1 00:00:02,240 --> 00:00:06,800 Speaker 1: This is Masters in Business with very Ridholts on Bloomberg Radio. 2 00:00:09,800 --> 00:00:11,959 Speaker 1: This week on Masters in Business, I have an extra 3 00:00:12,000 --> 00:00:15,400 Speaker 1: special guest. His name is David Hunt, and he is 4 00:00:15,480 --> 00:00:19,880 Speaker 1: president and CEO of Pigum, which could be the largest 5 00:00:19,880 --> 00:00:24,479 Speaker 1: asset manager that you are unfamiliar with. Uh. They manage 6 00:00:24,520 --> 00:00:28,120 Speaker 1: one point to trillion dollars UH and they are the 7 00:00:28,240 --> 00:00:32,800 Speaker 1: tenth largest asset manager in the world. Pijam has a 8 00:00:32,840 --> 00:00:37,720 Speaker 1: really fascinating business model. UH. They are a variety of 9 00:00:37,800 --> 00:00:43,239 Speaker 1: different groups that have a very very long history in 10 00:00:43,240 --> 00:00:46,480 Speaker 1: the world of asset management. UH. They've been around over 11 00:00:46,520 --> 00:00:51,320 Speaker 1: a hundred years. Their quantitative group dates back to seventy five. 12 00:00:51,440 --> 00:00:54,600 Speaker 1: It it could be the oldest quand group h that's 13 00:00:54,640 --> 00:00:59,200 Speaker 1: out there. Pigam is somewhat unique, not just in their 14 00:00:59,360 --> 00:01:05,280 Speaker 1: institute cutional um focus, but they are a very interesting 15 00:01:05,440 --> 00:01:10,959 Speaker 1: mix of fixed income, real estate and real estate financing. UH. 16 00:01:11,000 --> 00:01:17,039 Speaker 1: That makes for a really, really fascinating combination of asset classes. UH. 17 00:01:17,240 --> 00:01:23,840 Speaker 1: They David is as knowledgeable as anybody on these various subjects. 18 00:01:24,080 --> 00:01:28,319 Speaker 1: If you're at all interested in private credit, real estate investing, 19 00:01:28,440 --> 00:01:33,840 Speaker 1: fixed income investing, as well as traditional public markets, UH, 20 00:01:33,959 --> 00:01:37,399 Speaker 1: you're gonna find this to be absolutely fascinating. So, with 21 00:01:37,600 --> 00:01:46,080 Speaker 1: no further ado, my conversation with Piegams David Hunt. I'm 22 00:01:46,080 --> 00:01:48,760 Speaker 1: Barry rid Hilts. You're listening to Masters in Business on 23 00:01:48,800 --> 00:01:53,040 Speaker 1: Bloomberg Radio. My extra special guest this week is David Hunt. 24 00:01:53,360 --> 00:01:57,560 Speaker 1: He is president and CEO of Piegam. This is the 25 00:01:57,600 --> 00:02:04,040 Speaker 1: investment arm of Prudential, the insurance and asset management giant. Uh. 26 00:02:04,280 --> 00:02:06,680 Speaker 1: You might not be familiar with PI jim, but they 27 00:02:06,720 --> 00:02:11,160 Speaker 1: manage one point to trillion dollars in assets. They may 28 00:02:11,160 --> 00:02:16,000 Speaker 1: be one of the largest top ten asset managers. You 29 00:02:16,080 --> 00:02:18,880 Speaker 1: might not have heard of. Uh. David comes to us 30 00:02:18,960 --> 00:02:22,160 Speaker 1: with a bachelor's degree in engineering and he spent about 31 00:02:22,160 --> 00:02:27,280 Speaker 1: twenty two years at Mackenzie. That's a really unusual background 32 00:02:27,320 --> 00:02:30,160 Speaker 1: to go into the asset management business. Tell us a 33 00:02:30,200 --> 00:02:32,480 Speaker 1: little bit about how you found your way uh to 34 00:02:32,639 --> 00:02:36,600 Speaker 1: PI JIM. Well, to be honest, it's not that unusual. Actually, 35 00:02:36,680 --> 00:02:39,920 Speaker 1: the asset management world has quite a few people who have, 36 00:02:40,880 --> 00:02:45,080 Speaker 1: you know, management consulting backgrounds UM. And part of it, 37 00:02:45,120 --> 00:02:49,760 Speaker 1: I think is that UM, we are fundamentally wired to 38 00:02:49,919 --> 00:02:54,000 Speaker 1: be client oriented. And I think one of the aspects 39 00:02:54,000 --> 00:02:57,640 Speaker 1: of a great asset manager is the fiduciary part of 40 00:02:57,680 --> 00:03:00,720 Speaker 1: that culture, and I think you get that and spades 41 00:03:00,760 --> 00:03:04,120 Speaker 1: when you're working uh in in a firm like McKinsey, 42 00:03:04,160 --> 00:03:06,720 Speaker 1: and I really have appreciated that set of values from 43 00:03:06,800 --> 00:03:10,120 Speaker 1: the very beginning. So you mentioned being client oriented. Who 44 00:03:10,120 --> 00:03:14,000 Speaker 1: were the clients of pigum. So PIGAM, as you were 45 00:03:14,080 --> 00:03:16,800 Speaker 1: nice enough to point out, is the tenth largest asset 46 00:03:16,800 --> 00:03:20,520 Speaker 1: manager in the world. UM we serve most of the 47 00:03:20,560 --> 00:03:25,080 Speaker 1: world's largest pension plans and other large sovereign wealth funds 48 00:03:25,080 --> 00:03:30,560 Speaker 1: central banks, so we are predominantly an institutional manager. We 49 00:03:30,680 --> 00:03:33,800 Speaker 1: do have a retail business here in the United States 50 00:03:34,320 --> 00:03:36,880 Speaker 1: which has been growing quite quite rapidly, but we're better 51 00:03:36,920 --> 00:03:41,600 Speaker 1: known in the institutional market. UM we UH serve I 52 00:03:41,600 --> 00:03:45,360 Speaker 1: would say the world's most sophisticated client based with a 53 00:03:45,480 --> 00:03:49,240 Speaker 1: broad range of products. So we offer obviously public equities 54 00:03:49,280 --> 00:03:52,080 Speaker 1: and public fixed income. But maybe less known is that 55 00:03:52,120 --> 00:03:56,800 Speaker 1: we're the third largest real estate UH manager in the world, 56 00:03:57,080 --> 00:03:59,920 Speaker 1: and we do a lot of other alternatives, including things 57 00:04:00,040 --> 00:04:03,000 Speaker 1: like private credit, which have obviously been very UH hot 58 00:04:03,040 --> 00:04:05,960 Speaker 1: in in recent years. So we have both a public 59 00:04:06,000 --> 00:04:08,800 Speaker 1: and a private business. And when I when I was 60 00:04:09,720 --> 00:04:13,320 Speaker 1: working my way through the various websites of PJAM. Not 61 00:04:13,440 --> 00:04:16,520 Speaker 1: only are you one of the largest real estate managers, 62 00:04:16,560 --> 00:04:20,800 Speaker 1: but you're also a fairly substantial real estate financer. Did 63 00:04:20,880 --> 00:04:23,600 Speaker 1: did I read that correct? No, you're You're absolutely right. 64 00:04:23,640 --> 00:04:25,760 Speaker 1: I mean, for many, many years, and this really does 65 00:04:25,800 --> 00:04:30,000 Speaker 1: go back to the history as an insurance company. Obviously, 66 00:04:30,120 --> 00:04:33,120 Speaker 1: we financed a lot of office buildings. Prudential at one 67 00:04:33,160 --> 00:04:36,600 Speaker 1: point was the largest direct owner of of real estate 68 00:04:36,640 --> 00:04:39,320 Speaker 1: and the United States. But we also have been lending 69 00:04:39,320 --> 00:04:41,359 Speaker 1: into the real estate business for many, many years. So 70 00:04:41,400 --> 00:04:44,919 Speaker 1: those are old insurance businesses, and what we've done is 71 00:04:44,960 --> 00:04:47,960 Speaker 1: to take in them and essentially make them available to 72 00:04:48,040 --> 00:04:51,280 Speaker 1: third party investors. So at this point PIJAM, although it 73 00:04:51,400 --> 00:04:55,159 Speaker 1: started out with an insurance heritage, only about twenty percent 74 00:04:55,320 --> 00:04:58,520 Speaker 1: of my fees come from Prudential. Eighty percent of it 75 00:04:58,560 --> 00:05:01,600 Speaker 1: actually comes from a third party clients. So when you're 76 00:05:01,640 --> 00:05:04,640 Speaker 1: dealing with some and wealth funds and central banks and 77 00:05:04,760 --> 00:05:09,080 Speaker 1: pension funds, how is that different than the traditional base 78 00:05:09,160 --> 00:05:13,520 Speaker 1: of insurance clients. Um, it is quite different. I mean, 79 00:05:13,560 --> 00:05:17,760 Speaker 1: insurers need their money managed in very specific ways. They 80 00:05:17,800 --> 00:05:21,359 Speaker 1: have they have real specific liabilities that set future dates 81 00:05:21,400 --> 00:05:25,279 Speaker 1: based on the tables and in general, they want to 82 00:05:25,440 --> 00:05:29,159 Speaker 1: manage their money so that they effectively match those liabilities 83 00:05:29,160 --> 00:05:32,560 Speaker 1: with the cash flow of their of their assets and 84 00:05:32,640 --> 00:05:36,479 Speaker 1: so done. Well, there's actually not that much investment risk 85 00:05:37,000 --> 00:05:41,240 Speaker 1: that is inherent in those in those books. Third parties 86 00:05:41,360 --> 00:05:45,480 Speaker 1: tend to want a more active approach. They have less 87 00:05:45,800 --> 00:05:49,480 Speaker 1: specific liabilities that they're matching, and they will often want 88 00:05:49,480 --> 00:05:52,919 Speaker 1: a more active um and higher active share style of 89 00:05:52,960 --> 00:05:56,919 Speaker 1: management than insurance company will. That's quite fascinating. So you 90 00:05:57,040 --> 00:06:01,359 Speaker 1: spent twenty two years at McKenzie. How did that prepare 91 00:06:01,400 --> 00:06:05,480 Speaker 1: you for running what is now the tenth largest investment 92 00:06:05,480 --> 00:06:08,920 Speaker 1: manager in the world. Well, I think maybe in two ways. 93 00:06:09,080 --> 00:06:14,200 Speaker 1: One is that UH, I ran UH the asset management 94 00:06:14,279 --> 00:06:17,000 Speaker 1: practice at mckensey, so the group of people who actually 95 00:06:17,040 --> 00:06:21,040 Speaker 1: served asset managers. So I've spent a lot of the 96 00:06:21,160 --> 00:06:25,159 Speaker 1: last year's working with the leading CEOs in the asset 97 00:06:25,200 --> 00:06:28,360 Speaker 1: management industry, and so I think my pattern recognition of 98 00:06:28,400 --> 00:06:32,440 Speaker 1: what's worked and what hasn't is reasonably good UM over 99 00:06:32,480 --> 00:06:34,680 Speaker 1: that period of time. And the second one is that 100 00:06:34,720 --> 00:06:39,440 Speaker 1: I do think that UH managing and leading in a 101 00:06:39,560 --> 00:06:43,120 Speaker 1: professional services context UH is a lot has a lot 102 00:06:43,160 --> 00:06:47,560 Speaker 1: of parallels with the investment world. Uh, investors are people 103 00:06:47,640 --> 00:06:50,560 Speaker 1: with strong convictions. They don't need a lot of management. 104 00:06:50,560 --> 00:06:53,400 Speaker 1: They might need a little inspiration and leadership. Um, there 105 00:06:53,400 --> 00:06:56,200 Speaker 1: are people who have deep convictions, which are only good 106 00:06:56,200 --> 00:06:58,560 Speaker 1: if they're contrarian. There's no point in having the same 107 00:06:58,640 --> 00:07:01,880 Speaker 1: view as the rest of the market. And so by nature, uh, 108 00:07:01,920 --> 00:07:04,520 Speaker 1: they're very independent thinkers. And I would say the same 109 00:07:04,560 --> 00:07:07,560 Speaker 1: things as true of good consultants. And so having a 110 00:07:07,600 --> 00:07:11,440 Speaker 1: style where you're able to inspire and lead but not 111 00:07:11,680 --> 00:07:15,440 Speaker 1: manage is a is a style that works very well 112 00:07:15,440 --> 00:07:19,200 Speaker 1: in the investment world. What about the engineering background? Undergrad 113 00:07:19,240 --> 00:07:23,360 Speaker 1: you want to Princeton? Did you plan on going into finance? 114 00:07:23,640 --> 00:07:27,320 Speaker 1: Was the engineering background something? So? I think the engineering 115 00:07:27,360 --> 00:07:29,080 Speaker 1: is a little bit of a misnomer in the sense 116 00:07:29,160 --> 00:07:32,680 Speaker 1: that effectively the econometrics program at Princeton is in the 117 00:07:32,720 --> 00:07:38,320 Speaker 1: engineering school. And so I actually, I actually really majored 118 00:07:38,320 --> 00:07:41,720 Speaker 1: in econometrics, and I my senior thesis was on the 119 00:07:41,800 --> 00:07:45,920 Speaker 1: emerging markets debt crisis of the early eighties. You may 120 00:07:46,000 --> 00:07:49,600 Speaker 1: remember that, you know, City and many others got themselves 121 00:07:49,640 --> 00:07:52,480 Speaker 1: an enormous amount of trouble, and I built a model 122 00:07:52,560 --> 00:07:55,480 Speaker 1: of how that worked out in order to help predict 123 00:07:55,520 --> 00:07:59,040 Speaker 1: some of the future trouble spots. But so it was 124 00:07:59,080 --> 00:08:01,680 Speaker 1: effectively in an a metric which led me obviously very 125 00:08:01,760 --> 00:08:06,640 Speaker 1: easily into finance. Quite fascinating. You were at McKenzie prior 126 00:08:06,760 --> 00:08:12,520 Speaker 1: to joining Pigeum. What was your first job at Paigeum? Like? 127 00:08:12,600 --> 00:08:14,480 Speaker 1: What was your role when you first joined the company? 128 00:08:14,720 --> 00:08:16,520 Speaker 1: So I joined in the same role that I that 129 00:08:16,560 --> 00:08:19,200 Speaker 1: I have now. I came in as the president and 130 00:08:19,440 --> 00:08:22,240 Speaker 1: UH and CEO UM, and I think that in many 131 00:08:22,280 --> 00:08:25,080 Speaker 1: ways it was a very a very natural fit with 132 00:08:25,160 --> 00:08:28,240 Speaker 1: my with my background. I probably spend about half of 133 00:08:28,280 --> 00:08:32,599 Speaker 1: my time leading but not managing the investment units. I 134 00:08:32,720 --> 00:08:36,200 Speaker 1: spend about a third of my time externally with UH, 135 00:08:36,679 --> 00:08:39,680 Speaker 1: with clients at conferences, are really trying to keep my 136 00:08:39,760 --> 00:08:42,400 Speaker 1: ear to the market. And then I spend some time 137 00:08:42,480 --> 00:08:45,920 Speaker 1: on my kind of corporate duties for Prudential more broadly 138 00:08:45,960 --> 00:08:49,280 Speaker 1: and with our board. So what's it like leading but 139 00:08:49,480 --> 00:08:54,439 Speaker 1: not managing the various asset units. That sounds kind of interesting. 