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Speaker 2: We've been all in on Apple today.
Speaker 3: The company out with the biggest product launch of the year,
Speaker 3: the iPhone seventeen, a skinnier air design.
Speaker 2: It improves durability and camera tech.
Speaker 3: As far as prices go, seven ninety nine is the
Speaker 3: starting price of the standard phone. The new air versional
Speaker 3: costs nine to ninety nine. The pro is going to
Speaker 3: go up by one hundred dollars with twice as much storage.
Speaker 2: I want to bring in Dan Ives.
Speaker 3: He's Global head of Technology Research at Webush Securities. He's
Speaker 3: also chairman of eight co holdings over three thousand percent.
Speaker 3: After announcing a planned to buy the news just my
Speaker 3: open eyes all. But that was yesterday, Dan's here on
Speaker 3: site at future Proof in Huntington Beach. We're going to
Speaker 3: talk about a co holdings in a minute. But first
Speaker 3: I just want to get your reaction to Apple, because
Speaker 3: you you actually I saw you you were on your
Speaker 3: laptop and then I got your most recent Apple note.
Speaker 3: Well while we were doing our interview with Barry, you
Speaker 3: just you just you're maintaining your price target on Apple.
Speaker 3: You and the team at web bush us to make
Speaker 3: their three hundred and fifteen million folks out there who
Speaker 3: are ready to upgrade their iPhones. Is the seventeen gonna
Speaker 3: gun to upgrade?
Speaker 4: Look, I think it's gonna move the needle. I mean,
Speaker 4: I think, especially in China, there's definitely what i'd pin
Speaker 4: up demand. I think street numbers continue to be pretty
Speaker 4: conservative to maybe low, and that's a great setup. Look,
Speaker 4: the reality is that this is not going to be
Speaker 4: a super cycle. There's nothing here that makes you think
Speaker 4: that this is gonna be the game change that everyone's
Speaker 4: been waiting for. But I do believe given the install base,
Speaker 4: given some of the tweaks here, and ultimately on the
Speaker 4: on sort of the second half of this upgrade cycle,
Speaker 4: you will have an AI driven ecosystem.
Speaker 5: I believe it will be Google Gemini.
Speaker 4: This could be a sneaky upgrade cycle that I think
Speaker 4: surprises investors on the upside. What do you mean because
Speaker 4: right now, expectations New York City cab drivers bearish on Apple,
Speaker 4: and I think that what I like about the setup
Speaker 4: is it's all about it's kind of left behind.
Speaker 2: Now.
Speaker 4: A lot of that's been self inflicted, because every Apple
Speaker 4: event feels like it's a I feel like Michael J.
Speaker 5: Fox and back to the future, you know.
Speaker 4: So they continue to be left behind AI, but now
Speaker 4: with the Google DOJ issue in the rear view, they
Speaker 4: will double down ultimate in that Gemini partnership. And when
Speaker 4: you look at the install base, I think I think
Speaker 4: Street is underestimating what numbers look like for iPhone when
Speaker 4: you look out over the next six, nine, twelve months,
Speaker 4: And I think in big tech, I view Apple from
Speaker 4: a sentiment perspective relative to where I viewed Alphabet. Maybe
Speaker 4: about six months ago.
Speaker 3: You in your note ahead of the launch called Apple's
Speaker 3: AI strategy quote invisible. You said, the elephant in the room,
Speaker 3: and is the black over the stock AI's invisible or
Speaker 3: Apple's invisible AI strategy? Did you get any more information
Speaker 3: today at the launch about its strategy?
Speaker 4: I mean, I think fundamentally it they're keeping it close
Speaker 4: to the vest Right, you know, in the words, it
Speaker 4: continues to be that black cloud.
Speaker 5: I think they're waiting.
Speaker 4: For ultimately what's going to be Gemini, because I think
Speaker 4: they had a choice either go down the rout with
Speaker 4: perplexity and ultimately look to acquire that, or if it
Speaker 4: was a favorable ruling, then the candlelight dinner with Google
Speaker 4: and sun Dar could ultimately start again and then you
Speaker 4: could actually double down that partnership.
Speaker 5: And that is I believe the direction. But look, Tim
Speaker 5: they got it.
Speaker 4: It was a black eye moment a year ago when
Speaker 4: they laid out the AI strategy. Means it's ninety five
Speaker 4: percent of that had a backtrack on it.
Speaker 3: Well now and now they've lost a lot of the
Speaker 3: senior executives that we're working on that to matterply and.
Speaker 4: We've talked about there's a better chance to me playing
Speaker 4: Ryder cup Bethpage than any internal AI strategy happening at Apple.
Speaker 6: But is that such a bad thing? And this is
Speaker 6: one of the things that Dan we talk a lot
Speaker 6: about that maybe Apple's just kind of watching. There's a
Speaker 6: lot of money slashing around trying to figure out what
Speaker 6: ultimately are the standards, the methods the companies that really
Speaker 6: dominate right in terms of AI kind of protocols, and
Speaker 6: maybe Apple's like I'll just watch and then we'll figure
Speaker 6: it out.
Speaker 5: Are that bad? I think it's bad.
Speaker 4: I compare it to like Saturday night in New York
Speaker 4: City there's a restaurant where there's one person in there
Speaker 4: at eight thirty, like, oh, they must know something everyone
Speaker 4: else does. I'd rather go to the place where people
Speaker 4: are lining up outside when it comes to ultimately, AI,
Speaker 4: time's not on their side. Loo quid open AI. Look
Speaker 4: at Meta wartime CEO, look at Microsoft. Look what are
Speaker 4: Google's done? That's why are you in an all time high?
Speaker 4: So I do believe Cooks recognized it. But the problem
Speaker 4: is is that now it's a go time moment when
Speaker 4: it comes to AI. And now, look we've talked about
Speaker 4: that's how you get through three twenty five three point
Speaker 4: fifty four hundred dollars stock is AI?
Speaker 2: You know?
