The Perspective of the Asset Allocator’s

[Music] gentlemen our only request for the lovely audience is to speak loud and clear into these microphones and pull them towards you so that we can hear all your wonderful investment advice so I'm I wanted to really set the scene to start with because obviously lots of different perspectives here about the current states of the asset allocation landscape and since you're next to me Dan um give us your view of 2025 and Beyond so we we can look to next year but also look beyond that in terms of the investment landscape and asset allocation sure I I think to start I think it's it's U we're a long-term investor so we don't tend to really have a a one-ear Outlook we always use our as location process to actually have a much more longer view but what we've seen ultimately is that the you know the external environment is definitely changing um you know Market opportunities are becoming very thin there is fewer Market in efficiencies opportunity windows are very narrow so what we've done internally is adapting ourselves to become much more agile to be able to actually capture these opportunities in a most efficient way so one way to actually look at is definitely focus on the top down long-term perspective but having the ability to structure ourselves to become much more Raja to capture these opportunities in a much more faster way traditional ass classes I mean we heard this from the previous panel just now are becoming very blurry so real estate is becoming closer to infrastructure infrastructure is becoming much more closer to private uh Equity private credit is everywhere so we've see opportunities where actually these uh where as class actually do cut across and again you need to be agile and adaptive to be able to capture this yeah and I think that's a really interesting concept as you said that there's this merging Phil from your perspective obviously another long-term investor of course but um the vagaries of the market in between what what's your perspective well I think if you look uh today in terms of the current landscape I might say feast or famine in that there's great economic growth uh particularly if you look at the US economy uh but the level of uncertainty right now and the volatility that could be in front of us uh I think there's a range of scenarios uh certainly as Dan said the blurring of asset class lines creates opportunity but also greater complexity and when you look at the US economy um you know it's been so resilient uh you now have the opportunity of um the expectation anyway of deregulation uh of uh a a very accommodative fed policy in front of us and uh that environment uh is likely to have a robust uh continuation of growth at the same time uh there's under currence that could be unsettling um and whether that is um a labor policy with immigration that could be uh challenging and cause Labor uh to be more costly uh tariffs would be another Dynamic uh but in this environment um you've also got geopolitical risk um you know we just look at the region here um there's uh such a change that has been so uh dramatic uh but I think the uh in this environment uh the role of priv assets uh private Credit in particular uh and real estate uh I think those are arenas that uh have real potential in the coming years and David if I could bring you in on that as well your sort of macro picture and a little bit lower than macro in terms of the outlook on the this asset allocation yeah um we inhabit a corner of the investment world that is makes it very very hard to react to macro so our firm is focused just on venture capital and private equity in very long-term El liquid portfolios so it's really difficult to in some ways it's comforting because you focus on other things um and so we build these portfolios that really take five to 15 years to realize their outcomes and so it's very hard in a in a single moment in time to sort of react to next year and make bets on that that said we naturally live in the investment world and our role fits into sort of a broader um uh a array of asset classes and has a role to play there so um you know we're based in California we're in the thick of the AI Trend now but you know over the course of these portfolios that we manage they'll be they're me typically many Trends uh on the private Equity side those are more uh sort of normal businesses like less Tech oriented and ideally you're looking for businesses that'll do well through up and down Cycles recognizing that there are up and down Cycles luckily you've been in the right place of the market so you had a bigger part of the pie that's for sure um if I come through to you shiv um what's your kind of Outlook as well sure uh good afternoon everybody uh our mandate and our objective function is uh to make double digit absolute returns rain or shine and if you look and that's what we've been doing if you look at our returns about 133% with a beat of 02 last year last 5 years uh the the asset class that I focus on which is hedge fund investing uh has made double digit returns net um and so that is kind of how and that has been consistent throughout so just to give you a perspective of where I come from in a year like 2022 we were up around 8 and a half% when your standard 7030 was down 18% so if you if you look at it on a go forward basis uh asset prices are not necessarily cheap now one can sit and debate I mean how uh expensive or inexpensive it is but clearly where various assets public market equities as a case in point is trading it's certainly not cheap but then uh there has been changes in administration particularly in the US that I think is can be transformative and the feel is that uh the cues that we have got so far which are somewhat clear is on the deregulatory front in the US so that's clearly a theme I think that uh investors should take advantage of and we have we are looking to take advantage of as well and on the negative side the uncertainty as you were talking about is clearly on the tariffs how far reaching it's going to be and we have to wait and see so what it that tells me is there's going to be more volatility in the markets but amidst a very constructive backdrop given particularly the US is in a relatively good spot uh so with that said we continue to see uh exciting opportunities in spread strategies Longshot strategies