that and really be

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Speaker 1: relevant in all aspects of what we're not, they're doing

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Speaker 1: or trying to accomplish on behalf of the people that

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Speaker 1: they support and represent. So we'll talk a little bit

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Speaker 1: about transparency and secrecy and those sorts of things later

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Speaker 1: but right now I have to ask, what I guess

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Speaker 1: is kind of an obvious question, this growth that you've

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Speaker 1: achieved within black Rock for non public asset allocation within

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Speaker 1: a portfolio, what is this coming at expense of it?

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Speaker 1: Are these dollars that are being moved from public assets

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Speaker 1: into private assets or are you just competing with other

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Speaker 1: private investors. It's it's it's really both what what you

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Speaker 1: are seeing from our clients. If I take a step

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Speaker 1: back UM today the institutional client community, and you think

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Speaker 1: about the the retirement conundrum we're all facing around the world.

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Speaker 1: Right it's such an awful challenge when you think how

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Speaker 1: we'll prepare people are for that eventual stepping back from

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Speaker 1: the workplace, and then you know, longevity is your friend,

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Speaker 1: but can also be a very very difficult thing to

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Speaker 1: obviously live with if you're not prepared to retirement. The

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Speaker 1: typical tension plan today Verry is allocating about twenty five

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Speaker 1: eight percent in alternatives, predominantly private markets. UM. What they're

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Speaker 1: telling us is that's increasing quite substantially going forward. But

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Speaker 1: you know the funding for that, that alpha pursued for

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Speaker 1: that diversification, and that yield is coming from six income

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Speaker 1: assets it's coming from equity assets. So there's a real

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Speaker 1: rebalancing that's been taking place over the past number of years,

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Speaker 1: and quite frankly, the evolution, and I think the innovation

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Speaker 1: that's taken place, particularly the past ten years in alternatives

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Speaker 1: has been really profound. So the days where you just

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Speaker 1: invest in in a global fund, they still exist, but

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Speaker 1: now you can concentrate your efforts on sector exposure, industry exposures,

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Speaker 1: g A, graphic exposures, and I think the the menu

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Speaker 1: of things our clients can now have access to has

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Speaker 1: just been so greatly enhanced, and so the benefit is that,

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Speaker 1: but I think in some in some respects are the

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Speaker 1: next question is, well, with all of those choices, how

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Speaker 1: do you build the right portfolio for our client's needs,

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Speaker 1: knowing that each one of our client's needs are different.

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Speaker 1: So I would say it's absolutely coming from the public side.

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Speaker 1: We're very thankful those that have had a multi year

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Speaker 1: journey with us on the public side are now allocating

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Speaker 1: capital to us now on the private side too, because

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Speaker 1: I do think the the industry, given that change, given

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Speaker 1: that evolution, and given the complexity of these private assets,

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Speaker 1: our clients are looking to quite frankly, do more with

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Speaker 1: fewer managers because of that complexion of the industry and

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Speaker 1: the complexity that comes with it quite quite interesting and

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Speaker 1: and I it's pretty easy to see why large institutions

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Speaker 1: might be rotating away from things like treasuries or tips

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Speaker 1: because there's just no yield there. Um. Are you seeing

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Speaker 1: inflows coming in from the public equity side? Also, the

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Speaker 1: markets put together a pretty good string of years. Yeah,

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Speaker 1: it absolutely has. And in many respects, I think you know,

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Speaker 1: we've had a multi year period where there was big

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Speaker 1: questions around the alpha that can be generated, for example,

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Speaker 1: from active equities. The question was active or passive. I

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Speaker 1: think what what we've all realized is that at times

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Speaker 1: when politility introduces itself, which is frequent, even independent of

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Speaker 1: what's been done from a fiscal and monetary standpoint, that

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Speaker 1: these alpha speaking strategies on the traditional side still make

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Speaker 1: a lot of sense. Um. And so, you know, as

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Speaker 1: we think about what's what's happening here the transition of

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Speaker 1: assets um from both passive and active strategies to alternatives,

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Speaker 1: it's really to create better balance. It's not that there's

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Speaker 1: there's a lack of relevance anymore in the public side

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Speaker 1: it's just quite frankly that the growth of the private

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Speaker 1: asset base has grown so substantially. Um Now, I moved

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Speaker 1: married to the US in and you know, it's interesting

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Speaker 1: when you look back at today you start to recognize

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Speaker 1: the equity markets and what was available to invest in.

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Speaker 1: You know, the number of investable opportunities has shrunk by

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Speaker 1: forty plus percent, which that compression is extraordinarily high. But

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Speaker 1: yet you've seen obviously the equity markets grow in stature

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Speaker 1: and significance and prominence, but you're having more concentration risks

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Speaker 1: with some of the big public entities. The converse is

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Speaker 1: true though on the on the private side, just this

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Speaker 1: explosion of enterprise and innovation, employment creation, and then I

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Speaker 1: believe opportunities that has been real. So I look at

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Speaker 1: the public side, the investable universe is measured in the thousands,

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Speaker 1: and the private side is measured in the millions. And

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Speaker 1: I think part of the part of the thing our

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Speaker 1: clients are are not struggling with with what they're really

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Speaker 1: recognizing with with enterprises staying private for longer, if not forever,

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Speaker 1: and with this growth of the opportunity set both in

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Speaker 1: debt and equity in the private market side. You really

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Speaker 1: can't forego this opportunity. It has to be part of

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Speaker 1: your going forward concern and asset allocations. And I think

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Speaker 1: this is why we're seeing that transformation. And it's not

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Speaker 1: because equities and fixed thinking just aren't relevant anymore. They're

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Speaker 1: very relevant, but they're relevant now in a total portfolio,

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Speaker 1: whole portfolio context beside alternatives. So let's discuss this opportunity

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Speaker 1: set of alternatives. Where are you guys at black Rock

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Speaker 1: seeing demand, what sectors and from what sorts of clients

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Speaker 1: are are are is this demand increasing? We're very fortunate

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Speaker 1: varied today there isn't a single piece of our business

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Speaker 1: within within black Rock Alternatives that isn't growing. And quite

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Speaker 1: frankly too, it's it's it's really up to us to

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Speaker 1: deliver on the investment objectives that are set forth for

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Speaker 1: those clients. I think on the back of strong absolute

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Speaker 1: and relative performance. UM. You know, thankfully, our our clients

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Speaker 1: luck to us um to to help them as as

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Speaker 1: they think about what they're doing, as they're exploring more

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Speaker 1: in the alternatives areas. As you know, certainly the private

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Speaker 1: equity and real estate allocations are quite mature in many

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Speaker 1: of our client's portfolios, but they've been around for many decades.

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Speaker 1: I think that the areas where we're seeing let's call

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Speaker 1: it outside um demand an opportunity said just by virtue

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Speaker 1: of this small allocations on a relative basis that exist

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Speaker 1: today is really around infrastructure vary and it's around private credit.

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Speaker 1: So to caveat that, I think all of the areas

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Speaker 1: are certainly growing, and thankfully for us that's true where

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Speaker 1: we're looking at clients and we believe they're underinvested, would

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Speaker 1: believe they're underinvested in those two asset classes infrastructure both

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Speaker 1: debt and equity, and in private credit. And as you

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Speaker 1: think about you know why that is. The attributes that

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Speaker 1: they bring to our clients really important. And in a

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Speaker 1: world where your correlations and understanding those correlations is important,

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Speaker 1: these are definitely diversifying assets. In the world where you're

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Speaker 1: seeing trillions of dollars quite frankly, you're providing little to

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Speaker 1: know or even there's negative yield um you know, those

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Speaker 1: short folds are real, and people need yield, they need income.

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Speaker 1: These assets tend to provide that. So the diversification it

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Speaker 1: comes from these assets. The yield can come from these assets.

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Speaker 1: And because of the immaturity of these asset classes UM,

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Speaker 1: independent of the capital that's flowing in, we still consider

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Speaker 1: them relatively white space. You're not crowded out. UM. There's

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Speaker 1: much room for development in the markets and with our

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Speaker 1: client's portfolios, and to us that's exciting because it presents opportunities.

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Speaker 1: So for at the highest level, you know, they're the

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Speaker 1: two areas who believe are most underdeveloped in our clients.

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Speaker 1: So let's talk about both of those areas well. We'll

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Speaker 1: talk about structured credit in a few minutes. I think

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Speaker 1: everybody kind of understands what what that is. What when

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Speaker 1: you say infrastructure as a sector, how does that UM

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Speaker 1: show up as an investment are And obviously I have

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Speaker 1: infrastructure on the brand because we're recording this not too

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Speaker 1: long after the giant Infrastructure Bill has been passed. Tell

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Speaker 1: us a little bit about what alternative investments in infrastructure

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Speaker 1: looks like. Yeah, it's you know, it's really in its

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Speaker 1: infancy and and and what do the underlying investments look like.

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Speaker 1: I think traditionally you would consider it as and part

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Speaker 1: of the bill that has just been announcing roads, bridges, airports,

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Speaker 1: some of these hard assets, some of the core infrastructure

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Speaker 1: investments that have been around for actually quite some time.

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Speaker 1: The interesting thing is the the industry is evolved so

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Speaker 1: much and but the need for infrastructure is so great

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Speaker 1: across both developed and emerging economies. UM. It's it's become

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Speaker 1: something that if done the right way, the attributes we

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Speaker 1: just spoke of can really have a very strong effect

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Speaker 1: on our client's portfolios. So beyond the core that we

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Speaker 1: just mentioned what we've seen a tremendous demand as a

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Speaker 1: result of this energy transition. You're really seeing a spike

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Speaker 1: in activity and the necessity to transition industry to cleaner

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Speaker 1: technologies UM, a movement not away completely from fossil fuels,

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Speaker 1: but integrating new types of clean energy. And as a result,

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Speaker 1: you've seen a lot of demand on a global basis

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Speaker 1: for wind and solar and quite frankly, that's why even

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Speaker 1: at black Rock albeit UH ten twelve years ago, we

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Speaker 1: really established a capability there to help with that transition,

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Speaker 1: to think about how do we use these technologies, solar

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Speaker 1: panels and wind farms to generate clean forms of energy

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Speaker 1: for utilities where in some cases they're mandated to procure

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Speaker 1: this type of this type of power. UM. And when

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Speaker 1: you think about pre contracting with utilities for long duration

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Speaker 1: that to me spells vary. Uh. You know, good risk

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Speaker 1: mitigation and management, and a ability to get access to

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Speaker 1: clean forms of energy that throw off field that can

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Speaker 1: be very complementary to your traditional asset classes, but for

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Speaker 1: very long periods of time. And so you know, the

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Speaker 1: benefits for us of these these assets is that they

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Speaker 1: are long in duration, they are yield enhancing, they're definitely diversifying.

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Speaker 1: And so for us, you know, we're we've got about

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Speaker 1: let's call it two hundred and eighty assets around the

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Speaker 1: world that we're managing that literally generates this this clean electricity,

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Speaker 1: I think to give the relevance of how much I

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Speaker 1: believe today it's enough to power the country of Spain, um.

