Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business Weekdaily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies, and trends shaping today's complex economy. Plus global business finance and tech news as it happens. The Bloomberg Business Week Daily Podcast with Carol Masser and Tim Stenebeck on Bloomberg Radio.
We've been all in on Apple today.
The company out with the biggest product launch of the year, the iPhone seventeen, a skinnier air design.
It improves durability and camera tech.
As far as prices go, seven ninety nine is the starting price of the standard phone. The new air versional costs nine to ninety nine. The pro is going to go up by one hundred dollars with twice as much storage.
I want to bring in Dan Ives.
He's Global head of Technology Research at Webush Securities. He's also chairman of eight co holdings over three thousand percent. After announcing a planned to buy the news just my open eyes all. But that was yesterday, Dan's here on site at future Proof in Huntington Beach. We're going to talk about a co holdings in a minute. But first I just want to get your reaction to Apple, because you you actually I saw you you were on your laptop and then I got your most recent Apple note.
Well while we were doing our interview with Barry, you just you just you're maintaining your price target on Apple. You and the team at web bush us to make their three hundred and fifteen million folks out there who are ready to upgrade their iPhones. Is the seventeen gonna gun to upgrade?
Look, I think it's gonna move the needle. I mean, I think, especially in China, there's definitely what i'd pin up demand. I think street numbers continue to be pretty conservative to maybe low, and that's a great setup. Look, the reality is that this is not going to be a super cycle. There's nothing here that makes you think that this is gonna be the game change that everyone's
been waiting for. But I do believe given the install base, given some of the tweaks here, and ultimately on the on sort of the second half of this upgrade cycle, you will have an AI driven ecosystem.
I believe it will be Google Gemini.
This could be a sneaky upgrade cycle that I think surprises investors on the upside. What do you mean because right now, expectations New York City cab drivers bearish on Apple, and I think that what I like about the setup is it's all about it's kind of left behind.
Now.
A lot of that's been self inflicted, because every Apple event feels like it's a I feel like Michael J.
Fox and back to the future, you know.
So they continue to be left behind AI, but now with the Google DOJ issue in the rear view, they will double down ultimate in that Gemini partnership. And when you look at the install base, I think I think Street is underestimating what numbers look like for iPhone when you look out over the next six, nine, twelve months, And I think in big tech, I view Apple from a sentiment perspective relative to where I viewed Alphabet. Maybe about six months ago.
You in your note ahead of the launch called Apple's AI strategy quote invisible. You said, the elephant in the room, and is the black over the stock AI's invisible or Apple's invisible AI strategy? Did you get any more information today at the launch about its strategy?
I mean, I think fundamentally it they're keeping it close to the vest Right, you know, in the words, it continues to be that black cloud.
I think they're waiting.
For ultimately what's going to be Gemini, because I think they had a choice either go down the rout with perplexity and ultimately look to acquire that, or if it was a favorable ruling, then the candlelight dinner with Google and sun Dar could ultimately start again and then you could actually double down that partnership.
And that is I believe the direction. But look, Tim they got it.
It was a black eye moment a year ago when they laid out the AI strategy. Means it's ninety five percent of that had a backtrack on it.
Well now and now they've lost a lot of the senior executives that we're working on that to matterply and.
We've talked about there's a better chance to me playing Ryder cup Bethpage than any internal AI strategy happening at Apple.
But is that such a bad thing? And this is one of the things that Dan we talk a lot about that maybe Apple's just kind of watching. There's a lot of money slashing around trying to figure out what ultimately are the standards, the methods the companies that really dominate right in terms of AI kind of protocols, and maybe Apple's like I'll just watch and then we'll figure it out.
Are that bad? I think it's bad.
I compare it to like Saturday night in New York City there's a restaurant where there's one person in there at eight thirty, like, oh, they must know something everyone else does. I'd rather go to the place where people are lining up outside when it comes to ultimately, AI, time's not on their side. Loo quid open AI. Look at Meta wartime CEO, look at Microsoft. Look what are Google's done? That's why are you in an all time high?
