00:00Private credit is dominating the headlines, and if it's not that, it's other forms of volatility, be it concern about
00:06disruption of AI.
00:08And now the latest one we have to grapple with is the prospect of war and geopolitical uncertainty.
00:15Has that changed any of your assumptions for how 2026 plays out?
00:20As surprising as this may sound, not really.
00:23And the reason being, as a private markets manager, we're thinking in 5-, 10-, 15-year increments.
00:31And you and I have had this conversation before.
00:34It's actually an interesting place to live as a publicly traded company that can experience the day-to-day volatility
00:39in markets and has to react, at least emotionally, to the daily headlines.
00:46But when we're making investments behind secular themes like realigned supply chains globally, the reindustrialization of the U.S. economy,
00:55digital infrastructure, and digitization,
00:59these are not things that get knocked off track by the things that we tend to talk about day-to
01:04-day.
01:05So inevitably, the world that we're living in may change geopolitically.
01:09We may see realignment of alliances.
01:12Energy prices has a big impact.
01:14We may see inflation come back in.
01:17So that's going to have an impact on certain things that we own, and we will react.
01:22But one of the nice things about being a long-term investor in the private markets is we don't really
01:26have to say,
01:27OK, the playbook that we had put in place for ourselves is now fundamentally different.
01:31Have you started to think at all, again, early days, but of resurgence of inflation?
01:35If the Fed isn't able to cut as much as we assumed, how would that change things for you?
01:39Well, it's interesting because part of this private credit story, as an example, and I saw it on the walk
01:44-up,
01:44the way that most large private credit managers are set up is that we're kind of hedged against outcomes.
01:51So if software disrupts a sector of our portfolio, then our digital infrastructure and data center development business benefits.
02:00If software disrupts the portfolio, then our renewable energy business benefits.
02:05So when we think about inflation, what's interesting, the private credit narrative is also around base rates coming down.
02:12So there was this anxiety that crept into the market that as base rates were coming down, the return available
02:18in private credit would somehow become less attractive.
02:21If we find ourselves in an environment where we still have inflation and rates are elevated, that's actually theoretically good
02:28for total returns in private credit.
02:31So I think you have to start thinking about both sides of every coin.
02:35And most of the things that we tend to talk about on a day-to-day basis have a risk
02:40and an opportunity associated with them.
02:42And when you look at a broad-based manager like Aries, we tend to be on either side.
02:47And so we tend not to get that worked up.
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