探索2025年另類投資領域的新機遇

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Jamie Lavin Buzzard, Head of Family Office Investments and Advice. Jamie sits with two others at a long white table. Behind them is a green lined wall with text: J.P. Morgan.

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Hello, everyone, and welcome to today's Ideas and Insights call. Today, we're going to be talking about opportunities and alternative investments in 2025. I'm Jamie Lavin Buzzard. I'm head of Family Office Investments and Advice for the JP Morgan Private Bank.

And I'm so pleased to be joined by Kristin Kallergis Rowland, who is our global head of Alternative Investments, also for the JP Morgan Private Bank. And Jay Serpe, our global head of Alternative Investment Strategy. Welcome, guys.

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Kristin Kallergis Rowland, Global Head of Alternative Investments. Jay Serpe, Global Head of Alternative Investments Strategy and Business Development.

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Thanks for having us.

Thank you. We're excited to be here.

Yeah, awesome. So today, we're going to focus on trends. And there are five key trends around the globe that I think are going to make for some really interesting opportunities in private markets this year. But before we get there, I just want to set the stage in our general markets outlook for the year.

So we do expect the US to be a very pro-growth environment. And there are two things really driving that. One is capital investment, and the other is a continued easing interest rate environment. And that's really going to be a trend that we'll likely to see around the globe. We also have a new administration in Washington who has also signaled that they're very pro-growth and supportive of those two areas.

On earnings and valuations, we do think we see earnings growth, but that's going to be tempered just slightly by a contraction in valuation. All that put together, we expect to see high-single digit returns this year in US equities. But we do expect to see some bumps along the way from volatility, which might be opportunities for investment, as well.

Globally, especially outside the US, we think it will be a mixed bag. We certainly expect to see some pressures from potentially imminent US tariffs, so that could cause some noise. And then, also, just not as speedy as a global recovery as we're set to see in the US. But again, we look for themes around the globe that we can invest in, especially when it comes to private markets to complete your investment plan as part of your global wealth picture.

With that, we'd love to start-- before we get into some of those themes-- with just how we construct portfolios. KK, can you talk to us about how we work with our clients just to think about what's the goal, what are the opportunities, and then how do we implement within the portfolio?

Awesome. OK, so it's a great place to start because I do think every year allows us that chance to reset and think through whether it's allocations to drawdown funds or continued allocations in the evergreen space, whether that's private market evergreen funds or hedge funds, what that looks like.

And I think when we look at anchoring our own portfolios or when we help our clients build theirs, it really starts with understanding what the liquidity needs of the portfolio are, for obvious reasons, because there are some less liquid opportunities.

But we always say to clients, in the worst market sell-off, or in whatever your personal worst market conditions were, how much of your investments did you keep in public markets-- public equity, public fixed income? Because by not investing in private markets or hedge funds, you might be giving up returns for liquidity that you don't need. And so, it's something that we'll always like our clients to think about.

We actually published-- it was just under a year ago that we did that family office survey where we surveyed about 200 of our top global families.

That's right.

And not surprisingly to me, but surprising to some, was that alternatives represented about 46% of the investable portion of client portfolios in that space. And it will depend on the overall size of the balance sheet. Some clients can be zero because they just can't withstand that liquidity. Some are 10%, 15%.

But within the 46% of that report, 17% was in private funds, 15% was in real estate, whether that was funds or direct investments, about 6% in hedge funds, 5% in venture capital. It's all published actually online, which is fantastic. But it's a good starting point to think about.

And then the part two of it is within those allocations, what does it look like? And I would say that we continue to anchor our portfolios. 40% to 70% is in private equity as our core anchor. About 70% is in North America, typically, if not a little bit higher.

15% to 25% is in growth, equity, and venture, depending on the market environment. We'll talk about that as one of the themes. About 20% to 30% can be in real assets, whether that's real estate or infrastructure. And then 15% to 25% or so is in credit.

And the credit will be higher in years where we feel like there's more special assets or distressed opportunities. But those are the consistent allocations. But we work with every client to figure out how do you build towards that over a three to five year period? And the new year is always a good time to reset expectations and what those allocations look like.