140 00:08:55,280 --> 00:08:58,480 Speaker 1: It's it is absolutely a delicate, a delicate balance. And 141 00:08:58,520 --> 00:09:02,120 Speaker 1: I do like to say that the right style of 142 00:09:02,280 --> 00:09:05,360 Speaker 1: leadership for a role like this is much more as 143 00:09:05,200 --> 00:09:08,240 Speaker 1: as a servant leader. So I come into the office 144 00:09:08,240 --> 00:09:11,520 Speaker 1: in the morning, and what's in my mind is what 145 00:09:11,559 --> 00:09:14,240 Speaker 1: do I need to do to help the people running 146 00:09:14,280 --> 00:09:17,000 Speaker 1: our businesses be successful. I do not come in the 147 00:09:17,040 --> 00:09:20,200 Speaker 1: morning and think these guys somehow report to me in 148 00:09:20,240 --> 00:09:23,920 Speaker 1: a classic corporate style. And I think that's an extremely 149 00:09:24,320 --> 00:09:28,160 Speaker 1: important mindset in the investment world. Investors don't want to 150 00:09:28,160 --> 00:09:31,240 Speaker 1: work for a large corporate hierarchy. They want to work 151 00:09:31,240 --> 00:09:33,840 Speaker 1: in a place where they have autonomy and freedom to 152 00:09:33,960 --> 00:09:37,040 Speaker 1: express their often contrarian points of view. And you need 153 00:09:37,080 --> 00:09:40,040 Speaker 1: to create an environment where that's not just acceptable but 154 00:09:40,120 --> 00:09:44,640 Speaker 1: actually encouraged. So what happens if one of these contrarians 155 00:09:44,720 --> 00:09:48,840 Speaker 1: suddenly go off the rails and they're talking about, Hey, 156 00:09:48,840 --> 00:09:51,600 Speaker 1: this this X y Z is terrible and we need 157 00:09:51,640 --> 00:09:55,080 Speaker 1: to move to golden bottled water and we're gonna hide 158 00:09:55,080 --> 00:09:57,680 Speaker 1: in a cave somewhere. How do you deal with the 159 00:09:57,720 --> 00:10:02,640 Speaker 1: occasional um over reactions of managers Because all of us 160 00:10:03,000 --> 00:10:05,720 Speaker 1: have a tendency to allow our emotions to get get 161 00:10:05,760 --> 00:10:07,600 Speaker 1: the best of us without a doubt. And I think 162 00:10:07,640 --> 00:10:10,480 Speaker 1: one of the things that we do well is we 163 00:10:10,559 --> 00:10:15,000 Speaker 1: have a very discipline, team based investing process. So one 164 00:10:15,000 --> 00:10:17,840 Speaker 1: is that we have very few individuals who are making 165 00:10:17,960 --> 00:10:22,679 Speaker 1: those decisions. We have a clearly defined process which lays 166 00:10:22,720 --> 00:10:26,839 Speaker 1: out how we believe in investment UH thesis should work, 167 00:10:27,520 --> 00:10:31,360 Speaker 1: and we stick with high conviction trades that stay within 168 00:10:31,480 --> 00:10:35,840 Speaker 1: that philosophy and oftentimes will be wrong for some period 169 00:10:35,880 --> 00:10:39,280 Speaker 1: of time. Um, and that's okay. But we make a 170 00:10:39,400 --> 00:10:44,000 Speaker 1: very clear distinction between high conviction within a process versus 171 00:10:44,040 --> 00:10:46,880 Speaker 1: somebody who would make a move outside of what we've 172 00:10:46,880 --> 00:10:50,240 Speaker 1: told clients that we're actually investing behind. And in that 173 00:10:50,320 --> 00:10:52,760 Speaker 1: case we ran it back very quickly and very abruptly. 174 00:10:53,520 --> 00:10:56,640 Speaker 1: What was the environment like during the financial crisis? Was 175 00:10:56,800 --> 00:11:03,000 Speaker 1: everybody on point and thinking, Um, hey was something I 176 00:11:03,040 --> 00:11:06,000 Speaker 1: wasn't in this role during you you missed it? So 177 00:11:06,160 --> 00:11:09,720 Speaker 1: timing is important in all of Yes, moved over in 178 00:11:09,760 --> 00:11:12,240 Speaker 1: two thousand eleven. Okay, so you've been there for seven 179 00:11:12,320 --> 00:11:17,319 Speaker 1: years decent um. So your whole experience at PIGEM has 180 00:11:17,360 --> 00:11:20,520 Speaker 1: been during what pretty much looks like a rip roaring 181 00:11:20,880 --> 00:11:24,959 Speaker 1: bull market. Certainly domestically if we're talking emerging markets, perhaps 182 00:11:25,000 --> 00:11:28,200 Speaker 1: not so much. How do you think your role might 183 00:11:28,280 --> 00:11:32,520 Speaker 1: change when the wheel turns? Well? I think it's a great, 184 00:11:32,840 --> 00:11:36,800 Speaker 1: a great question. There's no doubt that in the years 185 00:11:36,800 --> 00:11:41,040 Speaker 1: since I've been in this seat, we've had pretty friendly markets. Um. 186 00:11:41,120 --> 00:11:43,600 Speaker 1: And for our mix of business, I would say that's 187 00:11:43,640 --> 00:11:47,959 Speaker 1: been particularly true because not only do you have you know, uh, 188 00:11:48,080 --> 00:11:51,400 Speaker 1: the equity markets which have been uh, you know, moving up, 189 00:11:51,600 --> 00:11:54,880 Speaker 1: but you've also had relatively low rates around the world 190 00:11:54,920 --> 00:11:57,760 Speaker 1: and pretty stable UM. And then you've had a pretty 191 00:11:57,800 --> 00:12:03,079 Speaker 1: attractive real estate business coupled with our private businesses, which 192 00:12:03,240 --> 00:12:06,080 Speaker 1: really have thrived as banks have pulled back from lending. 193 00:12:06,160 --> 00:12:08,360 Speaker 1: So we lend money into the middle market, we lend 194 00:12:08,400 --> 00:12:11,760 Speaker 1: money into the real estate business, and banks really pulled 195 00:12:11,760 --> 00:12:14,080 Speaker 1: out of that or or or substantially out of it, 196 00:12:14,679 --> 00:12:17,000 Speaker 1: and as a result, those businesses grew very rapidly for 197 00:12:17,080 --> 00:12:20,080 Speaker 1: us as well. So I think the macro environment for 198 00:12:20,160 --> 00:12:23,440 Speaker 1: us has been extremely strong. UM. We all know that 199 00:12:23,480 --> 00:12:26,400 Speaker 1: will turn. UM. Nobody can predict exactly when, but it will. 200 00:12:26,960 --> 00:12:30,400 Speaker 1: And part of the art of all of these managerial 201 00:12:30,520 --> 00:12:34,800 Speaker 1: roles are being willing to stay a bit ahead of 202 00:12:34,840 --> 00:12:38,800 Speaker 1: that and begin to prepare uh portfolios for a for 203 00:12:38,960 --> 00:12:44,000 Speaker 1: a downturn. So you guys have about you, guys, Pigium 204 00:12:44,080 --> 00:12:48,280 Speaker 1: has one point two trillion in assets about if I'm 205 00:12:48,320 --> 00:12:50,120 Speaker 1: doing this from memory, so far into me if I'm 206 00:12:50,160 --> 00:12:52,720 Speaker 1: off a little bit, a little less than two thirds 207 00:12:52,840 --> 00:12:55,400 Speaker 1: is fixed income? Is that? Is that about right? Seven 208 00:12:55,440 --> 00:12:59,400 Speaker 1: hundred plus? Yes, that's that's right. UM. We tend to 209 00:12:59,400 --> 00:13:01,000 Speaker 1: look at it a little bit more in terms of 210 00:13:01,040 --> 00:13:03,520 Speaker 1: fees rather than assets, because that tends to give you 211 00:13:03,559 --> 00:13:06,160 Speaker 1: a better picture. And from that, about forty of our 212 00:13:06,200 --> 00:13:09,200 Speaker 1: fees are public fixed income, about a third of it 213 00:13:09,280 --> 00:13:12,559 Speaker 1: is public fixed income, and the rest of it at alternatives, 214 00:13:13,000 --> 00:13:17,080 Speaker 1: including quite quite interesting. So given that we've just had 215 00:13:17,160 --> 00:13:22,439 Speaker 1: a thirty plus year bullmarket in fixed income, and last 216 00:13:22,520 --> 00:13:25,520 Speaker 1: year was the first year we really saw that sort 217 00:13:25,600 --> 00:13:29,240 Speaker 1: of coming to an end. What does this make your 218 00:13:29,440 --> 00:13:32,679 Speaker 1: group think in terms of UM, how you're going to 219 00:13:32,760 --> 00:13:37,520 Speaker 1: manage duration, risk, UM, et cetera. Are there big changes 220 00:13:37,559 --> 00:13:40,400 Speaker 1: coming or is it hey, we have a thirty year 221 00:13:40,480 --> 00:13:43,360 Speaker 1: time horizon, we don't care about last quarter. No, I 222 00:13:43,400 --> 00:13:46,320 Speaker 1: think absolutely. We spend a lot of time thinking about 223 00:13:46,320 --> 00:13:49,800 Speaker 1: the effect of rates on our portfolios. UM. If you 224 00:13:49,840 --> 00:13:52,240 Speaker 1: go back in time, we were one of the first 225 00:13:52,280 --> 00:13:55,080 Speaker 1: people after the financial crisis that said that we believe 226 00:13:55,160 --> 00:13:57,920 Speaker 1: that rates would stay low for a very long time. 227 00:13:57,960 --> 00:14:00,560 Speaker 1: And actually that was an out of consensus call. Most 228 00:14:00,559 --> 00:14:02,959 Speaker 1: people thought, oh, it'll be like the last time, it 229 00:14:02,960 --> 00:14:05,960 Speaker 1: will snap back quickly, And we really didn't think so. 230 00:14:06,360 --> 00:14:08,679 Speaker 1: And the reasons behind that had less to do with 231 00:14:08,720 --> 00:14:11,720 Speaker 1: the FED and more to do with the fundamental problems 232 00:14:11,760 --> 00:14:15,520 Speaker 1: we have in our economy, which are low productivity and 233 00:14:15,600 --> 00:14:18,960 Speaker 1: really low growth, and we felt that until either of 234 00:14:19,000 --> 00:14:21,360 Speaker 1: those got fixed, rates were going to stay really low 235 00:14:21,400 --> 00:14:24,360 Speaker 1: around the world. And you coupled that with very accommodative 236 00:14:24,400 --> 00:14:27,440 Speaker 1: central bank policies, and obviously that turned out to be true. 237 00:14:27,880 --> 00:14:30,640 Speaker 1: I would say as we went into thirteen and fourteen, 238 00:14:30,680 --> 00:14:32,800 Speaker 1: more and more people piled into our point of view, 239 00:14:32,800 --> 00:14:35,480 Speaker 1: and I would say lower for longer kind of became 240 00:14:35,520 --> 00:14:39,440 Speaker 1: the consensus view. Now you see many more people are 241 00:14:39,520 --> 00:14:42,960 Speaker 1: beginning again to say, finally, growth is beginning to pick up. 242 00:14:43,280 --> 00:14:46,680 Speaker 1: We actually do believe now that rates are going to rise. 243 00:14:47,240 --> 00:14:50,280 Speaker 1: We would agree to an extent, but probably to a 244 00:14:50,360 --> 00:14:52,720 Speaker 1: much less extent than most other people. We still have 245 00:14:53,280 --> 00:14:57,520 Speaker 1: lower numbers on our our yield curve than most other people. 246 00:14:57,880 --> 00:15:02,000 Speaker 1: We just see, uh, this lack of productivity, lack of growth, 247 00:15:02,080 --> 00:15:06,400 Speaker 1: and importantly the demographics around the world as keeping rates 248 00:15:06,720 --> 00:15:09,720 Speaker 1: much lower than they've been historically and for a very 249 00:15:09,760 --> 00:15:13,800 Speaker 1: long time. So let me ask a wonky question, giving 250 00:15:13,840 --> 00:15:18,760 Speaker 1: your econometric background, how much of the so called weakness 251 00:15:18,760 --> 00:15:22,520 Speaker 1: and productivity growth is a measurement issue. I know in 252 00:15:22,640 --> 00:15:28,920 Speaker 1: my firm, or even here in Bloomberg Technology, software algorithms 253 00:15:29,200 --> 00:15:33,760 Speaker 1: allow us to do so much more per individual employee 254 00:15:34,120 --> 00:15:36,920 Speaker 1: than was even imaginable ten or twenty years ago. So 255 00:15:36,960 --> 00:15:39,160 Speaker 1: I'm always shocked. I want to hear, oh, there's no 256 00:15:39,200 --> 00:15:43,160 Speaker 1: productivity gains, I see massive productivity gains. Or is that 257 00:15:43,400 --> 00:15:50,200 Speaker 1: my narrow biased technology oriented service sector perspective. So I 258 00:15:50,200 --> 00:15:53,840 Speaker 1: think there are two different ideas in your in your question, UM. 259 00:15:53,920 --> 00:15:56,000 Speaker 1: One of them is whether or not there's a measurement 260 00:15:56,040 --> 00:15:59,840 Speaker 1: problem with productivity, and the answer to that is absolutely yes. 261 00:16:00,240 --> 00:16:02,840 Speaker 1: But the more relevant question is is there any worse 262 00:16:02,920 --> 00:16:05,720 Speaker 1: the productivity problem measuring that than there was in the past, 263 00:16:06,000 --> 00:16:08,400 Speaker 1: and that we would actually say, there's no real evidence 264 00:16:08,400 --> 00:16:11,440 Speaker 1: of that. It's always been badly measured, UM, and we 265 00:16:11,520 --> 00:16:15,720 Speaker 1: don't see that it's necessarily any worse than it has been, 266 00:16:15,800 --> 00:16:18,680 Speaker 1: So we don't think you can attribute the productivity problem 267 00:16:18,760 --> 00:16:21,720 Speaker 1: to measurement at this point. The second the second point 268 00:16:21,760 --> 00:16:23,560 Speaker 1: you made though, is you know is your is your 269 00:16:24,120 --> 00:16:26,520 Speaker 1: lens on the world just unique and different, and I 270 00:16:26,520 --> 00:16:28,640 Speaker 1: would say that, I would say yes. One of the 271 00:16:28,640 --> 00:16:31,720 Speaker 1: interesting things about productivity when you break it down industry 272 00:16:31,720 --> 00:16:36,240 Speaker 1: by industry is it's just massively different. So communications and 273 00:16:36,360 --> 00:16:40,240 Speaker 1: media and some I've seen enormous growth in productivity telecommunications, 274 00:16:40,960 --> 00:16:44,680 Speaker 1: but very large, very large portions of the economy in 275 00:16:44,760 --> 00:16:47,760 Speaker 1: terms of healthcare, in terms of retail, have not seen that. 276 00:16:48,280 --> 00:16:51,320 Speaker 1: And so, uh, the productivity story is not a kind 277 00:16:51,360 --> 00:16:54,120 Speaker 1: of flat average. It's very much a tale of two studies. 