00:00Let's talk about how you weigh that pitch, that alternatives, they're a great way to diversify in times of geopolitical
00:07stress with what we're seeing, particularly when it comes to private credit.
00:11You think about the SaaSpocalypse, certainly shaking up a lot of these alternative managers, and I have to imagine putting
00:18a little bit of a cloud over the entire space.
00:20Yeah, there's a bit of a sentiment challenge right now in private credit. I'm not sure it's entirely justified, and
00:26that's coming from some things that we would certainly agree with, which is there's a large software component to private
00:33credit.
00:33But that's something that investors have to contend with in the equity markets as well as the debt markets. How
00:38do they feel about software, and is it something they want to have in their portfolio?
00:42But, you know, I think more broadly, private credit is paying a premium, continues to pay a premium to public
00:47credit. That's why investors are leaning into it.
00:50It's a source of constant return. And then when it comes to diversification, that's something that's been missing from public
00:56portfolios in the first quarter.
00:58We've had a good day in the markets today. We're up about a percent, but it's taken until April to
01:04get back into positive territory in the S&P.
01:07So portfolios that don't have any alternatives exposure, they've seen quarter one end with S&P down, stocks are down,
01:15bonds are pretty flat.
01:16So without any alternatives exposure, there's not a lot of green in the portfolio.
01:21Well, let's get specific here, because you think about the umbrella of alternatives. That is a very broad church.
01:27So specifically, you know, you think about the past month. It's been a really kooky kind of market.
01:32Traditional fixed income hasn't really given you any sort of hedge.
01:36Where do you see the best places to diversify right now within that umbrella?
01:42So investors are starting to lean into some of these asset classes that pay a constant return, have some inflation
01:48hedging characteristics.
01:50I think that's particularly important, as we've seen oil over $100 a barrel.
01:55We've come slightly below that figure now. But as your last guest said, we're not out of the woods.
01:59This conflict could continue for a while. And that is going to feed into inflation.
02:03And so looking at inflation hedging assets, assets like real estate that have been successful in in passing on rent
02:12increases.
02:12We've all seen a rents increase that gets turned for investors in real estate that gets turned into income.
02:17And then for an asset class like infrastructure, that's mainly invested in power generation.
02:23So again, we've we've we've all seen our electricity bills go up that get for investors that gets passed into
02:29income for their portfolio.
02:31So they're among the few asset classes in the green so far this year are those hard asset classes like
02:36real estate, like infrastructure to pay those constant returns that have some kind of inflation hedging characteristic to them.
02:41All I heard in that answer was rent increases because I'm a renter and there is indeed a steep rent
02:47increase every year.
02:48So if geopolitics can push oil up around 6 percent more or less and barely budge equities, in fact, we're
02:54seeing the equities, S&P at least, wiping out all of their gains for 2026.
02:58What is the market seeing maybe that most people aren't?
03:02Are we underpricing something?
03:04In terms of oil, you know, I think investors are taking another look at the energy component of their portfolios,
03:10because if we look long term, the expectation was oil prices are declining.
03:13We're going to get to pre or pre-ran crisis.
03:17We were looking at ending at $60 a barrel next year.
03:20That's no longer the case.
03:21When I look at future markets now, we're ending at maybe $75 a barrel, but we're likely to stay in
03:27the 80s at best case looking at the future markets throughout the summer.
03:31And so how do you how do you play in this environment?
03:33You need to look into assets to give you some kind of a hedge again against that.
03:37Shipping is one that has performed really well, both in the public markets as well as in the private markets,
03:43because if the oil's got to got to get into our cars somehow and it's not coming out of the
03:48Gulf.
03:49So it's coming from places further afield.
03:51Looking at countries in Asia, they're getting more oil from the U.S.
03:55They're getting liquid natural gas from the U.S.
03:57And so that's going into ships that are now traveling further to get to their destinations.
04:01So liquid natural gas, for example, 25 percent of it comes from Qatar that can't get out of the strait
04:06right now.
04:07And so it's being being exported from places like the United States to other countries.
04:12And so for investors that want to benefit from this, looking into transportation, both either in the public side or
04:17in private transportation funds.
04:20Let's go.
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