Speaker 4: Relative to right now Apple, they're kind of on the
Speaker 4: outside looking in of that AI party where it's still
Speaker 4: ten pm going to four am.
Speaker 3: Everyone wants to know about what the heck is going
Speaker 3: on over at eight co Holdings, your chairman of this company. Now,
Speaker 3: I think it took a lot of people by surprise.
Speaker 3: It's a crypto treasury firm. And for those who aren't
Speaker 3: familiar with the way this works, it's a Michael Sailor strategy,
Speaker 3: but with a different cryptocurrency. This is world Coin backed
Speaker 3: by Sam Altman eyeball scanning stuff.
Speaker 2: What is going on here?
Speaker 4: So I wouldn't have done this as chairman if it
Speaker 4: was just a regular token back strategy. The reason I
Speaker 4: did this it has to do with Sam. It has
Speaker 4: to do with my view World is going to be
Speaker 4: the acto standard for identification authentication in terms of human
Speaker 4: proof in AI world. This is much more of a
Speaker 4: tech infrastructure play than when I'd say the traditional crypto play.
Speaker 4: So obviously the reason I'm so excited about it is
Speaker 4: really this is going to become I think a huge
Speaker 4: part of the story and the narrative. It's really an
Speaker 4: intersection of AI and crypto. Explain that damn so So
Speaker 4: what that means is, you know, as tempto, it's IRIS
Speaker 4: scanning the orbs. Right going forward in the future, especially
Speaker 4: in the robotic world bots everywhere, You're not going to
Speaker 4: be able just identify through a boot check.
Speaker 5: It's really going to be iris scanning what they've done.
Speaker 4: Already fifteen million humans on the platform I believe going
Speaker 4: about one hundred million over the next year. That's going
Speaker 4: to be a form of identification. That's probably the most
Speaker 4: privacy lock box out there, and it's secured by a token,
Speaker 4: a World token. So my view and our view as
Speaker 4: a team, this is early days in terms of where
Speaker 4: this is all heading. And that's why we want to
Speaker 4: do a strategy.
Speaker 6: Now, what's to prevent somebody else from doing the same
Speaker 6: thing they are.
Speaker 4: They're playing a different game than they they're Vidian twenty
Speaker 4: twenty two. And in other words, like relative to what
Speaker 4: sam Alex and the team have built out, I mean
Speaker 4: from an infrastructure and authentication perspective, they are I think
Speaker 4: miles ahead. I don't see anyone that could capture them.
Speaker 4: That's why we bet on World as part of the
Speaker 4: acres strategy. And obviously having someone like Tom Lee and
Speaker 4: bitminor Huge, you know, big Investor, that's another support that
Speaker 4: we're so excited to have.
Speaker 3: You've also got an ETF the launched back in June.
Speaker 3: It's the dan ives wedbush Ai Revolution ETF. It's up
Speaker 3: sixteen percent since launch. It's outperforming the S and P
Speaker 3: five hundred and the NASDAQ one hundred, Broadcom, Google and Video, TSMC, Apple.
Speaker 2: They're the top holdings.
Speaker 3: Somebody watching right now might be like, Okay, he's got
Speaker 3: a clothing company, he's chairman of this crypto treasury company,
Speaker 3: he has his.
Speaker 2: Day job at Wedbush.
Speaker 3: How am I sure that he's going to manage this
Speaker 3: ETF and have the time and resources to manage the
Speaker 3: CTF and my interest?
Speaker 4: And that's a great question. I'd say, when you think
Speaker 4: about my chairman role, it's all related to to AI
Speaker 4: and the infrastructure, and there was this is interrelated to
Speaker 4: my view of where the AI revolution gets built out.
Speaker 4: And the reality is that ninety five percent of my
Speaker 4: time is spent you know, three and a half million
Speaker 4: aire miles last twenty five years. I think what's what's
Speaker 4: enabled to distinguish us is feet on the ground talking
Speaker 4: whether it's private public partners and really, you know, I
Speaker 4: think that's how investors have grown to.
Speaker 2: Do you add Do you add eight co holdings to
Speaker 2: the i's ETF?
Speaker 4: No, No, that would be totally it's a total separate operation.
Speaker 6: I keep firewalls between it, though, Like there's going to
Speaker 6: be people who are saying, yeah, of course Dan's going
Speaker 6: to talk up that he loves Alphabet and that he
Speaker 6: looks loves Nvidia. I mean he's got an ETF.
Speaker 4: Like I just how do we sure on the ETF
Speaker 4: and you for like and remember and part of how
Speaker 4: investors know us the ETF is all based on our
Speaker 4: ives AI thirty.
Speaker 5: It's all based or research.
Speaker 4: So the reality is I think part of how we've
Speaker 4: gotten so you know, the the customer, I'd say from
Speaker 4: an investor perspective, we've had massive you know, I think
Speaker 4: reception for the ETF is because it's our thirty names
Speaker 4: that altermately we've used the winners and we and we
Speaker 4: change out every quarter. And that's I think you did
Speaker 4: about ETF.
Speaker 5: What it's based on. It's all based on the research.
Speaker 4: And got everyone here that knows Dan ives they know
Speaker 4: like feet on the street, not sitting there in some
Speaker 4: Peter Malar fifteen to four of New York City office building.
Speaker 4: And the only time we travel is two times in
Speaker 4: San Francisco.
Speaker 2: Now, you just got back from Australia.
Speaker 5: Yeah, so I literally landed here from Australia.
Speaker 2: What were you doing there? Yeah?
Speaker 5: So part part work part pleasure.
Speaker 4: So it's fun because look, I mean we when we
Speaker 4: talk at AI revolution like in Sydney, in Melbourne pack meetings,
Speaker 4: because the reality is that this is not just us.
Speaker 4: And that's why I spend so much my time traveling
Speaker 4: around the globe what.
Speaker 6: Might be the national exuberance part of kind of the
Speaker 6: trade today or the tech trade or the AI trade.
Speaker 7: And just got about thirty seconds. There's got to be
Speaker 7: some fluff out.
Speaker 4: Just could you say AI forty times in a conference call?