278 00:16:54,280 --> 00:16:56,880 Speaker 1: But much of the economy is not seeing the productivity 279 00:16:56,880 --> 00:17:02,560 Speaker 1: lifts that you described. Quite fascinating. Let's let's talk about UM. 280 00:17:02,560 --> 00:17:05,119 Speaker 1: Where we are today in the markets, we see the 281 00:17:05,240 --> 00:17:10,119 Speaker 1: yield curve flattening. Everybody seems to be jumping up and 282 00:17:10,119 --> 00:17:14,600 Speaker 1: down and saying this fortends a recession in the in 283 00:17:14,640 --> 00:17:18,200 Speaker 1: the near future. What what is pigeons view on this? 284 00:17:19,119 --> 00:17:23,520 Speaker 1: So we believe that the yield curve will continue to flatten. UM. 285 00:17:23,640 --> 00:17:28,240 Speaker 1: We do believe that the Fed quite properly will continue 286 00:17:28,280 --> 00:17:31,040 Speaker 1: to raise rates at the at the short end, I mean, 287 00:17:31,040 --> 00:17:34,080 Speaker 1: the economy is doing very well, UM, and we think 288 00:17:34,119 --> 00:17:37,960 Speaker 1: that's entirely an appropriate policy response. On the other hand, 289 00:17:37,960 --> 00:17:40,600 Speaker 1: as we spoke about a moment ago. We do believe 290 00:17:40,640 --> 00:17:44,280 Speaker 1: that there is an enormous amount of money that's coming 291 00:17:44,359 --> 00:17:48,080 Speaker 1: from the aging population, so in the retirement systems and 292 00:17:48,119 --> 00:17:51,639 Speaker 1: pension funds, which will continue to weigh down on the 293 00:17:51,680 --> 00:17:54,960 Speaker 1: long end of the curve. So we think that flat 294 00:17:55,040 --> 00:17:57,760 Speaker 1: meaning that they're big long term investors, big want to 295 00:17:57,800 --> 00:18:01,560 Speaker 1: stay with long duration for they are because remember they're 296 00:18:01,680 --> 00:18:04,399 Speaker 1: matching liabilities for that as opposed to looking for the 297 00:18:04,440 --> 00:18:07,600 Speaker 1: absolute return. So we think that will continue to weigh 298 00:18:07,680 --> 00:18:11,800 Speaker 1: on that, which will just flatten that curve even further. Now, 299 00:18:11,840 --> 00:18:15,119 Speaker 1: at some point does it become inverted, quite possibly, But 300 00:18:15,240 --> 00:18:18,880 Speaker 1: remember an inverted yield curve doesn't cause anything. It's more 301 00:18:18,920 --> 00:18:22,399 Speaker 1: a symbol of what may happen, because what the market 302 00:18:22,440 --> 00:18:25,160 Speaker 1: is telling you when that happens is that people think 303 00:18:25,280 --> 00:18:28,560 Speaker 1: long term growth is actually below what short term rates are, 304 00:18:28,960 --> 00:18:31,720 Speaker 1: and that's actually the symbol that the signal that's being 305 00:18:31,720 --> 00:18:35,480 Speaker 1: sent out by an inverted yield curve. But we've also 306 00:18:35,520 --> 00:18:38,840 Speaker 1: had inverted yield curves which have not led ultimately to recessions, 307 00:18:38,840 --> 00:18:42,320 Speaker 1: and there's certainly a lag that goes with that. So 308 00:18:42,760 --> 00:18:45,360 Speaker 1: you're still looking at kind of eighteen to twenty four 309 00:18:45,400 --> 00:18:47,919 Speaker 1: months before that signal even really kicks out. Thank you 310 00:18:47,960 --> 00:18:50,080 Speaker 1: so much for saying that it's a symbol and not 311 00:18:50,200 --> 00:18:53,040 Speaker 1: a cause. I can't tell you how many people seem 312 00:18:53,080 --> 00:18:57,120 Speaker 1: to get that wrong. And it's absolutely um infuriating. We're 313 00:18:57,400 --> 00:19:01,960 Speaker 1: also starting from such low rates, and as the FED normalizes, 314 00:19:02,040 --> 00:19:06,080 Speaker 1: shouldn't the yield curve flatten anyway during that process? It 315 00:19:06,359 --> 00:19:08,960 Speaker 1: should and and remember kind of low all depends on 316 00:19:09,040 --> 00:19:13,120 Speaker 1: your perspective. So if you're in Japan, rates over here 317 00:19:13,240 --> 00:19:17,320 Speaker 1: look positively luxurious, um. And it's even true in large 318 00:19:17,359 --> 00:19:21,520 Speaker 1: parts of continental Europe. So while we if you have 319 00:19:21,560 --> 00:19:25,119 Speaker 1: a view on our our rates, many others around the 320 00:19:25,160 --> 00:19:28,520 Speaker 1: world see US as an attractive rate play and certainly 321 00:19:28,560 --> 00:19:32,720 Speaker 1: as a business we uh, we see quite significant flows 322 00:19:32,800 --> 00:19:37,160 Speaker 1: from outside the United States coming back into credit products 323 00:19:37,200 --> 00:19:39,159 Speaker 1: for that very reason. This is a yield pick up 324 00:19:39,240 --> 00:19:41,159 Speaker 1: for them. But that of course in turn keeps our 325 00:19:41,280 --> 00:19:43,719 Speaker 1: rates lower. Sure makes a lot of sense. UM. So 326 00:19:43,800 --> 00:19:48,119 Speaker 1: you have a substantial exposure in the private equity world, 327 00:19:48,200 --> 00:19:50,919 Speaker 1: and in that side of the market, how do you, 328 00:19:51,320 --> 00:19:54,920 Speaker 1: um look at that? Some people have been calling it frothy? 329 00:19:54,920 --> 00:19:58,800 Speaker 1: What's what's the pigem view on private markets and private 330 00:19:58,800 --> 00:20:01,600 Speaker 1: equity these days? So I would say that our view 331 00:20:01,840 --> 00:20:05,800 Speaker 1: on alternatives broadly defined which I would include private equity, 332 00:20:05,880 --> 00:20:08,960 Speaker 1: I would include real estate in particular in that and 333 00:20:09,040 --> 00:20:13,080 Speaker 1: our private credit businesses, UH is very positive. We actually 334 00:20:13,119 --> 00:20:17,679 Speaker 1: think that UH private forms of investment will continue to 335 00:20:17,720 --> 00:20:21,280 Speaker 1: grow pretty rapidly. We're seeing a lot of demand from 336 00:20:21,280 --> 00:20:24,199 Speaker 1: our big institutional clients for that. Many of them have 337 00:20:24,240 --> 00:20:27,760 Speaker 1: actually been taking money out of public equities and moving 338 00:20:27,760 --> 00:20:31,879 Speaker 1: it into into alternatives. One of the important things to 339 00:20:32,000 --> 00:20:35,040 Speaker 1: remember about private markets is that in many ways they 340 00:20:35,040 --> 00:20:39,560 Speaker 1: can weather a downturn a bit better, right because it 341 00:20:39,640 --> 00:20:43,040 Speaker 1: is no daily prices, and so if you think we're 342 00:20:43,359 --> 00:20:47,720 Speaker 1: twenty four months away or whatever your particular time frame is, UH, 343 00:20:47,800 --> 00:20:49,840 Speaker 1: you may decide that a better way to play this 344 00:20:49,880 --> 00:20:53,640 Speaker 1: market is through the private the private businesses. So we 345 00:20:53,640 --> 00:20:57,440 Speaker 1: we have a very attractive view of that UM and 346 00:20:57,680 --> 00:20:59,800 Speaker 1: much of the dry powder that's been raised in p 347 00:21:00,000 --> 00:21:02,000 Speaker 1: but equity, and we are not in the large buyout 348 00:21:02,240 --> 00:21:05,040 Speaker 1: business ourselves, but much of the dry powder and there 349 00:21:05,080 --> 00:21:08,200 Speaker 1: we think will actually probably sit on the sidelines until 350 00:21:08,200 --> 00:21:10,520 Speaker 1: pricing gets a little bit more reasonable. I was going 351 00:21:10,600 --> 00:21:13,159 Speaker 1: to ask about valuations. A lot of people seem to 352 00:21:13,280 --> 00:21:17,560 Speaker 1: think stocks and bonds are our price. We can we 353 00:21:17,600 --> 00:21:21,600 Speaker 1: can debate that it's certainly not historically cheap on on 354 00:21:21,640 --> 00:21:24,720 Speaker 1: the equity side. But that said, when we look at 355 00:21:24,800 --> 00:21:27,639 Speaker 1: venture capital, when we look at some of the private 356 00:21:27,640 --> 00:21:30,040 Speaker 1: equity firms, it seems to be a little frothy, seems 357 00:21:30,080 --> 00:21:33,440 Speaker 1: like a lot of money has flowed into those spaces. 358 00:21:33,960 --> 00:21:37,760 Speaker 1: Do you see the same valuation issue in private equity 359 00:21:37,920 --> 00:21:40,560 Speaker 1: or is it a hey, we don't get daily prices, 360 00:21:40,600 --> 00:21:43,640 Speaker 1: so we can ride out a downtown a little more 361 00:21:43,720 --> 00:21:46,800 Speaker 1: comfortably in that space. So this is where I think 362 00:21:46,840 --> 00:21:50,399 Speaker 1: having an institutional perspective is maybe very different than what 363 00:21:50,520 --> 00:21:53,200 Speaker 1: you hear in the in the retail world. So our 364 00:21:53,320 --> 00:21:56,480 Speaker 1: view is the biggest risk the markets present today is 365 00:21:56,560 --> 00:22:01,119 Speaker 1: high prices, not volatility. Actually, most of our clients would 366 00:22:01,119 --> 00:22:02,800 Speaker 1: be quite happy if we had a bit of a 367 00:22:02,800 --> 00:22:06,040 Speaker 1: correction in the market, because their biggest problem is today's 368 00:22:06,119 --> 00:22:08,560 Speaker 1: vintage of money that they're putting out. What kind of 369 00:22:08,680 --> 00:22:11,040 Speaker 1: return over ten years will they be able to earn 370 00:22:11,080 --> 00:22:14,000 Speaker 1: on that? Given the high prices that are almost any 371 00:22:14,080 --> 00:22:17,600 Speaker 1: asset class that you've got. So actually a bit more 372 00:22:17,720 --> 00:22:22,680 Speaker 1: volatility would be better and probably lower risk for most institutions. 373 00:22:22,680 --> 00:22:25,080 Speaker 1: From where we stand today, and I think that's with 374 00:22:25,200 --> 00:22:27,560 Speaker 1: the focus on what is the level of the market, 375 00:22:27,880 --> 00:22:31,680 Speaker 1: it completely misses the point that that volatility is not risk, 376 00:22:32,040 --> 00:22:35,360 Speaker 1: and actually a bit more volatility would give people an 377 00:22:35,359 --> 00:22:37,960 Speaker 1: opportunity to get into markets that they've been priced out of. 378 00:22:38,359 --> 00:22:43,479 Speaker 1: High valuations mean forward looking expected returns are lower, and 379 00:22:43,760 --> 00:22:49,480 Speaker 1: lower valuations are the opposite means. Quite quite interesting. Let's 380 00:22:49,520 --> 00:22:53,280 Speaker 1: talk a little bit about the industry, because you've gotten 381 00:22:53,320 --> 00:22:58,600 Speaker 1: to see how it's evolved from multiple perspectives um over 382 00:22:58,600 --> 00:23:03,120 Speaker 1: the past almost three decades. What do you see as 383 00:23:03,280 --> 00:23:06,880 Speaker 1: the evolution of the industry. What's the most significant thing 384 00:23:07,400 --> 00:23:11,520 Speaker 1: from your sort of institutional approach. So, I think the 385 00:23:11,600 --> 00:23:14,600 Speaker 1: most important trend that we see right now in the 386 00:23:14,640 --> 00:23:19,040 Speaker 1: industry is very much the fact that the two worlds 387 00:23:19,200 --> 00:23:23,159 Speaker 1: of alternatives and long only asset managers are coming together. 388 00:23:23,640 --> 00:23:27,120 Speaker 1: So the the entire universe was broken into these two. 389 00:23:27,119 --> 00:23:30,439 Speaker 1: I mean, there were the black Stones and Carlyles and 390 00:23:30,560 --> 00:23:33,400 Speaker 1: kkrs on the one hand, and they did they started 391 00:23:33,400 --> 00:23:36,119 Speaker 1: in private equity but expanded out broadly from that. And 392 00:23:36,119 --> 00:23:38,200 Speaker 1: then there was the broad variety of people who largely 393 00:23:38,240 --> 00:23:41,879 Speaker 1: did long only public securities, and these were covered by 394 00:23:41,920 --> 00:23:45,520 Speaker 1: different analysts. They were talked about by different parsons. Even 395 00:23:45,520 --> 00:23:49,879 Speaker 1: the press had very different people who covered those two groups. UM. 396 00:23:49,920 --> 00:23:54,240 Speaker 1: That really is now UM, we're seeing a fundamental merging 397 00:23:54,280 --> 00:23:57,359 Speaker 1: of those. So more and more you'll see firms like 398 00:23:57,480 --> 00:24:00,640 Speaker 1: PIGIM where we are very much a blend of those. 399 00:24:00,680 --> 00:24:03,040 Speaker 1: We have a big alternative business. We have a big 400 00:24:03,080 --> 00:24:06,160 Speaker 1: long only business as well. And you're seeing many more 401 00:24:06,240 --> 00:24:10,200 Speaker 1: of the UH historically alternatives guys getting into long only 402 00:24:10,240 --> 00:24:12,159 Speaker 1: all of a sudden they think core real estate is 403 00:24:12,200 --> 00:24:15,440 Speaker 1: just great, UM. And you see a lot of other 404 00:24:15,640 --> 00:24:18,439 Speaker 1: long only managers deciding that they'd like to really launch 405 00:24:18,720 --> 00:24:22,640 Speaker 1: private credit and infrastructure funds. So you're really seeing this 406 00:24:22,800 --> 00:24:26,639 Speaker 1: merger and that is driving a need for scale. So 407 00:24:26,680 --> 00:24:30,000 Speaker 1: the other I would say secondary trend you're seeing is 408 00:24:30,040 --> 00:24:33,120 Speaker 1: that the large global firms are winning and they are 409 00:24:33,240 --> 00:24:38,720 Speaker 1: taking share away from individual country specific firms UM, who 410 00:24:38,720 --> 00:24:41,720 Speaker 1: have largely grown up in an individual asset class. So 411 00:24:41,880 --> 00:24:45,879 Speaker 1: on the retail side, the biggest change over the past 412 00:24:45,920 --> 00:24:50,160 Speaker 1: decade has to be the rise of low cost passive indexing. 413 00:24:50,960 --> 00:24:55,840 Speaker 1: How are you seeing the reverberations of that. On the 414 00:24:55,880 --> 00:24:59,040 Speaker 1: institutional side, what what you guys do very much is 415 00:24:59,160 --> 00:25:04,000 Speaker 1: not passive by design, you're looking for active share, you're 416 00:25:04,040 --> 00:25:07,080 Speaker 1: looking for non correlated assets. It's a completely different it's 417 00:25:07,280 --> 00:25:09,760 Speaker 1: very a very different game. In fact, we've designed our 418 00:25:09,880 --> 00:25:13,040 Speaker 1: approach to the equity markets to work with passive, and 419 00:25:13,160 --> 00:25:16,880 Speaker 1: we believe that passive will continue to grow. We think 420 00:25:16,880 --> 00:25:20,879 Speaker 1: that it has an important role in many investors portfolios. 421 00:25:21,480 --> 00:25:24,919 Speaker 1: But what you need with that is than other high 422 00:25:25,000 --> 00:25:28,879 Speaker 1: active share strategies which will allow you to drive alpha 423 00:25:29,000 --> 00:25:31,760 Speaker 1: over longer periods of time. And most of the money 424 00:25:31,760 --> 00:25:34,840 Speaker 1: that we manage is done in either that style, or 425 00:25:35,000 --> 00:25:39,040 Speaker 1: we have a pretty big quantitative business um where we 426 00:25:39,119 --> 00:25:44,440 Speaker 1: actually use computer algorithms which capture very consistent alpha over 427 00:25:44,480 --> 00:25:47,520 Speaker 1: long periods of time at pricing that's just slightly above 428 00:25:47,840 --> 00:25:50,200 Speaker 1: what you would find in an index fund. So those 429 00:25:50,240 --> 00:25:54,200 Speaker 1: two strategies are designed to work with, not against, passive strategies, 430 00:25:54,560 --> 00:25:58,679 Speaker 1: and we've actually seen that approach be far more effective 431 00:25:58,760 --> 00:26:01,960 Speaker 1: than what many others have done, which is effectively try 432 00:26:02,040 --> 00:26:05,280 Speaker 1: to fight passive, particularly in the retail side, which has 433 00:26:05,280 --> 00:26:08,480 Speaker 1: not been a winning strategy. So my assumption is that 434 00:26:08,560 --> 00:26:12,760 Speaker 1: your clients have a big slug of passive exposure and 435 00:26:12,800 --> 00:26:15,639 Speaker 1: they come to you for the active side. That's correct 436 00:26:16,080 --> 00:26:20,040 Speaker 1: and and you mentioned the quantitative group. Pardon me if 437 00:26:20,080 --> 00:26:23,840 Speaker 1: I get the dates wrong. You had one of the 438 00:26:23,920 --> 00:26:27,120 Speaker 1: first quantitative groups on Wall Street. Does that date back 439 00:26:27,160 --> 00:26:29,720 Speaker 1: to like nineteen seventy five? You have a very good memory, 440 00:26:29,760 --> 00:26:32,880 Speaker 1: it absolutely does. That's uh, that's not from the notes. 