So I do believe Cooks recognized it. But the problem is is that now it's a go time moment when it comes to AI. And now, look we've talked about that's how you get through three twenty five three point fifty four hundred dollars stock is AI?
You know?
Relative to right now Apple, they're kind of on the outside looking in of that AI party where it's still ten pm going to four am.
Everyone wants to know about what the heck is going on over at eight co Holdings, your chairman of this company. Now, I think it took a lot of people by surprise. It's a crypto treasury firm. And for those who aren't familiar with the way this works, it's a Michael Sailor strategy, but with a different cryptocurrency. This is world Coin backed by Sam Altman eyeball scanning stuff.
What is going on here?
So I wouldn't have done this as chairman if it was just a regular token back strategy. The reason I did this it has to do with Sam. It has to do with my view World is going to be the acto standard for identification authentication in terms of human proof in AI world. This is much more of a tech infrastructure play than when I'd say the traditional crypto play. So obviously the reason I'm so excited about it is really this is going to become I think a huge
part of the story and the narrative. It's really an intersection of AI and crypto. Explain that damn so So what that means is, you know, as tempto, it's IRIS scanning the orbs. Right going forward in the future, especially in the robotic world bots everywhere, You're not going to be able just identify through a boot check.
It's really going to be iris scanning what they've done.
Already fifteen million humans on the platform I believe going about one hundred million over the next year. That's going to be a form of identification. That's probably the most privacy lock box out there, and it's secured by a token, a World token. So my view and our view as a team, this is early days in terms of where this is all heading. And that's why we want to do a strategy.
Now, what's to prevent somebody else from doing the same thing they are.
They're playing a different game than they they're Vidian twenty twenty two. And in other words, like relative to what sam Alex and the team have built out, I mean from an infrastructure and authentication perspective, they are I think miles ahead. I don't see anyone that could capture them. That's why we bet on World as part of the acres strategy. And obviously having someone like Tom Lee and bitminor Huge, you know, big Investor, that's another support that we're so excited to have.
You've also got an ETF the launched back in June. It's the dan ives wedbush Ai Revolution ETF. It's up sixteen percent since launch. It's outperforming the S and P five hundred and the NASDAQ one hundred, Broadcom, Google and Video, TSMC, Apple.
They're the top holdings.
Somebody watching right now might be like, Okay, he's got a clothing company, he's chairman of this crypto treasury company, he has his.
Day job at Wedbush.
How am I sure that he's going to manage this ETF and have the time and resources to manage the CTF and my interest?
And that's a great question. I'd say, when you think about my chairman role, it's all related to to AI and the infrastructure, and there was this is interrelated to my view of where the AI revolution gets built out. And the reality is that ninety five percent of my time is spent you know, three and a half million
aire miles last twenty five years. I think what's what's enabled to distinguish us is feet on the ground talking whether it's private public partners and really, you know, I think that's how investors have grown to.
Do you add Do you add eight co holdings to the i's ETF?
No, No, that would be totally it's a total separate operation.
I keep firewalls between it, though, Like there's going to be people who are saying, yeah, of course Dan's going to talk up that he loves Alphabet and that he looks loves Nvidia. I mean he's got an ETF.
Like I just how do we sure on the ETF and you for like and remember and part of how investors know us the ETF is all based on our ives AI thirty.
It's all based or research.
So the reality is I think part of how we've gotten so you know, the the customer, I'd say from an investor perspective, we've had massive you know, I think reception for the ETF is because it's our thirty names that altermately we've used the winners and we and we change out every quarter. And that's I think you did about ETF.
What it's based on. It's all based on the research.
And got everyone here that knows Dan ives they know like feet on the street, not sitting there in some Peter Malar fifteen to four of New York City office building. And the only time we travel is two times in San Francisco.
Now, you just got back from Australia.
Yeah, so I literally landed here from Australia.
What were you doing there? Yeah?
So part part work part pleasure.