Absolutely. And as you just heard KK say, that's a diversity of ways to invest, whether it's completely with us, sourcing your own investment in partnership with us. But the most important thing, just like the entirety of the portfolio, is the diversification. And that's a big part of not only what we see in trends, but then also how to implement.

And Jay, I want to talk a little bit more about that implementation. Not necessarily from our client's portfolio point of view, but from the funds that we seed themselves. So the main underpinnings of private investments, particularly private equity, is dealmaking.

We want good managers who can go out there, find interesting deals, and pay a fair price. And dealmaking, depending on the environment, can have a significant amount of growth or stagnate a bit. We are seeing more dealmaking on the market. And so, what are you seeing from some of our managers? How are they taking advantage, and what are the implications?

Thanks, Jamie. Yeah, that's our first theme for this year is we anticipate seeing a revival in dealmaking, especially in the US, but we think it could be a global trend, too. And as you rightly alluded to, dealmaking is the lifeblood of private equity.

The main premise is, you buy a company, you improve it, maybe you pursue some mergers and acquisitions, you sell a business. But all of those are deals that need to be made.

And what we've experienced in the last few years is really muted deal activity. And it's coincided with the time of higher interest rates. Higher interest rates for the private equity industry have been pretty tough.

You see higher cost of financing, which makes transactions a little bit more difficult. You've seen a widening mismatch in valuations between what buyers and sellers are willing to pay. You see capital market activity, and liquidity in capital markets has been muted. Low IPOs, low net issuance. And so, as a result, you've seen really limited dealmaking.

We expect that to change this year. Interest rates are coming down. That's going to be conducive to lower cost of financing. You've already seen liquidity begin to improve in the market from lows that we hadn't seen since the great financial crisis. Still on an absolute basis, it really relatively low levels, but beginning to improve.

And you're also seeing a regulatory environment in the United States that we think could be more conducive to more M&A after a really tough four years under the former Federal Trade commissioner. So we think that we'll see a revival in dealmaking this year. We think that could be good for the private equity industry.

Overall, we think allocating to private equity every year as opposed to trying to time markets is the best approach. And academic research has shown that time and time again. This year, though, because of those "green shoots," we do think that we could see better capital deployment from private equity managers as more deals are consummated and greater exit activity.

So within private equity this year, we'll continue to be focused on managers that drive the vast majority of their value creation through operational improvements, as opposed to multiple expansion or leverage. We will be slightly overweight some sectors, in the United States in particular, that align with our public market view.

So slightly overweight areas like technology, aerospace and defense, industrials, some financials where we see nice tailwinds from a regulatory perspective, as well. And then we also see opportunities both on the primary and the secondary side.

Secondary private equity activity reached record levels in 2024. We think we'll hit another record again this year as the industry works through a multiyear backlog of exit activity. We think secondary markets can provide some liquidity to investors and managers in this environment. So we'll be looking both at primary and secondary opportunities this year.

And it's still such a small percentage of the overall market, too. Secondaries, I think, it's still mid-single digits as a percentage of the overall private market. So the further along, the more mature it gets, the higher the volume we think continues.

Absolutely. And we hear that a lot from our family offices. If you are truly trying to build an allocation up towards 45%, you're going to want to be constantly putting that capital work. Secondaries are a great way to get investors sooner.

So I mentioned one of the growth drivers this year is capital investment. And capital investment across the US really speaks to the innovation that we're seeing. And naturally, a lot of that's going to be in technology and AI.

So AI is a hot topic these days. I don't think you can go anywhere without hearing about it, whether it's in your home, or on the news, or even in your workplace. And so that AI and that expansion within tech, I think we'll see some themes within our growth equity managers and venture, perhaps.

Yeah, it's an interesting time in those markets because you went from the rise of valuations and everything in the growth and venture market up until 2021, where it peaks. If you look at valuations today versus 2021 across the board, they're down about just over 50%. They're closer to 2018, 2019 levels.