441 00:26:33,240 --> 00:26:37,120 Speaker 1: Remember being a little startled in saying nineteen we were 442 00:26:37,160 --> 00:26:39,720 Speaker 1: we were, We were absolutely one of the very first 443 00:26:39,760 --> 00:26:43,360 Speaker 1: people into pioneer the use of computer algorithms. For that. 444 00:26:44,080 --> 00:26:46,159 Speaker 1: The business goes under the brand q M A a 445 00:26:46,240 --> 00:26:49,840 Speaker 1: pig in business and uh, you know, it's been remarkably 446 00:26:49,960 --> 00:26:53,520 Speaker 1: successful in both the US and in global markets. They 447 00:26:53,560 --> 00:26:57,080 Speaker 1: also do a lot of our multi asset class UH investing, 448 00:26:57,119 --> 00:27:00,760 Speaker 1: which again has had very attractive returns through through a cycle. 449 00:27:00,840 --> 00:27:05,359 Speaker 1: And clearly that's a business that's highly scalable once you've 450 00:27:05,800 --> 00:27:09,320 Speaker 1: you know, got your got your algorithms thoroughly thoroughly tested. 451 00:27:10,240 --> 00:27:16,720 Speaker 1: So we're talking about active versus passive and quantitative versus traditional. Uh. 452 00:27:16,800 --> 00:27:19,040 Speaker 1: One of the things that keeps coming up in those 453 00:27:19,080 --> 00:27:24,160 Speaker 1: discussions is the declining number of companies that are publicly 454 00:27:24,200 --> 00:27:27,639 Speaker 1: available to trade, especially here in the United States. Any 455 00:27:27,680 --> 00:27:30,680 Speaker 1: thoughts on that? What how do you how do how 456 00:27:30,720 --> 00:27:35,520 Speaker 1: does pigam view that in terms of your public market exposure. 457 00:27:36,760 --> 00:27:40,240 Speaker 1: So we uh, we are quite troubled by the health 458 00:27:40,480 --> 00:27:44,000 Speaker 1: of the public equity markets in the US. While they 459 00:27:44,080 --> 00:27:47,800 Speaker 1: hit all time highs, we think that that actually UH 460 00:27:48,000 --> 00:27:51,880 Speaker 1: masks what's going on underneath, and that is that our 461 00:27:51,960 --> 00:27:55,040 Speaker 1: public markets in this country have ceased to be the 462 00:27:55,160 --> 00:27:58,960 Speaker 1: home of choice for fast growing UH, mid sized or 463 00:27:59,000 --> 00:28:02,840 Speaker 1: smaller companies. So if you go back to there were 464 00:28:02,880 --> 00:28:07,440 Speaker 1: almost eight thousand publicly traded companies, there are now three thousand, 465 00:28:07,520 --> 00:28:11,520 Speaker 1: seven hundred, so almost more than half falling in terms 466 00:28:11,560 --> 00:28:14,720 Speaker 1: of number. As worrying or maybe even more worrying is 467 00:28:14,840 --> 00:28:17,119 Speaker 1: the is the I P O trend. So again, if 468 00:28:17,160 --> 00:28:19,080 Speaker 1: you go back to the nineties, we were looking at 469 00:28:19,200 --> 00:28:22,040 Speaker 1: five companies a year that we're coming in. I mean, 470 00:28:22,080 --> 00:28:25,080 Speaker 1: if you were a tech and UH entrepreneur, then your 471 00:28:25,240 --> 00:28:29,000 Speaker 1: your holy grail was to become public. Now your holy 472 00:28:29,040 --> 00:28:32,239 Speaker 1: grail is to take another dollarp of private capital and 473 00:28:32,359 --> 00:28:35,200 Speaker 1: stay private for as long as you can. And so 474 00:28:35,240 --> 00:28:39,280 Speaker 1: what we're seeing is that basically private equity is becoming 475 00:28:39,320 --> 00:28:41,959 Speaker 1: the owner of choice for these companies. And at one 476 00:28:42,040 --> 00:28:43,959 Speaker 1: level you can say, well, maybe that doesn't matter. At 477 00:28:44,000 --> 00:28:47,040 Speaker 1: least we're funding it, and the capitalist system is working. 478 00:28:47,480 --> 00:28:49,480 Speaker 1: But what's hidden in that is that it used to 479 00:28:49,480 --> 00:28:52,320 Speaker 1: be the returns from these fast scoring companies were available 480 00:28:52,360 --> 00:28:56,160 Speaker 1: to retail investors, and they now aren't. Um they're actually 481 00:28:56,200 --> 00:29:00,320 Speaker 1: captured by institutions through private equity, and you know, that's 482 00:29:00,320 --> 00:29:02,640 Speaker 1: a bit of a shame. I think that the democrazation 483 00:29:02,720 --> 00:29:04,880 Speaker 1: of our capital market has always be an important part 484 00:29:04,880 --> 00:29:08,880 Speaker 1: of the American story, and that's becoming less true. But 485 00:29:08,920 --> 00:29:11,080 Speaker 1: the public markets are going to have to raise their 486 00:29:11,120 --> 00:29:14,720 Speaker 1: game because private equity has been very successful. They're getting 487 00:29:14,720 --> 00:29:17,040 Speaker 1: better better at what they do. They have proven to 488 00:29:17,080 --> 00:29:19,640 Speaker 1: be good owners of businesses, and the public markets are 489 00:29:19,640 --> 00:29:21,200 Speaker 1: going to have to raise their game if they're going 490 00:29:21,240 --> 00:29:25,440 Speaker 1: to work really turn this around. I don't necessarily disagree 491 00:29:25,520 --> 00:29:29,680 Speaker 1: with you, but here's the pushback here on this subject. 492 00:29:30,280 --> 00:29:33,880 Speaker 1: When you control for the number of teeny tiny pink 493 00:29:33,920 --> 00:29:37,840 Speaker 1: sheet companies that were a dry cleaner trading at three 494 00:29:37,880 --> 00:29:42,120 Speaker 1: million dollar valuation, when you remove all that, the big 495 00:29:42,200 --> 00:29:46,760 Speaker 1: decrease from eight thousand to four thousand, most of that 496 00:29:46,800 --> 00:29:51,840 Speaker 1: goes away, says some uh AN analysts. And then you 497 00:29:51,920 --> 00:29:55,520 Speaker 1: take the Jobs Act under the Bush administration, which really 498 00:29:55,560 --> 00:29:59,800 Speaker 1: opened up the ability for more people to make investments 499 00:29:59,840 --> 00:30:03,680 Speaker 1: in then private companies, plus the ton of venture capital 500 00:30:03,680 --> 00:30:07,280 Speaker 1: cash flowing around, I mean there is a uh tsunami 501 00:30:07,320 --> 00:30:10,640 Speaker 1: of cash out there. Is it a shock that that 502 00:30:10,680 --> 00:30:13,840 Speaker 1: we're not seeing as many companies trading publicly as we 503 00:30:13,920 --> 00:30:17,400 Speaker 1: did ten and twenty years ago. I don't necessarily say 504 00:30:17,440 --> 00:30:19,560 Speaker 1: I was it's a shock, but I do think that 505 00:30:19,840 --> 00:30:22,440 Speaker 1: our public markets are very much under threat by this 506 00:30:23,360 --> 00:30:26,400 Speaker 1: um And almost all of the sources of capital that 507 00:30:26,480 --> 00:30:30,040 Speaker 1: you describe, whether it's private equity or venture um, those 508 00:30:30,080 --> 00:30:33,640 Speaker 1: are institutional pools of money for the most part. So yeah, 509 00:30:33,720 --> 00:30:35,760 Speaker 1: as an institutional money manager, I will be able to 510 00:30:35,800 --> 00:30:38,800 Speaker 1: capture a good deal of that, but it won't be 511 00:30:38,840 --> 00:30:41,480 Speaker 1: available the way it was in the ninety nineties. Two 512 00:30:42,040 --> 00:30:44,479 Speaker 1: people through their four oh one K plans, and I 513 00:30:44,480 --> 00:30:46,040 Speaker 1: think that is a bit of a shame, and it's 514 00:30:46,040 --> 00:30:48,760 Speaker 1: certainly a big change in our capital markets. I don't 515 00:30:48,760 --> 00:30:51,280 Speaker 1: know if we ever made the decision that we wanted 516 00:30:51,320 --> 00:30:55,760 Speaker 1: to have private equity be, you know, a dominant funder 517 00:30:56,360 --> 00:30:59,680 Speaker 1: of of midsized companies, but I think cats often they've 518 00:30:59,680 --> 00:31:02,240 Speaker 1: been really good job at it. So what's the prescription 519 00:31:02,480 --> 00:31:08,560 Speaker 1: for the various NASADAC nys c um various forces around 520 00:31:08,560 --> 00:31:11,680 Speaker 1: the world to repair that. So the so the popular 521 00:31:11,680 --> 00:31:15,080 Speaker 1: whipping boy for this has been regulation. That regulation has 522 00:31:15,120 --> 00:31:18,840 Speaker 1: gotten so onerous on public markets that many people don't 523 00:31:18,840 --> 00:31:21,360 Speaker 1: want to kind of bear the scrutiny of that. And indeed, 524 00:31:21,880 --> 00:31:24,600 Speaker 1: UH last year, in two thousands seventeen, we had more 525 00:31:24,680 --> 00:31:28,560 Speaker 1: companies go from public to private than we've ever had. UM. 526 00:31:28,640 --> 00:31:31,400 Speaker 1: I personally think that that is true a bit, but 527 00:31:31,480 --> 00:31:34,840 Speaker 1: it's actually far from the full the full story. The 528 00:31:34,880 --> 00:31:38,760 Speaker 1: reality is, over the last ten years, effectively the banks 529 00:31:38,760 --> 00:31:41,560 Speaker 1: and the cell side have withdrawn their support of small 530 00:31:41,760 --> 00:31:45,440 Speaker 1: of small stocks. There's no analysts covering these anymore. They're 531 00:31:45,480 --> 00:31:48,480 Speaker 1: not putting out capital in order to trade UH these, 532 00:31:48,520 --> 00:31:51,320 Speaker 1: they're not supporting them. And so we would actually need 533 00:31:51,360 --> 00:31:54,840 Speaker 1: to go back and rewire a good deal of the 534 00:31:54,880 --> 00:31:58,760 Speaker 1: ecosystem that supports public trading and small companies in order 535 00:31:58,800 --> 00:32:02,000 Speaker 1: to fix this problem. And of course it's exacerbated by 536 00:32:02,080 --> 00:32:05,080 Speaker 1: the huge flow into index funds that you described earlier, 537 00:32:05,120 --> 00:32:07,960 Speaker 1: because there's a big difference between being in the know 538 00:32:08,120 --> 00:32:11,240 Speaker 1: SMP not being Most of these companies would come in 539 00:32:11,280 --> 00:32:13,959 Speaker 1: they wouldn't be in that and so they're not drawing 540 00:32:14,000 --> 00:32:17,920 Speaker 1: the kind of capital that they would have pre pre indexing. 541 00:32:18,120 --> 00:32:22,160 Speaker 1: Post financial crisis, we've seen a huge consolidation amongst the 542 00:32:22,160 --> 00:32:26,080 Speaker 1: big banks, amongst the big investment banks as well. How 543 00:32:26,200 --> 00:32:32,040 Speaker 1: much does that top heavy much fewer banks managing the 544 00:32:32,080 --> 00:32:36,480 Speaker 1: top half of assets effect what you're describing as the 545 00:32:36,880 --> 00:32:40,600 Speaker 1: lack of enthusiasm for small and MidCap companies and for 546 00:32:40,600 --> 00:32:42,280 Speaker 1: for I. P. O. S Oh, I think I think 547 00:32:42,280 --> 00:32:46,280 Speaker 1: it's had a very significant impact. We have not only 548 00:32:46,320 --> 00:32:49,000 Speaker 1: the consolidation that you refer to, but we've also had 549 00:32:49,040 --> 00:32:52,880 Speaker 1: a massive retrenchment. Right so the continental European banks have 550 00:32:52,960 --> 00:32:55,800 Speaker 1: gone back to continental Europe, the Brits have gone back 551 00:32:55,800 --> 00:32:58,560 Speaker 1: to their island for the most part. And whereas you 552 00:32:58,680 --> 00:33:01,800 Speaker 1: used to have a whole series of large global banks 553 00:33:01,800 --> 00:33:05,920 Speaker 1: who staked their ambitions on doing that, you now really don't. 554 00:33:06,120 --> 00:33:09,360 Speaker 1: And so we see that even in our own trading businesses, 555 00:33:09,400 --> 00:33:13,920 Speaker 1: where we have less options for counterparties um than we 556 00:33:14,000 --> 00:33:17,280 Speaker 1: did UH ten years ago. We also get a lot 557 00:33:17,360 --> 00:33:21,160 Speaker 1: less UH of our our analyst work done by the 558 00:33:21,200 --> 00:33:23,640 Speaker 1: cell side, and as a result, we have many more 559 00:33:23,960 --> 00:33:26,280 Speaker 1: of our own researchers and analysts than we would have 560 00:33:26,280 --> 00:33:29,680 Speaker 1: had a decade ago. For sure, quite fascinating. Can you 561 00:33:29,680 --> 00:33:31,560 Speaker 1: stick around a bit? I have a ton more questions. 562 00:33:32,360 --> 00:33:36,080 Speaker 1: We have been speaking with David Hunt's CEO of Pigam 563 00:33:36,200 --> 00:33:39,800 Speaker 1: asset Management. If you enjoy this conversation, be sure and 564 00:33:39,880 --> 00:33:42,520 Speaker 1: come back for the podcast extras, where we keep the 565 00:33:42,560 --> 00:33:47,080 Speaker 1: tape rolling and continue discussing all things asset management. We 566 00:33:47,200 --> 00:33:50,960 Speaker 1: love your comments, feedback and suggestions right to us at 567 00:33:51,720 --> 00:33:54,920 Speaker 1: m IB podcast at Bloomberg dot net. You can check 568 00:33:54,920 --> 00:33:57,800 Speaker 1: out my daily columns at Bloomberg dot com or follow 569 00:33:57,840 --> 00:34:01,760 Speaker 1: me on Twitter at Ridoltz. I'm Barry Ritolts. You're listening 570 00:34:01,800 --> 00:34:19,640 Speaker 1: to Masters in Business on Bloomberg Radio. Welcome to the podcast. David, 571 00:34:19,680 --> 00:34:22,280 Speaker 1: Thank you so much for doing this. I've been looking 572 00:34:22,320 --> 00:34:27,200 Speaker 1: forward to this. I'm fascinated by Pigamin and you hinted 573 00:34:27,239 --> 00:34:30,400 Speaker 1: it at something I have to bring up. How do 574 00:34:30,520 --> 00:34:34,480 Speaker 1: you get to be the tenth largest asset manager with 575 00:34:34,600 --> 00:34:38,640 Speaker 1: a hundred year track record and not only does the 576 00:34:38,760 --> 00:34:42,640 Speaker 1: average retail investor not know who you are? Half the 577 00:34:42,680 --> 00:34:45,759 Speaker 1: people from the industry I spoke to I said, oh, 578 00:34:45,800 --> 00:34:50,280 Speaker 1: I'm interviewing the CEO of of Pigam and they're like, who, 579 00:34:51,120 --> 00:34:54,800 Speaker 1: It's a trillion dollar firm and and I'm I'm guilty 580 00:34:54,840 --> 00:34:58,160 Speaker 1: of it. Also, how have you guys managed to stay 581 00:34:58,280 --> 00:35:01,520 Speaker 1: so under the radar grow as rapidly as you have? 582 00:35:02,600 --> 00:35:05,000 Speaker 1: So the grow as rapidly as you have a part 583 00:35:05,080 --> 00:35:07,920 Speaker 1: as the easy question to answer, and that is because 584 00:35:08,000 --> 00:35:11,360 Speaker 1: we uh, we believe that we have some of the 585 00:35:11,400 --> 00:35:14,200 Speaker 1: best investment performance in the industry. At the end of 586 00:35:14,200 --> 00:35:16,200 Speaker 1: the day, that's how we measure our success as to 587 00:35:16,320 --> 00:35:19,240 Speaker 1: whether or not our clients are doing well. We actually 588 00:35:19,480 --> 00:35:22,400 Speaker 1: don't care about how much a U M we have. 589 00:35:22,560 --> 00:35:25,239 Speaker 1: We don't uh, we don't have a goal around that. 590 00:35:25,360 --> 00:35:28,040 Speaker 1: We don't have financial goals, but we have a lot 591 00:35:28,080 --> 00:35:31,120 Speaker 1: of goals around creating excess returns for clients. And if 592 00:35:31,160 --> 00:35:33,640 Speaker 1: you do that well, the rest of the things take 593 00:35:33,680 --> 00:35:36,080 Speaker 1: care of themselves. You'll have more clients, you'll have more 594 00:35:36,120 --> 00:35:39,160 Speaker 1: money for existing clients, and your growth will happen. So 595 00:35:39,239 --> 00:35:40,960 Speaker 1: let's come on to your other question, which is about 596 00:35:41,000 --> 00:35:44,759 Speaker 1: what about the What about the brand? So PGIM is 597 00:35:44,800 --> 00:35:47,720 Speaker 1: only two and a half years old as a brand um. 598 00:35:48,120 --> 00:35:50,920 Speaker 1: Prior to that, all of our different affiliates had their 599 00:35:50,960 --> 00:35:55,040 Speaker 1: own brand names, and they also have their own independent 600 00:35:55,080 --> 00:36:01,200 Speaker 1: websites right under the parent companies. Jurisprunce and while while 601 00:36:01,280 --> 00:36:04,720 Speaker 1: this business was largely a US business in some ways, 602 00:36:04,760 --> 00:36:07,920 Speaker 1: I don't know if that mattered very much. But as 603 00:36:07,960 --> 00:36:12,400 Speaker 1: you may know, we can't use the Prudential name outside 604 00:36:12,440 --> 00:36:14,239 Speaker 1: really of the U S and Japan, and there are 605 00:36:14,160 --> 00:36:16,560 Speaker 1: a few other exceptions. Is that is that due to 606 00:36:16,680 --> 00:36:20,319 Speaker 1: contract or is it because of the Prudential Plc, which 607 00:36:20,320 --> 00:36:22,239 Speaker 1: is based in the UK and which is not in 608 00:36:22,280 --> 00:36:25,960 Speaker 1: any way affiliated with US, but they own the rights 609 00:36:25,960 --> 00:36:29,279 Speaker 1: to the name Prudential. So as I came into this role, 610 00:36:29,640 --> 00:36:32,799 Speaker 1: um it was clear if I wanted to expand the 611 00:36:32,840 --> 00:36:36,120 Speaker 1: business to be truly a global leader in the investment world, 612 00:36:36,400 --> 00:36:38,760 Speaker 1: we needed a single name that we could use around 613 00:36:38,800 --> 00:36:42,279 Speaker 1: the world, and so we looked around. We obviously did 614 00:36:42,320 --> 00:36:44,480 Speaker 1: a lot of test marketing, as you can imagine, and 615 00:36:44,520 --> 00:36:47,320 Speaker 1: we came up with with p Jim, which is a 616 00:36:47,400 --> 00:36:50,040 Speaker 1: name that we can use everywhere. But that is only 617 00:36:50,040 --> 00:36:52,400 Speaker 1: two and a half years old, and like with any brand, 618 00:36:52,880 --> 00:36:55,640 Speaker 1: it takes time for that to really sink in and 619 00:36:55,680 --> 00:36:58,279 Speaker 1: be associated and it's a new brand. We didn't have 620 00:36:59,040 --> 00:37:02,440 Speaker 1: really a name that we used externally for the the 621 00:37:02,680 --> 00:37:05,640 Speaker 1: entire investment business, so it's not surprising to me at 622 00:37:05,680 --> 00:37:08,319 Speaker 1: all that you've you've found that, but I do think 623 00:37:08,360 --> 00:37:10,440 Speaker 1: that's in the process of changing. And my hope is 624 00:37:10,440 --> 00:37:13,239 Speaker 1: that when we sit down three years from now and 625 00:37:13,280 --> 00:37:15,719 Speaker 1: you've talked to your colleague, that they will say, oh, yes, 626 00:37:15,760 --> 00:37:17,520 Speaker 1: I have heard of them a bit. And there are 627 00:37:17,560 --> 00:37:22,560 Speaker 1: a handful of acronym based asset managers from every M, 628 00:37:22,680 --> 00:37:25,040 Speaker 1: S C I, UM, D F A. There are a 629 00:37:25,040 --> 00:37:29,080 Speaker 1: bunch of them around UM, Ge Sam, M sim GAM, 630 00:37:29,080 --> 00:37:31,719 Speaker 1: I mean, pick your favorite. Yeah, although ge Sam and 631 00:37:32,120 --> 00:37:34,960 Speaker 1: those you know you they're really under golden sacks, So 632 00:37:35,000 --> 00:37:36,759 Speaker 1: you really think I don't think of them as an 633 00:37:36,760 --> 00:37:40,080 Speaker 1: acronym business the way I do. Uh an M, S 634 00:37:40,080 --> 00:37:43,680 Speaker 1: C I or A d F A UM. So that's 635 00:37:43,920 --> 00:37:46,640 Speaker 1: probably old enough to know what PIMCO stands for. Uh. Yeah, 636 00:37:46,680 --> 00:37:51,960 Speaker 1: Pacific Insurance Management Co R and uh. Not only that, 637 00:37:52,040 --> 00:37:56,000 Speaker 1: I'm old enough to remember, uh And it helps to 638 00:37:56,080 --> 00:38:00,000 Speaker 1: having had Bill grows here. The story of how pim 639 00:38:00,239 --> 00:38:04,719 Speaker 1: was launched out of the Pacific Life Insurance Company began as, hey, 640 00:38:04,760 --> 00:38:07,279 Speaker 1: why don't you let us manage your fixed income and 641 00:38:07,320 --> 00:38:10,319 Speaker 1: maybe we'll find some other people. Yeah, so it's it's 642 00:38:10,760 --> 00:38:13,120 Speaker 1: it's one of those things, and UM, I guess you 643 00:38:13,200 --> 00:38:16,160 Speaker 1: forget I forget PIMCO is an acronym because I'm just 644 00:38:16,239 --> 00:38:18,560 Speaker 1: so used to it as PIMCO. And then that happens 645 00:38:18,600 --> 00:38:22,040 Speaker 1: over over time, well thirty five years later. Sure, So 646 00:38:22,520 --> 00:38:27,160 Speaker 1: well let's revisit this and and we'll see how how 647 00:38:27,200 --> 00:38:31,120 Speaker 1: broadly pigem pigem has been has been accepted. So there's 648 00:38:31,160 --> 00:38:33,920 Speaker 1: a bunch of other questions I wanted to to get 649 00:38:33,960 --> 00:38:37,440 Speaker 1: to UM that we kind of skipped. We talked about 650 00:38:37,480 --> 00:38:43,080 Speaker 1: market valuation, We talked about UM, your your role at 651 00:38:43,239 --> 00:38:47,600 Speaker 1: at pigam. UM, Let's talk a little bit about consultants, 652 00:38:47,640 --> 00:38:52,919 Speaker 1: because I think consultants these days have gotten a bad rap, 653 00:38:53,080 --> 00:38:56,320 Speaker 1: some of which is not deserved, but some of which 654 00:38:56,400 --> 00:38:59,840 Speaker 1: is how do you how does your office work with 655 00:39:00,120 --> 00:39:05,640 Speaker 1: various consultants two different large UM by side customers like 656 00:39:06,080 --> 00:39:10,080 Speaker 1: pension funds, insurers and and solein wealth funds. Well, the 657 00:39:10,360 --> 00:39:14,879 Speaker 1: pension consultants are obviously extremely important partners of ours in 658 00:39:14,880 --> 00:39:18,560 Speaker 1: in the whole ecosystem of money management. UM. You know, 659 00:39:18,640 --> 00:39:21,560 Speaker 1: they are the people who the trustees look to for 660 00:39:21,680 --> 00:39:24,040 Speaker 1: advice and guidance. There are also the people that do 661 00:39:24,160 --> 00:39:27,359 Speaker 1: a lot of the asset and liability studies UM that 662 00:39:27,520 --> 00:39:31,680 Speaker 1: the underpin the strategic asset allocation. So here's my question 663 00:39:31,719 --> 00:39:34,479 Speaker 1: about that, and and this is really off the top 664 00:39:34,480 --> 00:39:39,640 Speaker 1: of my head. Why does a investment committee at a 665 00:39:39,640 --> 00:39:43,680 Speaker 1: big pension fund need and outside consultant. Isn't what the 666 00:39:43,680 --> 00:39:47,240 Speaker 1: consultant does really their job? I think that's a fairly 667 00:39:48,040 --> 00:39:51,759 Speaker 1: common um perspective from people. Why why is that view 668 00:39:51,800 --> 00:39:54,799 Speaker 1: wrong or is it wrong? Well? I think that there 669 00:39:54,800 --> 00:39:58,359 Speaker 1: are two aspects of of the question. I mean, one 670 00:39:58,400 --> 00:40:00,560 Speaker 1: of them is just are they doing the same job, 671 00:40:00,600 --> 00:40:03,239 Speaker 1: And the answer to that is, in general no, Um. 672 00:40:03,280 --> 00:40:06,439 Speaker 1: If you look at what goes into a detailed liability 673 00:40:06,480 --> 00:40:09,920 Speaker 1: study of one of these uh, most pension funds are 674 00:40:09,960 --> 00:40:11,600 Speaker 1: not staff to do that. And by the way, they 675 00:40:11,640 --> 00:40:13,480 Speaker 1: only do that every few years, and it would be 676 00:40:13,520 --> 00:40:15,200 Speaker 1: still leave for them to do it. So I think 677 00:40:15,239 --> 00:40:17,480 Speaker 1: that's actually an effective way. In other words, they have 678 00:40:17,480 --> 00:40:19,880 Speaker 1: an expert from the outside as opposed to needing to 679 00:40:20,040 --> 00:40:24,600 Speaker 1: develop any house for the occasional you know, quadrennial need. 680 00:40:24,840 --> 00:40:27,840 Speaker 1: And the the other then is is having a second 681 00:40:27,840 --> 00:40:31,640 Speaker 1: opinion on asset asset allocation sessions. Most c i O 682 00:40:31,760 --> 00:40:34,640 Speaker 1: s do have their own internal views and group that 683 00:40:34,719 --> 00:40:36,960 Speaker 1: does that. They have a pension group. They may even 684 00:40:37,000 --> 00:40:40,440 Speaker 1: have a second pension group UM that they get views 685 00:40:40,560 --> 00:40:42,680 Speaker 1: on that because they do want to get the very 686 00:40:42,800 --> 00:40:45,480 Speaker 1: best thinking on those questions. And I think that's completely 687 00:40:45,680 --> 00:40:50,800 Speaker 1: completely appropriate. Quite quite interesting. Um, we discussed your clients, 688 00:40:50,880 --> 00:40:55,440 Speaker 1: We talked about UM pensions a little bit. Lots of 689 00:40:55,520 --> 00:40:59,520 Speaker 1: pensions in the United States, especially public pensions, seem to 690 00:40:59,560 --> 00:41:03,200 Speaker 1: be somewhat underfunded, although there are plenty of corporate pensions 691 00:41:03,239 --> 00:41:07,600 Speaker 1: that are underfunded. Also, how is that going to play out? 692 00:41:07,640 --> 00:41:12,880 Speaker 1: What what should these underfunded public pensions be doing today 693 00:41:12,960 --> 00:41:16,520 Speaker 1: so that the rest of the taxpayers aren't on the hook, 694 00:41:17,200 --> 00:41:20,359 Speaker 1: uh for for a big bill twenty thirty years down 695 00:41:20,400 --> 00:41:23,440 Speaker 1: the road of the pension guaranteed trust is eventually going 696 00:41:23,480 --> 00:41:27,120 Speaker 1: to run out of money. How do we deal with this? Well, 697 00:41:27,160 --> 00:41:29,080 Speaker 1: I think it's a great question. I mean, for most 698 00:41:29,200 --> 00:41:32,680 Speaker 1: of my career, you could walk into a corporate pension 699 00:41:32,840 --> 00:41:37,240 Speaker 1: and a public pension and guess that the asset allocation 700 00:41:37,320 --> 00:41:41,040 Speaker 1: was and you largely be right within a few percentages. 701 00:41:41,440 --> 00:41:43,839 Speaker 1: Now you go into a corporate plan and for the 702 00:41:43,880 --> 00:41:47,839 Speaker 1: most part, uh, they have fundamentally de risk their portfolios. 703 00:41:47,920 --> 00:41:51,080 Speaker 1: They have moved out of risk assets. They're much heavier 704 00:41:51,080 --> 00:41:54,960 Speaker 1: into fixed income, they started to match through UH liability 705 00:41:55,280 --> 00:41:58,960 Speaker 1: driven investing match their investment and in some extreme cases 706 00:41:59,000 --> 00:42:02,640 Speaker 1: they've even done UM a pension risk transfer, which is 707 00:42:02,680 --> 00:42:05,719 Speaker 1: to literally take that pension off their balance sheet and 708 00:42:05,800 --> 00:42:08,759 Speaker 1: give it to an insurance company to manage. But they've 709 00:42:08,760 --> 00:42:11,920 Speaker 1: really worked very hard to d risk because what they 710 00:42:11,920 --> 00:42:15,720 Speaker 1: care about is not absolute return. They care about whether 711 00:42:15,800 --> 00:42:19,719 Speaker 1: or not their funding level relative to their liabilities is 712 00:42:19,960 --> 00:42:22,040 Speaker 1: UM going to be appropriate so they can meet their 713 00:42:22,160 --> 00:42:25,800 Speaker 1: meet their obligations. So they've been de risking. At the 714 00:42:25,880 --> 00:42:28,120 Speaker 1: same time, the public plants have really been going in 715 00:42:28,120 --> 00:42:31,520 Speaker 1: the other direction because the assets and the liabilities there 716 00:42:31,520 --> 00:42:35,080 Speaker 1: are not actually managed in the same place. The politicians 717 00:42:35,160 --> 00:42:39,160 Speaker 1: generally control how large the liabilities get by what's promised 718 00:42:39,160 --> 00:42:43,800 Speaker 1: to unions and others UM. The c i O S 719 00:42:43,840 --> 00:42:47,120 Speaker 1: tends then need to manage those assets to match that, 720 00:42:47,840 --> 00:42:50,480 Speaker 1: and the only even if it's unrealistic, even if it's unrealistic, 721 00:42:50,480 --> 00:42:52,080 Speaker 1: and so the only way they've been able to do 722 00:42:52,120 --> 00:42:54,440 Speaker 1: that has been to continue to move out on the 723 00:42:54,560 --> 00:42:57,480 Speaker 1: on the risk curve so real and leverage all equity, 724 00:42:58,960 --> 00:43:01,000 Speaker 1: a lot of private equity, a lot of hedge funds 725 00:43:01,200 --> 00:43:03,640 Speaker 1: UH to try to do that now, if you do 726 00:43:03,719 --> 00:43:08,640 Speaker 1: the math, you really can't convince yourself that investment returns 727 00:43:08,719 --> 00:43:11,000 Speaker 1: will actually make up for the shortfalls in a lot 728 00:43:11,000 --> 00:43:13,000 Speaker 1: of this. There's really no way. And when you look 729 00:43:13,040 --> 00:43:16,759 Speaker 1: at the recent decade of alternatives that most of these 730 00:43:16,800 --> 00:43:19,840 Speaker 1: pension funds are in, I know they for some reason, 731 00:43:19,880 --> 00:43:22,960 Speaker 1: I can't explain it. They all have higher expected returns, 732 00:43:23,000 --> 00:43:26,160 Speaker 1: but the actual performance for the most part across the 733 00:43:26,200 --> 00:43:30,400 Speaker 1: whole industry has been pretty poor. That's true. Uh, And 734 00:43:30,560 --> 00:43:32,920 Speaker 1: I would say that that's been uh as we've been. 735 00:43:33,000 --> 00:43:36,319 Speaker 1: We did a big study on different forms of alternatives, 736 00:43:36,320 --> 00:43:38,960 Speaker 1: and the group that did come in for the toughest 737 00:43:39,000 --> 00:43:42,160 Speaker 1: test was was hedge funds, because not only did you 738 00:43:42,239 --> 00:43:45,279 Speaker 1: have the return problem, but actually most of them turned 739 00:43:45,320 --> 00:43:48,440 Speaker 1: out to be quite correlated with the equity podats. And 740 00:43:48,520 --> 00:43:50,520 Speaker 1: so you know, one of the reasons they were called 741 00:43:50,560 --> 00:43:54,120 Speaker 1: alternatives was supposed to give you a different risk profile, 742 00:43:54,280 --> 00:43:56,640 Speaker 1: right than then you had with your public markets, and 743 00:43:56,680 --> 00:44:00,120 Speaker 1: they really haven't delivered on that. Private equity interestingly did, 744 00:44:00,160 --> 00:44:04,719 Speaker 1: as did real estate. Private equity least correlated and returns 745 00:44:04,719 --> 00:44:07,719 Speaker 1: than than the rest of the alternatives. And and and 746 00:44:07,760 --> 00:44:10,600 Speaker 1: some of that has to do I would imagine with 747 00:44:10,680 --> 00:44:13,880 Speaker 1: the ability to not only have these longer holding periods 748 00:44:13,880 --> 00:44:16,880 Speaker 1: where you're not more absolutely to market, but the ability 749 00:44:16,920 --> 00:44:20,799 Speaker 1: to take advantages of the volatility and the dislocations when 750 00:44:20,880 --> 00:44:24,799 Speaker 1: value presents itself. Private equity has the best seat to 751 00:44:24,880 --> 00:44:27,319 Speaker 1: jump into that or am I overstating it No? I 752 00:44:27,320 --> 00:44:29,760 Speaker 1: think I think that that that ability to take the 753 00:44:29,840 --> 00:44:31,960 Speaker 1: kind of seven to ten year view and not be 754 00:44:32,120 --> 00:44:36,160 Speaker 1: forced to either mark the market or necessarily to invest 755 00:44:36,280 --> 00:44:40,759 Speaker 1: this year even is a very attractive piece of the 756 00:44:40,760 --> 00:44:45,320 Speaker 1: business model. I wouldn't underplay though, the role that getting 757 00:44:45,440 --> 00:44:48,160 Speaker 1: kind of common incentives have played. I think that if 758 00:44:48,200 --> 00:44:50,759 Speaker 1: you go back in the history of private equity, they 759 00:44:50,840 --> 00:44:54,080 Speaker 1: the early days, a lot of this was financial engineering, 760 00:44:54,080 --> 00:44:56,920 Speaker 1: and it was it was done with leverage. That's the 761 00:44:57,080 --> 00:44:59,600 Speaker 1: l b O side. That was not true today you 762 00:44:59,640 --> 00:45:02,320 Speaker 1: really do you find that, uh, you know, private equity 763 00:45:02,400 --> 00:45:06,120 Speaker 1: have been good owners, They've been investing behind their businesses. 