The Market View Of Trillion Dollar Asset Managers

[Music] so thank you so much gentlemen uh we've had a huge roll call so far this morning in terms of this big macro picture and you know we've kind of got a market view from the top so I really wanted to start by that because as Her Excellency was just saying we're edging so close to 2025 now so I think the the people in the room would love to sort of test the temperature of how you see the next year coming so maybe if I could go along Bill starting with you um 2025 what are you looking for in the markets what what are going to be the major Trends and we'll go along the block yeah I think the uh in the market in 2025 are going to be three things rates inflation and uh new administrations right and and I think you know taking that into consideration and when you're looking at those things the key things you're going to be thinking about as as you invest are I think around credit more than duration uh you're going to be thinking about Alternatives and diversifying that portfolio uh and you're going to be keeping an eye on on inflation and and where um what you might want to invest in to protect against that yes those pesky interest rates Alexander where are we going with those well first and for foremost thank you for having me it's a pleasure to be here um guess so we remain constructive on the markets in 2025 uh we continue to to see the economy especially in the US still going strong we continue to see earnings growth which is important we need to keep an eye on inflation I think that is a key one I think the new Administration has a number of potential measures that could be inflationary so we need to have a we need to have an eye on that I think deregulation can unleash Animal Spirits so we'll we'll see you know what what happens uh there and uh look I think it was uh I think it was war Buffett who said being an entrepreneur made him a better investor and being an investor made him a better entrepreneur maybe you know we can say the same about politicians uh I think this new Administration has probably more entrepreneurs than ever before so let's see how that plays out and I think the most common themes clearly you know credit I think fixed income remains a big topic as well look I think in the US there's still 8 trillion in AUM sitting in Money Market funds you know if you can imagine what that could do once it starts to be deployed in the market I mean that could provide a very interesting backdrop and uh David you I think you sit State Side most of the time do you I do although um Pim has about 14.4 trillion do and we manage that right around the around the globe and in fact it's one of the great privileges of my job to be able to actually talk to cios right around the world and I think um for this audience the most most important thing about 24 was the incredible rotation of capital that we see geographically so when you spend your time in Europe slow growth concerns about the future problems generating real productivity you do not have Capital going into Europe right now and particularly that's true of the poor European countries you then spend time in Asia um Japan actually has been a relative bright spot uh you know you finally got some price increase good Heavens you've actually got uh g g GDP growing it's actually been quite exciting um China um you know even though there's been some movement I think in the last couple of months towards stimulus there is no external money at this point going back into China southeast Asia absolutely and we're seeing to starting to see the effects really of the real changes in Supply chains and then you come as Alex said to to the US and the US has right through this been strong the labor Market is strong um inflation does appear to be uh gradually uh tamed and uh most importantly productivity has actually been um really strong so Capital has been going into the US capital is going into Japan in Southeast Asia and it's coming out of Europe and it's coming out of China and that rotation I think has been more Stark than I can remember in the last decade yeah so um but 2025 a new uh president in the US a fully but well I'm not going to say say fully valued because we keep saying a fully valued US market but we're particularly sensitive to it in this region because of the attachment to the dollar and the local currency what's your view State Side you know we've seen this big run up in the market um a lot of pro business measures perhaps but what what's your view in in 2025 so I would say in general that um people feel uh nervous because they over overweight the us but they don't feel that they have a lot of other good Alternatives that said when I talk to cios their biggest risk is geopolitics it's actually not the business cycle it's not the administration we talk about some of the policies but that's not it it's actually the real rise in geopolitical risk and I think that um you know the solution and we've been doing a lot of work with cios on on what do you do to build a resilient portfolio if you believe we're in a period of really heightened uh geopolitical risk and the solution is exactly what Ray set up here just a few minutes ago it is liquidity because when we we have one of these real bouts of volatility you need to move I mean some of our best money was put out in 2009 and 21 and some of these periods you've got to get an entry point and the other piece of it uh is diversification diversification has never been more critical or more important and so those two things I think are are