Speaker 4: Doesn't make yourself an AI need Look just because like
Speaker 4: Tim he was wearing an AI shirt because he says
Speaker 4: it fifteen times and says Tim on the back AI,
Speaker 4: it doesn't. My view is you have to distinguish the
Speaker 4: winners and the real ones from the fakes.
Speaker 5: And that's the reality. And then look, that's what we
Speaker 5: spend all of our time doing.
Speaker 2: The one company you're most bullish on right now, public.
Speaker 4: Company SCFAI volunteer that's going to a trillion next two
Speaker 4: to three years. And I always say the haters hate it,
Speaker 4: hated fifteen, despise it, eighties, say it's super expensive one
Speaker 4: point fifty.
Speaker 5: They'll be seeing the same thing at a trillion.
Speaker 6: Yeah, it's a company we've talked a lot about, I
Speaker 6: would say, in the last year and then some dnives.
Speaker 5: Thank you so much.
Speaker 6: I always appreciate it. Globalhead of Technology Research at web
Speaker 6: Bush Securities.
Speaker 2: Stay with us.
Speaker 3: More from Bloomberg Business Week Daily coming up after this.
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Speaker 6: Jennifer Grancia was back with US, globalhead of ETFs over
Speaker 6: at TCW. They've got more than two hundred billion across
Speaker 6: investment solutions as of the mid of this year midpoint.
Speaker 6: ETF platforms have more than four billion a lot under management.
Speaker 2: They see a lot of flows.
Speaker 6: We want to remind everybody to Jennifer, the former CEO
Speaker 6: of the Impact Investment from Engine Number one, which took
Speaker 6: on Exon, You're going to be iconic forever. This is
Speaker 6: going to go with you wherever you go because it
Speaker 6: was really significant.
Speaker 3: I think also, I think also you joined us at
Speaker 3: Milkin during that time. Yeah, you guys were in the
Speaker 3: midst of that and that's where sort of like I
Speaker 3: still know you from, but I think people still know
Speaker 3: you from that, as Carol mentioned, Yeah.
Speaker 8: I mean Engine number one was a moment in time
Speaker 8: where I think we had just started to think about
Speaker 8: energy transition at a very big level. It's not just green,
Speaker 8: it's brown. And then it's going to require so much
Speaker 8: to move the world towards better sources of energy, electrification,
Speaker 8: all the power we need for restoring in the US.
Speaker 8: So yeah, that was it was a great moment in time,
Speaker 8: and then we folded in a lot of the work
Speaker 8: we had done there into TCW.
Speaker 6: We'll talk about what you are doing because energy is
Speaker 6: a big theme in terms of investing here for you
Speaker 6: guys for sure.
Speaker 8: So if you think about the world today as much
Speaker 8: as it's volatile and we're never sure exactly what's going
Speaker 8: to happen or how things are going to play out,
Speaker 8: if you think about TCW, we started as an equity firm,
Speaker 8: and then we've got a great public private credit business,
Speaker 8: and so on the equity side, a lot of what
Speaker 8: we do is fundamental concentrated portfolios that help you diversify
Speaker 8: from the index fund and the direct indexing you have
Speaker 8: at the core because the market is broadening and we
Speaker 8: have a huge opportunity as investors to actually take advantage
Speaker 8: of How do you profit from the fact that we're
Speaker 8: seeing different sources of energy and we have a huge
Speaker 8: demand for energy for AI and data centers, but also
Speaker 8: for the restoring of manufacturing.
Speaker 3: How do you do that in an environment where the administration,
Speaker 3: depending on who's in the White House, changes their view
Speaker 3: on the future of energy, like does a one ad.
Speaker 3: I mean you have the president wanting to actually doing it,
Speaker 3: trying to cancel offshore wind projects and really anything that
Speaker 3: isn't oil. It seems like he's not interested in safer nuclear.
Speaker 3: But that's a bigger time arise in time.
Speaker 8: Yeah, but that's how we think about it. So from
Speaker 8: a TCW perspective, we've been investing in the energy and
Speaker 8: power transition. We do that through the ETF Powered pr PWRD.
Speaker 8: Pardon me, but when we think about that, that's a
Speaker 8: very long trend. So that's over decades and decades, and
Speaker 8: so the way we think about it as we as
Speaker 8: managers want to invest for you, so that we're paying
Speaker 8: attention to one administration to the other and what happens
Speaker 8: and there will be some changes, but if you think
Speaker 8: about the changes in the traditional brown so that they
Speaker 8: can electrify and be more productive in a market like
Speaker 8: the Permian on oil, that's really important. Nuclear is incredibly important,
Speaker 8: and then what Trump said on actually supporting more nuclear. Yeah,
Speaker 8: it's a long run game, but that's great intermittent power.
Speaker 8: So we like to think about it very broadly, and
Speaker 8: it transcends administrations.
Speaker 3: What does it mean you ignore wind and solar That can.
Speaker 8: Be part of our portfolio as well. We're looking at
Speaker 8: things that from a very long term perspective will make sense.
Speaker 3: And you think, even though wind is under so much
Speaker 3: pressure right now, in a different administration, it could come back.
Speaker 8: It will be part of the solution. It's not the
Speaker 8: lead place to make money in the next couple of years.
Speaker 8: And we're active managers, so we can take that into
Speaker 8: account in terms of the way we manage the portfolio.
Speaker 6: Where is money going across your platforms, where are the
Speaker 6: flows going in, where are the flow's coming out?
Speaker 8: We would see if I answer it, maybe had an
Speaker 8: industry question, and then I can talk about to PACW
Speaker 8: We see active equity is tough, so in active equity
Speaker 8: investments are very selective. So what we're doing in active
Speaker 8: equity products like powered or AIFD for AI, if they're selective,
Speaker 8: they're meant to be complementing to bake index holdings. And
Speaker 8: on fixed income, like a lot of money continues to
Speaker 8: come into fixed income and continues to come into active
Speaker 8: fixed income or also big in private credit, not in
Speaker 8: the ETF space and products that are appropriate there, but
Speaker 8: both if fixed income and private credit are probably the
Speaker 8: places we see the most money coming in.