764 00:45:06,440 --> 00:45:09,600 Speaker 1: They get the incentives right with management um and I 765 00:45:09,640 --> 00:45:13,480 Speaker 1: think they've proven that when you have a longer time frame, 766 00:45:13,560 --> 00:45:16,440 Speaker 1: that's actually a very effective way uh to run to 767 00:45:16,520 --> 00:45:19,480 Speaker 1: run a firm. So I pulled this off of the 768 00:45:19,560 --> 00:45:24,200 Speaker 1: website that under your bio, I have to have you 769 00:45:24,560 --> 00:45:28,960 Speaker 1: UM explain this a bit. Mr Hunt oversees all aspects 770 00:45:29,000 --> 00:45:33,200 Speaker 1: of the AST asset management business, including its public fixed income, 771 00:45:33,719 --> 00:45:39,120 Speaker 1: real estate, public equity, private fixed income, and mutual fund units. 772 00:45:39,680 --> 00:45:43,680 Speaker 1: That sounds like an enormous job. What is your day 773 00:45:43,680 --> 00:45:45,600 Speaker 1: to day like? What what is a day in the 774 00:45:45,640 --> 00:45:50,040 Speaker 1: life of David Hunt like at Pigeon? So I'm not 775 00:45:50,120 --> 00:45:53,040 Speaker 1: sure there's any typical day, which is one of the 776 00:45:53,680 --> 00:45:56,840 Speaker 1: wonderful things about a role like this is that it's endlessly, 777 00:45:57,320 --> 00:46:00,880 Speaker 1: endlessly varied, UM. But I can say that over the 778 00:46:00,960 --> 00:46:03,960 Speaker 1: period of a year, UM, I would say about half 779 00:46:03,960 --> 00:46:07,080 Speaker 1: of my time is spent um leading but not managing 780 00:46:07,120 --> 00:46:10,520 Speaker 1: the businesses that you described. About a third of my 781 00:46:10,560 --> 00:46:13,879 Speaker 1: time is spent out with clients UM and and kind 782 00:46:13,920 --> 00:46:16,600 Speaker 1: of outwardly focused, so I'm trying to keep my ear 783 00:46:16,640 --> 00:46:19,880 Speaker 1: to the market of what clients are really needing and wanting. 784 00:46:20,280 --> 00:46:22,200 Speaker 1: And then the remaining time is spent more on kind 785 00:46:22,239 --> 00:46:26,440 Speaker 1: of corporate governance issues and working with prudential executives in 786 00:46:26,520 --> 00:46:29,000 Speaker 1: our and our board. So it's a it's a pretty 787 00:46:29,160 --> 00:46:32,560 Speaker 1: nice mix of activities. So you mentioned you have your 788 00:46:32,600 --> 00:46:36,240 Speaker 1: ear to the ground and listening to what clients UM 789 00:46:36,920 --> 00:46:40,480 Speaker 1: are talking about what our clients saying today, What what 790 00:46:40,600 --> 00:46:43,120 Speaker 1: are they concerned about, and what do you think is 791 00:46:43,200 --> 00:46:46,399 Speaker 1: kind of interesting that's bubbling up from that client base. 792 00:46:47,239 --> 00:46:49,600 Speaker 1: So I would say the most interesting thing is that 793 00:46:49,960 --> 00:46:52,560 Speaker 1: to watch the battle between the head and the heart 794 00:46:52,760 --> 00:46:55,359 Speaker 1: of many of our clients right now. So they look 795 00:46:55,400 --> 00:46:57,520 Speaker 1: at all the numbers and they the economy is doing 796 00:46:57,560 --> 00:47:01,120 Speaker 1: really well. Um, you know, we've got four percent growth 797 00:47:01,160 --> 00:47:07,080 Speaker 1: in the second quarter, earnings were up, inflation looks really good. Um, 798 00:47:07,120 --> 00:47:10,440 Speaker 1: you know, they should be feeling pretty um, you know, 799 00:47:10,719 --> 00:47:15,640 Speaker 1: comfortable with with risk assets. And then that conversation ends 800 00:47:15,640 --> 00:47:18,600 Speaker 1: pretty quickly and and the heart comes in and they 801 00:47:18,680 --> 00:47:22,319 Speaker 1: are very defensive. All of the questions they asked me 802 00:47:22,320 --> 00:47:25,960 Speaker 1: are about positioning their portfolio to get through the next downturn. 803 00:47:26,360 --> 00:47:29,680 Speaker 1: They're worried about trade and political risk. They're not worried 804 00:47:29,680 --> 00:47:33,480 Speaker 1: about the traditional business cycles. So you have this very 805 00:47:33,520 --> 00:47:37,640 Speaker 1: strange paradox where the numbers all actually look really good, 806 00:47:37,680 --> 00:47:41,799 Speaker 1: and yet people's questions and behavior is actually much more 807 00:47:41,880 --> 00:47:45,200 Speaker 1: of a group of people who is worried that, um, 808 00:47:45,239 --> 00:47:49,240 Speaker 1: we're going to have a pullback. That that's that's quite 809 00:47:49,440 --> 00:47:54,560 Speaker 1: quite fascinating. It's um, that battle between head and heart 810 00:47:54,800 --> 00:47:59,120 Speaker 1: is is an ongoing is an ongoing issue amongst all investors. 811 00:47:59,320 --> 00:48:01,320 Speaker 1: So how do you how do you respond to people 812 00:48:01,400 --> 00:48:04,640 Speaker 1: when they say, you know, we want to be defensive 813 00:48:04,880 --> 00:48:08,160 Speaker 1: and and how much of that is still the scar 814 00:48:08,280 --> 00:48:11,640 Speaker 1: tissue left over from the oh eight oh nine. I 815 00:48:11,960 --> 00:48:16,000 Speaker 1: think it's a great point. There's there's a fascinating anthropological 816 00:48:16,120 --> 00:48:18,480 Speaker 1: study to look at those c I O s who 817 00:48:18,480 --> 00:48:20,800 Speaker 1: were in their seats when we went through the crisis 818 00:48:20,960 --> 00:48:23,319 Speaker 1: versus the guys who got their job more recently, and 819 00:48:23,360 --> 00:48:27,600 Speaker 1: they have very different behaviors. And there's no question there's 820 00:48:27,640 --> 00:48:30,080 Speaker 1: a lot of scar tissue that that still remains from 821 00:48:30,080 --> 00:48:31,920 Speaker 1: the people that have their jobs. I don't know if 822 00:48:31,920 --> 00:48:34,760 Speaker 1: you remember the book The Money Game by Adam Smith. 823 00:48:35,360 --> 00:48:38,520 Speaker 1: He within the book there's a chapter that describes a 824 00:48:38,600 --> 00:48:41,560 Speaker 1: person running of funds and he says, I have to 825 00:48:41,640 --> 00:48:44,839 Speaker 1: hire all these young turks to trade because I would 826 00:48:44,880 --> 00:48:47,319 Speaker 1: never touch any of this stuff. I've been through the 827 00:48:47,320 --> 00:48:49,680 Speaker 1: previous cycles and all this stuff looks like junk to me. 828 00:48:50,120 --> 00:48:52,640 Speaker 1: But I would underperform if I didn't have the hot shots. 829 00:48:52,920 --> 00:48:55,600 Speaker 1: And when they blow up, I'll still be around afterwards. 830 00:48:55,640 --> 00:48:58,359 Speaker 1: They'll lose their jobs, but I'll capture the return now 831 00:48:58,400 --> 00:49:01,399 Speaker 1: that I wouldn't have otherwise. It's kind of an interesting thing. 832 00:49:02,040 --> 00:49:05,880 Speaker 1: You were at Mackenzie in the middle of the financial crisis. 833 00:49:06,400 --> 00:49:09,759 Speaker 1: What was the experience like there when it looked like 834 00:49:09,800 --> 00:49:13,560 Speaker 1: the world was teetering on the abyss. Well, I think 835 00:49:13,600 --> 00:49:17,120 Speaker 1: like almost anybody who was working in the financial industry, 836 00:49:17,120 --> 00:49:21,279 Speaker 1: it was. It was absolutely frightening, particularly because of the 837 00:49:21,360 --> 00:49:24,719 Speaker 1: ramifications all around the world on almost any industry of 838 00:49:24,760 --> 00:49:28,160 Speaker 1: what was happening in the in the financial world, um, 839 00:49:28,200 --> 00:49:32,399 Speaker 1: you know, to some extent for consulting firms. Uh, there 840 00:49:32,600 --> 00:49:35,399 Speaker 1: was an enormous amount of problems to be solved coming 841 00:49:35,400 --> 00:49:36,799 Speaker 1: out of it. And if you're in the business of 842 00:49:36,840 --> 00:49:40,480 Speaker 1: solving problems, that tends to be a good thing. That 843 00:49:40,600 --> 00:49:43,640 Speaker 1: type of problems. Let me tell you, growth strategies pretty 844 00:49:43,719 --> 00:49:47,000 Speaker 1: much came to a grinding halt. But but workouts and 845 00:49:47,080 --> 00:49:50,520 Speaker 1: liquidity and risk management really came to the came to 846 00:49:50,560 --> 00:49:53,040 Speaker 1: the four So the mix of work changed. But it 847 00:49:53,080 --> 00:49:56,440 Speaker 1: was absolutely fascinating and terrifying at the same time. So 848 00:49:56,480 --> 00:49:59,960 Speaker 1: the one question I didn't get to that I would 849 00:50:00,040 --> 00:50:03,040 Speaker 1: be remiss if I did not bring up, is the 850 00:50:03,160 --> 00:50:07,600 Speaker 1: role of all the new financial technologies, both for managing 851 00:50:07,640 --> 00:50:12,239 Speaker 1: assets and for running an asset management business. How is 852 00:50:12,360 --> 00:50:15,160 Speaker 1: pi JAM looking at all the new fintech that's out 853 00:50:15,200 --> 00:50:19,120 Speaker 1: there and what does this mean for the industry going forward. Well, 854 00:50:19,160 --> 00:50:22,440 Speaker 1: I would say we're at peak hype on the technology 855 00:50:24,040 --> 00:50:26,319 Speaker 1: front at the moment. I'm convinced that if I just 856 00:50:26,400 --> 00:50:29,560 Speaker 1: slap the word AI on the name of any mutual fund, 857 00:50:29,560 --> 00:50:32,440 Speaker 1: I could raise another billion dollars. That's really not a 858 00:50:32,520 --> 00:50:35,359 Speaker 1: good place to be. Um So, I I think that 859 00:50:35,719 --> 00:50:38,719 Speaker 1: it's important to focus on technology, but I also think 860 00:50:38,760 --> 00:50:40,520 Speaker 1: you can't be carried away with a lot of the 861 00:50:40,560 --> 00:50:42,319 Speaker 1: things that you're reading in the in the press. At 862 00:50:42,320 --> 00:50:45,920 Speaker 1: the moment um, we have spent a lot of time 863 00:50:46,000 --> 00:50:48,560 Speaker 1: on artificial intelligence and how to apply it to the 864 00:50:48,560 --> 00:50:51,399 Speaker 1: investment process, and we do think, uh, there are some 865 00:50:51,600 --> 00:50:55,640 Speaker 1: real possible breakthroughs in that particularly come coming from the 866 00:50:55,719 --> 00:50:59,600 Speaker 1: use of satellite imagery and also the use of location 867 00:50:59,640 --> 00:51:02,640 Speaker 1: device is for example, in our real estate business, we're 868 00:51:02,719 --> 00:51:05,480 Speaker 1: able to underwrite an office building using that kind of 869 00:51:06,040 --> 00:51:08,719 Speaker 1: information in a far more sophisticated way than we would 870 00:51:08,719 --> 00:51:12,640 Speaker 1: have before. What satellite information or I mean imagine you 871 00:51:12,640 --> 00:51:15,000 Speaker 1: you you you you're about to buy in an office 872 00:51:15,040 --> 00:51:18,239 Speaker 1: complex and you'd like to know for the last you know, 873 00:51:18,400 --> 00:51:21,759 Speaker 1: five years, what is the traffic been like at how 874 00:51:21,840 --> 00:51:23,800 Speaker 1: many cars have been parked in there, what is the 875 00:51:23,840 --> 00:51:26,920 Speaker 1: foot traffic around it? And you can actually get real 876 00:51:27,160 --> 00:51:29,040 Speaker 1: data on that, you don't just have to look at 877 00:51:29,080 --> 00:51:32,400 Speaker 1: what's happened to UH two sales. So there's there. The 878 00:51:32,520 --> 00:51:35,000 Speaker 1: alternative data is important, but it's going to be an 879 00:51:35,000 --> 00:51:39,319 Speaker 1: evolution um and many people will find false signals for 880 00:51:39,360 --> 00:51:42,000 Speaker 1: a long time. And we we know running money quantitatively, 881 00:51:42,080 --> 00:51:44,719 Speaker 1: you look at a hundred signals before you find one 882 00:51:44,760 --> 00:51:47,879 Speaker 1: that has real staying power, and so it'll take time 883 00:51:47,920 --> 00:51:49,759 Speaker 1: before we we figure this out. But I think that 884 00:51:49,920 --> 00:51:52,560 Speaker 1: is an important piece of it. The other side of 885 00:51:52,560 --> 00:51:56,080 Speaker 1: it is the the use of robotics, and we do 886 00:51:56,280 --> 00:51:59,239 Speaker 1: see a lot of the kinds of repetitive tasks that 887 00:51:59,320 --> 00:52:02,960 Speaker 1: happen in UH an asset manager as being able to 888 00:52:03,040 --> 00:52:07,279 Speaker 1: be done through bots. UM. We are certainly using those 889 00:52:07,320 --> 00:52:09,960 Speaker 1: and have plans to do more of that, which simply 890 00:52:10,000 --> 00:52:15,719 Speaker 1: allows us to UM use our associates in ways that 891 00:52:15,760 --> 00:52:18,800 Speaker 1: make better use of their talents than doing repetitive tasks. 