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Speaker 1: And that's really that's really changing. So you're seeing governments,

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Speaker 1: so from a policy standpoint, be seeing governments really embracing

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Speaker 1: new forms of energy, transitioning out of bunker fuels, for example,

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Speaker 1: of burning diesels which really spew emissions into the into

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Speaker 1: the into the environment. Um. But it's really around modernizing

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Speaker 1: for the future. So developed an emerging economies like want

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Speaker 1: to retain capital, they want to attract new capital and

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Speaker 1: by having the proper infrastructure to support industry is a

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Speaker 1: really really important thing. Now on the back of that too,

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Speaker 1: one thing we've learned from COVID is that the necessity

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Speaker 1: to really bring e commerce into how you conduct your

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Speaker 1: business is so important. And I think from the theme

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Speaker 1: of digitization within infrastructure too with a huge part. So

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Speaker 1: it's not just the energy transition that you're seeing, it's

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Speaker 1: not just roads and bridges, but by allowing businesses to

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Speaker 1: connect to a global consumer, allowing children be educated from home,

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Speaker 1: you know, allowing experiences that span geographies and boundaries in

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Speaker 1: a digital form is so important, not just for commerce,

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Speaker 1: between so many other aspects. And so when you think

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Speaker 1: about cable, fiber optics, as you think about all the

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Speaker 1: other things even outside of power that enable us to

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Speaker 1: conduct commerce, to educate um. There are many examples where Barrey,

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Speaker 1: you can build resilience into your portfolio because that need

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Speaker 1: is not measured in years. Actually the shortfall of capital

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Speaker 1: is measured in the trillions, so which means this is uh,

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Speaker 1: this is a multidecade opportunity set from our vantage point

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Speaker 1: and one which our clients should really avail of. Quite

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Speaker 1: quite an interesting and I mentioned in passing structured credit.

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Speaker 1: Tell us a little bit about what that opportunity looks like.

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Speaker 1: I think of this as a space that is too

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Speaker 1: big for local banks but too small for Wall Street

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Speaker 1: to finance. Is that an oversimplification? What what is going

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Speaker 1: on in that space? I probably couldn't have said it better. Variation.

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Speaker 1: It's it's we can go back to just even the

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Speaker 1: investi the universe, I mean the the the tens of

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Speaker 1: thousands um companies. Just if we take North America that

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Speaker 1: our private that have great leadership, that really have strategic

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Speaker 1: vision um and are at the in some cases at

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Speaker 1: the start of their growth life cycle, or even if

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Speaker 1: they maintain they have a very credible and viable business

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Speaker 1: for the future, they still need capital. And you're you're

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Speaker 1: absolutely right. With the retreat of the banks from this

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Speaker 1: space through various regulations that have come after the global

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Speaker 1: financial crisis, you've seen the asset managers in many respects

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Speaker 1: working behalf of our clients, both wealth and institutional, becoming

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Speaker 1: the new lenders of choice. And and when we when

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Speaker 1: we think about that opportunity set, then it's really understanding

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Speaker 1: the client's desire for risk, right for something maybe on

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Speaker 1: a lower risk side, from middle market lending or middle

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Speaker 1: market enterprises where you know you can support that organization

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Speaker 1: through its growth cycle, all the way to some higher

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Speaker 1: yielding obviously with more risk assets on the opportunistic or

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Speaker 1: even the special situation side. But it spans many things.

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Speaker 1: I'm going back to the comment area around the evolution

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Speaker 1: of the space you know, private credit today and what

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Speaker 1: you can do has changed so profoundly. It spans the

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Speaker 1: liquidity spectrum, it spans the risk spectrum. And the great

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Speaker 1: news is with the number of companies both here and abroad,

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Speaker 1: the opportunity set is has been enriched every single day. Um.

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Speaker 1: And we're certainly seeing particularly going back to the question,

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Speaker 1: are some of these assets coming from the traditional side,

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Speaker 1: the public side when we think of private credit, you

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Speaker 1: are seeing private credit now being incorporated in fixed income allocations. Um.

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Speaker 1: You know, this is a is a yielding asset, this

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Speaker 1: is these are dead instruments, these are structures were creating.

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Speaker 1: We're trying to be flexible and dynamic with these clients.

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Speaker 1: But it really is an area where we think it

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Speaker 1: really is still act, it's at its infancy relevant to

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Speaker 1: where it can potentially be. That's that's really quite quite interesting.

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Speaker 1: Let's let's stick with that concept of of money rotating

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Speaker 1: away from fixed income. I have to imagine clients are

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Speaker 1: starved for yields. So so what are the popular substitutes

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Speaker 1: for this is? Is it primarily structured credit? Is it

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Speaker 1: real estate? How do you respond to an institution that says, hey,

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Speaker 1: I'm not getting any sort of realistic coupon on my bonds.

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Speaker 1: I need a substitute. Yeah, it's it's it's it's all

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Speaker 1: of those in many respects. And I think to the

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Speaker 1: role even around now, at a time where people have

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Speaker 1: questions around inflation, how do you substitute this yield efficiency

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Speaker 1: or certainly make up for that shortfall? How do you

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Speaker 1: think about a world where we're increasingly seeing inflation not

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Speaker 1: as a transitory thing, but it feels certainly quasi permanent.

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Speaker 1: Um These are a lot of questions we're getting, and

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Speaker 1: certainly real estate is an important part of how they

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Speaker 1: think about inflation protection, how clients think about yield. But

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Speaker 1: quite frankly too, we've we've gone through something none of

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Speaker 1: us really had thought about, a global pandemic. And as

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Speaker 1: I think about real estate, just how you allocate to

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Speaker 1: the sector. You know, what was very heavily influenced with

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Speaker 1: retail assets, high streets, our shopping behaviors and habits have changed.

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Speaker 1: We all occupied offices for obviously many many years pre

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Speaker 1: the pandemic. The shape of how we operate and how

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Speaker 1: we do that has changed. So I think some of

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Speaker 1: the underlying investment investments have changed. Or you've seen heavily

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Speaker 1: waiting towards office space to leisure travel in the past.

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Speaker 1: Actually now you've seen a rotation in some respects out

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Speaker 1: of those, just given some of the uncertainties around what

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Speaker 1: the future holds as we come come through a really

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Speaker 1: difficult time. But the great thing about this sector is

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Speaker 1: between senior living, between student housing, between logistics and so

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Speaker 1: many other parts. There are ways in real estate to

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Speaker 1: capture where there's where there's demands. So still a robust

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Speaker 1: opportunity set and we do think can absolutely be yield enhancing.

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Speaker 1: We mentioned infrastructure. Even if you think about and we

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Speaker 1: mentioned O E c D and and non O E

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Speaker 1: c D emerging and and developed. You know, and I

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Speaker 1: think about Asia in particular just as a subset of

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Speaker 1: the world in which we're living in. You know, that

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Speaker 1: is a two point six trillion dollar alternative market today

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Speaker 1: growing at a fift keger um, and quite frankly, the

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Speaker 1: all growth is driven by the large economic growth in

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Speaker 1: the region. So even from a regional perspective, if we pivot,

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Speaker 1: you know, it houses fifty seven percent of the world's

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Speaker 1: population and yet delivers seven percent of the world's economic role.

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Speaker 1: So I think think of that, and then with regard

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Speaker 1: to to infrastructure and goes back to that, this is

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Speaker 1: truly a global phenomenon. So we just even take that sector, Barry,

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Speaker 1: you realize that the way to maintain that type of growth,

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Speaker 1: to attract capital, to keep capital, it really requires an

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Speaker 1: investment of significance amount of money to be able to

433
00:28:49,080 --> 00:28:52,640
Speaker 1: sustain that. And you know when you have forty two

434
00:28:52,680 --> 00:28:55,600
Speaker 1: million people in a pack migrating to cities in the year.

435
00:28:55,680 --> 00:29:01,120
Speaker 1: Going back to digitization, that's an important things. So when

436
00:29:01,160 --> 00:29:04,040
Speaker 1: I say we're so much at the infancy and infrastructure,

437
00:29:04,200 --> 00:29:07,840
Speaker 1: I really mean it. Um. It can be water, it

438
00:29:07,880 --> 00:29:10,440
Speaker 1: can be sewage systems, it can be digital, it can

439
00:29:10,440 --> 00:29:14,320
Speaker 1: be rows. There's so much to this um and then

440
00:29:14,360 --> 00:29:17,400
Speaker 1: even down to the regional perspective, it's it's a it's

441
00:29:17,400 --> 00:29:20,480
Speaker 1: a need that doesn't just exist in the US. So

442
00:29:20,720 --> 00:29:23,920
Speaker 1: for these assets. These tend to be long and duration.

443
00:29:24,200 --> 00:29:26,920
Speaker 1: There's both equity and debt and on the death side,

444
00:29:27,000 --> 00:29:30,960
Speaker 1: quite frankly, very few outside of our insurance clients and

445
00:29:30,960 --> 00:29:34,320
Speaker 1: their general accounts are taking advantage of the debt opportunity

446
00:29:34,520 --> 00:29:37,280
Speaker 1: and as we both know, to finance these projects that

447
00:29:37,320 --> 00:29:41,680
Speaker 1: are becoming more plentiful every single day across the world,

448
00:29:42,080 --> 00:29:45,200
Speaker 1: including like I said, an a pack in scale um.

449
00:29:45,440 --> 00:29:48,200
Speaker 1: There's an opportunity on both sides, and I think that's

450
00:29:48,240 --> 00:29:52,680
Speaker 1: where the asset mix change happened. It's recognizing that the

451
00:29:52,720 --> 00:29:56,560
Speaker 1: attributes of these assets can have a role. The attributes

452
00:29:56,600 --> 00:30:00,560
Speaker 1: of these assets can potentially replace some of these traditional assets,

453
00:30:01,080 --> 00:30:03,120
Speaker 1: and I think you're going to see it grow. So

454
00:30:03,200 --> 00:30:07,440
Speaker 1: infrastructure to us is really equity and debt um. And

455
00:30:07,480 --> 00:30:09,600
Speaker 1: then on the credit side, like like I mentioned it

456
00:30:09,800 --> 00:30:14,120
Speaker 1: again too, it's a very very big and growing market

457
00:30:14,640 --> 00:30:18,320
Speaker 1: and certainly the biggest area today and from our advantage

458
00:30:18,320 --> 00:30:22,320
Speaker 1: point is middle market landing from a scale opportunity standpoint,

459
00:30:22,880 --> 00:30:25,560
Speaker 1: so you know, we think much more to come in

460
00:30:25,640 --> 00:30:29,600
Speaker 1: all of those spaces. Really interesting, and let's just stay

461
00:30:29,680 --> 00:30:35,120
Speaker 1: with the concept of of public versus private um. That

462
00:30:35,160 --> 00:30:38,840
Speaker 1: line is kind of getting blurred in the secondary markets.

463
00:30:38,840 --> 00:30:42,560
Speaker 1: There's liquidly coming to for lack of a better phrase,

464
00:30:43,240 --> 00:30:47,240
Speaker 1: pre public equities. Tell us a little bit about that space.