So it's fun because look, I mean we when we talk at AI revolution like in Sydney, in Melbourne pack meetings, because the reality is that this is not just us. And that's why I spend so much my time traveling around the globe what.
Might be the national exuberance part of kind of the trade today or the tech trade or the AI trade.
And just got about thirty seconds. There's got to be some fluff out.
Just could you say AI forty times in a conference call? Doesn't make yourself an AI need Look just because like Tim he was wearing an AI shirt because he says it fifteen times and says Tim on the back AI, it doesn't. My view is you have to distinguish the winners and the real ones from the fakes.
And that's the reality. And then look, that's what we spend all of our time doing.
The one company you're most bullish on right now, public.
Company SCFAI volunteer that's going to a trillion next two to three years. And I always say the haters hate it, hated fifteen, despise it, eighties, say it's super expensive one point fifty.
They'll be seeing the same thing at a trillion.
Yeah, it's a company we've talked a lot about, I would say, in the last year and then some dnives.
Thank you so much.
I always appreciate it. Globalhead of Technology Research at web Bush Securities.
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Jennifer Grancia was back with US, globalhead of ETFs over at TCW. They've got more than two hundred billion across investment solutions as of the mid of this year midpoint. ETF platforms have more than four billion a lot under management.
They see a lot of flows.
We want to remind everybody to Jennifer, the former CEO of the Impact Investment from Engine Number one, which took on Exon, You're going to be iconic forever. This is going to go with you wherever you go because it was really significant.
I think also, I think also you joined us at Milkin during that time. Yeah, you guys were in the midst of that and that's where sort of like I still know you from, but I think people still know you from that, as Carol mentioned, Yeah.
I mean Engine number one was a moment in time where I think we had just started to think about energy transition at a very big level. It's not just green, it's brown. And then it's going to require so much to move the world towards better sources of energy, electrification, all the power we need for restoring in the US. So yeah, that was it was a great moment in time, and then we folded in a lot of the work we had done there into TCW.
We'll talk about what you are doing because energy is a big theme in terms of investing here for you guys for sure.
So if you think about the world today as much as it's volatile and we're never sure exactly what's going to happen or how things are going to play out, if you think about TCW, we started as an equity firm, and then we've got a great public private credit business, and so on the equity side, a lot of what we do is fundamental concentrated portfolios that help you diversify from the index fund and the direct indexing you have at the core because the market is broadening and we
have a huge opportunity as investors to actually take advantage of How do you profit from the fact that we're seeing different sources of energy and we have a huge demand for energy for AI and data centers, but also for the restoring of manufacturing.
How do you do that in an environment where the administration, depending on who's in the White House, changes their view on the future of energy, like does a one ad. I mean you have the president wanting to actually doing it, trying to cancel offshore wind projects and really anything that isn't oil. It seems like he's not interested in safer nuclear. But that's a bigger time arise in time.
Yeah, but that's how we think about it. So from a TCW perspective, we've been investing in the energy and power transition. We do that through the ETF Powered pr PWRD. Pardon me, but when we think about that, that's a
very long trend. So that's over decades and decades, and so the way we think about it as we as managers want to invest for you, so that we're paying attention to one administration to the other and what happens and there will be some changes, but if you think about the changes in the traditional brown so that they can electrify and be more productive in a market like the Permian on oil, that's really important. Nuclear is incredibly important,
and then what Trump said on actually supporting more nuclear. Yeah, it's a long run game, but that's great intermittent power. So we like to think about it very broadly, and it transcends administrations.
What does it mean you ignore wind and solar That can.
Be part of our portfolio as well. We're looking at things that from a very long term perspective will make sense.
And you think, even though wind is under so much pressure right now, in a different administration, it could come back.
It will be part of the solution. It's not the lead place to make money in the next couple of years. And we're active managers, so we can take that into account in terms of the way we manage the portfolio.
Where is money going across your platforms, where are the flows going in, where are the flow's coming out?