892 00:52:19,080 --> 00:52:22,240 Speaker 1: What does this mean for head count in the world 893 00:52:22,280 --> 00:52:26,640 Speaker 1: of finance going forward? So far, we've post financial crisis 894 00:52:27,120 --> 00:52:31,759 Speaker 1: seeing not just fee compression but an ongoing reduction in 895 00:52:32,120 --> 00:52:35,760 Speaker 1: total employee head count. UM is that going to continue 896 00:52:35,800 --> 00:52:40,640 Speaker 1: for the foreseeable future. So I would say let's leave 897 00:52:40,680 --> 00:52:42,680 Speaker 1: for the financial services broadly out of it. We just 898 00:52:42,719 --> 00:52:47,400 Speaker 1: talked about the investment world. UM. I think that broadly, 899 00:52:47,880 --> 00:52:51,640 Speaker 1: fee compression has been uh concentrated in a couple of 900 00:52:51,680 --> 00:52:56,360 Speaker 1: different areas, mostly in public equities. But there's been relatively 901 00:52:56,440 --> 00:53:00,480 Speaker 1: little fee compression in the alternatives world in private equity, uh, 902 00:53:00,520 --> 00:53:04,759 Speaker 1: in private credit. So if you look at PIGIM for example, UM, 903 00:53:04,760 --> 00:53:11,200 Speaker 1: we really haven't seen any uh any real price compression. UM. 904 00:53:11,239 --> 00:53:13,560 Speaker 1: If you look across the total the total platform that 905 00:53:13,560 --> 00:53:17,520 Speaker 1: that's fascinating. The two areas where I'm where it's noticeable 906 00:53:18,239 --> 00:53:23,719 Speaker 1: active mutual funds clearly under pressure from low cost um indexes, 907 00:53:24,160 --> 00:53:26,400 Speaker 1: and then the hedge fund world that was known as 908 00:53:26,480 --> 00:53:30,240 Speaker 1: two and twenty has become one in fifteen or less. 909 00:53:30,320 --> 00:53:34,440 Speaker 1: And there are some really interesting alternative fee structures where 910 00:53:34,600 --> 00:53:38,920 Speaker 1: it's UM fifty basis points and then a percentage of 911 00:53:38,960 --> 00:53:44,719 Speaker 1: alpha as opposed to profits, much of which is beta. 912 00:53:44,880 --> 00:53:48,640 Speaker 1: So that's really been under pressure. You're not seeing that 913 00:53:48,719 --> 00:53:51,319 Speaker 1: in the private equity side or the real estate side. No, 914 00:53:51,520 --> 00:53:53,520 Speaker 1: you really, um, you really aren't. I mean, if you're 915 00:53:53,560 --> 00:53:57,320 Speaker 1: able to generate alpha and you have a scarce source 916 00:53:57,360 --> 00:53:59,759 Speaker 1: of that, I would say that people are willing to 917 00:54:00,200 --> 00:54:04,160 Speaker 1: for it um and you know it's uh, it's very 918 00:54:04,280 --> 00:54:06,759 Speaker 1: interesting if you were to ask yourself the question from 919 00:54:06,760 --> 00:54:08,799 Speaker 1: the client's point of view, So do you think that 920 00:54:09,280 --> 00:54:12,600 Speaker 1: large pension plans pay more or less for asset management 921 00:54:12,640 --> 00:54:15,240 Speaker 1: now than they did ten years ago? I would assume 922 00:54:15,360 --> 00:54:20,319 Speaker 1: less because the mix has changed. Because we were talking 923 00:54:20,360 --> 00:54:23,359 Speaker 1: about before how the asset allocation has worked. As they've 924 00:54:23,400 --> 00:54:27,320 Speaker 1: moved much more into risk assets and alternatives, they're actually 925 00:54:27,360 --> 00:54:29,479 Speaker 1: paying more now. A lot of that's in performance fees, 926 00:54:29,480 --> 00:54:31,920 Speaker 1: so they're getting the return for it, but they're actually 927 00:54:31,960 --> 00:54:35,239 Speaker 1: their total bill um in many cases has gone up. 928 00:54:35,480 --> 00:54:38,600 Speaker 1: What they're paying for beta has definitely gone down. And 929 00:54:38,640 --> 00:54:41,239 Speaker 1: I'd say that's good, right. I think people are very 930 00:54:41,320 --> 00:54:45,480 Speaker 1: comfortable paying up for performance if they get if they perform. 931 00:54:46,080 --> 00:54:48,120 Speaker 1: What they were doing before was paying up for the 932 00:54:48,160 --> 00:54:51,920 Speaker 1: possibility of performance and then not getting it. That business 933 00:54:51,960 --> 00:54:53,960 Speaker 1: seems to really be on depression. I think it is. 934 00:54:54,000 --> 00:54:56,160 Speaker 1: I think if you were a closet index guy, and 935 00:54:56,239 --> 00:54:59,319 Speaker 1: charging actual fees for it. You're having a really tough time, 936 00:54:59,320 --> 00:55:01,120 Speaker 1: and my view would be and so you should be 937 00:55:01,320 --> 00:55:05,000 Speaker 1: that that. Bill Miller, the famous fund manager, said the 938 00:55:05,040 --> 00:55:10,840 Speaker 1: exact same thing. It's not necessarily passive overactive. It's closet 939 00:55:10,880 --> 00:55:14,000 Speaker 1: passive with active fees because there's no reason people should 940 00:55:14,040 --> 00:55:15,960 Speaker 1: be doing that. I would agree with. And I think 941 00:55:16,000 --> 00:55:20,000 Speaker 1: for a long time people, uh, people didn't recognize that. 942 00:55:20,200 --> 00:55:23,160 Speaker 1: But a little bit of turmoil and suddenly everybody comes 943 00:55:23,200 --> 00:55:26,640 Speaker 1: a little uh clus conscience. I know I only have 944 00:55:26,760 --> 00:55:29,080 Speaker 1: you for a finite amount of time, So let me 945 00:55:29,200 --> 00:55:32,799 Speaker 1: jump into my favorite questions. Uh. These are what we 946 00:55:32,880 --> 00:55:36,760 Speaker 1: ask all of our guests tell us. The most important 947 00:55:36,800 --> 00:55:40,239 Speaker 1: thing that people don't know about you? What? What? What 948 00:55:40,400 --> 00:55:42,840 Speaker 1: is it that? Uh? Is the deep dark secret of 949 00:55:42,920 --> 00:55:46,440 Speaker 1: David Hunt. I don't think there's any deep dark secrets 950 00:55:46,440 --> 00:55:50,200 Speaker 1: whre I hope not, but I think that, Uh. The 951 00:55:50,520 --> 00:55:53,080 Speaker 1: one of the most important things about my development has 952 00:55:53,120 --> 00:55:55,080 Speaker 1: been the fact that I've had the opportunity to work 953 00:55:55,080 --> 00:55:58,560 Speaker 1: around the world for much of my life. What word world? 954 00:55:58,760 --> 00:56:01,600 Speaker 1: I worked when I first graduated from school, I worked 955 00:56:01,600 --> 00:56:05,680 Speaker 1: in Asia for several years. Um, I mean I I remember, 956 00:56:06,320 --> 00:56:09,719 Speaker 1: you know, traveling throughout China when there were literally very 957 00:56:09,719 --> 00:56:12,800 Speaker 1: few roads and only those big, you know, Russian black 958 00:56:12,840 --> 00:56:16,480 Speaker 1: cars to ferry the government officials around. UM. I worked 959 00:56:17,280 --> 00:56:20,200 Speaker 1: in in Paris, I've Worre, I worked for six years 960 00:56:20,680 --> 00:56:24,520 Speaker 1: in London, UM and so I really feel that I 961 00:56:24,600 --> 00:56:28,560 Speaker 1: have been able to develop a much broader perspective on 962 00:56:28,560 --> 00:56:31,960 Speaker 1: on business and on people and on management because I've 963 00:56:32,000 --> 00:56:35,280 Speaker 1: actually not just traveled, but worked and lived in different 964 00:56:35,280 --> 00:56:38,000 Speaker 1: cultures around the world. And I think that's so important 965 00:56:38,000 --> 00:56:40,200 Speaker 1: for people to have. That experience gives you a global 966 00:56:40,239 --> 00:56:43,920 Speaker 1: perspective as opposed to h home country bias. Who are 967 00:56:43,960 --> 00:56:46,800 Speaker 1: some of your early mentors who helped guide your career 968 00:56:46,800 --> 00:56:50,960 Speaker 1: when you were getting started out. So I really feel 969 00:56:51,200 --> 00:56:55,000 Speaker 1: very fortunate in that having grown up at McKenzie, which 970 00:56:55,400 --> 00:56:58,680 Speaker 1: is a partnership, that there were many other senior partners 971 00:56:58,719 --> 00:57:02,480 Speaker 1: around who wanted to help and mentor people and explicitly 972 00:57:02,520 --> 00:57:04,680 Speaker 1: made it a part of their day to day life 973 00:57:04,719 --> 00:57:08,719 Speaker 1: to do that. And I would point out particularly a 974 00:57:08,760 --> 00:57:11,279 Speaker 1: guy named Ron Daniel, who was the managing director for 975 00:57:11,320 --> 00:57:16,040 Speaker 1: many years, who was the person who urged me UM 976 00:57:16,080 --> 00:57:20,080 Speaker 1: to really step out of the consulting world and go 977 00:57:20,200 --> 00:57:22,960 Speaker 1: on a series of not for profit boards UM as 978 00:57:22,960 --> 00:57:26,160 Speaker 1: a way of building a whole different perspective and different 979 00:57:26,160 --> 00:57:28,959 Speaker 1: set of skills. And so he's the person who got 980 00:57:29,000 --> 00:57:32,880 Speaker 1: me really onto uh, both the International Rescue Committee and 981 00:57:32,880 --> 00:57:35,040 Speaker 1: then ultimately onto the Lincoln Center Board, where I've been 982 00:57:35,040 --> 00:57:38,960 Speaker 1: for about fifteen years. And these are incredibly important and 983 00:57:39,040 --> 00:57:43,959 Speaker 1: formative experiences for people to have today. I urge many 984 00:57:44,040 --> 00:57:47,000 Speaker 1: of my colleagues to try to go on boards because 985 00:57:47,040 --> 00:57:50,280 Speaker 1: it does open an entirely different world to you. And 986 00:57:50,320 --> 00:57:52,960 Speaker 1: the mentorship that I had early on really encouraged and 987 00:57:53,000 --> 00:57:57,480 Speaker 1: supported that, and I'm I'm forever grateful. Quite quite interesting. Um, 988 00:57:57,600 --> 00:58:00,800 Speaker 1: what about investors who influenced the way you look at 989 00:58:00,840 --> 00:58:04,440 Speaker 1: the world of finance and investing as as you were 990 00:58:04,440 --> 00:58:09,200 Speaker 1: coming up through Princeton and Wharton and beyond. I think 991 00:58:09,200 --> 00:58:11,160 Speaker 1: it's uh, I think it's hard to pick on any 992 00:58:11,240 --> 00:58:15,680 Speaker 1: particular person in all of this because I think that, uh, 993 00:58:15,800 --> 00:58:19,000 Speaker 1: you know, one does pick a style that depends on 994 00:58:19,160 --> 00:58:23,680 Speaker 1: who your clients are, so uh, for uh, for for 995 00:58:23,880 --> 00:58:29,000 Speaker 1: large institutional investors, the whole theory of asset pricing and 996 00:58:29,080 --> 00:58:31,600 Speaker 1: what Marco wits and the work that they did, or FAMA, 997 00:58:31,880 --> 00:58:34,920 Speaker 1: where the people that I studied the most. But I 998 00:58:34,960 --> 00:58:38,520 Speaker 1: also think that the world changes and uh as we 999 00:58:38,600 --> 00:58:42,000 Speaker 1: see now what as an efficient frontier and how pricing 1000 00:58:42,040 --> 00:58:45,320 Speaker 1: work is very different in a world now with with 1001 00:58:45,440 --> 00:58:46,960 Speaker 1: beta the way we have it than it was when 1002 00:58:46,960 --> 00:58:49,600 Speaker 1: they did their work. So I think that uh, I 1003 00:58:49,640 --> 00:58:53,480 Speaker 1: think that while it's good to have early informative you 1004 00:58:53,520 --> 00:58:56,760 Speaker 1: know kind of uh stars that you study, you need 1005 00:58:56,840 --> 00:58:59,080 Speaker 1: to be willing to continue to update those views as well. 1006 00:58:59,400 --> 00:59:02,400 Speaker 1: Have to be into lexually flexible. UM, let's talk about 1007 00:59:02,440 --> 00:59:05,120 Speaker 1: some of your favorite books. This is everybody's favorite question. 1008 00:59:05,200 --> 00:59:07,960 Speaker 1: What have you been reading fiction, non fiction? What do 1009 00:59:08,000 --> 00:59:11,480 Speaker 1: you like to recommend to people? So my my pick 1010 00:59:11,600 --> 00:59:15,920 Speaker 1: for the summer has been Why We Sleep? Why We Sleep? 1011 00:59:16,200 --> 00:59:20,640 Speaker 1: Which is written by the head of the Berkeley Sleep Lab, 1012 00:59:21,440 --> 00:59:28,040 Speaker 1: and it is an absolutely fascinating exposay on what does 1013 00:59:28,120 --> 00:59:30,200 Speaker 1: sleep really do for you? Why? Why do you sleep? 1014 00:59:30,240 --> 00:59:33,480 Speaker 1: And it starts even with the broadest range of why 1015 00:59:33,520 --> 00:59:37,120 Speaker 1: do all animals sleep? Do you know that giraffes need 1016 00:59:37,200 --> 00:59:40,680 Speaker 1: four hours? Uh? Did you did you know that dolphins 1017 00:59:40,680 --> 00:59:43,160 Speaker 1: sleep with one half of their brain and then they 1018 00:59:43,200 --> 00:59:45,160 Speaker 1: wake up and the other half goes to sleep because 1019 00:59:45,200 --> 00:59:48,240 Speaker 1: they need to keep moving in the water. Talks about 1020 00:59:48,240 --> 00:59:51,600 Speaker 1: the importance of of rem and non rem sleep and 1021 00:59:51,640 --> 00:59:55,040 Speaker 1: what the two do and their involvement in that in learning. 1022 00:59:55,440 --> 00:59:57,640 Speaker 1: And then it does talk a bit about how, uh, 1023 00:59:57,720 --> 01:00:00,760 Speaker 1: you know, as a society we don't nearly get enough 1024 01:00:00,800 --> 01:00:04,440 Speaker 1: sleep and don't uh and don't value it nearly as 1025 01:00:04,520 --> 01:00:07,840 Speaker 1: much as that we should, and how the technological wave 1026 01:00:07,920 --> 01:00:11,480 Speaker 1: that we were talking about earlier UM has actually intruded 1027 01:00:11,520 --> 01:00:15,000 Speaker 1: on people sleep in very important and fundamental ways. And 1028 01:00:15,040 --> 01:00:17,880 Speaker 1: he makes the case that America is an incredibly sleep 1029 01:00:17,920 --> 01:00:20,960 Speaker 1: star of society. And not only are we asleep star 1030 01:00:21,000 --> 01:00:24,960 Speaker 1: of society, we've exported that around the world, and other 1031 01:00:25,040 --> 01:00:29,640 Speaker 1: countries have unfortunately been following our lead. That that sounds fascinating. 