465
00:30:47,320 --> 00:30:50,480
Speaker 1: Is that an area that is ripe for growth for

466
00:30:50,560 --> 00:30:56,440
Speaker 1: black Rock? Yeah, we absolutely think it is. And you're

467
00:30:56,480 --> 00:31:00,040
Speaker 1: you're you're absolutely correct. The secondary market is is on

468
00:31:00,240 --> 00:31:03,120
Speaker 1: quite substantially. If you if you even look at just

469
00:31:03,560 --> 00:31:06,880
Speaker 1: the private equity secondary market and what will transact this year,

470
00:31:07,560 --> 00:31:10,080
Speaker 1: you know, we think it will be attention in excess

471
00:31:10,120 --> 00:31:12,880
Speaker 1: of a hundred billion, and that's what will clear. Let's

472
00:31:12,920 --> 00:31:15,080
Speaker 1: not to mention what will be visible and what will

473
00:31:15,080 --> 00:31:19,160
Speaker 1: be what will be analyzed, um and and that speaks

474
00:31:19,200 --> 00:31:24,800
Speaker 1: to me, what's what's really happening and the innovation that

475
00:31:24,800 --> 00:31:28,520
Speaker 1: that we mentioned earlier. It's no longer about just primary exposure.

476
00:31:28,760 --> 00:31:31,480
Speaker 1: It's secondary exposure. And then we see all sorts of

477
00:31:31,480 --> 00:31:35,920
Speaker 1: interest in co investment opportunities as well. I think the

478
00:31:35,920 --> 00:31:41,000
Speaker 1: the the available sources of alpha and the flexibility you

479
00:31:41,040 --> 00:31:45,440
Speaker 1: can now have, albeit if directed and advised, I believe

480
00:31:45,520 --> 00:31:48,560
Speaker 1: the right way Barry can can be very helpful and

481
00:31:48,640 --> 00:31:52,400
Speaker 1: in the portfolio. Um so your pre I p O.

482
00:31:53,040 --> 00:31:55,719
Speaker 1: It is a big part of actually what we do

483
00:31:55,760 --> 00:31:59,560
Speaker 1: and we think about growth equity. You know, there is

484
00:31:59,760 --> 00:32:03,520
Speaker 1: a significant amount of capital following that space from from

485
00:32:03,560 --> 00:32:06,440
Speaker 1: our vantage point as one of the largest investors in

486
00:32:06,760 --> 00:32:10,960
Speaker 1: public equity market UM and now obviously one of the

487
00:32:11,000 --> 00:32:14,520
Speaker 1: largest investors in the in the private side. The bridge

488
00:32:14,560 --> 00:32:18,920
Speaker 1: between between private to public, there's there's a real need.

489
00:32:19,480 --> 00:32:22,320
Speaker 1: I p o s are not going away, and I

490
00:32:22,360 --> 00:32:26,000
Speaker 1: think smart informed capital to help with these journeys these

491
00:32:26,080 --> 00:32:29,280
Speaker 1: journeys is really as really a necessity and the need.

492
00:32:30,360 --> 00:32:33,840
Speaker 1: So let's talk a little bit about this recent restructuring.

493
00:32:33,880 --> 00:32:37,400
Speaker 1: You were first named global head of black Rock Alternate

494
00:32:37,480 --> 00:32:44,560
Speaker 1: Investors in April, the entire alternatives business was restructured. Tell

495
00:32:44,640 --> 00:32:47,560
Speaker 1: us a little bit about how that restructuring is going

496
00:32:48,320 --> 00:32:50,960
Speaker 1: continues to go really well Bury. When you look at

497
00:32:50,960 --> 00:32:54,880
Speaker 1: the the flow of assets from our clients, I think

498
00:32:55,040 --> 00:32:59,240
Speaker 1: hopefully that speaks to the performance we've been generating. UM.

499
00:32:59,280 --> 00:33:02,440
Speaker 1: You know, I joined the firm, as you know, albeit

500
00:33:03,120 --> 00:33:08,400
Speaker 1: eleven years ago, and being very close to the alternatives

501
00:33:08,400 --> 00:33:11,080
Speaker 1: franchise was as a critical thing for me, and running

502
00:33:11,080 --> 00:33:16,640
Speaker 1: the institutional platform to me, when you watched this migration

503
00:33:16,720 --> 00:33:20,880
Speaker 1: of assets towards alternatives, it was obviously very evident for

504
00:33:21,000 --> 00:33:25,440
Speaker 1: decades now that this is a is a critical leg

505
00:33:25,480 --> 00:33:30,080
Speaker 1: of the stool as our clients are thinking about their portfolios. Um,

506
00:33:30,200 --> 00:33:34,240
Speaker 1: we're continuing to innovate, we're continuing to invest, and thankfully

507
00:33:34,240 --> 00:33:39,680
Speaker 1: we'll continue to deliver a strong performance. We're growing at about,

508
00:33:40,160 --> 00:33:44,360
Speaker 1: you know, high double digits on an annual basis, but

509
00:33:44,400 --> 00:33:46,959
Speaker 1: we're trying to be purposeful to around where that growth

510
00:33:47,000 --> 00:33:49,760
Speaker 1: is coming from. I think the reality is when you

511
00:33:49,800 --> 00:33:53,320
Speaker 1: look at the competitive universe, I think the last number

512
00:33:53,320 --> 00:33:56,200
Speaker 1: I sold it was about thirty eight thousand alternative asset

513
00:33:56,240 --> 00:33:59,960
Speaker 1: managers out there today, obviously coming from hedge funds all

514
00:34:00,000 --> 00:34:03,600
Speaker 1: the way through through private credit and private equity. So

515
00:34:03,840 --> 00:34:07,280
Speaker 1: competition is real, and I do think the outcomes for

516
00:34:07,320 --> 00:34:12,319
Speaker 1: our clients are starting to really grow, unfortunately some in

517
00:34:12,360 --> 00:34:15,400
Speaker 1: some cases obviously very good, in some cases actually not great.

518
00:34:16,239 --> 00:34:20,480
Speaker 1: So our focus are really much on how how can

519
00:34:20,520 --> 00:34:24,600
Speaker 1: we deliver performance, how can we be a partner. And

520
00:34:25,040 --> 00:34:27,759
Speaker 1: I think we've been rewarded with the trust and the

521
00:34:27,840 --> 00:34:30,960
Speaker 1: faith their clients have on us because they're seeing something

522
00:34:31,040 --> 00:34:34,000
Speaker 1: different I think from us. Now, the scale of the

523
00:34:34,000 --> 00:34:38,520
Speaker 1: business that you mentioned earlier really gives us tentacles into

524
00:34:38,520 --> 00:34:42,080
Speaker 1: the market that I believe allows us to access what

525
00:34:42,160 --> 00:34:45,000
Speaker 1: I think is the new Alpha, which is in many

526
00:34:45,040 --> 00:34:50,359
Speaker 1: respects given the heft of competition, Sourcing and originating new

527
00:34:50,440 --> 00:34:56,799
Speaker 1: investments is certainly harder. But for us sitting in or

528
00:34:56,880 --> 00:34:59,920
Speaker 1: having our Alternatives team sitting in fifty offices around the

529
00:35:00,040 --> 00:35:04,600
Speaker 1: world really investing in the markets because that's the market

530
00:35:04,680 --> 00:35:09,320
Speaker 1: they grew up with and have relationships within. I think this,

531
00:35:09,320 --> 00:35:14,600
Speaker 1: this network value that we have is something that's quite special,

532
00:35:15,200 --> 00:35:18,440
Speaker 1: and I think in the world that's becoming increasingly competitive,

533
00:35:19,080 --> 00:35:21,480
Speaker 1: we're going to continue to use and harness that network

534
00:35:21,600 --> 00:35:26,279
Speaker 1: value to pursue opportunities. And thankfully, as a result of

535
00:35:26,320 --> 00:35:29,600
Speaker 1: the partnership we've been we've been pursuing with our clients.

536
00:35:30,280 --> 00:35:34,160
Speaker 1: Like we've we're certainly looking for opportunities and investments in

537
00:35:34,160 --> 00:35:36,800
Speaker 1: our funds, but because of the brand, I think, because

538
00:35:36,840 --> 00:35:40,759
Speaker 1: of the successes, opportunity seeks us as much as we

539
00:35:40,840 --> 00:35:45,160
Speaker 1: seek opportunity, and that has been something that you know,

540
00:35:45,200 --> 00:35:48,040
Speaker 1: we look at an ongoing basis and feel very privileged

541
00:35:48,120 --> 00:35:52,479
Speaker 1: to actually have that inbound flow as well. Really really

542
00:35:52,560 --> 00:35:55,360
Speaker 1: quite interesting. There was a quote of yours I found

543
00:35:56,000 --> 00:35:59,000
Speaker 1: while while doing some prep for this conversation that I

544
00:35:59,080 --> 00:36:02,440
Speaker 1: have to have you and on quote the relationship between

545
00:36:02,480 --> 00:36:07,000
Speaker 1: black Rocks, alternative capabilities and wealth firms marked a large

546
00:36:07,080 --> 00:36:11,200
Speaker 1: opportunity for growth in the coming years. This was back

547
00:36:11,239 --> 00:36:15,680
Speaker 1: in so the first part of the question is was

548
00:36:15,800 --> 00:36:19,719
Speaker 1: your expectations correct? Did you did you see the sort

549
00:36:19,760 --> 00:36:23,640
Speaker 1: of growth you were hoping for? And more broadly, how

550
00:36:23,800 --> 00:36:29,120
Speaker 1: large of an opportunity is alternatives not just for Black

551
00:36:29,239 --> 00:36:33,399
Speaker 1: Rock but for the entire investment industry. Yeah, it's It's

552
00:36:33,400 --> 00:36:38,040
Speaker 1: been very much an institutional opportunity, says up until now.

553
00:36:38,880 --> 00:36:42,000
Speaker 1: And there's so much to be done still to to

554
00:36:42,160 --> 00:36:46,920
Speaker 1: really democratize alternatives. And we we certainly joke around making

555
00:36:46,960 --> 00:36:51,600
Speaker 1: alternatives less alternative. Actually, even the normenclature we use and

556
00:36:51,600 --> 00:36:54,000
Speaker 1: how we describe it doesn't kind of make sense anymore.

557
00:36:54,560 --> 00:36:58,440
Speaker 1: It's such a core an important allocation to our clients, Barry,

558
00:36:58,560 --> 00:37:02,840
Speaker 1: that just calling it alternate the seems wrong. Um, I

559
00:37:02,920 --> 00:37:05,719
Speaker 1: just think about the institutional clients its ranges. I think,

560
00:37:05,760 --> 00:37:08,880
Speaker 1: as I mentioned on our some of our more conservative clients,

561
00:37:08,880 --> 00:37:13,320
Speaker 1: which would be pension plans which really have liquidity needs

562
00:37:13,400 --> 00:37:15,960
Speaker 1: on a monthly basis because of the liabilities they have

563
00:37:16,080 --> 00:37:19,360
Speaker 1: to think about, you know, at about twenty five plus

564
00:37:19,400 --> 00:37:24,799
Speaker 1: percent in private markets to endowments, foundations, family offices going

565
00:37:24,840 --> 00:37:29,560
Speaker 1: to fifty plus. So's it's a really important part and

566
00:37:29,680 --> 00:37:33,839
Speaker 1: has been for now many years, the institutional climate, communities outcomes.

