00:00Let's start with the partnerships, because I know you recently signed one with PGM.
00:04You have a partnership as well with BlackRock.
00:07And I do think it's interesting that you have this growing trend of you have these more traditional asset managers signing on with private market specialists.
00:15And I wonder why that is happening and why that needs to happen.
00:20Well, I think if you look back over the last decade or so, we've all been quite happy to ride the markets as these large technology positions have been built.
00:30But now that they're built, we have to live with the volatility associated with that.
00:34And so you have investors increasingly that are looking for ways to diversify their portfolio.
00:40And over the last 30 years, the private markets has become home to many of the world's most interesting middle sized companies.
00:47You know, people used to invest into the Russell 2000 and things like that to get their mid cap exposure.
00:55If you look at the number of companies that have been going public the last number of years, it has been a small fraction of the number that have been acquired by private markets firms like us.
01:05And so the way that investors get access to the most interesting middle sized companies today is through private markets portfolios.
01:14And so you're starting to see the portfolios of the future coming together as a blend of public content and private content.
01:23And I think that's a trend that's going to continue well into the future.
01:27It's a good point that for a lot of investors, it's not two separate conversations, public or private, that increasingly it's the same conversation.
01:34But to bring it back to the partnerships, I mean, what do you bring to a PGM, to a BlackRock, even that they couldn't just build in house at this point?
01:42Yeah.
01:43So with all of this interest coming into the evergreen space in particular, a tool used to make private markets content more accessible to everyday investors, partners group has been one of the leaders in that space.
01:55We have almost a 20-year track record now of building and managing evergreen structures, bringing private markets content to individual investors.
02:05And that's a big part of what these partnerships are based on, that long-term track record of success.
02:11We now have $52 billion in evergreens.
02:14And so for partners that have some scale ambition within the space, having a partner that already has some critical mass built within the topic is helpful.
02:25Let's talk a little bit about where this could go when it comes to broadening access, because wealth channels are one thing.
02:32You know, increasing access to everyday investors, that's one thing.
02:35I feel like that is a slightly different conversation than when you're talking about retirement and putting private assets in 401ks.
02:43And, I mean, what is the pitch there when it comes to 401ks?
02:47Why do we necessarily need to have private credit or private companies in your retirement savings?
02:53Yeah, and there have been some early movers in that space.
02:57So with Empower, they're one of the first providers in the 401k space to announce that they'll be putting private markets content in that.
03:05And we're one of the partners that they've selected to do that with.
03:08And it comes back to that same topic that we talked about previously.
03:12It used to be when people thought about the public markets, well, that's where you go to get your, you know, exposure to large companies that anchor the economy, household names.
03:23And the private markets used to be more speculative in nature, risky venture capital or highly leveraged equity.
03:28But that dynamic has changed.
03:30There's much more speculative activity taking place in the public markets today.
03:34And the private markets has expanded to be a $15 trillion asset class that is home to many entire sectors and subsectors that are now serviced by this large asset class.
03:47And so as you think about the portfolios of the future, you need to blend together private content and public content in a format that is digestible.
03:57And I don't think anybody's anticipating that people are going to go into their 401ks and rebalance into a private markets fund directly.
04:06But there are parts of these 401k programs that are professionally managed.
04:12And as part of a broader portfolio strategy within those segments of the portfolios, I think private markets makes a lot of sense.
04:20Something else that, you know, I think about a lot is the way that people are actually accessing private markets.
04:25What fund structures they're using to get there.
04:28You know, I cover ETFs very closely.
04:30And that's been one of the most fun thought exercises of the past several years is how do you fit private companies?
04:36How do you fit private credit into ETFs?
04:38And there's a lot of hand-wringing over whether that's appropriate.
04:41When you think about the liquidity mismatch between a truly private asset and an ETF, which, of course, trades all day long.
04:48And I wonder where you fall in that debate.
04:49Yeah, I think when people think about private markets, you need to think about that as a long-term investment into the space.
04:59Because, you know, in order to trade in and out of the sector, you have to use tools like the secondary market.
05:06And that market is growing.
05:07That's grown from a $50 billion market a couple of years ago.
05:11It's probably $100 billion of opportunities that have been capitalized in the secondary market so far this year.
05:17So that is a growing part of the market.
05:20But you can't rely on that.
05:22I think when people think about private markets, this should be the place that you go to invest into good, solid businesses for the long term.
05:30And there are things that we can do to make those structures more liquid, more easy to use.
05:36The tools that we've used historically, limited partnerships, these are archaic structures.
05:40That are not really meant to allow investors to rebalance their portfolios and to make pivots mid-cycle.
05:50And the tools that we're building today, these evergreen structures, are meant to be long-term investment vehicles,
05:56but do give investors a reasonable amount of ability to rebalance those portfolios.
06:02And so from our perspective, you can make it more liquid, but it's always got to be thought of as a long-term investment.
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