When you look at IPO activity, it's down 70% since 2021. There's been about a dozen of size IPOs of recent. And if you still look at-- unicorns were private tech companies typically that had over a billion dollars of valuation. There were over 1,400 in the industry that still remain today. And I think that's just a US number alone. Average age is now nine years.

So there's a debate happening in the overall industry of which of these will continue to make it, which of these might have that AI angle to them in terms of what they are and what it drives forward. I think we've been a little bit careful on the AI side in terms of that's the one place where valuations still are a little frothy in some areas.

And then, there's continued news. We just saw the news around DeepSeek, whether it's open source or closed source, what those models look like, who's using them, the need for chips, and all of that. We're sort of at this tectonic shift within these markets.

We do know that the need for capital outweighs-- I think it's like 2 to 1 that the demand for it versus the supply that's there. And so the things that I always caution our clients is, as a lot of people are still digesting the capital investments from 2021 or 2022 vintages, to consistently allocate, like we talked about in private equity, in these markets.

Because valuations have come down, opportunities have expanded, and we still see incredible amounts of innovation happening, whether it's in AI or whether it's in broader growth markets. I think we've talked a lot about how it's not just does AI take out some costs in the system, does it help you be more productive? And so we're looking really closely at that.

And I would say there's also subsectors of the growth and venture markets. Even in health care, a lot of people think that AI can change the future of drug discovery and what happens. And I do think some of that will happen sooner. And so it was interesting because I read a report that said even a 5% increase in productivity of drug discovery could result in 60 new drugs and $70 billion of added additional revenue to the system.

So there's these little shifts that can just happen that can have a meaningful impact to revenues, profitability, and so forth. And it's certainly something that we're looking at across the board. And so we're going to continue to back it. I think this year, it'll be about 20% of our portfolios with some folks that we highly respect in the space that have been doing it and driving both investments, but also distributions over the years.

And as KK alluded to, growth equity and venture capital isn't just AI. We want to make sure that we have exposure there in private markets and in public markets, in venture and growth. Health care is one other theme that we're focused on. We're focused on areas like automation and robotics, like cybersecurity, like high-growth consumer businesses. You can find growth in a lot of places, and it's not solely reliant on AI. We're excited about those opportunities, too.

And honestly, because of this dearth of capital and the growth equity space, we're also seeing some additional opportunities for private equity buyout software managers where we see not only AI being a key driver of an expanding opportunity set going forward, but also, as a lot of these private companies mature, they have positive cash flows, they become great candidates for potentially a controlled takeover from a private equity investor, too.

Yeah, going in, redoing a tech stack of a company, figuring out how to take it from buyout to a growth transformative company on a go forward basis, those are some interesting ideas.

Interesting, I like that. Because I do think we hear about that primary headline, and you can wonder, am I too late? Or maybe I already have exposure in public markets? I think the follow-on is so important. Some of them are obvious and some of them are not. Some of them are just, what does the infrastructure complete to continue growing the ability to keep up versus the rest of the world?

Our best investments in that space, in growth and venture, came from 10, 15 years ago that no one knew anything about at the time. So right now, information is all at our fingertips. But knowing what happens as these little shifts take place, I think it's just hard to know.

Yeah, absolutely. And Jay, I think you're seeing it even within energy with some of our managers?

Yeah. Look, our third big theme and it ties to AI beyond just investing in technology businesses is investing in infrastructure assets. And AI is being constrained right now by hard infrastructure. We're at the very early stages of infrastructure upgrade, both in power-related infrastructure and digital infrastructure.

We've been talking for a long time about the value of infrastructure and portfolios. It can be an inflation hedge. It can provide yields, it can provide diversification in portfolios. And today, we see two major macro tailwinds, both in digital infrastructure and power infrastructure, being driven by AI.

We do expect AI compute to become more efficient over time. That doesn't mean that we still won't see significant growth in data centers and a significant uptick in power demand. Right now, we're anticipating-- power demand growth has been relatively flat for the last 10 years-- we anticipate it will grow by five to seven times in the next three to five years.