567
00:37:34,719 --> 00:37:37,080
Speaker 1: I think the thing that we use an industry have

568
00:37:37,320 --> 00:37:42,320
Speaker 1: to change is alternatives has to be for the many,

569
00:37:42,480 --> 00:37:46,319
Speaker 1: not for the few. And quite frankly, it's been for

570
00:37:46,400 --> 00:37:48,759
Speaker 1: the view and as we talked about some of the

571
00:37:48,800 --> 00:37:52,719
Speaker 1: attributes and the important attributes of these asset classes. To

572
00:37:52,840 --> 00:37:57,760
Speaker 1: think that, you know, those who have been less fortunate

573
00:37:57,840 --> 00:38:00,960
Speaker 1: in their careers can't access things that and enrich their

574
00:38:01,040 --> 00:38:05,160
Speaker 1: future retirement outcomes, to me is a failing UM and

575
00:38:05,200 --> 00:38:08,240
Speaker 1: we have to address that. That comes from regulation changes,

576
00:38:08,400 --> 00:38:12,799
Speaker 1: it comes from structuring of new products, it comes from education,

577
00:38:14,239 --> 00:38:17,800
Speaker 1: and it comes from this this this knowledge transmission where

578
00:38:18,600 --> 00:38:22,080
Speaker 1: UM clients in the wealth segment can understand the role

579
00:38:22,120 --> 00:38:25,600
Speaker 1: of alternatives in the context of what that can do

580
00:38:26,120 --> 00:38:29,560
Speaker 1: as they invest in equities and fixed income too, and

581
00:38:29,600 --> 00:38:32,640
Speaker 1: we think that's a big shortfall. So the journey today

582
00:38:32,719 --> 00:38:35,319
Speaker 1: just to give you a sense as we look at

583
00:38:35,320 --> 00:38:38,120
Speaker 1: our clients in Europe on the wealth side on average,

584
00:38:38,360 --> 00:38:40,960
Speaker 1: as you look from what we would call accredited investors

585
00:38:40,960 --> 00:38:44,359
Speaker 1: all the way through to more ultra high net worth individuals,

586
00:38:44,600 --> 00:38:47,640
Speaker 1: their allocation to alternatives we believe stands it around two

587
00:38:47,680 --> 00:38:51,880
Speaker 1: to three of their total portfolio. In the US, we

588
00:38:51,960 --> 00:38:56,840
Speaker 1: believe it stands at three to five. So most of

589
00:38:56,880 --> 00:38:59,759
Speaker 1: those intermediaries we speak to our partners who are who

590
00:38:59,760 --> 00:39:03,720
Speaker 1: are porting and serving the wealth channel, they have certainly

591
00:39:03,760 --> 00:39:06,240
Speaker 1: an ambition to help their clients grow that to twenty

592
00:39:06,360 --> 00:39:09,439
Speaker 1: percent and potentially even beyond that. So when I look

593
00:39:09,480 --> 00:39:12,920
Speaker 1: at that gap of let's call it two to three

594
00:39:13,800 --> 00:39:16,839
Speaker 1: in in a in a market that just given the

595
00:39:16,960 --> 00:39:20,600
Speaker 1: explosion and wealth around the world, I think the last

596
00:39:20,640 --> 00:39:25,480
Speaker 1: numbers I saw this is a sixty trillion dollar market um.

597
00:39:25,520 --> 00:39:30,560
Speaker 1: That speaks to the shortfall relative to the ambition. And

598
00:39:30,760 --> 00:39:33,440
Speaker 1: you know, how has it been going. We have a

599
00:39:33,600 --> 00:39:36,560
Speaker 1: number of things and capabilities we've set up to allow

600
00:39:36,680 --> 00:39:41,680
Speaker 1: for this market to experience hopefully private equity, hedge funds,

601
00:39:42,000 --> 00:39:45,800
Speaker 1: credit and infrastructure in ways they haven't in the past.

602
00:39:46,640 --> 00:39:48,759
Speaker 1: We've done it in the US, we're doing it now

603
00:39:48,800 --> 00:39:51,600
Speaker 1: in Europe. But I will say various this is still

604
00:39:51,760 --> 00:39:55,520
Speaker 1: very much at the start of the journey. Wealth is

605
00:39:55,560 --> 00:39:59,080
Speaker 1: a really important part of our future given our business.

606
00:39:59,200 --> 00:40:04,040
Speaker 1: Quite frankly, ninety plus percent institutional today, but we're looking

607
00:40:04,040 --> 00:40:08,080
Speaker 1: to change that by hopefully democratizing these asset classes, and

608
00:40:08,239 --> 00:40:10,480
Speaker 1: I'm making it so much more accessible than that of

609
00:40:10,560 --> 00:40:14,520
Speaker 1: the past. So we we hinted at this before, but

610
00:40:14,560 --> 00:40:19,120
Speaker 1: I'm going to ask the question outright, how significant is

611
00:40:19,280 --> 00:40:24,120
Speaker 1: interest rates to clients risk appetites. How much of the

612
00:40:24,200 --> 00:40:30,080
Speaker 1: current low rate environment are driving people to move chunks

613
00:40:30,080 --> 00:40:36,239
Speaker 1: of their assets from fixed income UH to alternatives. It's

614
00:40:36,320 --> 00:40:40,920
Speaker 1: really significant, Verry Um. I think that the transition of

615
00:40:41,000 --> 00:40:46,960
Speaker 1: these portfolios UM is quite profound. So you're and I

616
00:40:47,000 --> 00:40:53,480
Speaker 1: think the unfortunate thing in some respects as this transition happens, UM,

617
00:40:53,640 --> 00:40:58,279
Speaker 1: is that you're introducing new variables and new risks. And

618
00:40:58,360 --> 00:41:00,359
Speaker 1: the reason I say it's unfortunate that I think as

619
00:41:00,400 --> 00:41:03,880
Speaker 1: an industry, this goes back to the education around the

620
00:41:04,000 --> 00:41:09,640
Speaker 1: assets you want, understanding the role, understanding the various outcomes.

621
00:41:09,760 --> 00:41:13,279
Speaker 1: I think it is so incredibly important, and that this

622
00:41:13,360 --> 00:41:18,080
Speaker 1: is a time where complete transparency is needed. UH. And

623
00:41:18,239 --> 00:41:22,040
Speaker 1: quite frankly, we're investing capital. It's not ours as an industry.

624
00:41:22,040 --> 00:41:26,160
Speaker 1: We're investing our clients assets and they need to know

625
00:41:26,600 --> 00:41:30,440
Speaker 1: exactly the underlying investments, and you know, in good and

626
00:41:30,640 --> 00:41:35,880
Speaker 1: bad times, how would those assets behave? So certainly interest

627
00:41:35,920 --> 00:41:39,759
Speaker 1: rates are driving a flow of capital away from these

628
00:41:39,760 --> 00:41:43,640
Speaker 1: traditional assets you know, fixed income and absolutely in towards

629
00:41:44,280 --> 00:41:51,080
Speaker 1: UM real estate, infrastructure, private credit, etcetera, in the pursuit

630
00:41:51,200 --> 00:41:55,239
Speaker 1: of this this yield. But I do I do think

631
00:41:55,440 --> 00:41:59,000
Speaker 1: one of the things that's critically important for the institutional town,

632
00:41:59,160 --> 00:42:02,759
Speaker 1: not just the well which are newer entrance, is this

633
00:42:02,840 --> 00:42:07,640
Speaker 1: transmission of education of data, because that's how I think

634
00:42:07,680 --> 00:42:11,279
Speaker 1: you build a better balanced portfolio UM. And that's a

635
00:42:11,360 --> 00:42:14,080
Speaker 1: that's a real conundrum I think that the the industry

636
00:42:14,160 --> 00:42:18,360
Speaker 1: is facing, and certainly your clients to quite quite interesting.

637
00:42:18,760 --> 00:42:21,960
Speaker 1: So so let's talk a little bit about the differences

638
00:42:22,040 --> 00:42:26,320
Speaker 1: between investing in in the private side versus the public markets.

639
00:42:26,360 --> 00:42:30,400
Speaker 1: The most obvious one has to be the illiquidity. You know,

640
00:42:30,440 --> 00:42:32,760
Speaker 1: when you buy stocks or bonds, you get a print

641
00:42:33,520 --> 00:42:37,719
Speaker 1: every micro second, every tick, but most of these investments

642
00:42:37,760 --> 00:42:42,759
Speaker 1: are only marked quarterly or annually. What does this i

643
00:42:42,840 --> 00:42:46,480
Speaker 1: liquidity do when you're interacting with clients, how do you

644
00:42:47,200 --> 00:42:49,600
Speaker 1: how do you discuss this with them and how do

645
00:42:49,680 --> 00:42:54,719
Speaker 1: they perceive? Uh? Some of the challenges of illquid investments

646
00:42:57,280 --> 00:43:00,319
Speaker 1: over the over the number past number of day case,

647
00:43:00,440 --> 00:43:04,759
Speaker 1: it's I think our clients have largely held too much

648
00:43:04,800 --> 00:43:08,480
Speaker 1: liquidity in their portfolios. Like, so, what what we are

649
00:43:08,600 --> 00:43:12,200
Speaker 1: finding is the ability to take on I liquidity risk

650
00:43:13,000 --> 00:43:17,240
Speaker 1: and obviously in pursuit of that premium above the traditional markets.

651
00:43:17,280 --> 00:43:19,880
Speaker 1: I mean, I think the sentiment there is an absolute

652
00:43:19,960 --> 00:43:24,120
Speaker 1: right one that transition towards private market exposure, we think

653
00:43:24,200 --> 00:43:29,080
Speaker 1: is is an important one just given the return objectives

654
00:43:29,120 --> 00:43:32,000
Speaker 1: the majority of our client's need. But then also again

655
00:43:32,160 --> 00:43:39,200
Speaker 1: most importantly now with geopolicy, with uncertainty, with interest rate uncertainty,

656
00:43:39,200 --> 00:43:44,200
Speaker 1: inflation uncertainty, going back to the resilience point, the characteristics

657
00:43:44,239 --> 00:43:48,160
Speaker 1: now by introducing these assets into the mix is important

658
00:43:48,640 --> 00:43:51,960
Speaker 1: and I think that's that that point is is maybe hort.

659
00:43:52,000 --> 00:43:56,400
Speaker 1: I'll expand on as we're talking to clients using the

660
00:43:56,440 --> 00:44:00,600
Speaker 1: Aladdin systems, and as you know, we bought the Front technologys,

661
00:44:00,600 --> 00:44:04,759
Speaker 1: albeit a couple of years ago. By allowing I think

662
00:44:04,840 --> 00:44:09,799
Speaker 1: great data and technology to help our clients understand these

663
00:44:09,840 --> 00:44:12,600
Speaker 1: assets in the context of how they should own them

664
00:44:13,200 --> 00:44:19,080
Speaker 1: relative to their liquidity needs, their risk tolerances, and the

665
00:44:19,160 --> 00:44:23,280
Speaker 1: return expectations. We're really trying to use tech and data

666
00:44:23,920 --> 00:44:27,560
Speaker 1: to provide a better understanding and comprehension of the outcomes.

