Miletti Says Money Still on Sidelines

same to you. What do you win back? When you make your rounds and you're talking to clients and stuff, what do they want to know? What do they ask you? Most often? Most people want to know when is the bull market going to end? I mean that's kind of the most widely feared um probably topic, right because as good as things have been, people worry about when is it going to end? Does that mean everybody? Because for

so long we talked about money on the sidelines? I mean, did people finally ultimately well just think I never Mr Peanut com it was good. No, I promised you it wasn't you it was, But I mean I do wonder about did people finally come into the market or is there still a lot of hesitation by investors. There still is a lot of hesitation and a lot of money

on the sidelines. When you look at money flows, a lot of money came into money markets, a lot of money still flowed into bond funds, fixed income, but not a lot of money flowed still into the equity markets even last year. And so the you know, kind of supply demand really as you looked into the equity space still maybe hasn't been met, which is maybe you know, part of the reason that's driving this market even higher.

Is it going elsewhere? That to private markets? Jason, I think about how much we talk about the you know, we're just talking about private equity planning to raise even more money U this year. Is that where it's going. Certainly clients have institutional clients have allocated more money to investments, and so I think that is, you know, clearly an allocation.

And what about this whole active management question. I mean, we love talking to you about this because you're obviously a big believer in it, You do it, uh, And yet we live in a world that is increasingly passive, I feel like across all of our lives. But that's a separate we'll deal with that separately. They sex exactly, Um, but I do wonder how people are responding to the message around active, especially as you said at the top, when they're like, well, when is this bull market gonna end?

I'm making money pretty easily. Yeah, So you know, it's a really great question. And I look, active manager part of the reason why the money flow has been so great too passive, is because active managers have struggled to keep up. And when you look at UM internally Wells Fargo Asset Management, eight percent of our strategies are of our active strategies have outperformed their benchmarks within the last

three years. So over the last three years, so I feel like that's a that's a significant portion of our active strategies outperforming. I think we've kind of answered the question that active managers can find areas of the market, and some of them by substantial amounts. Right. The magnitude in general has been just under two percent, but we have managers in en that outperformed their benchmarks by ten percent, by some by four percent, right, significant amounts and are

the outperforming of the broader market. Which is why I think at this point everyone's like, okay, let me just go for that so called diversified basket and just throw it in that way. You're saying yes, yes, yes, you know. And again they're across all different strategies and across different benchmarks, and so it's a depending on where you're allocating your dollars in a lot of different passive spaces. Are active managers in those spaces, the majority of them have done

well over that longer time period. But I think you know, look, we just put out our investment insight piece yesterday, and the one thing that we also recognize is clients care about what's going on today. They care about what's going to happen over the next quarter, the next year. But as investors, we're looking at which companies are innovating for the next three to five years. And you know, now in my current position too, as heading up all of the active teams, what we want to make sure we're

doing is investing in the innovation for our teams. And so when you look at active management, we know that there's a lot of tools that you can place in the hands of active managements, in the hact of hands of active managers and make them even better, such as so we've developed an internal tool we call Casper, and what it does is, over the last three to five years, it's looked at the way that I've managed money, that other portfolio teams have managed money, and it starts to

suggest ideas for you know, your portfolio, and it learns basically from some of the activities that you've done over the past years and from your investment strategies. And from that, what we've done and what I've seen is some of the ideas that end up on our watch list as a bottom up stock selector are sometimes ending up on the list of that that this tool is helping us provide. And those are names you might not have otherwise thought of because you just wouldn't have seen it in from

that sort of twist of the prison. Possibly not. But then we're also looking at external tools that will help our managers build inefficiencies right, that can help with natural language processing, that can help table stitch, go back, you know, multiple quarters, and pull together in income statement things that we don't need our analyst wasting time doing so. I think you know, when you look at the returns of you know, quant managers, they've been somewhat disappointing because there's

a lot of people doing them. If you combine the two, you can even get better outcomes. And I think that's what you know. We're to take away layers, to takeaways maybe waste of time and trying to figure out things. It's amazing where it's all going. And thank you, so nice to see you again. An Lettie. She's head of active Equity at Wells Fargo Asset Management based in the Nominee Falls, Wisconsin. In our New York studio,