We would see if I answer it, maybe had an industry question, and then I can talk about to PACW We see active equity is tough, so in active equity investments are very selective. So what we're doing in active equity products like powered or AIFD for AI, if they're selective,
they're meant to be complementing to bake index holdings. And on fixed income, like a lot of money continues to come into fixed income and continues to come into active fixed income or also big in private credit, not in the ETF space and products that are appropriate there, but both if fixed income and private credit are probably the places we see the most money coming in.
Really not surprising. It feels like everything is private credit.
I mean, I don't like katty.
Does it does.
But on the other hand, it's early. So if you think about if you think about the portfolio, and if you think about the biggest institutions in the world, they're invested in some kinds of private credit, but they're looking to get into private ABF because it's diversifying. But in wealth portfolios, if you think about the average investor or registered investment advisors, they're looking at how to take advantage of returns that can be like our core plus income
ETF flexer. You know that's returning almost seven percent with over five percent annual yield. That's very attractive when you move into safe control careful private credit. You're still picking up multiple percentage points a year, so people should do it carefully. But it's a big opportunity.
Do you see that opportunity continue to grow in a weakening environment?
We do. It's if again, if you go out and you survey. There's a McKinsey report that just came out surveying institutions and wealth and private credit by far is the place that people are most interested in most increasing allocations.
In What confidence do you have that we have the right regulatory oversight on this in a world where private credit still there is a lack of transparency and people don't maybe not all investors understand that it's not liquid like a lot of other investments.
It's the right question, which is from a responsibility perspective as asset managers or for wealth managers, we should always be in a dialogue with clients on do they understand the liquids when you do a semi liquid product. For example, for us, we have things that have many many your five plus year draw downs, that's not a liquid product.
We wouldn't tell.
Clients if that's a liquid product. In the asset back finance space, we have an interval fund, but the loans there are getting kind of turning over within two to four years, so there's a little bit more liquidity there. So I think we'll watch the regulatory space, but investor education and responsibility by the managers it's critical.
So when it comes to private credit, you're looking for things where it is two to four years that they're turning over a little bit more liquid that that's a.
Little bit more liquid. And so if you think about private credit in the private securitized or asset back finance space, the loans are self advertising in two to four years, that's a space we think in interval fund makes sense we manage an interval fund there. There are other places where it's just not that liquid and that should be a private market product.
Still a lot of interest in AI and the fund that tracks that a.
Huge amount of interest in AI, and I think everybody's interested in one what's happening with AI, who wins what happens, but people are also looking at how to invest in it. So at TCW, we manage an ETFAIFD which is investing very broadly in AI, and that's an opportunity to take advantage of. Yes, it Holds, Navidia, Broadcom and other companies that are benefiting and early winners in the trade.
When you come to an event like this, I mean, is there a narrative you're picking up on that might be surprising?
I'm just curious.
Just got about thirty seconds here, I.
Think from this conference, which is full of wealth advisors, they are trying to figure out how does artificial intelligence affect their business, how do they get smarter about it, and how can they adopt new outsourcing and new technology so that they can spend more time actually serving their clients.
Which is a great thing.
Which is a great thing.
More time with the investment advisors. Always good to get more time with you. Thank you so much, an always find it. Jennifer Grancio, She's Global ahead of ETFs over at TCW, joining us on site at future Proof.
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Carol Master, TIMSTEANOK live here at Futureproof in Huntington Beach, California. Whill our next guests help others manage their money. They are content creators at the same time. With us here at future Proof is Doug and Heather Bonaparte of Bona Fide Wealth. Doug is founder and president, Heather's director of business and legal affairs. Doug is a wealth advisor. Heather a former attorney corporate attorney, a big time in the insurance industry, and the firm has about one hundred million
in assets under management. Nice to have you here.
I know it's busy for you.
You've got a lot going on your website notes a wealth management firm built on unprecedented times. Walk us through what that means.
Doug, Yeah, absolutely, So you look to older millennials like ourselves, the geriatric millennials.
If you're will speaking my language, yeah, yeah.
We start our adult lives in our careers in two thousand and eight.