667
00:44:28,280 --> 00:44:31,960
Speaker 1: And as we continue to introduce these concepts and these

668
00:44:32,000 --> 00:44:34,279
Speaker 1: approaches by the way that there's as you know so

669
00:44:34,440 --> 00:44:38,839
Speaker 1: used to in the traditional side, it's it's giving them

670
00:44:38,840 --> 00:44:42,840
Speaker 1: more comfort around what they should and can't expect, and

671
00:44:42,960 --> 00:44:45,000
Speaker 1: that to me is a really important part of what

672
00:44:45,080 --> 00:44:48,560
Speaker 1: we're doing. So you know, we've released recently new technology

673
00:44:48,600 --> 00:44:51,040
Speaker 1: to the wealth sector because you know, quite frankly we

674
00:44:51,080 --> 00:44:55,239
Speaker 1: mentioned it before, the sixty forty portfolio is a thing

675
00:44:55,280 --> 00:44:58,600
Speaker 1: of the past um and that that introduction of about

676
00:44:59,600 --> 00:45:03,520
Speaker 1: into alternatives. We applaud our our partners who are suggesting

677
00:45:03,640 --> 00:45:06,120
Speaker 1: that to their clients, we think is something they have

678
00:45:06,200 --> 00:45:09,480
Speaker 1: to do. What we're doing to support that is really

679
00:45:09,520 --> 00:45:16,120
Speaker 1: bringing thought, leadership, education, but also portfolio construction techniques and

680
00:45:16,400 --> 00:45:20,640
Speaker 1: and data to bear in that conversation. And this goes

681
00:45:20,680 --> 00:45:23,400
Speaker 1: back to it's no longer an alternative, right, this is

682
00:45:23,440 --> 00:45:26,600
Speaker 1: a core allocation. So the comprehension of what it is

683
00:45:26,640 --> 00:45:29,840
Speaker 1: you own the behavior of the assets in good and

684
00:45:29,880 --> 00:45:33,440
Speaker 1: bad times is so necessary and that's become a very

685
00:45:33,480 --> 00:45:36,600
Speaker 1: big thing, uh with regard to our activities bar because

686
00:45:36,920 --> 00:45:40,000
Speaker 1: you know, our clients are looking to understand better when

687
00:45:40,000 --> 00:45:42,800
Speaker 1: you're talking about assets that are very complex in their nature.

688
00:45:43,520 --> 00:45:49,000
Speaker 1: Huh So, is now fifty twenty something along those lines, yes,

689
00:45:50,520 --> 00:45:54,800
Speaker 1: really really intriguing. Uh So, So what are clients really

690
00:45:54,800 --> 00:45:57,799
Speaker 1: looking for these days? We we talked about yield, are

691
00:45:57,800 --> 00:46:01,200
Speaker 1: they also looking for downside protect on the equity side

692
00:46:01,320 --> 00:46:06,839
Speaker 1: or inflation hedges? You hinted at how broad are the

693
00:46:06,880 --> 00:46:12,480
Speaker 1: demands of clients in the alternative space. It's yeah, it's

694
00:46:12,600 --> 00:46:16,200
Speaker 1: it ranges the gamut. And even you know, we didn't

695
00:46:16,440 --> 00:46:21,240
Speaker 1: speak to even hedge funds. We've had you know, differing

696
00:46:21,400 --> 00:46:24,560
Speaker 1: levels of interest in the hedge fund world for for years.

697
00:46:25,520 --> 00:46:28,440
Speaker 1: Um and I quite frankly think some degree of disappointment

698
00:46:28,480 --> 00:46:31,840
Speaker 1: to Barry with with regard to the alpha the returns

699
00:46:31,840 --> 00:46:34,520
Speaker 1: that were produced relative to the cost. It's a tough

700
00:46:34,560 --> 00:46:38,479
Speaker 1: space to say the very least exactly right. But when

701
00:46:38,560 --> 00:46:43,399
Speaker 1: when you start to see volatility introducing itself, you can

702
00:46:43,440 --> 00:46:49,640
Speaker 1: really see where skill plays a critical factor. So where

703
00:46:49,680 --> 00:46:52,480
Speaker 1: we are absolutely seeing in the hedge fund space a

704
00:46:52,560 --> 00:46:56,439
Speaker 1: resurgence of interest and demand by virtue of those who

705
00:46:56,520 --> 00:47:01,080
Speaker 1: really have honed in on their skills, who have demonstrated

706
00:47:01,120 --> 00:47:03,799
Speaker 1: an up and down markets, an ability to protect and

707
00:47:03,840 --> 00:47:07,960
Speaker 1: preserve capital, but importantly in a low not uncorrelated way,

708
00:47:08,680 --> 00:47:13,480
Speaker 1: build attractive risk adjusted returns. We're starting to see more

709
00:47:13,480 --> 00:47:17,080
Speaker 1: activity there again too, I think with an alternatives you've

710
00:47:17,120 --> 00:47:22,480
Speaker 1: really seen a predominant demand coming from from privates. These

711
00:47:22,520 --> 00:47:26,240
Speaker 1: private markets, like you said, have grown so extraordinarily fast,

712
00:47:26,840 --> 00:47:30,239
Speaker 1: and the opportunity set is rich. The reality too, on

713
00:47:30,360 --> 00:47:35,120
Speaker 1: the public side, which is where hedge funds operate, they

714
00:47:35,120 --> 00:47:38,640
Speaker 1: continue to in large part do a really good job.

715
00:47:39,600 --> 00:47:42,440
Speaker 1: The the issue with our industry now, with the thirty

716
00:47:42,440 --> 00:47:46,719
Speaker 1: eight thousand managers is how do you distill all the information,

717
00:47:47,680 --> 00:47:50,040
Speaker 1: how do you think about your needs as a client

718
00:47:50,600 --> 00:47:53,799
Speaker 1: and pick a manager can deliver the outcomes. And just

719
00:47:53,880 --> 00:47:56,520
Speaker 1: to give you a sense that the difference now between

720
00:47:56,560 --> 00:47:59,880
Speaker 1: a top performing private equity manager, so a top court

721
00:48:00,280 --> 00:48:03,440
Speaker 1: versus the bottom quartile, the difference can be measured in

722
00:48:03,520 --> 00:48:07,160
Speaker 1: tens of percent, whereas if you look at the public

723
00:48:07,160 --> 00:48:11,320
Speaker 1: equity side, for example, a large cap manager top quartile

724
00:48:11,480 --> 00:48:15,600
Speaker 1: versus bottom quartile, it's measured in hundreds of basis points.

725
00:48:15,640 --> 00:48:18,920
Speaker 1: So there there is definitely a world that has started

726
00:48:19,040 --> 00:48:23,480
Speaker 1: where the outcomes our clients will experience can be great

727
00:48:23,800 --> 00:48:31,120
Speaker 1: as they pursue yield as they pursue diversification, inflation protection, etcetera.

728
00:48:31,719 --> 00:48:34,600
Speaker 1: I think the caveat that I would say is, you know,

729
00:48:35,520 --> 00:48:39,839
Speaker 1: the outcomes can vary greatly, so manager underwriting and the

730
00:48:39,880 --> 00:48:42,840
Speaker 1: importance of it now, I think really is is something

731
00:48:42,840 --> 00:48:45,840
Speaker 1: to pay attention to because if you do have that

732
00:48:45,920 --> 00:48:49,319
Speaker 1: bottom performing at the bottom quartile manager, it will it

733
00:48:49,400 --> 00:48:52,600
Speaker 1: will affect your your outcomes obviously, and that's the basic

734
00:48:52,600 --> 00:48:55,319
Speaker 1: thing we collectively have to to face. So let's talk

735
00:48:55,360 --> 00:48:57,840
Speaker 1: a little bit about real estate. UM, there are a

736
00:48:57,880 --> 00:49:01,920
Speaker 1: couple of different areas of investment on the private side.

737
00:49:02,719 --> 00:49:06,000
Speaker 1: Rent to own was a very large one, and we've seen,

738
00:49:06,719 --> 00:49:11,799
Speaker 1: um some lesser by the flip al go driven approaches.

739
00:49:12,160 --> 00:49:14,799
Speaker 1: Tell us what black Rock is doing in the real

740
00:49:14,960 --> 00:49:19,240
Speaker 1: estate space and how many different approaches are you bringing

741
00:49:19,280 --> 00:49:23,600
Speaker 1: to bear on this? Yeah, we think it's it's both

742
00:49:23,600 --> 00:49:28,239
Speaker 1: equity and death UM. Because again, no different to the

743
00:49:28,320 --> 00:49:32,840
Speaker 1: infrastructure side, these projects need to be financed. But on

744
00:49:32,960 --> 00:49:36,200
Speaker 1: the if you think about the sectors in which you

745
00:49:36,239 --> 00:49:40,080
Speaker 1: can avail of the opportunity, you know, you've no doubt

746
00:49:40,120 --> 00:49:42,880
Speaker 1: heard a lot and I mentioned earlier this demand for

747
00:49:43,000 --> 00:49:49,640
Speaker 1: logistics facilities. UH, the explosion of shopping online and having

748
00:49:50,480 --> 00:49:53,920
Speaker 1: until we've obviously had the supply chain disruption, an ability

749
00:49:54,000 --> 00:49:58,000
Speaker 1: to have nearly immediate satisfaction because the delivery of the

750
00:49:58,040 --> 00:50:02,799
Speaker 1: good to your home has become so readily available. Uh,

751
00:50:03,120 --> 00:50:08,319
Speaker 1: it's it's a very different consumer experience. So the explosion

752
00:50:08,400 --> 00:50:11,800
Speaker 1: and the need for logistics facilities to support this type

753
00:50:11,840 --> 00:50:15,279
Speaker 1: of behavior of the consumers is really an area that

754
00:50:15,320 --> 00:50:18,759
Speaker 1: will continue to be a great interest to us. And

755
00:50:18,760 --> 00:50:23,279
Speaker 1: then you think to think about the transformation of of business, um,

756
00:50:23,360 --> 00:50:28,200
Speaker 1: and you think about the aging worlds unfortunately, um, you know,

757
00:50:28,400 --> 00:50:31,640
Speaker 1: you can look at various economies where our populations are

758
00:50:31,719 --> 00:50:36,319
Speaker 1: decreasing and quite frankly, we're getting older. And so when

759
00:50:36,320 --> 00:50:38,720
Speaker 1: you when you think in the context of that, senior

760
00:50:38,760 --> 00:50:43,560
Speaker 1: living facilities becomes a really important part, not just as

761
00:50:43,600 --> 00:50:46,200
Speaker 1: part of the health care solution that will come with it,

762
00:50:46,239 --> 00:50:49,560
Speaker 1: but also from living as well. So you know, single

763
00:50:49,600 --> 00:50:53,799
Speaker 1: family multifamily opportunities continue to be something that you know,

764
00:50:53,880 --> 00:50:57,520
Speaker 1: the world looks at because there is really the shortfall

765
00:50:57,920 --> 00:51:01,319
Speaker 1: of available properties for people to to live in and

766
00:51:01,360 --> 00:51:06,240
Speaker 1: as the community has evolved to support the growing age

767
00:51:06,239 --> 00:51:10,759
Speaker 1: of the population, tremendous opportunity there too. But we won't

768
00:51:10,800 --> 00:51:14,160
Speaker 1: give up on office space. It really isn't going away.