Speaker 2: Really not surprising. It feels like everything is private credit.
Speaker 5: I mean, I don't like katty.
Speaker 2: Does it does.
Speaker 8: But on the other hand, it's early. So if you
Speaker 8: think about if you think about the portfolio, and if
Speaker 8: you think about the biggest institutions in the world, they're
Speaker 8: invested in some kinds of private credit, but they're looking
Speaker 8: to get into private ABF because it's diversifying. But in
Speaker 8: wealth portfolios, if you think about the average investor or
Speaker 8: registered investment advisors, they're looking at how to take advantage
Speaker 8: of returns that can be like our core plus income
Speaker 8: ETF flexer. You know that's returning almost seven percent with
Speaker 8: over five percent annual yield. That's very attractive when you
Speaker 8: move into safe control careful private credit. You're still picking
Speaker 8: up multiple percentage points a year, so people should do
Speaker 8: it carefully. But it's a big opportunity.
Speaker 3: Do you see that opportunity continue to grow in a
Speaker 3: weakening environment?
Speaker 8: We do. It's if again, if you go out and
Speaker 8: you survey. There's a McKinsey report that just came out
Speaker 8: surveying institutions and wealth and private credit by far is
Speaker 8: the place that people are most interested in most increasing allocations.
Speaker 6: In What confidence do you have that we have the
Speaker 6: right regulatory oversight on this in a world where private
Speaker 6: credit still there is a lack of transparency and people
Speaker 6: don't maybe not all investors understand that it's not liquid
Speaker 6: like a lot of other investments.
Speaker 8: It's the right question, which is from a responsibility perspective
Speaker 8: as asset managers or for wealth managers, we should always
Speaker 8: be in a dialogue with clients on do they understand
Speaker 8: the liquids when you do a semi liquid product. For example,
Speaker 8: for us, we have things that have many many your
Speaker 8: five plus year draw downs, that's not a liquid product.
Speaker 7: We wouldn't tell.
Speaker 8: Clients if that's a liquid product. In the asset back
Speaker 8: finance space, we have an interval fund, but the loans
Speaker 8: there are getting kind of turning over within two to
Speaker 8: four years, so there's a little bit more liquidity there.
Speaker 8: So I think we'll watch the regulatory space, but investor
Speaker 8: education and responsibility by the managers it's critical.
Speaker 6: So when it comes to private credit, you're looking for
Speaker 6: things where it is two to four years that they're
Speaker 6: turning over a little bit more liquid that that's a.
Speaker 8: Little bit more liquid. And so if you think about
Speaker 8: private credit in the private securitized or asset back finance space,
Speaker 8: the loans are self advertising in two to four years,
Speaker 8: that's a space we think in interval fund makes sense
Speaker 8: we manage an interval fund there. There are other places
Speaker 8: where it's just not that liquid and that should be
Speaker 8: a private market product.
Speaker 3: Still a lot of interest in AI and the fund
Speaker 3: that tracks that a.
Speaker 8: Huge amount of interest in AI, and I think everybody's
Speaker 8: interested in one what's happening with AI, who wins what happens,
Speaker 8: but people are also looking at how to invest in it.
Speaker 8: So at TCW, we manage an ETFAIFD which is investing
Speaker 8: very broadly in AI, and that's an opportunity to take
Speaker 8: advantage of. Yes, it Holds, Navidia, Broadcom and other companies
Speaker 8: that are benefiting and early winners in the trade.
Speaker 6: When you come to an event like this, I mean,
Speaker 6: is there a narrative you're picking up on that might
Speaker 6: be surprising?
Speaker 5: I'm just curious.
Speaker 2: Just got about thirty seconds here, I.
Speaker 8: Think from this conference, which is full of wealth advisors,
Speaker 8: they are trying to figure out how does artificial intelligence
Speaker 8: affect their business, how do they get smarter about it,
Speaker 8: and how can they adopt new outsourcing and new technology
Speaker 8: so that they can spend more time actually serving their clients.
Speaker 2: Which is a great thing.
Speaker 8: Which is a great thing.
Speaker 6: More time with the investment advisors. Always good to get
Speaker 6: more time with you. Thank you so much, an always
Speaker 6: find it. Jennifer Grancio, She's Global ahead of ETFs over
Speaker 6: at TCW, joining us on site at future Proof.
Speaker 2: Stay with us.
Speaker 3: More from Bloomberg Business Week Daily coming up after this.
Speaker 1: This is the Bloomberg Business Week Daily Podcast. Listen live
Speaker 1: each weekday starting at two pm e's during on Applecarplay
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Speaker 6: Carol Master, TIMSTEANOK live here at Futureproof in Huntington Beach, California.
Speaker 6: Whill our next guests help others manage their money. They
Speaker 6: are content creators at the same time. With us here
Speaker 6: at future Proof is Doug and Heather Bonaparte of Bona
Speaker 6: Fide Wealth. Doug is founder and president, Heather's director of
Speaker 6: business and legal affairs. Doug is a wealth advisor. Heather
Speaker 6: a former attorney corporate attorney, a big time in the
Speaker 6: insurance industry, and the firm has about one hundred million
Speaker 6: in assets under management. Nice to have you here.
Speaker 5: I know it's busy for you.
Speaker 6: You've got a lot going on your website notes a
Speaker 6: wealth management firm built on unprecedented times. Walk us through
Speaker 6: what that means.
Speaker 9: Doug, Yeah, absolutely, So you look to older millennials like ourselves,
Speaker 9: the geriatric millennials.
Speaker 2: If you're will speaking my language, yeah, yeah.
Speaker 9: We start our adult lives in our careers in two
Speaker 9: thousand and eight.
Speaker 7: I know, I literally moved to New York City on
Speaker 7: top time.
Speaker 9: Yeah, October two thousand and eight to work and find it.
Speaker 2: It's in New York City.