I know, I literally moved to New York City on top time.
Yeah, October two thousand and eight to work and find it.
It's in New York City.
Great time to be you know, getting that started and then we survive that. I get through that, only to you know, start raising kids during a pandemic.
Can we get a break here?
So, you know, two major historical, once in a lifetime events happening, and this is what we've had a navigate. Doesn't make us any more special than other generations. It's just very specific to how we manage our lives and our financial lives during these times.
And to what extent of your clientele actually represent that demographic.
I would tell you eighty percent are between the ages of twenty eight to fifty. So with that average being right around forty forty two.
I think people know you guys from social media, like the jokes on Twitter.
Sure how much of.
Customer acquisition comes from social media.
So I like to think of it as one piece of the overall puzzle here. We're doing, you know, very traditional mainstream financial media, and you pair that with social media.
It's never one thing.
Are you calling us traditional?
No, I'm calling you awesome.
Okay.
Second, we need you and we need all of these kitty I know, but we need all of these tools to create, you know, a robust way to market in the Internet era, right, and the intention of the attention economy that we're in.
Well, one of the things I was thinking and it was funny people have come up to me about truth in today's society and just with the political environment and just there's so much content even when it comes to business advice, and how do you make sure that what you're putting out there, you're careful about it, there's transparency because there's a lot of information that's out there that is not good.
Yeah, Heather can talk to that in terms of you know, we talk about financial influencers all the time and those who are licensed and those who are and you're getting more information on the reddits and the tiktoks, and you and I look at those videos and that content all the time and we have opinions around that.
I think it's very important that you don't end up on the extreme ends of the scale. Right when we talk, we try and tell people, Look, there isn't one right way for everyone, So I think you have to be cautious when you see, let's say, a f influencer online who says everyone should always do this or you should be extremes be in a position to do that, you know that it's the.
Only products for you.
They're trying to sell you that product right here. And I know a lot of clients with creators that are so hard working it is it is tough to do this and a lot of respect to them. But when you get into those extremes, or you're pushing products, or there are no guardrails whatsoever, it can get dangerous here and there's just not enough.
With a hybrid, you can be both. You can be a professional and a content creator.
You can do all of these things. But people tend to just stick to their corners.
I think.
So if we think about your your clients, it's it's different in the sense of, you know, we're oftentimes talking to wealth managers. You have you know, five ten, one hundred dollars in assets under management, I mean, much bigger than where you guys are right now. So you're at a different end of the spectrum, and your client tele represent that.
I think people might.
Say, Okay, these are a lot of these folks are Henry's right, high income, not yet rich, right, whatever the acronym is, How do you keep them when they do become rich?
Yeah, I think we have less of that problem when you're there with somebody in the days that they're grinding it out and establishing themselves likely to have a stickier relationship, a more loyal relationship. You meet someone after they've made their money, I think you have a weaker relationship. You were not there for the time. You're as good as your last transaction. That's the worst place you want to
be as a wealth manager. As good as your last transaction, as someone who's been at the core of their growth and having that kind of relationship. So you know, by design, investing in our clients at a time when we were in our mid to late twenties, that's how we keep them for you know generations.
Their children are our clients.
They are also nine years old. But there are clients and they will be and that can then transcend down and we don't have to worry about maybe some of our colleagues that haven't been paying attention to the next generation.
They have seventy eighty year old clients.
They have issues with retaining the money because they didn't even bring their partner to the table.
Ye and like these gender chops.
A lot of why we've written a book about Love and Money is to solve that problem. Bring both partners to the table, and that's very characteristic of the type of clients that we serve.
Do you have any book coming out to think October money together? But I want to ask you about the quarterly check ins. I do think this is such no money dates. Yeah, tell us about these money dates in terms of what you guys do in terms of your own financial planning.
Well, for us, we try and do something that we could look forward to. So Doug and I know what we like to do, right. We like to go for walks. That's just maybe that's like a leftover thing from COVID. From COVID and like fish strollers around the neighborhood.