769
00:51:15,120 --> 00:51:17,640
Speaker 1: And I've even think about our younger generation here in

770
00:51:17,680 --> 00:51:21,200
Speaker 1: Black Rock. They love being in New York, they love

771
00:51:21,239 --> 00:51:24,160
Speaker 1: being in London, they love being in Hong Kong. So

772
00:51:24,480 --> 00:51:27,719
Speaker 1: the shape and the footprint may change slightly, but the

773
00:51:27,800 --> 00:51:32,080
Speaker 1: necessity to be in the major financial centers it still exists.

774
00:51:32,880 --> 00:51:36,160
Speaker 1: But how we wait the risks has definitely changed, certainly

775
00:51:36,239 --> 00:51:40,560
Speaker 1: for the for the short term and medium term future um.

776
00:51:40,640 --> 00:51:43,600
Speaker 1: But real estate continues to be very a critical part

777
00:51:43,719 --> 00:51:47,200
Speaker 1: of how we express our our thoughts around the investment

778
00:51:47,239 --> 00:51:51,319
Speaker 1: opportunity set, but clients largely do this themselves. To the

779
00:51:51,400 --> 00:51:54,799
Speaker 1: direct investing from the clients is quite significant because they

780
00:51:54,840 --> 00:51:58,960
Speaker 1: too see this as still a rich investment ground all

781
00:51:59,040 --> 00:52:00,799
Speaker 1: the one that has changed quite a bit as a

782
00:52:00,840 --> 00:52:05,360
Speaker 1: result of COVID. H Well, I'm I'm fascinated by the

783
00:52:05,400 --> 00:52:10,960
Speaker 1: real estate issue, especially having seen some massive construction take

784
00:52:11,000 --> 00:52:16,000
Speaker 1: place in cities pre pandemic. Look over in Manhattan at

785
00:52:16,040 --> 00:52:19,680
Speaker 1: Hudson Yards, and look at what's taking place, uh in London,

786
00:52:20,320 --> 00:52:24,040
Speaker 1: not not just um the center of London, but all

787
00:52:24,080 --> 00:52:29,399
Speaker 1: but all around it. And I'm forced to admit the

788
00:52:29,480 --> 00:52:32,640
Speaker 1: future is going to look somewhat different than the past,

789
00:52:33,200 --> 00:52:37,920
Speaker 1: with some hybrid combination of collaborative work in the office

790
00:52:38,160 --> 00:52:42,319
Speaker 1: and remote work from home when it's convenient. That sort

791
00:52:42,360 --> 00:52:47,200
Speaker 1: of suggests that we now have an excess of capacity

792
00:52:47,239 --> 00:52:49,960
Speaker 1: in office space. Do you see it that way? Or

793
00:52:50,239 --> 00:52:53,080
Speaker 1: is this just something that we're going to grow into

794
00:52:53,239 --> 00:52:58,080
Speaker 1: and and just the nature of working in offices is changing,

795
00:52:58,160 --> 00:53:02,239
Speaker 1: but offices are not going away. Yeah, I I do

796
00:53:02,320 --> 00:53:06,200
Speaker 1: think there's it's a very valid point in that in

797
00:53:06,360 --> 00:53:10,839
Speaker 1: certain cities you will see access and others we just

798
00:53:10,960 --> 00:53:14,640
Speaker 1: don't vary UM And quite frankly, as a firm to

799
00:53:15,360 --> 00:53:19,560
Speaker 1: as you know, we have adopted flexibility with our teams.

800
00:53:20,000 --> 00:53:23,680
Speaker 1: Now we're very fortunate the technologies in which we created

801
00:53:23,719 --> 00:53:26,640
Speaker 1: a black Rock has just become such an amazing enabler,

802
00:53:27,120 --> 00:53:30,360
Speaker 1: not just to help us, as we mentioned, manage the portfolios,

803
00:53:30,840 --> 00:53:34,960
Speaker 1: help us with better portfolio construction, understand risks, but also

804
00:53:35,000 --> 00:53:37,759
Speaker 1: to communicate with our clients. You know, I think we've

805
00:53:37,880 --> 00:53:42,080
Speaker 1: we've all witnessed and experienced a way to have connectivity

806
00:53:42,880 --> 00:53:48,000
Speaker 1: UM that allows one to believe that commerce can exist

807
00:53:48,320 --> 00:53:52,000
Speaker 1: beyond the boundaries of one building. You know, however, I

808
00:53:52,040 --> 00:53:54,720
Speaker 1: do look at our property portfolios and even the things

809
00:53:54,719 --> 00:53:59,920
Speaker 1: that we're doing. You know, rent collections still being extraordinarily high.

810
00:54:00,760 --> 00:54:04,000
Speaker 1: Occupancy now getting back up to pre pandemic levels, not

811
00:54:04,040 --> 00:54:06,520
Speaker 1: in all cities, but in many the major ones that

812
00:54:06,520 --> 00:54:11,320
Speaker 1: have reopened. And certainly the demand for people to just socialize,

813
00:54:11,440 --> 00:54:15,320
Speaker 1: that that that demand for human connectivity is really high.

814
00:54:15,600 --> 00:54:17,800
Speaker 1: It's palpable, right, we see it here to the smiles

815
00:54:17,800 --> 00:54:20,680
Speaker 1: and people's faces are back in the office, conversing together,

816
00:54:20,760 --> 00:54:26,240
Speaker 1: innovating together. Um. You know, when people were feeling unsafe, unquestionably,

817
00:54:26,600 --> 00:54:29,280
Speaker 1: I think the question marks around the role of office

818
00:54:29,280 --> 00:54:32,680
Speaker 1: space was really brought to bear. But as we're coming

819
00:54:32,680 --> 00:54:36,239
Speaker 1: through this um, as you've seen vaccine rates change, have

820
00:54:36,360 --> 00:54:40,520
Speaker 1: you've seen the infection rates fall, as you've seen confidence grow,

821
00:54:41,200 --> 00:54:43,640
Speaker 1: the return to work is really happening, and turned to

822
00:54:43,680 --> 00:54:47,400
Speaker 1: work to office work is really happening, albeit now with

823
00:54:47,480 --> 00:54:52,480
Speaker 1: degrees of flexibility. So going back to the I, I

824
00:54:52,520 --> 00:54:55,600
Speaker 1: do believe in certain areas you're seeing a surplus, but

825
00:54:55,680 --> 00:55:00,239
Speaker 1: in many areas you're absolutely seeing a deficit. And the

826
00:55:00,280 --> 00:55:03,680
Speaker 1: reason I say that we are seeing occupancy in certain

827
00:55:03,680 --> 00:55:07,000
Speaker 1: buildings at such a high level and frankly to demand

828
00:55:07,160 --> 00:55:11,400
Speaker 1: from more space being so high, um, it's uneven. And

829
00:55:11,480 --> 00:55:14,200
Speaker 1: this goes back to then you know, where do you

830
00:55:14,239 --> 00:55:19,120
Speaker 1: invest our clients capital, making sense of those trends, predicting

831
00:55:19,200 --> 00:55:23,560
Speaker 1: where you will see resilience versus stress, and building that

832
00:55:23,600 --> 00:55:26,560
Speaker 1: into the portfolio consequences as you as you better risk,

833
00:55:26,600 --> 00:55:31,240
Speaker 1: manage and mitigate. Very interesting and so we are seeing

834
00:55:31,280 --> 00:55:35,960
Speaker 1: this transition across a lot of different segments of investing.

835
00:55:36,560 --> 00:55:39,759
Speaker 1: Are you seeing any products that were or or investing

836
00:55:40,160 --> 00:55:45,000
Speaker 1: styles that was once thought of as primarily institutional that

837
00:55:45,080 --> 00:55:49,560
Speaker 1: are sort of working their way towards the retail side

838
00:55:49,560 --> 00:55:55,919
Speaker 1: of things, meaning going from institutional to accredited to mom

839
00:55:55,920 --> 00:56:02,920
Speaker 1: and pop investors. Um. Well, certainly the past private equity

840
00:56:03,080 --> 00:56:08,279
Speaker 1: was was really an asset class for institutional investors, and

841
00:56:08,600 --> 00:56:12,640
Speaker 1: I think that's that has changed in a very profound way.

842
00:56:14,000 --> 00:56:18,839
Speaker 1: I mentioned earlier, Sorry that regulation has become a bit

843
00:56:18,840 --> 00:56:21,720
Speaker 1: more adoptive, but it also has hurt in many respects

844
00:56:21,760 --> 00:56:24,920
Speaker 1: and providing this access and I think the perception of

845
00:56:25,040 --> 00:56:29,520
Speaker 1: owning and be part of this liquid investment opportunities that

846
00:56:30,480 --> 00:56:33,680
Speaker 1: it was hard to stomach because many didn't under understand

847
00:56:33,800 --> 00:56:35,680
Speaker 1: the attributes and a lot of could brain and I

848
00:56:35,680 --> 00:56:39,080
Speaker 1: think we've been trying to solve for that, and what

849
00:56:39,200 --> 00:56:42,960
Speaker 1: you're seeing now with with regulators understanding that the difference

850
00:56:43,000 --> 00:56:45,360
Speaker 1: between if we take it quite simply as you d

851
00:56:45,520 --> 00:56:50,680
Speaker 1: D versus DC, the differences between the options you have

852
00:56:51,600 --> 00:56:54,760
Speaker 1: as a participant in in a retirement plan are so

853
00:56:55,040 --> 00:56:59,399
Speaker 1: vastly different that and I think there's a broad recognition

854
00:56:59,440 --> 00:57:01,720
Speaker 1: now that there's needs to be more equity with regard

855
00:57:01,760 --> 00:57:04,839
Speaker 1: to what happens there and private equity being a really

856
00:57:05,000 --> 00:57:09,960
Speaker 1: established part of the alternatives marketplace was once I think,

857
00:57:10,040 --> 00:57:14,240
Speaker 1: really believed to be an institutional asset class, but albeit

858
00:57:14,920 --> 00:57:18,640
Speaker 1: now has become much more accessible to wealth. We've seen

859
00:57:18,640 --> 00:57:23,200
Speaker 1: it by structuring UM activities in Europe working with the

860
00:57:23,240 --> 00:57:27,480
Speaker 1: regulators there. Now we're being able to provide private equity

861
00:57:27,520 --> 00:57:32,160
Speaker 1: exposure to clients across the continent and they're really getting

862
00:57:32,200 --> 00:57:36,920
Speaker 1: access to what was historically very much an institutional asset class.