Speaker 9: Great time to be you know, getting that started and
Speaker 9: then we survive that. I get through that, only to
Speaker 9: you know, start raising kids during a pandemic.
Speaker 5: Can we get a break here?
Speaker 9: So, you know, two major historical, once in a lifetime
Speaker 9: events happening, and this is what we've had a navigate.
Speaker 9: Doesn't make us any more special than other generations. It's
Speaker 9: just very specific to how we manage our lives and
Speaker 9: our financial lives during these times.
Speaker 3: And to what extent of your clientele actually represent that demographic.
Speaker 9: I would tell you eighty percent are between the ages
Speaker 9: of twenty eight to fifty. So with that average being
Speaker 9: right around forty forty two.
Speaker 3: I think people know you guys from social media, like
Speaker 3: the jokes on Twitter.
Speaker 2: Sure how much of.
Speaker 3: Customer acquisition comes from social media.
Speaker 9: So I like to think of it as one piece
Speaker 9: of the overall puzzle here. We're doing, you know, very
Speaker 9: traditional mainstream financial media, and you pair that with social media.
Speaker 2: It's never one thing.
Speaker 6: Are you calling us traditional?
Speaker 2: No, I'm calling you awesome.
Speaker 5: Okay.
Speaker 9: Second, we need you and we need all of these
Speaker 9: kitty I know, but we need all of these tools
Speaker 9: to create, you know, a robust way to market in
Speaker 9: the Internet era, right, and the intention of the attention
Speaker 9: economy that we're in.
Speaker 6: Well, one of the things I was thinking and it
Speaker 6: was funny people have come up to me about truth
Speaker 6: in today's society and just with the political environment and
Speaker 6: just there's so much content even when it comes to
Speaker 6: business advice, and how do you make sure that what
Speaker 6: you're putting out there, you're careful about it, there's transparency
Speaker 6: because there's a lot of information that's out there that
Speaker 6: is not good.
Speaker 9: Yeah, Heather can talk to that in terms of you know,
Speaker 9: we talk about financial influencers all the time and those
Speaker 9: who are licensed and those who are and you're getting
Speaker 9: more information on the reddits and the tiktoks, and you
Speaker 9: and I look at those videos and that content all
Speaker 9: the time and we have opinions around that.
Speaker 10: I think it's very important that you don't end up
Speaker 10: on the extreme ends of the scale. Right when we talk,
Speaker 10: we try and tell people, Look, there isn't one right
Speaker 10: way for everyone, So I think you have to be
Speaker 10: cautious when you see, let's say, a f influencer online
Speaker 10: who says everyone should always do this or you should
Speaker 10: be extremes be in a position to do that, you
Speaker 10: know that it's the.
Speaker 2: Only products for you.
Speaker 9: They're trying to sell you that product right here. And
Speaker 9: I know a lot of clients with creators that are
Speaker 9: so hard working it is it is tough to do
Speaker 9: this and a lot of respect to them. But when
Speaker 9: you get into those extremes, or you're pushing products, or
Speaker 9: there are no guardrails whatsoever, it can get dangerous here
Speaker 9: and there's just not enough.
Speaker 2: With a hybrid, you can be both. You can be
Speaker 2: a professional and a content creator.
Speaker 9: You can do all of these things. But people tend
Speaker 9: to just stick to their corners.
Speaker 2: I think.
Speaker 3: So if we think about your your clients, it's it's
Speaker 3: different in the sense of, you know, we're oftentimes talking
Speaker 3: to wealth managers. You have you know, five ten, one
Speaker 3: hundred dollars in assets under management, I mean, much bigger
Speaker 3: than where you guys are right now. So you're at
Speaker 3: a different end of the spectrum, and your client tele
Speaker 3: represent that.
Speaker 2: I think people might.
Speaker 3: Say, Okay, these are a lot of these folks are
Speaker 3: Henry's right, high income, not yet rich, right, whatever the
Speaker 3: acronym is, How do you keep them when they do
Speaker 3: become rich?
Speaker 9: Yeah, I think we have less of that problem when
Speaker 9: you're there with somebody in the days that they're grinding
Speaker 9: it out and establishing themselves likely to have a stickier relationship,
Speaker 9: a more loyal relationship. You meet someone after they've made
Speaker 9: their money, I think you have a weaker relationship. You
Speaker 9: were not there for the time. You're as good as
Speaker 9: your last transaction. That's the worst place you want to
Speaker 9: be as a wealth manager. As good as your last transaction,
Speaker 9: as someone who's been at the core of their growth
Speaker 9: and having that kind of relationship. So you know, by design,
Speaker 9: investing in our clients at a time when we were
Speaker 9: in our mid to late twenties, that's how we keep
Speaker 9: them for you know generations.
Speaker 7: Their children are our clients.
Speaker 9: They are also nine years old. But there are clients
Speaker 9: and they will be and that can then transcend down
Speaker 9: and we don't have to worry about maybe some of
Speaker 9: our colleagues that haven't been paying attention to the next generation.
Speaker 7: They have seventy eighty year old clients.
Speaker 9: They have issues with retaining the money because they didn't
Speaker 9: even bring their partner to the table.
Speaker 7: Ye and like these gender chops.
Speaker 9: A lot of why we've written a book about Love
Speaker 9: and Money is to solve that problem. Bring both partners
Speaker 9: to the table, and that's very characteristic of the type
Speaker 9: of clients that we serve.
Speaker 6: Do you have any book coming out to think October
Speaker 6: money together? But I want to ask you about the
Speaker 6: quarterly check ins. I do think this is such no
Speaker 6: money dates. Yeah, tell us about these money dates in
Speaker 6: terms of what you guys do in terms of your
Speaker 6: own financial planning.
Speaker 10: Well, for us, we try and do something that we
Speaker 10: could look forward to. So Doug and I know what
Speaker 10: we like to do, right. We like to go for walks.
Speaker 10: That's just maybe that's like a leftover thing from COVID.
Speaker 10: From COVID and like fish strollers around the neighborhood.
Speaker 2: Drinks too.