critical uh that cios uh address over the course of the next the next year because they are nervous about the you know over over indexing to the US right now yes and Bill I want to bring you in on this as well I I often hear the Cockroach approach to portfolio management my husband is constantly talking about this um what's your view on on the US uh Market uh you know over the coming year well all three of us have touched on this I think there's three obviously it's going to be about taxes tariffs and and deregulation right and those three things are going to probably be inflationary and so uh exactly what you know David was just saying is you have to have diversification you I think credit is going to be extremely important uh I think rates are going to be higher for longer and I think you have to invest in Alternatives you have to invest in you know Farmland private credit uh you know things that can stand the test of time and you can look out into the future we manage over 300 billion in Alternatives today uh we're the leading manager in Farmland we're one of the leading manager in private credit all these things make a difference in a portfolio and I think those are critical going into this new you know this next year and Alexander I want to build on that alternative space because back in the day when I was in the market um I still take a keen interest but you know it's pretty simple wasn't it it was your bonds it was your equities and and yeah maybe a bit of Emerging Market but now there's a whole different suede of products that are allowing a different perspective on risk and investment so in the alternative space kind of what are your picks uh institutional picks for 2025 no thank you so um I think all three of us manage you know significant amounts in Alternatives you know 300 400 I know David probably you know little north of 300 yeah so there you I think all of us I think it's such an important master class for for all of us and I think for most players you've seen uh Black Rock has been very active this year to spend 25 billion on Acquisitions you know only on on olds so I think it will remain very important I think there was a recent prequin study that uh showed alternative assets as of the end of 23 stood at 17 trillion and forecast to grow by the end of the decade to 30 so I think you know almost doubling which tells you where where the market is going I think for institutional investors credit is probably one of the main places where they are looking to deploy fur the capital um I will I will say it has been an asset class that has attracted a lot of CL I think that as the M macro dnamic are changing not too long ago we saw positive Equity Bond correlation you know this a very phenomenon of the denominator effect that and on the back of that it's been you know quite slow on the capital raising side in in private markets I think as you see that Bond Equity correlation become more negative again I think you know going to David's diversification point it will probably unlock further capacity for alternatives and I think private credit is certainly an area that will benefit and I think the other one is infrastructure there are sums of money that have to be invested R alio talked about the indebtedness of countries governments so I think the private Capital Pools will have to come in and bridge that funding up so David where you putting your money in Alternatives then so I think it's really important for people to understand the how this whole dynamic in privates is is is operating in the early days um back when people did invest in stocks and there came along this new asset class but it was largely private equity and what's happened over the last really since the GFC is that it's been much more around private credit now this is not a new asset class at all it just happened to be on bank's balance sheets so it's not as if this is something that's being discovered it's just that banks have really been unable to lend into the middle Market they've been unable to lend I'll come to the ABF Market in a moment so that that that basically GPS and LPS and managers such as ourselves have really stepped in where the banks have really not been able to keep up with the economy and so private credit is now providing an enormous push uh to many of the economies uh around the world and the next phase of this we believe is asset-based finance and this is the good oldfashioned you know financing of aircrafts and rail car leases and almost anything where there's real collateral again this was owned by the Banks U and still is in some countries that is now moving to the private Market Market as well and so if you're an Institutional Investor and you're looking to diversify if you buy that whole argument you now have a whole range of credit which actually is not highly correlated with each other that you can now move into that you didn't have those Tools 10 years ago and so that's the direction uh that we see the private markets going and certainly the direction that we're uh driving our business which is private credit has been our fastest growing so Bill I put you under pressure for 2025 now I'm going to get the crystal ball out again and say what's happening the longer term because everybody's out there obviously actively evolved in the market so what sort of asset classes are you favoring geographical areas I know that uh we had there from David a sort of Illusion to to the shift of capital but what's your strategy say over the next 10 years five to 10 years I think you know when you look over the