Drinks too.
We like cocktails too, so.
Like we'll go out for a nice cocktail, or we will go for a walk, or we'll go play tennis and be sure to leave twenty minutes on the back end to have a good conversation after we've like sweated out a little bit. I think the most important thing with money dates is to do what you enjoy, so this doesn't become something that is a chore, something that you dread. You want to incorporate the money conversation into your life.
Does it always go well?
No of course not, you're talking about actual decisions you need to make that evolve risk and charting the course of your life.
Giving forty sometimes of course.
How about this, to Heather's point, start the conversations with the winds and what you did right, you're going to have a better time getting into it, and then talk about where room for improvement needs to be made. Then be critical, give yourself a pat on the back and the hard work you're doing before you get into that stuff, so you reduce the probability that you're gonna get into some kind of scuffle around something that you don't agree on.
And it's very normal to find stuff you don't agree on. If you're green everything, I'd be a little more concerned about that.
Well, right, And our concept of a money date doesn't just include looking at a networth table, looking at spending.
Don't start there.
Don't start there. You can talk about childcare, talk about whether you both feel like you're bandwidth, like you have any bandwidth or you don't, or whether you feel totally overwhelmed.
You could talk about goals.
You talk about how, like Doug said, the things you've been doing right and the things you could stand to improve upon.
For the next quarter.
We rather talk about how we're going to get on that trip with the kids, you know during November when the teachers do their convention thing in New Jersey, and we rather, you know, we're going to rally around that conversation because we want to go have that experience with them, and that then dovetails into Okay, let's yeah, we can afford to do that. What do we have to shift around? All right, let's cancel this baby's let's not do that date with our friends because we much rather, you know,
we can do that anytime. You can't create those memories, you know, all the time with your little kids. So those are great ways to engage something where most people are like, here's what you did wrong this month, sweetie, Like, what an awful.
Awful way to start out.
You're not gonna do it next quarter, and you need four quarters in a year. You know, two years is only eight cracks at it.
It's not a lot, it's practical, but it makes an awful lot of sense. We're gonna let you go because you've got to run to your panel. Good luck with you, You're not so lucky, good luck, good luck with the panel. You go absolutely We do want to stay with you, you know, Heather, because you do have this book coming out in October, Money Together, How to find Fairness in
your relationship and become an unstoppable financial team. And I just think it's kind of interesting because I do think a lot of couples do have different priorities, right and be sure to figure it out. They sure do tell us about this book though, and what you guys wanted to do with it.
We want to help couples communicate about money better. Bottom line, I think that it's one of the hardest things for couples to talk about because money is not just money, right. We tether our beliefs and our behaviors around money. They they come along with them post of feelings about trust, freedom, power, independence, you know, So when you're actually getting in a little spat, you know, week to week on spending, that's not really
what you're talking about. There might be feelings beneath that. There could be a spouse who doesn't feel like all of their invisible work is being seen. So what we really hope to do with this book is to have the conversations that aren't being had. We want to really uncover those, you know, deeper power dynamics over money in your relationship and help couples find a way to talk about it in hopes that we can level that playing field and really bring more equity into relationships.
Well, when the book comes out, you got to join us in the studio back in New York. Heather Bonaparth, director of business and legal Affairs for Bona Fide. Well, she joins us on site here in Huntington Beach, California for future Proof.
Stay with us.
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All right, folks, we're going to talk a little bit about the world of private credit. It has ballooned, by the way to about one point seven trillion dollars in the size in size and just a matter of years.
There's a lot of issues.
Going on in this environment. Most loans held in private credit funds mature within five to seven years. It's a timeframe for when investors should start seeing many more returns, but many vehicles formed eight years ago still lagging on a closely watched metric known as distribution to paid in capital, which measures how much investors have received compared to what they put in Originally. We're curious what our next guest has to say. He is a player in the private
credit world. Marcato is a co founder, co president and co CEO of sci On Investments, which specializes in alternative assets, in particular private credit or private debt. Has about ten billion in assets under management. Mark is also director, co CEO and Investment Allocation Committee member of the Scion Areas Diversified Credit Fund. So you know a little bit about credit. How are you tell us a little bit about your fund in the strategy right now?