Speaker 5: We like cocktails too, so.
Speaker 10: Like we'll go out for a nice cocktail, or we
Speaker 10: will go for a walk, or we'll go play tennis
Speaker 10: and be sure to leave twenty minutes on the back
Speaker 10: end to have a good conversation after we've like sweated
Speaker 10: out a little bit. I think the most important thing
Speaker 10: with money dates is to do what you enjoy, so
Speaker 10: this doesn't become something that is a chore, something that
Speaker 10: you dread. You want to incorporate the money conversation into
Speaker 10: your life.
Speaker 6: Does it always go well?
Speaker 9: No of course not, you're talking about actual decisions you
Speaker 9: need to make that evolve risk and charting the course
Speaker 9: of your life.
Speaker 2: Giving forty sometimes of course.
Speaker 9: How about this, to Heather's point, start the conversations with
Speaker 9: the winds and what you did right, you're going to
Speaker 9: have a better time getting into it, and then talk
Speaker 9: about where room for improvement needs to be made. Then
Speaker 9: be critical, give yourself a pat on the back and
Speaker 9: the hard work you're doing before you get into that stuff,
Speaker 9: so you reduce the probability that you're gonna get into
Speaker 9: some kind of scuffle around something that you don't agree on.
Speaker 9: And it's very normal to find stuff you don't agree on.
Speaker 9: If you're green everything, I'd be a little more concerned
Speaker 9: about that.
Speaker 10: Well, right, And our concept of a money date doesn't
Speaker 10: just include looking at a networth table, looking at spending.
Speaker 2: Don't start there.
Speaker 10: Don't start there. You can talk about childcare, talk about
Speaker 10: whether you both feel like you're bandwidth, like you have
Speaker 10: any bandwidth or you don't, or whether you feel totally overwhelmed.
Speaker 7: You could talk about goals.
Speaker 10: You talk about how, like Doug said, the things you've
Speaker 10: been doing right and the things you could stand to
Speaker 10: improve upon.
Speaker 7: For the next quarter.
Speaker 9: We rather talk about how we're going to get on
Speaker 9: that trip with the kids, you know during November when
Speaker 9: the teachers do their convention thing in New Jersey, and
Speaker 9: we rather, you know, we're going to rally around that
Speaker 9: conversation because we want to go have that experience with them,
Speaker 9: and that then dovetails into Okay, let's yeah, we can
Speaker 9: afford to do that. What do we have to shift around?
Speaker 9: All right, let's cancel this baby's let's not do that
Speaker 9: date with our friends because we much rather, you know,
Speaker 9: we can do that anytime. You can't create those memories,
Speaker 9: you know, all the time with your little kids. So
Speaker 9: those are great ways to engage something where most people
Speaker 9: are like, here's what you did wrong this month, sweetie, Like,
Speaker 9: what an awful.
Speaker 2: Awful way to start out.
Speaker 9: You're not gonna do it next quarter, and you need
Speaker 9: four quarters in a year. You know, two years is
Speaker 9: only eight cracks at it.
Speaker 6: It's not a lot, it's practical, but it makes an
Speaker 6: awful lot of sense. We're gonna let you go because
Speaker 6: you've got to run to your panel. Good luck with you,
Speaker 6: You're not so lucky, good luck, good luck with the panel.
Speaker 6: You go absolutely We do want to stay with you,
Speaker 6: you know, Heather, because you do have this book coming
Speaker 6: out in October, Money Together, How to find Fairness in
Speaker 6: your relationship and become an unstoppable financial team. And I
Speaker 6: just think it's kind of interesting because I do think
Speaker 6: a lot of couples do have different priorities, right and
Speaker 6: be sure to figure it out. They sure do tell
Speaker 6: us about this book though, and what you guys wanted
Speaker 6: to do with it.
Speaker 10: We want to help couples communicate about money better. Bottom line,
Speaker 10: I think that it's one of the hardest things for
Speaker 10: couples to talk about because money is not just money, right.
Speaker 10: We tether our beliefs and our behaviors around money. They
Speaker 10: they come along with them post of feelings about trust, freedom, power, independence,
Speaker 10: you know, So when you're actually getting in a little spat,
Speaker 10: you know, week to week on spending, that's not really
Speaker 10: what you're talking about. There might be feelings beneath that.
Speaker 10: There could be a spouse who doesn't feel like all
Speaker 10: of their invisible work is being seen. So what we
Speaker 10: really hope to do with this book is to have
Speaker 10: the conversations that aren't being had. We want to really
Speaker 10: uncover those, you know, deeper power dynamics over money in
Speaker 10: your relationship and help couples find a way to talk
Speaker 10: about it in hopes that we can level that playing
Speaker 10: field and really bring more equity into relationships.
Speaker 3: Well, when the book comes out, you got to join
Speaker 3: us in the studio back in New York. Heather Bonaparth,
Speaker 3: director of business and legal Affairs for Bona Fide. Well,
Speaker 3: she joins us on site here in Huntington Beach, California
Speaker 3: for future Proof.
Speaker 2: Stay with us.
Speaker 3: More from Bloomberg Business Week Daily coming up after this.
Speaker 1: You're listening to the Bloomberg Business Week Daily Podcast. Catch
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Speaker 6: All right, folks, we're going to talk a little bit
Speaker 6: about the world of private credit. It has ballooned, by
Speaker 6: the way to about one point seven trillion dollars in
Speaker 6: the size in size and just a matter of years.
Speaker 7: There's a lot of issues.
Speaker 6: Going on in this environment. Most loans held in private
Speaker 6: credit funds mature within five to seven years. It's a
Speaker 6: timeframe for when investors should start seeing many more returns,
Speaker 6: but many vehicles formed eight years ago still lagging on
Speaker 6: a closely watched metric known as distribution to paid in capital,
Speaker 6: which measures how much investors have received compared to what
Speaker 6: they put in Originally. We're curious what our next guest
Speaker 6: has to say. He is a player in the private
Speaker 6: credit world. Marcato is a co founder, co president and
Speaker 6: co CEO of sci On Investments, which specializes in alternative assets,
Speaker 6: in particular private credit or private debt. Has about ten
Speaker 6: billion in assets under management. Mark is also director, co
Speaker 6: CEO and Investment Allocation Committee member of the Scion Areas
Speaker 6: Diversified Credit Fund. So you know a little bit about credit.