We need more power. The world needs more power, not just for AI, but also for things like increasing manufacturing, industrial capacity and ongoing electrification. And so, within the infrastructure space, we're looking at power generation assets, traditional energy in the US, renewable energy in the US and outside the US, nuclear-related services to the extent that becomes more of a real power generator, again, over time. And we're also looking at digital infrastructure.

So continued growth in data centers in the US and outside the US, which is running behind the development of data centers in the US where we anticipate 15% to 25% annual growth rates in data centers in the US, Europe, and Asia over the course of the next 5 to 10 years, and in other related digital infrastructure like fiber optic cables and cell towers which are enabling us at our business and in our personal lives to actually tap into that compute power that's being housed at data centers.

So we expect significant growth in those areas. We expect significant value creation. And even if compute and AI becomes more efficient, which we're seeing more of--

Yeah

Yeah, which we hope for, that will just expand to access and mean more people can be using it more quickly. We think adoption and that demand will still hold.

And a chart that we often look at, which is in our guide to alternatives, shows the-- I think it's $3.6 trillion of deficit and spending from an infrastructure perspective. And some of those are in places that you wouldn't need to lock up capital and private markets to invest in, whether it's some of the roads or tolls, et cetera.

But the one that I think is over a third of that demand is power. So power is going to be the focus this year. We obviously just hit on it. And I think tying those two things together, if AI and automation is the decision-maker of future economic growth for countries, you got to figure out the energy side and the power side of the equation.

Absolutely. OK, great. That's helpful. I'm going to shift just a little bit, not too far away from our infrastructure conversation, but let's go to real estate. So real estate, for many of the families we work with around the world, plays a part in their allocation.

It could be their original operating company. It could be a significant asset that they've accumulated along the way. Maybe a multi-generational form. Or it could just be a financial asset that they are either building as part of their general asset allocation.

Now, it's no shock to anyone that real estate can cause some emotions for people. And you may have a predisposed way of thinking about it, whether your mind goes directly to office, or single family, or multifamily homes. There's a lot of different ways to play real estate, both in the US and around the world.

But the one thing we do know, when we look at the opportunity that exists in a portfolio, we just released our long-term capital markets assumptions for 2025, and real estate may very well be one of the best opportunities over the next 10 years in a diversified portfolio.

So help us a little bit with how you're looking at real estate. Where are some of the opportunities that clients can go?

Well, I'm glad you started with the long-term capital market assumptions, because we were looking at this last week, the data going back in time, too, because a lot of those projections are projections over the next 10 to 15 years. And the team that puts those together and spends hundreds of hours every year revising those, and it goes back. You can actually go back to 2004 and see how accurate they were along the way.

So what we did was we went back to real estate, and we set over a 5 year, 10 year, all these different points in time, what was that range of real estate? It was typically between 7% to 8%, let's call it. And this year, it's the top of the leaderboard. It's just over 10% in terms of the target returns, which is interesting. Then the question is, OK, how do you actually build a portfolio? What subsectors?

And I think some of the reasons why the forward-looking returns are so high is because we just came off of a period that we think prices have obviously dropped in some areas, whether it's office or commercial real estate more broadly.

It's always a supply dynamic story in real estate. When you think of the demand side of the equation in the US alone, we ended up between two to three million shortage of homes in the US. I think that's expected to get to a four million home shortages this year. And so there continues to be both demand, but the supply side has been completely constrained.

If you think about home builders and everything else, the costs that went into it, to the extent you need a loan with the prices of that were and how that shifted over the last three or so years, it's been pretty dramatic.

We think demand continues to be there. We think supply continues to remain strained. We're starting to look at office probably more on the debt side to start, although we're pretty close, too, on the equity side of seeing some opportunities.

On multifamily, we continue to see demand because of the shortage of homes. In senior housing continue-- or senior living, I should say, continue to see strong demand, partly because of the baby boomers. There's still 10,000 people turning 65 every day for eight more years. So a huge opportunity there.

And then workforce housing is another area that we are interested in. And so, I'm going to leave aside the real estate side-- that's like data centers and everything else that we just talked about-- but just plain old, core plus real estate makes a lot of sense and a lot of clients' portfolios that are looking for both yield and then some upside from a return perspective.