next five 10 years there's there's some asset classes we don't even know are going to exist right and so I think the key is and like David said you know you had private credit existed and then it changed you know in terms of and how it it was brought to the market uh I think that's going to stay for a long time um I think uh you know things like Farmland I mentioned it earlier Farmland I think infrastructure energy transition uh those types of things are going to be critical to people's portfolios as they go forward uh and I think that'll just keep extending this whole Alternatives route uh affordable housing if you look around that many count we're the largest investor in affordable housing in the United States but we're working with the UK government today there's other governments we're working with housing has to be a critical component people probably don't think about that as an investment but you can get really good returns and affordable housing so I think there's going to be just these continued uh new types of things to invest in that are backed by real assets and you talked about that so um alexand I'm going to ask you a difficult question now but um when it comes to differenti ation because I've got such a lot of cash on the table here with your various companies but how are we going to differentiate you know how do investors differentiate between the different offerings and and different houses well look I think at the end at the end of the day you know our job is to provide value to our investors they come to us for different investment needs and I think you know even you know here on the panel you have a very different set of investment capabilities strength geographically at the asset class level so I think that is where everyone plays a different role I I guess as part of that of that ecosystem if I look at the industry we we all have different geographical bets as well so for example Bill mentioned the US and the the US housing market we are very big in Asia very big in China China has been you know a bit slower growth than you know in the past um probably not as compelled you know to David's point to invest right now but you know I was looking at the ralo's chart before the US versus China I think this this will remain a secular story to really deploy capital and I think you know going back to what can we provide at the differentiating factor I think our footprint in China and and in Asia is is one of the go-to places so we're sat here in Abad Dhabi obviously we've got three minutes on the clock so it's one minute each no pressure but David you've all expanded into the region so so what's your perspective on Abu Dhabi and The Wider Emirates and region so we're absolutely delighted to uh to be here we've obviously been managing money in the region for uh for many many decades and I think what's really exciting about the last couple of years is to see the transformation and and and the real change in the local economy and so um you know as I come even even year by year I see the changes and the diversification that's occurring here and I think that's certainly for us why we moved from for a long time kind of covering this out of London to actually saying no we we need to have a closer partnership we're opening an office we uh really setting ourselves up to work with the leadership here in the development of many of the local infrastructure pieces the pension system and many other things that I think are going to be more and more important uh to the UAE overall and I would I in particular so we find it a very exciting time uh to be here in the region and Bill uh 50% of Revenue in 2024 non oil uh it's pretty amazing feat so what what were the factors that attracted you here and and the kind of Investments that you're interested in yeah I mean I think when you think about the asset management industry all of us have kind of touched upon it it's about globalization it's compression of fees and it's about scale and diversification and I think this region is an area where we already had clients and we were already investing but it's we we get very focused on being intentful about what we're doing and this was a region where we thought we could be partners with other institutions and really invest into uh the region and invest money and grow and and and it's a it's a key part of our globalization strategy and so that's why we came here and Alexandra it's a pretty useful time zone when you got to speak to clients and also attracting Talent right you guys have got to get Talent on the ground here um so I guess that's another attractive theme absolutely we've been we've been here in the region for 60 years we very much look forward to the next 60 years is I think what the UAE and the gulf in particular they have really done an incredible journey I mean you know the capital of capital I think says it all right it is not just a provider of capital to the world it is also attracting Capital into the country I think the UAE has done a phenomenal job I think with the vision and I think to establish the UA as an as an investment Hub I think the gulf there is about 5 trillion in terms of asset pool 3 trillion to be invested over the next few years we use I think that I think that speaks for itself and I think we're all very very excited to be part of that Journey well gentlemen we're very excited to have you here and thank you so much for your contributions and uh giving us a way ahead for our investment pocketbooks in 2025 and Beyond so thank you so much for having us thank you [Music]