I'm doing well. Thank you for having me today.
So our platform is really focused on providing alternative investment solutions to private wealth investors, individual investors. So where a lot of the private firms, private asset managers that deal in private credit and other strategies focused on institutional clients, our focus is on individuals and we distribute our products through the wealth channel, the rias, the wirehouses independent broker dealers. We currently have three products that we're very proud of.
One is our publicly list a BBC which is called Scion Investment Corp. And that's a strategy where we focus on the US middle market, providing direct lending private loans to US middle market companies.
We also have a diversified credit.
Fund and that's a partnership that we have with Areas Management, one of the world's largest global investors, top tier and credit, and that fund is structured is an interval fund, and we have close to eight billion dollars of AUM in that product. That's the one, that's the big one, that's the big one. And then we just recently launched it's not private credit, but it's private assets, private markets. We
launched an interval fund that focus on infrastructure investing. So we are all in on private markets, but we're also very focused on the right structures for the individual investor.
The stat that you mentioned.
Earlier about capital effectively being locked up, right, that's not what we do. We really focus on strategies that provide appropriate liquidity, as I like to call it, appropriate liquidity to individual investors. So the interval fund structure, the BDC structure. What we do is we are giving dividends. We're giving distributions on a regular basis, and that's something we pride ourselves in, is consistent, stable dividends that are are are necessary.
I think for the retail invest.
You really got layout on your website.
Yes, absolutely, So when you think about investing in one of our products, you're going to see hopefully a high single digit distribution yield every year. So you're getting your capital back where traditional private credit was done in a GP LP drawdown structure and your capital could be locked up for a long time. And because of these structures, we're seeing this strong demand by registered investment advisors other financial advisors that deal with individuals, and that's what these
products really are doing. They're opening the gate right, They're providing the access that individuals have never had.
The growth of private credit over the last few years has coincided with a pretty strong economy, and we're now starting to see some cracks for them. We saw the revisions downward with the labor numbers that we got today. Jamie Diamond telling CNBC today that the economy is quote weakening. He said, whether that is on the way to recession or just weakening, I don't know what happens to private credit in an environment that's weakening economy, that we.
Can help your strategy specifically.
So I think that obviously there will be some winners and losers, but I don't think the market creators. So it's really important to tie yourself to a good manager. Someone that is very experienced in the industry, knows how to underwrite, knows how to be selective, can generate opportunities that makes sense for the investments.
Well, because the concern is that the folks who have been let money will not be able to pay that money back.
Yeah, and that's been a theme that's going on for some time now, right, We've been having this conversation for a long time, and people got really spooked when interest rates spiked, and how are these companies going to afford their debt payments?
And the reality is that they have they have been able to do it.
And I think a lot of the US middle market is very resilient. And when you think about the assets that we focus on in our publicly traded BBC looking at companies that are between twenty five and seventy five million dollars of epatah, which we believe is the true middle market. What's happening now is there's a real convergence of the syndicated loan market where banks typically played right
and the upper upper middle market. So private investment managers, private credit manager of doing those deals that banks used to. And I think that's where you're going to see some more issues.
Why do the banks Why are the banks not doing loans to those companies or conversely, why are those companies not going to a traditional bank for that loan?
Sure, so effectively banks have been regulated out of the business, right, they're not focused on it. They abandoned the business after the Great Financial Crisis. They let all of their deal team go, you know, all of their portfolio managers go. They were gobbled up or formed their own private asset management firms. So you don't see private bank I see the big banks doing these types of deals because they
just don't have the expertise anymore. What they do is they get involved, I think, in the market more synthetically by lending to firms like UH where they can be on a more senior secured position. And what we're seeing is these larger private institutional asset managers, they're getting so
big where they are now the bank. The difference is is that the investment committee, that people making decisions there are able to do it more efficiently, provide more certainty, be more flexible than say a traditional money center bank.