863
00:57:37,680 --> 00:57:40,720
Speaker 1: And I do think the receptivity is extraordinarily high. Just

864
00:57:40,840 --> 00:57:45,480
Speaker 1: throughout people's careers they have seen wealth being created as

865
00:57:45,520 --> 00:57:49,680
Speaker 1: a result of engineering a great outcome with great management

866
00:57:49,680 --> 00:57:54,120
Speaker 1: teams in a great business, and I do believe the

867
00:57:54,200 --> 00:57:57,360
Speaker 1: receptivity towards private equity is high. As as an example,

868
00:57:57,880 --> 00:58:02,240
Speaker 1: in the US too. You know, working with the various

869
00:58:02,240 --> 00:58:05,960
Speaker 1: intermediaries and being able to wrap now private equity in

870
00:58:06,000 --> 00:58:10,240
Speaker 1: a forty Act fund, for example, is possible by being

871
00:58:10,240 --> 00:58:13,600
Speaker 1: able to deliver that too, you know, the many as

872
00:58:13,600 --> 00:58:16,000
Speaker 1: opposed to the few, we think has been a very

873
00:58:16,080 --> 00:58:19,880
Speaker 1: good success story and I think obviously appreciated by buyer

874
00:58:19,960 --> 00:58:23,040
Speaker 1: clients as well. So I would look at we're seeing

875
00:58:23,200 --> 00:58:26,840
Speaker 1: across private equity as well as private credit and quite

876
00:58:26,840 --> 00:58:33,000
Speaker 1: frankly infrastructure. You're seeing now regulation that's becoming more appreciative

877
00:58:33,120 --> 00:58:36,840
Speaker 1: of these asset classes. You're seeing a more a greater

878
00:58:36,920 --> 00:58:39,960
Speaker 1: level of openness and willingness to allow for these assets

879
00:58:39,960 --> 00:58:44,280
Speaker 1: to be part of many people's experiences across their investment portfolio.

880
00:58:45,080 --> 00:58:49,200
Speaker 1: And now with innovation around structures as an industry, we're

881
00:58:49,240 --> 00:58:52,280
Speaker 1: able to wrap these investments in a way that our

882
00:58:52,320 --> 00:58:55,160
Speaker 1: clients can really access them. So I think across the

883
00:58:55,200 --> 00:58:58,160
Speaker 1: board probably speaks to the innovation that's happening. But I

884
00:58:58,200 --> 00:59:00,720
Speaker 1: do think that accessibility has changed age in a very

885
00:59:00,760 --> 00:59:05,080
Speaker 1: significant way. But you've really seen it happen in private

886
00:59:05,080 --> 00:59:08,600
Speaker 1: equity first, and now that's spanning across these various other astrocauses.

887
00:59:09,000 --> 00:59:13,000
Speaker 1: Quite intriguing. I know I only have you for a

888
00:59:13,040 --> 00:59:16,680
Speaker 1: relatively limited period of time. So let's jump to our

889
00:59:16,760 --> 00:59:20,560
Speaker 1: favorite questions that we ask all of our guests, starting

890
00:59:20,600 --> 00:59:23,560
Speaker 1: with tell us what you've been streaming these days? Give

891
00:59:23,640 --> 00:59:29,320
Speaker 1: us your favorite Netflix or Amazon Prime shows. That is

892
00:59:29,360 --> 00:59:33,280
Speaker 1: an interesting question. I don't watch a hell of a

893
00:59:33,280 --> 00:59:37,160
Speaker 1: lot of TV. I gotta tell you I am. I

894
00:59:37,240 --> 00:59:39,960
Speaker 1: keep busy with three wonderful children and a beautiful wife,

895
00:59:40,800 --> 00:59:44,000
Speaker 1: and you know, between the sports activities when I do

896
00:59:44,080 --> 00:59:47,480
Speaker 1: watch TV, I have to tell you I'm addicted to

897
00:59:47,520 --> 00:59:51,400
Speaker 1: sports and having I may have mentioned it earlier. Growing

898
00:59:51,440 --> 00:59:53,840
Speaker 1: up playing rugby, which is not the most common sport

899
00:59:53,880 --> 00:59:59,520
Speaker 1: in the US. I stream NonStop the Six Nations that

900
00:59:59,600 --> 01:00:02,680
Speaker 1: happened in Europe, where Ireland is one of those six

901
01:00:02,800 --> 01:00:05,840
Speaker 1: nations that compete against each other on an annual basis.

902
01:00:06,800 --> 01:00:09,360
Speaker 1: Right now, they're playing a lot of sides that are

903
01:00:09,360 --> 01:00:12,600
Speaker 1: touring for the sub of the Southern Hemisphere. And to me,

904
01:00:13,240 --> 01:00:16,080
Speaker 1: the free time that I have is either enjoying golf,

905
01:00:16,600 --> 01:00:19,200
Speaker 1: are really enjoying rugby because I think it's a it's

906
01:00:19,520 --> 01:00:23,600
Speaker 1: an extraordinary sport, obviously very physical, was very enjoyable to watch,

907
01:00:23,640 --> 01:00:26,080
Speaker 1: and that that truly is my passion outside of family.

908
01:00:27,320 --> 01:00:31,160
Speaker 1: Interesting stuff. Tell us a bit about your mentors who

909
01:00:31,240 --> 01:00:36,320
Speaker 1: helped to shape your early career. Well, it even even

910
01:00:36,320 --> 01:00:40,640
Speaker 1: goes back to some of the aspects of sports. Um.

911
01:00:40,680 --> 01:00:45,760
Speaker 1: You know, playing on a team and being on a

912
01:00:45,880 --> 01:00:50,040
Speaker 1: on a field where you're you're working together. There's a

913
01:00:50,080 --> 01:00:54,600
Speaker 1: strategy involved with that. Now, I used to really appreciate

914
01:00:55,320 --> 01:00:59,480
Speaker 1: how we approached playing in all the All Ireland league. Um,

915
01:00:59,760 --> 01:01:02,680
Speaker 1: how we thought about our opponents, how we thought about

916
01:01:02,760 --> 01:01:06,680
Speaker 1: the structure, how we thought about each individual with on

917
01:01:06,720 --> 01:01:10,320
Speaker 1: a rugby field and the team having a role. They're

918
01:01:10,360 --> 01:01:14,800
Speaker 1: all different, um, but you knew your role and actually,

919
01:01:14,800 --> 01:01:17,880
Speaker 1: even starting from an early age, very thinking about and

920
01:01:17,920 --> 01:01:20,880
Speaker 1: I know it's it's it's sports, but how to build

921
01:01:20,920 --> 01:01:26,400
Speaker 1: a great team with those various skills perspectives that can

922
01:01:26,440 --> 01:01:30,520
Speaker 1: be a really really powerful combination when done well. And

923
01:01:30,640 --> 01:01:34,360
Speaker 1: certainly from an early age that allowed me to appreciate that.

924
01:01:34,600 --> 01:01:38,640
Speaker 1: Actually in the work environment, it's not too different. I

925
01:01:38,720 --> 01:01:43,480
Speaker 1: give you surround yourself with just really great people that

926
01:01:43,600 --> 01:01:48,120
Speaker 1: have high integrity, UM, that are empathetic and have a

927
01:01:48,160 --> 01:01:51,360
Speaker 1: degree of humility that you know, when working together good

928
01:01:51,400 --> 01:01:54,880
Speaker 1: things can happen. UM. And I will say, it really

929
01:01:54,920 --> 01:01:58,000
Speaker 1: started at sports, but I think of today in even

930
01:01:58,040 --> 01:02:01,240
Speaker 1: in Black Rock, you know how Larry think thinks about

931
01:02:01,280 --> 01:02:05,720
Speaker 1: the world. Um, and I think Larry truly as a visionary.

932
01:02:06,760 --> 01:02:10,640
Speaker 1: And then Rob Capito, who really helps lead the charge

933
01:02:10,640 --> 01:02:14,920
Speaker 1: across our various businesses, you know, speaking and conversing with

934
01:02:14,960 --> 01:02:18,760
Speaker 1: them on a daily basis, getting their perspectives, trying to

935
01:02:18,800 --> 01:02:22,240
Speaker 1: get inside their head and thinking about the world from

936
01:02:22,320 --> 01:02:25,560
Speaker 1: their vantage point. To me, it's it's it's a it's

937
01:02:25,560 --> 01:02:28,800
Speaker 1: a huge thing about my ongoing personal career and development.

938
01:02:28,840 --> 01:02:32,160
Speaker 1: And I really enjoy those moments because I think what

939
01:02:32,240 --> 01:02:34,800
Speaker 1: you recognize as independent of how much you think you know,

940
01:02:35,560 --> 01:02:38,960
Speaker 1: there's so much more to know. And this, this journey

941
01:02:39,080 --> 01:02:42,600
Speaker 1: is is an ever evolving one where you have to

942
01:02:42,640 --> 01:02:45,000
Speaker 1: appreciate that you will never know everything and you need

943
01:02:45,040 --> 01:02:48,080
Speaker 1: to be a student every single day. So I'll probably

944
01:02:48,120 --> 01:02:53,040
Speaker 1: cite those barriers certainly the two most important mentors in

945
01:02:53,160 --> 01:02:57,600
Speaker 1: my life today, but professionally and personally quite frankly, really

946
01:02:57,760 --> 01:03:02,120
Speaker 1: very interesting. Uh, let's talk about what you're reading these days.

947
01:03:02,160 --> 01:03:04,160
Speaker 1: Tell us about some of your favorite books and what

948
01:03:04,200 --> 01:03:07,720
Speaker 1: you're reading currently. Sorry, what I love to read. I

949
01:03:07,760 --> 01:03:10,560
Speaker 1: love to read history, believe it or not from a

950
01:03:10,640 --> 01:03:13,919
Speaker 1: very small country that seems to have exported many, many,

951
01:03:13,960 --> 01:03:17,640
Speaker 1: many people love to understand the history of Ireland. So

952
01:03:17,640 --> 01:03:20,400
Speaker 1: there's so many books. Uh. And you know, having three

953
01:03:20,480 --> 01:03:22,280
Speaker 1: children that have been born in the US and my

954
01:03:22,320 --> 01:03:26,040
Speaker 1: wife is a New Yorker, trying to help them understand,

955
01:03:26,480 --> 01:03:29,000
Speaker 1: you know, some of their history and what's made them

956
01:03:29,040 --> 01:03:33,640
Speaker 1: what they are. UM. I love delving into Irish history

957
01:03:33,680 --> 01:03:36,920
Speaker 1: and how the country has had moments of greatness and

958
01:03:36,960 --> 01:03:40,640
Speaker 1: moments of tremendous struggle. Outside of that, I really don't

959
01:03:40,760 --> 01:03:44,480
Speaker 1: enjoy science fiction or any of these books. I love reading,

960
01:03:44,960 --> 01:03:48,040
Speaker 1: um you name any paper in any magazine on a

961
01:03:48,120 --> 01:03:52,040
Speaker 1: daily basis. Unfortunately, I wake at about four thirty five

962
01:03:52,040 --> 01:03:54,800
Speaker 1: o'clock every day. I spent my first two hours of

963
01:03:54,800 --> 01:03:57,280
Speaker 1: the day just consuming as much information as possible. I

964
01:03:57,400 --> 01:04:01,760
Speaker 1: enjoy it, but it's all it's it's really investment related magazines,

965
01:04:02,040 --> 01:04:05,720
Speaker 1: not books. It's every paper that you could possibly imagine.