So it still remains our top focus and one that we think you can invest behind a lot of the mega themes in broader markets through real assets. And it's one that we're leaning more heavily into now than the last couple of years.

I also think we're seeing interesting opportunities on the real estate debt side, just given higher interest rates and a tougher financing environment for commercial real estate, given that regional banks have historically been one of the largest lenders, we're still seeing opportunities in real estate debt to provide attractive income, potentially, and diversify some risks that you often see in other parts of client portfolios.

And this is another area where we do see opportunities outside of the US, too. A lot of the private banks outlook this year focused on an emphasis around US exceptionalism. We hold that true in private markets and public markets. We are overweight, the US, in our portfolios, but we are still global investors.

And we do see interesting opportunities in real estate and also in infrastructure outside of the US, where you see a different supply-demand fundamental mix, potentially with better financing environments. And you could see attractive returns in real estate there, too.

Great. And some of these opportunities come to be because of the trends you mentioned, but also the interest rate environment. And so, the interest rate environment is obviously something we track closely. It's important across our clients' balance sheet, but also their portfolios.

And over the past couple of years, private credit has been a place where we've seen a lot of capital where those returns have been attractive to investors. And that might even be a first stop for a family who's stepping into private investments.

Now, going forward in a slightly decreasing interest rate environment, talk to me about the opportunities we see in private credit this year, and where we're really focused in the space?

Yeah, this is our fifth trend that we're focusing-- normalizing policy rates around the world, potentially at a much slower rate of decreases than we thought even a year ago. We've already talked about some of the implications of lower interest rates. It's positive for private equity. It should be positive to real estate, especially as cap rates come down.

Within private credit, it's creating a mix of different opportunities. And it has been and continues to be a good investment idea. It's generating a significant return premium relative to more liquid credit markets. And because of higher base rates on an absolute basis, it's also generated attractive returns north of 10% for the last two years.

We think that normalizes lower, though, into a range between 8% to 10% over time, which is what we would expect through a market cycle as base rates come down and spreads tighten because of more competition.

Now, increased deal activity will actually be-- or dealmaking will be good for the direct lending space as more and more capital is needed. But we see a balance in senior secured direct lending. As you rightly point out, for clients seeking income, we still think it makes a very attractive opportunity. And for clients who don't have any exposure, we still think the opportunity set is one worthwhile to explore.

At the same time, we've been encouraging and advising clients to make sure that the mix of different private credit strategies in their portfolio is right sized to protect a stable return or potentially increase returns relative to what you can get in senior secured direct lending as rates come down.

One area that we've been focused on is special situations and distressed. We haven't seen a huge default cycle. Defaults remain relatively muted in most developed markets. But because of the growth of credit markets overall, the volume of distressed exchanges last year hit a new record.

And so we are seeing our managers in the special situations and distressed areas see a lot of deal flow and opportunity, both in the US and even more so in Europe. So we think that remains an attractive way to potentially increase returns and capitalize on what could be a more volatile market environment.

Because people look at the percentages of that, and what they forget is that the US non-investment grade market has grown from $1.5 trillion post the great financial crisis to $5 trillion today. So even if the percentage remains slow, or low, or lower, the overall size is pretty incredible.

So in direct lending, we prefer some of the larger scaled managers because there's more downside and upside in that market. In the special distressed area of the portfolios, we actually prefer some of the smaller sized managers who are very focused on finding these microcycles instead of needing a macrocycle. And so that's why we're still surprised and impressed at some of the returns that we're seeing generated consistently in that portfolio.

The other two areas that we are focused on, one is around playing on the higher for longer theme. Yes, interest rates are normalizing, and yes, they are expected to remain higher than we thought even a year ago. Many companies that finance debt in 2020, 2021 at zero-interest rate environment, now they have more trouble servicing their debt, and they're coming up on a refinancing or maturity.

They need some sort of capital solution that isn't a bankruptcy, but also isn't just a plain vanilla refinancing. And we're seeing more and more opportunities in the junior debt or structured equity space that we think can potentially enhance returns and tax efficiency and portfolios for US investors.