where you can take advantage of good companies uh be long them and short bad companies and that's been something that I think will continue to persist and these uh strategies do well when there's volatility and just by way of teams to take advantage of the policy backdrop uh the three or four themes that we really like where we are we have a committed capital and we continue to see opportunities on a structural basis is the AI theme I mean so we do continue to think that we we think that this is going to be a structural theme upon us so we investors should take advantage of it not withstanding the volatility that that could happen intermittently the second that we like given the regulatory backdrop of the current Trump Administration that's likely to be that will be inaugurated is in biotech so we continue to see pretty attractive opportunities uh in the biotech arena in the drug Discovery Arena so that is an area that has started doing well and we continue to see opportunities there and the third opportunity is in merger Arbitrage so as the administration and Trump has clearly said that we need to be more uh uh towards deregulation so that means there's going to be more you know takeouts mergers and Acquisitions and merger Arbitrage as a investment strategy I think uh after m&a winter is likely to take off um and then we look for opportunities pockets of opportunities in places like Latin America which are kind of off at the moment and investors to the point nobody is talking about it and we see some very attractive value to uh uh and again on a spread basis on a Longshot basis in those types of strategies so yeah and we'll get back to that Geographic versus asset allocation as well afterwards because that that's quite an interesting Dynamic hasham I feel like I'm going to ask you an unfair question here obviously I want your outlook but I'm thinking on the one hand uh inflation people are worried about inflation on the other hand we've got perhaps uh a reduction because of tariffs of reduction in global trade counterbalancing each other or not really uh thank you for for for for inviting us to to this panel to speak so uh you know you you might okay you know I think you know perhaps before addressing this one should really understand what does it mean to own all of these assets people talk about Alternatives I mean I I at the end of today Alternatives whether they're liquid or semi liquid have an exposure to an economy so so you know you you're still operating within an economy so so people need to understand that if they're moving to to Alternatives or they're taking a liquidity what kind of economic exposure they're taking and so to your question whether these companies are able to deal with inflation or pass through the inflation to for so that the cash flow would benefit or not and my sense is you know a lot of the the the uh institutions whether it the private side or even the long-term ones are not looking at that aspect in thinking through what what would it mean because the inflation period has been very small we've had this inflation up move and then it went away so the you know the basics of investing people need to go to it and really think through a private Equity is owning a company a public Equity is owning a company what does it mean to lock up your money for they've talked about 10 to 15 years of course you need that type of period to do your work but then the investor has to appreciate that so I think in today's unknowns people should really be open to different paths for their cash flow this idea you know that everything just runs as the spreadsheet shows is not real life yeah and I I want a couple of you to build on that maybe dianae if you've got um uh something to say on this because obviously we're talking about the evolution of asset classes we know what that means you know outside of equity and all the rest of it but actually the evolution within uh asset classes as well so things you know that were liquid investments before uh people seeing increased liquidity there and more interest um in Evergreen semi-liquid products and things like that are you excited about that sort of EXP expion of Alternatives in these specific areas definitely um again I think I I would build on what the you know my colleagues here on the panel that are talking about as as as we see more and more private assets and private companies being taken private and private the private assets uh in general is much more larger than the public assets so far we definitely want to see more Innovation on that front so we're seeing for example now a lot of the private credit funds partnering with um asset managers to create some kind of products with liquidity um ETFs that basically gives you a sense of uh exposure to the underlying uh illiquid nature of the private private credit for example and that's definitely exciting again one of the things that we definitely want is to have some liquidity uh especially when when that asset is continue to grow and again I completely agree there's a lot of opportunities in that in that asset class uh depending you know where where you invest whether it's uh uh in a private credit with an underlying real estate exposure or um or um or private credit with a with a loans U you again midcap exposures for example having that sense of liquidity or partial liquidity is definitely helps especially when you're a when you're a large Institutional Investor and ass allocator you want to build a barbell portfolio where you can actually manage the liquidity uh as efficiently as possible yeah I mean liquidity never goes out of fashion right it's liquidity is King and and it always will be um David since you've been in this space for such a long time as she said Focus same sort of question that I said to Diane there is that you know this evolution of assets within the Alternatives what what are you seeing from all the way in sunny California well again uh you can separate the Venture Capital world and the private equ world the backdrop is and the um you know if you look around the world us European Global 90% of the businesses normal businesses not Tech businesses are private businesses um when you read the papers you think about you know you hear of an overhang of capital seeking returns in privates um but the reality is there's enormous amounts of capital in the public