00:00Performance has been pretty good. I mean, if you're a fixed income manager this year, it was decent.
00:04I guess the question is, what sort of continues that performance into next year?
00:07Well, 2025 is definitely a strong year for us.
00:10We had significant inflows across public and private credit, particularly in total return and income-oriented strategies.
00:20In the fourth quarter, we impressively saw growth into strategies like asset-backed finance,
00:26which we can talk more about our strategy for 2026 and some of the innovative products that we're launching as a result of client demand.
00:35But you're right, our performance was really great this year.
00:37I mean, we delivered solid performance over the benchmark relative to our peers, and I see that happening in 2026.
00:48Well, talk about some of those new opportunities.
00:50You mentioned the asset-backed financing products. What are we talking about here?
00:53So as we go into 2026, I think what most people probably should continue to accept the fact that the buzzwords of private credit are going to continue to grow.
01:03And I think it's actually a really good thing because it probably highlighted that there is probably a redefinition of fixed income
01:11and the intersection of public and private credit is now becoming a core component in portfolios.
01:17And at Guggenheim Investments, we believe that combining the two is incredibly beneficial to investors, and we see that demand from our clients.
01:28With respect to the asset-backed finance offerings, they complement private credit really well,
01:34and we plan on embedding those into some of the private credit products to differentiate ourselves from all the others.
01:42I mean, I think we've all seen there's been a ton of merger and acquisition and asset management alone in 25, right?
01:49Whether it's a percentage ownership in one firm or it's a JV here or it's, you know, rebranding, selling off this piece.
01:57And the one thing I love about Guggenheim, and, you know, I've been there for, you know, almost 25 years, is we just stick to what we do, right?
02:05We've been in the private credit business for over 20 years where, you know, we do old-school credit selection discipline.
02:12And that's really what's going to matter as we go into 2026.
02:15A lot of people have invested in private credit, and it's going to be about quality over quantity.
02:20Do you know it's also my 25-year anniversary coming up in the next month?
02:23Oh, I'm so glad I brought you this month.
02:24Not that you needed to know that.
02:25Yeah, but I brought you gifts today because, you know, you and I, you always have to have this dialogue.
02:29That's kinship, Katie Gryffel.
02:29I actually didn't know that, Romain.
02:31I don't know whether to brag about that or be ashamed.
02:34No, you look great.
02:36I brought you some Guggenheim swag today.
02:38I started when I was 15.
02:39Happy anniversary.
02:41I'm sure we're going to celebrate it once we get there.
02:44Let's talk a little bit more, though, about what you're seeing in asset-backed financing.
02:48What is sort of the pitch and the appeal there?
02:51I had on my chart behind me that you take a look at the best-performing parts of the fixed-income market year-to-date.
02:58Securitized products are one of the market leaders.
03:00And just talk to us about the interest, what investors see right there.
03:04So the important part about ABF, which is what everybody calls it, and there's not a lot of managers that actually specialize in this, but Guggenheim is one of them, is when you look at direct lending, the main thing that you have to look at when you evaluate the credit is the borrower's ability to pay the interest.
03:23When you look at the ABF area, you want to evaluate the hard asset, and the hard asset is what's going to pay back front-end some of those payments.
03:33You're going to get the interest plus that front-end payment, which is going to obviously boost the returns.
03:39It's going to potentially drive diversification and yield.
03:45So I think it's just another way to embed another version of private credit into these types of portfolios, where I don't know if a lot of people really, truly understand that there are very different types of private credit, right?
03:58There's subordinate credit, there's the senior subordinate, opportunistic, distressed, and venture, right?
04:07Very different.
04:08So as we see all this M&A activity, it's not just going to be about buying private credit, it's who you are trusting to manage that private credit.
04:18Absolutely.
04:19There's a lot of education that needs to happen, a lot of concepts that need to be socialized.
04:24So I want to talk a little bit more about Guggenheim specifically, though.
04:282025, a big year for you guys.
04:30I know that you were certainly focused on building out your wealth channel.
04:34Talk us through what the goals are when it comes to 2026.
04:38So the most important thing is technology and amplifying our expertise by utilizing the tools within data aggregation and leveraging the build-out of AI, right?
04:53And I know that's a big buzzword, but we feel we're way ahead of the curve on that.
05:00As you know, we started aggregating and organizing and governing our data and the structured side of things well and like in 2020.
05:08So now we're already embedded in creating a very sophisticated set of use cases and tools to drive purpose in our investment process and non-investment process by utilizing a lot of the technology and the tools.
05:25And then that will allow us to scale a lot of the different products that we're going to be offering into the marketplace that will include all the same strategies that we've always outperformed in and we've been offering to our clients for the last two decades plus.
05:39But they'll just become more available in products for clients that are looking for different types of liquidity needs like ETFs and BDCs, retail SMAs, interval funds, but that are highly customized for the different types of clients that are looking for those types of strategies.
06:00When we talk about those types of clients in terms of individual clients, are we just talking about the high net worth individuals or have you guys also looked a lot more at the massive clients?
06:08Believe it or not, we see a lot of institutional clients wanting a lot of the same wrappers that once was utilized just by the Wealth Channel, right?
06:17Right. Insurance companies, they're looking at ETFs. We've got insurance companies that actually want to, you know, seed BDCs, you know, embed those in their annuity offerings.
06:30We're seeing a lot of wealth management advisors. And as you know, I came from that world.
06:36You know, the average size of a wealth management advisory client now is growing.
06:41As a matter of fact, in the SMEs that we launched last year that we thought were just going to be for the Wealth Channel, we're seeing a tremendous amount of interest from the middle market size institutions like pension funds, insurance companies.
06:56So, you know, I think there's really definitely beginning to be more of an intersection and a hybrid approach to all of these different type of offerings.
07:07How do you think, though, about that mass affluent investor? Is that something that Guggenheim, you know, prioritizes and focuses on or is it more about those institutional clients?
07:18No, it's definitely both. And as a matter of fact, I think you're going to see a growth in the mass affluent, right?
07:23So the and I think you're going to see a lot of demand coming from the mass affluent and the way they want to access those products are going to be through digital, right?
07:32So online, you're particularly seeing that offshore. There's a lot of different tools that we're actually looking at so that we can be direct to consumer through technology.
07:42And I think that that's actually going to be the next phase over the next three to five years of where you're going to see growth for asset managers is you really have to get out of that comfort zone.
07:53And you have to start looking at other ways to drive results for the clients, but also give them access.
08:00Mm hmm.
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