966
01:04:05,720 --> 01:04:10,760
Speaker 1: Barry and I just have a great appreciation for certainly

967
01:04:10,760 --> 01:04:12,800
Speaker 1: trying to be a student of the world because that's

968
01:04:12,800 --> 01:04:15,080
Speaker 1: what we're operating in. And I find that just a

969
01:04:15,280 --> 01:04:19,360
Speaker 1: very interesting avenue too, to get an appreciation to for

970
01:04:19,440 --> 01:04:22,080
Speaker 1: the not just the opportunities, but the challenges were collectively

971
01:04:22,080 --> 01:04:24,320
Speaker 1: facing as the society, and but I was as a business.

972
01:04:25,600 --> 01:04:30,760
Speaker 1: I'm with you on that mass consumption of of investing

973
01:04:30,920 --> 01:04:34,720
Speaker 1: related news. I sounds like you and I have the

974
01:04:34,760 --> 01:04:40,160
Speaker 1: same morning routine. UM, let's talk about what sort of

975
01:04:40,200 --> 01:04:43,840
Speaker 1: advice you would give to a recent college graduate who

976
01:04:43,920 --> 01:04:52,160
Speaker 1: was interested in a career of alternative investments. Well, you know,

977
01:04:52,200 --> 01:04:56,160
Speaker 1: the the the industry has, it's just gone through such

978
01:04:56,360 --> 01:05:03,280
Speaker 1: extraordinary growth, UM, and the difference when I started versus today,

979
01:05:04,000 --> 01:05:09,720
Speaker 1: the career opportunities set has changed so much. And I

980
01:05:10,040 --> 01:05:12,880
Speaker 1: think I tried to remind any one of our analysts

981
01:05:12,920 --> 01:05:16,680
Speaker 1: who come into each one of our annual classes. Right

982
01:05:16,720 --> 01:05:19,640
Speaker 1: as we bring in the new recruits, I think about

983
01:05:19,640 --> 01:05:23,360
Speaker 1: how talented they are first vary, and how privileged we

984
01:05:23,400 --> 01:05:25,520
Speaker 1: all are to one be in this industry and work

985
01:05:25,600 --> 01:05:28,240
Speaker 1: for the clients that we do. It's just such an

986
01:05:28,240 --> 01:05:30,960
Speaker 1: honor to do that. I tind of. I try to

987
01:05:30,960 --> 01:05:33,680
Speaker 1: remind them of that. UM. You know, at the end

988
01:05:33,720 --> 01:05:37,720
Speaker 1: of the day, whether you're supporting an institution, that institution

989
01:05:37,800 --> 01:05:41,000
Speaker 1: is the face of many people in the background, and

990
01:05:41,800 --> 01:05:45,800
Speaker 1: alternatives has really now become such an important part of

991
01:05:45,880 --> 01:05:49,920
Speaker 1: their experience, and we talked about earlier just this challenge

992
01:05:49,920 --> 01:05:54,760
Speaker 1: of retirement. If we do a good job these institutions

993
01:05:54,760 --> 01:05:58,640
Speaker 1: that support them any they can have hopefully a retirement

994
01:05:58,680 --> 01:06:02,440
Speaker 1: that involves you know, dignity, and they can have an

995
01:06:02,480 --> 01:06:05,040
Speaker 1: ability to do things they so wanted to do as

996
01:06:05,080 --> 01:06:09,760
Speaker 1: they worked so hard over their lives, you know, getting

997
01:06:09,800 --> 01:06:15,880
Speaker 1: that that personal connection and allowing for those newbies to

998
01:06:16,040 --> 01:06:20,919
Speaker 1: understand that that's the effect that you can have. UM

999
01:06:20,960 --> 01:06:26,680
Speaker 1: and alternatives, whether it's private equity, real estate, infrastructure, private credit,

1000
01:06:26,800 --> 01:06:30,280
Speaker 1: hedge funds, all of these now with the scale at

1001
01:06:30,280 --> 01:06:33,640
Speaker 1: which they're operating at, can allow for a great career.

1002
01:06:34,320 --> 01:06:36,840
Speaker 1: But my advice to them is always don't forget your

1003
01:06:36,880 --> 01:06:41,080
Speaker 1: career is supporting other people. And that comes directly through

1004
01:06:41,280 --> 01:06:44,320
Speaker 1: how we intersect with the wealth channel. It comes indirectly

1005
01:06:44,760 --> 01:06:48,040
Speaker 1: as as a result of the institution and and it's

1006
01:06:48,120 --> 01:06:52,280
Speaker 1: such a privilege to do that. I didn't envision when

1007
01:06:52,320 --> 01:06:54,880
Speaker 1: I grew up, as I mentioned my first year of

1008
01:06:54,960 --> 01:06:57,640
Speaker 1: milking cows and back in a small town the middle

1009
01:06:57,680 --> 01:06:59,560
Speaker 1: of Ireland, that I would be one day leading an

1010
01:06:59,600 --> 01:07:03,560
Speaker 1: alternati those business within Black Rock. I see that as

1011
01:07:03,560 --> 01:07:07,520
Speaker 1: a great privilege. So you know, for for those who

1012
01:07:07,520 --> 01:07:10,240
Speaker 1: are joining a fresh hopefully try to remind them that

1013
01:07:10,440 --> 01:07:12,840
Speaker 1: it is that for all of us and show up

1014
01:07:12,920 --> 01:07:17,520
Speaker 1: with empathy, dignity, compassion, and you know, do the best

1015
01:07:17,560 --> 01:07:20,280
Speaker 1: you can and hopefully these people we serve, we'll serve

1016
01:07:20,320 --> 01:07:24,040
Speaker 1: them well. And our final question, what do you know

1017
01:07:24,120 --> 01:07:27,520
Speaker 1: about the world of alternam investing today? You wish you

1018
01:07:27,600 --> 01:07:32,000
Speaker 1: knew years or so ago when you were first getting started.

1019
01:07:35,400 --> 01:07:40,640
Speaker 1: I think if we had invested much more heavily as

1020
01:07:40,680 --> 01:07:44,800
Speaker 1: an industry in technology, we would not be in the

1021
01:07:44,800 --> 01:07:48,400
Speaker 1: position we are today. Um and I say that very

1022
01:07:48,520 --> 01:07:51,080
Speaker 1: from from a number of aspects. I mentioned that the

1023
01:07:51,240 --> 01:07:56,440
Speaker 1: shortfall of information or clients are dealing with today. They're

1024
01:07:56,480 --> 01:07:59,920
Speaker 1: making choices to do best from one asset class to

1025
01:08:00,160 --> 01:08:03,640
Speaker 1: invest in another. To do that and do that effectively,

1026
01:08:04,120 --> 01:08:08,320
Speaker 1: they need great transparency. They needed real time in many respects.

1027
01:08:08,400 --> 01:08:11,880
Speaker 1: It can be just on a quarterly lacked basis. And

1028
01:08:12,200 --> 01:08:14,760
Speaker 1: if we had been better prepared as an industry to

1029
01:08:14,800 --> 01:08:17,799
Speaker 1: provide the technology and the data to help our clients

1030
01:08:17,880 --> 01:08:21,839
Speaker 1: really appreciate what it is they own, how we're managing

1031
01:08:21,840 --> 01:08:25,360
Speaker 1: the assets on their behalf, I think they would be

1032
01:08:25,400 --> 01:08:28,760
Speaker 1: so much better served. I think We're very fortunate at

1033
01:08:28,800 --> 01:08:31,479
Speaker 1: this firm to have built a business on the back

1034
01:08:31,520 --> 01:08:34,800
Speaker 1: of technology for all the a thirty plus years and

1035
01:08:34,800 --> 01:08:37,440
Speaker 1: we're investing over a billion dollars a year in technology

1036
01:08:37,560 --> 01:08:40,880
Speaker 1: as as I'm sure you know, um. But we need

1037
01:08:40,920 --> 01:08:43,320
Speaker 1: to see more of that in the industry. So the

1038
01:08:43,400 --> 01:08:49,000
Speaker 1: client experience is so important. Stop let's demystify alternatives. It's

1039
01:08:49,040 --> 01:08:53,960
Speaker 1: not that alternative. Let's provide education and data um. And

1040
01:08:54,040 --> 01:08:58,720
Speaker 1: it's becomes so large relative to other asset classes. The

1041
01:08:58,920 --> 01:09:03,760
Speaker 1: need to support, to educate and transmit information, uh not

1042
01:09:03,960 --> 01:09:07,120
Speaker 1: data information so or clients can understand it is at

1043
01:09:07,160 --> 01:09:09,880
Speaker 1: a paramount now and I think it's certainly is an

1044
01:09:09,880 --> 01:09:13,840
Speaker 1: industry things have to change there. If I knew how

1045
01:09:13,880 --> 01:09:17,559
Speaker 1: big the growth would have been and how prominent these

1046
01:09:17,560 --> 01:09:21,280
Speaker 1: asset classes were becoming, I would have pushed so much

1047
01:09:21,320 --> 01:09:23,800
Speaker 1: harder on that front thirty years ago. Thank you Edwin

1048
01:09:23,920 --> 01:09:26,400
Speaker 1: for being so generous with your time. We've been speaking

1049
01:09:26,439 --> 01:09:29,840
Speaker 1: with Edward Conway. He is the head of black Rock

1050
01:09:30,320 --> 01:09:35,200
Speaker 1: Investor Alternatives Group. If you enjoy this conversation, please check

1051
01:09:35,200 --> 01:09:38,960
Speaker 1: out all of our prior discussions. You can find those

1052
01:09:39,040 --> 01:09:43,519
Speaker 1: at iTunes, Spotify, or wherever you get your podcasts at

1053
01:09:44,000 --> 01:09:47,400
Speaker 1: We Love your comments, feedback and suggestions right to us

1054
01:09:47,520 --> 01:09:51,800
Speaker 1: at m IB podcast at Bloomberg dot net. You can

1055
01:09:51,920 --> 01:09:55,560
Speaker 1: sign up for my daily reads at Ridalts dot com.

1056
01:09:55,720 --> 01:09:59,799
Speaker 1: Check out my weekly column at Bloomberg dot com slash Opinion.

1057
01:10:00,280 --> 01:10:03,799
Speaker 1: Follow me on Twitter at Ritholtz. I would be remiss

1058
01:10:03,840 --> 01:10:05,840
Speaker 1: if I did not thank the crack team that helps

1059
01:10:05,880 --> 01:10:10,120
Speaker 1: with these conversations together each week. Mohammed is my audio engineer,

1060
01:10:10,280 --> 01:10:13,960
Speaker 1: Paris Wald is my producer. Michael Batnick is my head

1061
01:10:13,960 --> 01:10:19,280
Speaker 1: of research. Attiko Valbrann is our project manager. I'm Barry Rihalts.

1062
01:10:19,360 --> 01:10:22,920
Speaker 1: You've been listening to Masters in Business on Bloomberg Radio