1032 01:00:29,840 --> 01:00:31,800 Speaker 1: I'm gonna put that on us and any other books 1033 01:00:31,840 --> 01:00:33,800 Speaker 1: you uh, I think that's a that's a good one 1034 01:00:33,840 --> 01:00:37,240 Speaker 1: for this all right for sure? UM, tell us about 1035 01:00:37,680 --> 01:00:40,000 Speaker 1: what excites you right now about the industry. What do 1036 01:00:40,040 --> 01:00:44,960 Speaker 1: you think is the most interesting development that's taking place today? Oh? 1037 01:00:45,000 --> 01:00:46,960 Speaker 1: I think it's a it's a fabulous time to be 1038 01:00:47,000 --> 01:00:51,000 Speaker 1: in the investment world. UM. We are really seeing that 1039 01:00:51,200 --> 01:00:55,600 Speaker 1: the change of business models in almost every single UH 1040 01:00:56,080 --> 01:00:58,240 Speaker 1: aspect of the industry, whether or not it is in 1041 01:00:59,000 --> 01:01:02,520 Speaker 1: what is the technology g company, what's happening to online retail, 1042 01:01:03,240 --> 01:01:06,960 Speaker 1: what's happening with internet companies in the developing countries. So, 1043 01:01:07,480 --> 01:01:10,320 Speaker 1: you know, we see some of the most interesting opportunities 1044 01:01:10,360 --> 01:01:14,240 Speaker 1: in China and India actually being in technology companies there 1045 01:01:14,280 --> 01:01:16,840 Speaker 1: because they don't have all these legacy systems. They are 1046 01:01:16,840 --> 01:01:21,680 Speaker 1: going right to the smartphones, and we see fascinating opportunities 1047 01:01:21,760 --> 01:01:24,479 Speaker 1: disrupt industries in that. So I think there's never been 1048 01:01:24,920 --> 01:01:27,920 Speaker 1: a more interesting time, given the pace of change, to 1049 01:01:28,040 --> 01:01:31,600 Speaker 1: be an active manager, because there's so many places where 1050 01:01:31,600 --> 01:01:36,680 Speaker 1: you can add significant excess returns. Quite quite interesting. Um, 1051 01:01:36,720 --> 01:01:38,840 Speaker 1: what changes are you looking forward to? What do you 1052 01:01:38,880 --> 01:01:42,520 Speaker 1: think is in flux? What does the next decade look like, 1053 01:01:42,600 --> 01:01:44,600 Speaker 1: and how is it going to be different than what 1054 01:01:44,640 --> 01:01:47,080 Speaker 1: we just came out of. I think the biggest change 1055 01:01:47,120 --> 01:01:50,560 Speaker 1: is going to be this uh confluence of private and 1056 01:01:50,680 --> 01:01:54,520 Speaker 1: public into a very different form of asset manager who 1057 01:01:54,560 --> 01:01:57,320 Speaker 1: is able to do both of those and to deliver 1058 01:01:57,400 --> 01:02:00,360 Speaker 1: integrated solutions to their their clients. And we will no 1059 01:02:00,480 --> 01:02:03,480 Speaker 1: longer have a world where you know, Bloomberg as a 1060 01:02:03,520 --> 01:02:06,640 Speaker 1: reporter for private equity and a reporter for long only. 1061 01:02:06,880 --> 01:02:09,440 Speaker 1: I mean, all of a sudden, these will become fundamentally 1062 01:02:09,480 --> 01:02:13,840 Speaker 1: integrated with each other. Quite quite interesting. Tell us about 1063 01:02:13,840 --> 01:02:17,280 Speaker 1: a time you failed and what you learned from the experience. 1064 01:02:18,680 --> 01:02:22,160 Speaker 1: I mean, so so many times it's uh, it's really 1065 01:02:22,200 --> 01:02:25,880 Speaker 1: hard to uh, it's hard to know what to pick. Um. 1066 01:02:25,960 --> 01:02:30,400 Speaker 1: So if I you you asked earlier about the financial crisis, Um, 1067 01:02:30,440 --> 01:02:33,520 Speaker 1: if I go back even beyond that to uh, the 1068 01:02:33,600 --> 01:02:36,440 Speaker 1: early nots w and we had the big meltdown around 1069 01:02:36,520 --> 01:02:40,400 Speaker 1: technology stocks. So I was the leader of the capital 1070 01:02:40,440 --> 01:02:44,600 Speaker 1: markets practice at that point, and literally our revenue went 1071 01:02:44,760 --> 01:02:48,600 Speaker 1: from very large and global to zero in about four months. 1072 01:02:49,560 --> 01:02:52,960 Speaker 1: And I had partners all around the world who, uh, 1073 01:02:53,000 --> 01:02:55,040 Speaker 1: you know, we're very worried about what this is going 1074 01:02:55,080 --> 01:02:58,000 Speaker 1: to mean for their careers and families. We had clients 1075 01:02:58,000 --> 01:03:01,080 Speaker 1: who were obviously in deep array about what they were 1076 01:03:01,120 --> 01:03:04,439 Speaker 1: going to do, and uh, you know, it was a 1077 01:03:04,520 --> 01:03:08,760 Speaker 1: monumental task to try to get that group up and 1078 01:03:08,840 --> 01:03:12,040 Speaker 1: running and confident and staying with clients and being willing 1079 01:03:12,080 --> 01:03:15,760 Speaker 1: to take the five year view on their success rather 1080 01:03:15,800 --> 01:03:17,520 Speaker 1: than whether or not that there would be anything to 1081 01:03:17,560 --> 01:03:20,760 Speaker 1: do over six months. And I would say in the 1082 01:03:20,800 --> 01:03:23,280 Speaker 1: beginnings of that I failed utterly at finding the right 1083 01:03:23,320 --> 01:03:26,800 Speaker 1: way to motivate into enhance that. And it took me 1084 01:03:26,880 --> 01:03:29,320 Speaker 1: a lot of trial and error before I got to 1085 01:03:29,360 --> 01:03:32,200 Speaker 1: the point where I realized that what was needed here 1086 01:03:32,240 --> 01:03:36,720 Speaker 1: again was not management, but inspiration of the role that 1087 01:03:36,760 --> 01:03:39,600 Speaker 1: they could play with their clients. Those are two very 1088 01:03:39,640 --> 01:03:43,080 Speaker 1: different things, very different things, and I really learned to 1089 01:03:43,160 --> 01:03:46,360 Speaker 1: shift between the two. People didn't need, you know, day 1090 01:03:46,360 --> 01:03:48,320 Speaker 1: to day instruction on what they ought to be doing, 1091 01:03:48,360 --> 01:03:51,000 Speaker 1: and mostly they felt badly because they weren't generating any 1092 01:03:51,040 --> 01:03:53,480 Speaker 1: revenue and that wasn't the point. But they needed to 1093 01:03:53,520 --> 01:03:56,600 Speaker 1: feel that they were making a difference with their clients. 1094 01:03:56,640 --> 01:03:59,840 Speaker 1: And once I got that right, then good things began 1095 01:03:59,880 --> 01:04:03,280 Speaker 1: to happen quite quite fascinating. Um, what do you do 1096 01:04:03,360 --> 01:04:04,920 Speaker 1: for fun when you're not in the office, What do 1097 01:04:04,960 --> 01:04:10,320 Speaker 1: you do to relax or for entertainment? So I'm a 1098 01:04:10,600 --> 01:04:13,880 Speaker 1: a a poor but enthusiastic tennis player and have been 1099 01:04:14,600 --> 01:04:18,600 Speaker 1: for a long time. Um and Uh, I have found 1100 01:04:18,640 --> 01:04:21,280 Speaker 1: that tennis has been a really important part of my life. 1101 01:04:21,320 --> 01:04:23,800 Speaker 1: We talked earlier about living all over the world. Well, 1102 01:04:23,840 --> 01:04:25,680 Speaker 1: you know, you go to Hong Kong, you don't know anybody, 1103 01:04:25,920 --> 01:04:27,880 Speaker 1: You take your little rackets and you go down to 1104 01:04:27,920 --> 01:04:30,520 Speaker 1: the local tennis club, and in two weeks you have 1105 01:04:30,640 --> 01:04:32,959 Speaker 1: a whole set of friends. And by the way, they're 1106 01:04:32,960 --> 01:04:36,680 Speaker 1: friends that you wouldn't necessarily meet through your regular work day. 1107 01:04:36,720 --> 01:04:38,600 Speaker 1: So you're you're all of a sudden involved in a 1108 01:04:38,640 --> 01:04:44,640 Speaker 1: different society. Uh. It's it's really a wonderful sports of life, sport, 1109 01:04:45,080 --> 01:04:47,640 Speaker 1: and it's one that you can do anywhere. So I 1110 01:04:48,080 --> 01:04:50,840 Speaker 1: when I travel, I take my tennis racket and I 1111 01:04:50,920 --> 01:04:53,320 Speaker 1: always try to get my tom on the courts. Have 1112 01:04:53,400 --> 01:04:55,840 Speaker 1: you been watching the US Open we're recording this right, 1113 01:04:56,760 --> 01:05:00,120 Speaker 1: of course I have. I went on Monday. In fact, 1114 01:05:00,120 --> 01:05:03,880 Speaker 1: why I I saw. I saw Madison's big match on Monday, 1115 01:05:03,920 --> 01:05:05,800 Speaker 1: So I do. I I watch as much of it, 1116 01:05:05,960 --> 01:05:08,000 Speaker 1: uh as as I can. I think it's one of 1117 01:05:08,000 --> 01:05:10,120 Speaker 1: the great terms world. I even went to the French 1118 01:05:10,160 --> 01:05:12,320 Speaker 1: Open this year as well, No kidding, I was a 1119 01:05:12,320 --> 01:05:15,280 Speaker 1: little shocked by Federer. That was That was a surprise. 1120 01:05:15,480 --> 01:05:18,160 Speaker 1: It was a big surprise, and uh, you know, it's 1121 01:05:18,200 --> 01:05:21,080 Speaker 1: a reminder to all of us that even even the 1122 01:05:21,120 --> 01:05:25,040 Speaker 1: great ones do begin to slow down a little something 1123 01:05:25,160 --> 01:05:28,880 Speaker 1: like that. But that but that heat was really intense, 1124 01:05:28,960 --> 01:05:30,720 Speaker 1: I can tell you. On Monday when I was there, 1125 01:05:30,800 --> 01:05:34,520 Speaker 1: it was the hottest I can ever remember, and human 1126 01:05:35,640 --> 01:05:38,560 Speaker 1: feels like five and you got to play for four hours. 1127 01:05:38,640 --> 01:05:40,640 Speaker 1: It's just I don't know how they do it actually, Um, 1128 01:05:40,680 --> 01:05:44,600 Speaker 1: and and Serena Williams, this is a pretty amazing just 1129 01:05:44,680 --> 01:05:48,360 Speaker 1: had a baby wonderful months ago. It's crazyerful story and 1130 01:05:49,320 --> 01:05:54,000 Speaker 1: incredible level of athleticism and most importantly ability to compete. 1131 01:05:54,520 --> 01:05:56,400 Speaker 1: You know, and you think about that even in a 1132 01:05:56,400 --> 01:05:59,680 Speaker 1: corporate context, of how difficult it is to actually play 1133 01:06:00,040 --> 01:06:03,240 Speaker 1: better when you're under pressure, and that is a unique 1134 01:06:03,280 --> 01:06:05,960 Speaker 1: and wonderful skill. And she does it time and again. 1135 01:06:06,120 --> 01:06:09,360 Speaker 1: She very easily could be the greatest tennis player of 1136 01:06:09,360 --> 01:06:11,680 Speaker 1: all time. By the time her career is done, she 1137 01:06:11,720 --> 01:06:16,320 Speaker 1: will certainly have more opens in the modern era than anybody, 1138 01:06:16,480 --> 01:06:19,880 Speaker 1: maybe more of all time. That that'll be interesting. UM, 1139 01:06:19,960 --> 01:06:21,880 Speaker 1: So let's talk a little bit about we were discussing 1140 01:06:21,960 --> 01:06:25,720 Speaker 1: millennials earlier. UM, what would you say to a recent 1141 01:06:25,800 --> 01:06:28,520 Speaker 1: college grad or a millennial who was looking for some 1142 01:06:28,640 --> 01:06:31,560 Speaker 1: career advice and was interested in the world to finance? 1143 01:06:32,120 --> 01:06:35,360 Speaker 1: So very similar to the story I talked about in 1144 01:06:35,360 --> 01:06:37,959 Speaker 1: In terms of my own career, I my biggest piece 1145 01:06:38,000 --> 01:06:41,160 Speaker 1: of advice is while you're young, make sure you have 1146 01:06:41,240 --> 01:06:45,120 Speaker 1: an opportunity to live and work abroad. UM, it's really 1147 01:06:45,200 --> 01:06:48,800 Speaker 1: important that you gain that broad based experience. It will 1148 01:06:48,920 --> 01:06:51,520 Speaker 1: change what who you are as a person. It will 1149 01:06:51,600 --> 01:06:54,320 Speaker 1: change how you feel about being an American, it will 1150 01:06:54,400 --> 01:06:58,520 Speaker 1: change how you learn to interact with other cultures and people. 1151 01:06:58,960 --> 01:07:01,400 Speaker 1: And so while you're young and you don't have kids 1152 01:07:01,400 --> 01:07:04,760 Speaker 1: and you have some flexibility moved to Europe for two years. 1153 01:07:05,720 --> 01:07:09,640 Speaker 1: That that that is sounds like really good advice. And 1154 01:07:09,680 --> 01:07:12,280 Speaker 1: our final question, what is it that you know about 1155 01:07:12,320 --> 01:07:15,520 Speaker 1: the world of business and finance today that you wish 1156 01:07:15,600 --> 01:07:18,560 Speaker 1: you knew thirty years ago when you were just getting started. 1157 01:07:20,520 --> 01:07:23,360 Speaker 1: The value of time. I think that when you're young, 1158 01:07:23,520 --> 01:07:27,360 Speaker 1: it's really hard to understand what twenty years can do 1159 01:07:27,480 --> 01:07:30,920 Speaker 1: in the investment world. And uh, it's very easy to 1160 01:07:30,960 --> 01:07:33,520 Speaker 1: get wound up and what happens to markets today and 1161 01:07:33,560 --> 01:07:36,200 Speaker 1: tomorrow and whether or not they go up and down. 1162 01:07:36,320 --> 01:07:39,600 Speaker 1: And Uh, what you learn as you get older is 1163 01:07:39,640 --> 01:07:42,800 Speaker 1: you have the perspective of cycles. You know what it's 1164 01:07:42,840 --> 01:07:46,360 Speaker 1: like to take the perspective of a broad portfolio, and 1165 01:07:46,600 --> 01:07:51,560 Speaker 1: you actually uh embrace difficult times. You embrace volatility as 1166 01:07:51,600 --> 01:07:55,400 Speaker 1: opportunity rather than concern. And when you're younger and you 1167 01:07:55,480 --> 01:07:59,440 Speaker 1: haven't been through a downturn or a crisis, it's very 1168 01:07:59,440 --> 01:08:03,040 Speaker 1: easy to overreact to those things. And I do think 1169 01:08:03,040 --> 01:08:05,800 Speaker 1: there's a reason why many of the great investors are older. 1170 01:08:05,800 --> 01:08:07,560 Speaker 1: And I do think it's one of the few things 1171 01:08:07,600 --> 01:08:10,760 Speaker 1: that you can potentially get better at as you get older, 1172 01:08:10,840 --> 01:08:14,680 Speaker 1: because you have more pattern recognition of how things happen 1173 01:08:14,760 --> 01:08:17,080 Speaker 1: through you know, a ten year a ten year cycle. 1174 01:08:17,280 --> 01:08:20,320 Speaker 1: And I do think that the appreciation of time is 1175 01:08:20,360 --> 01:08:25,479 Speaker 1: really important, quite fascinating. We have been speaking with David Hunt, 1176 01:08:25,560 --> 01:08:30,360 Speaker 1: president and CEO of Pigam. If you enjoy this conversation, well, 1177 01:08:30,400 --> 01:08:32,559 Speaker 1: Bi Sean looked up an inch or down an inch 1178 01:08:32,640 --> 01:08:34,840 Speaker 1: on Apple iTunes and you can see any of the 1179 01:08:34,880 --> 01:08:38,800 Speaker 1: other two hundred such interviews we have conducted over the 1180 01:08:38,840 --> 01:08:42,719 Speaker 1: past four years. Uh you can find that wherever Finder 1181 01:08:42,800 --> 01:08:49,479 Speaker 1: podcasts are sold Apple iTunes, Bloomberg, Stitcher, Overcast, etcetera. We 1182 01:08:49,560 --> 01:08:53,360 Speaker 1: love your comments, feedback and suggestions right to us at 1183 01:08:53,960 --> 01:08:57,479 Speaker 1: m IB podcast at Bloomberg dot net. I would be 1184 01:08:57,560 --> 01:08:59,720 Speaker 1: remiss if I did not thank our crack staff who 1185 01:08:59,800 --> 01:09:04,200 Speaker 1: helped put together these conversations each week. Medina Parwana is 1186 01:09:04,240 --> 01:09:08,479 Speaker 1: my producer. Slash Audio engineer Taylor Riggs is our booker. 1187 01:09:08,520 --> 01:09:11,880 Speaker 1: Slash producer Michael bat Nick is our head of research. 1188 01:09:12,439 --> 01:09:15,719 Speaker 1: I'm Barry Ritolts. You've been listening to Masters in Business 1189 01:09:16,080 --> 01:09:17,200 Speaker 1: on Bloomberg Radio.