markets seeking a financial return and relatively little so it's a it's a bit and the the smaller you get the more the Le much less efficient it is so a lot of that a lot of this approach to investing on the private Equity front is playing that Arbitrage of smaller companies inefficient processes and so forth um you know in Venture Venture is a tiny little part of the world it gets um a lot of play in the papers it's intriguing when you see huge outcomes um but the reality is it's very risky and these portfolio that are assembled rely on a few companies to have you know a few companies out of 50 that will make for a great result and even the most brilliant Venture capitalists don't know which three are going to do it for them it really takes eight or 10 years to see what plays out um and so that's kind of the world that that we live in and um Phil uh Insurance Capital going to private credit as well talk us some more through that and that liability mindset uh sure so you know private credit is uh such a broad um Arena it's almost like describing food uh you think about the size of the debt markets and how much of it's private uh I think what's changed is the proportion of that private credit Market uh that's being provided by Banks uh that is now constrained because of the regulatory environment and that's uh created a broadening of private credit uh insures uh we have many insur clients where that's become uh an engine of in terms of where they're allocating uh and I think it's the breadth of capabilities whether it's direct lending commercial mortgage loans that are uh private in nature asset back Finance has had quite uh an expansion and I think this Arena will grow uh especially as uh additional types of investors High net worth as an example go into private credit that could help with the liquidity uh that you referenced uh but I think think there is a landscape in front of us in which the private credit growth will uh continue um but I think there is a differentiation and uh risk management that's critical uh to get that right absolutely I just wanted to we've only got four minutes left but shiv and um I wanted to bring you in on this and Hashim as well is that it's kind of happened to a certain extent but this geographical investment being trumped by sectorial and thematic Investments globally is that something that you're seeing a lot or advocating a lot in in the the assets that you allocate yeah I mean for me You' you all always need to be geographically Diversified you know theme investing is dangerous so like who would have thought that the AI would show up and then challenge all type of business models so no you know uh uh we don't Advocate that I think you know Geographic diversification is now a reality for a lot of people that's why you have people showing up here opening opening Offices here and the and I think you know the theme the theme investing yes you have to look for the new opportunities and think it through but you're not going to just suddenly say oh you know what everything I want to do is AI maybe you know it turns out that all that CAPIC takes longer to produce its results if you look at our portfolio what we are trying to do is uh have individual positions that are sort of less correlated to each other and building uh a diversified portfolio that gives you a higher sharp because of the uh you know lower PIR PIR wise correlation so as part of that I mean we do have thematic positions but it's also to hashin's point I think it's important to caveat that in that for us we are in the public markets and uh we play both from the long and the short side and a lot of our managers are playing the spread within a theme because of the greater inefficiencies between the winners and the losers and they have a deep domain expertise in that Arena compared to David who takes a 15-year view we are probably on the other end of that Spectrum for what I do and as a result we can uh take advantage of opportunities because we liquidity is one of the key tenants under which we operate and uh and ultimately it's a case of asset allocation because you do want to have your best of breed uh you know venture capitalist in your portfolio because there will be a time in the sun if you get out of the game I mean you can't get back in so it it is about asset allocation and diversification and as I told you some of the themes we do see some favorable backdrop and Tailwinds and we do take advantage of managers but who have an absolute return orientation who just don't play the teams blindly if that makes sense so Diane we have one minute left um since we're in Abu I'm going to end with you no particular preference but um I I just wanted to talk about the challenges out there we kind of alluded to some of them as well when we're looking at the market what should people uh when they're allocating those assets be wary of I mean there's quite a few things that we've mentioned but anything to add to that I think one of the again I think I do share a lot of the uh views here especially when it comes to ass allocation definitely geography geographical location is important if you miss the rally in the US you know I think I'm too sorry for you because that's very important the top down view is very important but given the cyclic and some structural changes it's very important to assess them very very carefully it's very important to really understand the value traps that could exist in these opportunities and themes so I think the due diligence and the importance to capture these let's say cyclical or structural uh shifts we seeing is very important especially if you're going to play a thematic angle we do that so we already have um a good understanding of certain themes and we try to Capt them but again I think it's very important to have the right themes boots on the ground really make sure you you flip every Rock to ensure that basically you don't fall into this value track so good oldfashioned due diligence never goes out fashion I'm an equity analyst so I'm bound to say that on time but anyway gentlemen thank you so much that has given us a really good sort of look around the globe and I also dive down and deeper into some of these key things that people need to consider when they're allocating in these markets so thank you so much for your time today very much appreciated thank you [Music]