We're talking with Mark Gatto, he's co founder, co president and co CEF signed on investments. Mark, what's the deal you will do in the private credit space?
What's the deal you will not do?
Because I mean, and how much transparency are you feeling like you're getting on these deals?
So we feel like we get a lot of good information. Obviously, we're very diligent about doing our underwriting and understanding what we're getting ourselves into. I think every investment warrants merit if it meets some of our baseline criteria. Right, So we're we're again we're looking at companies that have earnings ye, right first and foremost, So twenty five to seventy five million dollars is our sweet spot. And then we want to really focus on are they relevant in their industry?
Are they a leader in their industry? Do they have a good management team? Is there a reason for them to exist? So we're gonna focus on those things. Determined whether or not we want to do the deal on a high level, you know, we're not doing a lot of stuff that's very cyclical in the BBC and even in our integal Fund Diversity by Credit, we're not doing cyclical industries. We're probably staying clear of retail in many instances.
Not to say that we won't do.
Either of those deals, right, it's just not going to be a major portion of what we do.
Give us an idea of a deal you recently did, and I'm curious about, like the infrastructure play right now, if that's a big part of it, or energy like what you're seeing.
Yes, so on the infrastructure side, which is a little bit different because we're actually focused more on the equity of these infrastructure deals, but they do have a lot of characteristics that credit assets have. I think it kind of falls in between pure credit and private equity, if you will, right because when we're talking about infrastructure, we're talking about stable, stable revenue that's being generated by these assets as predictable, so it has that element, but there
is some sort of growth story to that. And if you look at our infrastructure fund, we're doing deals like the M twenty five in London, so roads, bridges, we have terminals, at LaGuardia Terminals. At JFK, we're in AI and data storage. So we really run a diversified strategy and that is a theme throughout all of our products. We want to be diversified, and we think that's probably the most important thing for us as a manager, and we think for investors is to be diversified.
If you look at our BDC, we have.
One hundred and sixty different names in there. If you look at our Interval Fund, the sign Areas Diversible Credit Fund, we have over seven hundred names in there. So you're really getting granular, you're really getting diversified. So no one deal is going to make a difference, and no group of deals is going to make a difference. And we're doing that same thing with infrastructure. We want to be highly diversified.
Is there political risk with the Infrastructure Fund in the sense that you have an administration right now that wants to punish different states and cities for not getting online. Essentially we see that with the Trump administration and with the MTA for example, and tolling congestion tolling?
Is that a risk?
So we don't view it as a risk because of our diversification because we are investing in different.
Areas of infrastructure.
We're not a cleaning energy play, We're not a fossil fossil fuel play. We don't believe that there's much political risk in terms of our strategy. And then if you look at the industry as a whole, the market as whole, there's such a high demand for infrastructure assets. There's such a need to spend capital to improve our infrastructure assets, not only here in the United States, but globally. It's
a multi multi trillion dollar opportunity. We don't think that political the current administration, our new administration is going to sort of move the we move the needle one way.
Or the other, especially if you're diversified.
And again I go back to that theme, it's really important at SIGN Investments.
We preach it to our advisors and.
Clients that that's where you need to be, not only within alternatives, but across the entire spectrum.
Just got thirty seconds.
How would you describe the environment like in a word, a couple of words.
I think the word that describes the environment is uncertain. It's been still, it's been it's been that way for a while. It's going to be that way for a long time. Information moves too quickly, where the global kinds are too interconnected. There's always a news story that's going to give you some sort of angst, that's going to
make you think things are uncertain. So that's why we again, we fall back to diversification and we like alternatives for our clients, our advisors because we think we stabilize some of that uncertainty and volatility in the market place.
We know you're based on the West Coast, but we hope we can attract you back to our New York studio.
We're headquartered in New York, so anytime there often, anytime you would like to have me on as a guest, I would be my pleasure.
We would love it.
Marcatto. He's co founder, co resident and Cofcion Investment.
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