Speaker 6: How are you tell us a little bit about your
Speaker 6: fund in the strategy right now?
Speaker 7: I'm doing well. Thank you for having me today.
Speaker 11: So our platform is really focused on providing alternative investment
Speaker 11: solutions to private wealth investors, individual investors. So where a
Speaker 11: lot of the private firms, private asset managers that deal
Speaker 11: in private credit and other strategies focused on institutional clients,
Speaker 11: our focus is on individuals and we distribute our products
Speaker 11: through the wealth channel, the rias, the wirehouses independent broker dealers.
Speaker 11: We currently have three products that we're very proud of.
Speaker 11: One is our publicly list a BBC which is called
Speaker 11: Scion Investment Corp. And that's a strategy where we focus
Speaker 11: on the US middle market, providing direct lending private loans
Speaker 11: to US middle market companies.
Speaker 7: We also have a diversified credit.
Speaker 11: Fund and that's a partnership that we have with Areas Management,
Speaker 11: one of the world's largest global investors, top tier and credit,
Speaker 11: and that fund is structured is an interval fund, and
Speaker 11: we have close to eight billion dollars of AUM in
Speaker 11: that product. That's the one, that's the big one, that's
Speaker 11: the big one. And then we just recently launched it's
Speaker 11: not private credit, but it's private assets, private markets. We
Speaker 11: launched an interval fund that focus on infrastructure investing. So
Speaker 11: we are all in on private markets, but we're also
Speaker 11: very focused on the right structures for the individual investor.
Speaker 7: The stat that you mentioned.
Speaker 11: Earlier about capital effectively being locked up, right, that's not
Speaker 11: what we do. We really focus on strategies that provide
Speaker 11: appropriate liquidity, as I like to call it, appropriate liquidity
Speaker 11: to individual investors. So the interval fund structure, the BDC structure.
Speaker 11: What we do is we are giving dividends. We're giving
Speaker 11: distributions on a regular basis, and that's something we pride
Speaker 11: ourselves in, is consistent, stable dividends that are are are necessary.
Speaker 7: I think for the retail invest.
Speaker 6: You really got layout on your website.
Speaker 11: Yes, absolutely, So when you think about investing in one
Speaker 11: of our products, you're going to see hopefully a high
Speaker 11: single digit distribution yield every year. So you're getting your
Speaker 11: capital back where traditional private credit was done in a
Speaker 11: GP LP drawdown structure and your capital could be locked
Speaker 11: up for a long time. And because of these structures,
Speaker 11: we're seeing this strong demand by registered investment advisors other
Speaker 11: financial advisors that deal with individuals, and that's what these
Speaker 11: products really are doing. They're opening the gate right, They're
Speaker 11: providing the access that individuals have never had.
Speaker 3: The growth of private credit over the last few years
Speaker 3: has coincided with a pretty strong economy, and we're now
Speaker 3: starting to see some cracks for them. We saw the
Speaker 3: revisions downward with the labor numbers that we got today.
Speaker 3: Jamie Diamond telling CNBC today that the economy is quote weakening.
Speaker 3: He said, whether that is on the way to recession
Speaker 3: or just weakening, I don't know what happens to private
Speaker 3: credit in an environment that's weakening economy, that we.
Speaker 6: Can help your strategy specifically.
Speaker 11: So I think that obviously there will be some winners
Speaker 11: and losers, but I don't think the market creators. So
Speaker 11: it's really important to tie yourself to a good manager.
Speaker 11: Someone that is very experienced in the industry, knows how
Speaker 11: to underwrite, knows how to be selective, can generate opportunities
Speaker 11: that makes sense for the investments.
Speaker 3: Well, because the concern is that the folks who have
Speaker 3: been let money will not be able to pay that
Speaker 3: money back.
Speaker 11: Yeah, and that's been a theme that's going on for
Speaker 11: some time now, right, We've been having this conversation for
Speaker 11: a long time, and people got really spooked when interest
Speaker 11: rates spiked, and how are these companies going to afford
Speaker 11: their debt payments?
Speaker 7: And the reality is that they have they have been
Speaker 7: able to do it.
Speaker 11: And I think a lot of the US middle market
Speaker 11: is very resilient. And when you think about the assets
Speaker 11: that we focus on in our publicly traded BBC looking
Speaker 11: at companies that are between twenty five and seventy five
Speaker 11: million dollars of epatah, which we believe is the true
Speaker 11: middle market. What's happening now is there's a real convergence
Speaker 11: of the syndicated loan market where banks typically played right
Speaker 11: and the upper upper middle market. So private investment managers,
Speaker 11: private credit manager of doing those deals that banks used to.
Speaker 11: And I think that's where you're going to see some
Speaker 11: more issues.
Speaker 3: Why do the banks Why are the banks not doing
Speaker 3: loans to those companies or conversely, why are those companies
Speaker 3: not going to a traditional bank for that loan?
Speaker 11: Sure, so effectively banks have been regulated out of the business, right,
Speaker 11: they're not focused on it. They abandoned the business after
Speaker 11: the Great Financial Crisis. They let all of their deal
Speaker 11: team go, you know, all of their portfolio managers go.
Speaker 11: They were gobbled up or formed their own private asset
Speaker 11: management firms. So you don't see private bank I see
Speaker 11: the big banks doing these types of deals because they
Speaker 11: just don't have the expertise anymore. What they do is
Speaker 11: they get involved, I think, in the market more synthetically
Speaker 11: by lending to firms like UH where they can be
Speaker 11: on a more senior secured position. And what we're seeing
Speaker 11: is these larger private institutional asset managers, they're getting so
Speaker 11: big where they are now the bank. The difference is
Speaker 11: is that the investment committee, that people making decisions there
Speaker 11: are able to do it more efficiently, provide more certainty,
Speaker 11: be more flexible than say a traditional money center bank.
Speaker 6: We're talking with Mark Gatto, he's co founder, co president
Speaker 6: and co CEF signed on investments. Mark, what's the deal
Speaker 6: you will do in the private credit space?
Speaker 5: What's the deal you will not do?
Speaker 6: Because I mean, and how much transparency are you feeling
Speaker 6: like you're getting on these deals?
Speaker 11: So we feel like we get a lot of good information. Obviously,
Speaker 11: we're very diligent about doing our underwriting and understanding what
Speaker 11: we're getting ourselves into. I think every investment warrants merit
Speaker 11: if it meets some of our baseline criteria. Right, So
Speaker 11: we're we're again we're looking at companies that have earnings ye,
Speaker 11: right first and foremost, So twenty five to seventy five
Speaker 11: million dollars is our sweet spot. And then we want
Speaker 11: to really focus on are they relevant in their industry?
Speaker 11: Are they a leader in their industry? Do they have
Speaker 11: a good management team? Is there a reason for them
Speaker 11: to exist? So we're gonna focus on those things. Determined
Speaker 11: whether or not we want to do the deal on
Speaker 11: a high level, you know, we're not doing a lot
Speaker 11: of stuff that's very cyclical in the BBC and even
Speaker 11: in our integal Fund Diversity by Credit, we're not doing
Speaker 11: cyclical industries. We're probably staying clear of retail in many instances.
Speaker 7: Not to say that we won't do.
Speaker 11: Either of those deals, right, it's just not going to
Speaker 11: be a major portion of what we do.
Speaker 6: Give us an idea of a deal you recently did,
Speaker 6: and I'm curious about, like the infrastructure play right now,
Speaker 6: if that's a big part of it, or energy like
Speaker 6: what you're seeing.
Speaker 11: Yes, so on the infrastructure side, which is a little
Speaker 11: bit different because we're actually focused more on the equity
Speaker 11: of these infrastructure deals, but they do have a lot
Speaker 11: of characteristics that credit assets have. I think it kind
Speaker 11: of falls in between pure credit and private equity, if
Speaker 11: you will, right because when we're talking about infrastructure, we're
Speaker 11: talking about stable, stable revenue that's being generated by these
Speaker 11: assets as predictable, so it has that element, but there
Speaker 11: is some sort of growth story to that. And if
Speaker 11: you look at our infrastructure fund, we're doing deals like
Speaker 11: the M twenty five in London, so roads, bridges, we
Speaker 11: have terminals, at LaGuardia Terminals. At JFK, we're in AI
Speaker 11: and data storage. So we really run a diversified strategy
Speaker 11: and that is a theme throughout all of our products.
Speaker 11: We want to be diversified, and we think that's probably
Speaker 11: the most important thing for us as a manager, and
Speaker 11: we think for investors is to be diversified.
Speaker 7: If you look at our BDC, we have.
Speaker 11: One hundred and sixty different names in there. If you
Speaker 11: look at our Interval Fund, the sign Areas Diversible Credit Fund,
Speaker 11: we have over seven hundred names in there. So you're
Speaker 11: really getting granular, you're really getting diversified. So no one
Speaker 11: deal is going to make a difference, and no group
Speaker 11: of deals is going to make a difference. And we're
Speaker 11: doing that same thing with infrastructure. We want to be
Speaker 11: highly diversified.
Speaker 3: Is there political risk with the Infrastructure Fund in the
Speaker 3: sense that you have an administration right now that wants
Speaker 3: to punish different states and cities for not getting online.
Speaker 3: Essentially we see that with the Trump administration and with
Speaker 3: the MTA for example, and tolling congestion tolling?
Speaker 2: Is that a risk?
Speaker 11: So we don't view it as a risk because of
Speaker 11: our diversification because we are investing in different.
Speaker 7: Areas of infrastructure.
Speaker 11: We're not a cleaning energy play, We're not a fossil
Speaker 11: fossil fuel play. We don't believe that there's much political
Speaker 11: risk in terms of our strategy. And then if you
Speaker 11: look at the industry as a whole, the market as whole,
Speaker 11: there's such a high demand for infrastructure assets. There's such
Speaker 11: a need to spend capital to improve our infrastructure assets,
Speaker 11: not only here in the United States, but globally. It's
Speaker 11: a multi multi trillion dollar opportunity. We don't think that
Speaker 11: political the current administration, our new administration is going to
Speaker 11: sort of move the we move the needle one way.
Speaker 7: Or the other, especially if you're diversified.
Speaker 11: And again I go back to that theme, it's really
Speaker 11: important at SIGN Investments.
Speaker 7: We preach it to our advisors and.
Speaker 11: Clients that that's where you need to be, not only
Speaker 11: within alternatives, but across the entire spectrum.
Speaker 7: Just got thirty seconds.
Speaker 6: How would you describe the environment like in a word,
Speaker 6: a couple of words.
Speaker 11: I think the word that describes the environment is uncertain.
Speaker 11: It's been still, it's been it's been that way for
Speaker 11: a while. It's going to be that way for a
Speaker 11: long time. Information moves too quickly, where the global kinds
Speaker 11: are too interconnected. There's always a news story that's going
Speaker 11: to give you some sort of angst, that's going to
Speaker 11: make you think things are uncertain. So that's why we again,
Speaker 11: we fall back to diversification and we like alternatives for
Speaker 11: our clients, our advisors because we think we stabilize some
Speaker 11: of that uncertainty and volatility in the market place.
Speaker 6: We know you're based on the West Coast, but we
Speaker 6: hope we can attract you back to our New York studio.
Speaker 11: We're headquartered in New York, so anytime there often, anytime
Speaker 11: you would like to have me on as a guest,
Speaker 11: I would be my pleasure.
Speaker 5: We would love it.
Speaker 6: Marcatto. He's co founder, co resident and Cofcion Investment.
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