And then finally, we often think about ways to build portfolio resiliency. And one way to do that is to diversify away from corporate credit into asset-backed debt. So lending to owners of real estate debt, of hard assets like equipment, or to royalties in areas like health care and music, all of these are ways to still see attractive yields that compete with direct lending, but also diversify your collateral pool to help mitigate against what could be a volatile environment on a go-forward basis.

And if you think about the market opportunity versus the cap-- we always talk about supply and demand dynamics in real estate-- but if you think about just credit overall, we were looking at a stat that showed about $1.5 trillion that's raised in corporate direct lending versus an overall financing market of $3 trillion in that space.

And then we looked at asset-backed, which was over $20 trillion, so almost seven times the size, with about a half a trillion dollars of dedicated capital raise. So seven times the size with about a third of the capital raised. And so it requires a lot of boots on the ground, sourcing.

There's a lot more work that I think goes into working some of these assets and some of these sub areas and the expertise that's needed, but it's certainly something that I think is the next generation of private debt because a lot of that was on regional bank balance sheets that we think continues to move and shift in the private markets.

Makes sense. And the key there really is, everything in a portfolio is diversification, even within these themes. Making sure you have the right exposures, the right time. You can never time it perfectly, so that's why you want to broaden out where you have exposure.

All right. So those are really great five themes to leave you with for this year. But before we let you go, I would just love to know maybe some of the exciting things-- not that these aren't exciting--

But don't fit in the themes.

--but don't fit in the themes. So some things that might be new or different that our clients or potential clients might hear from us this year.

All right. So I'm going to start with sports, because I feel like it mixes a lot of the things that we just talked about. We love infrastructure because it's super monopolistic in terms of how it does. Its recurring revenue. There's a lot of these characteristics of infrastructure investments that all of a sudden, the more and more we looked at, sports also has that link to media rights, monopolistic content, recurring revenue.

We have been looking at this space and actually investing in it for probably almost two years now from a funds perspective. A lot of our clients own plenty of the teams themselves. Last summer, we worked with Michael Cembalest to put out a report called Piece of the Action. I think we're going to keep updating that because there's so many interesting things that it's not just stakes and teams, but really, the linkage that each team has to the media rights or thinking through growth.

But we do actually think that if you think about AI and the disruption that takes place, one of the places that you still need content-wise is in live things. So live sports is one of them. I'm sure you watched the most recent game to figure out who was going into--

The Super Bowl.

--the Super Bowl. I know your husband's a Buffaloes fan. Sorry about that. But the point of me saying that is sports continues to be at the forefront of our minds. We have an incredible sports advisory business in our investment bank. So we have a ton of insight in the space, as well as from our clients. So sports will remain at the top of the list.

The second thing I'd say--

And it's playing both credit and equity.

Totally.

We're seeing opportunities on both sides. On the credit side, it actually has a lot of what I was just talking about-- tangible assets that can be part of the collateral pool. And we think the lending space in sports is really interesting, maybe even more so than the equity side right now. So we're looking to potentially have a mix of both of them on our platform.

Yeah. Some of the dedicated leagues we haven't done yet partly because the liquidity side of the equation, if you do take the equity risk versus having the option to be lenders, we like, or some of these emerging leagues are really interested in the equity side. So there's a good mix on the sports side.

And then, I guess, the second theme that you'll hear us talk more specifically about is places outside the US. We've talked about on the real estate side outside the US, but in particular, places like Japan. I think the same thing is true for corporate governance in Japan, and some of the opportunities within the hedge fund space.

And then the third, and maybe last thing I'll say, unless you want to add here, too, I do think the rise of the evergreen funds in portfolios is really interesting. It's had us reshift how we allocate to senior direct lending. We no longer really do that in drawdown form. We do that in evergreen form. It has both a benefit for our non-US investors from an effectively connected income perspective.

But even for our US investors, or global investors, the ability to-- even though they're slightly lower returns we expect on a go-forward basis-- to compound and receive 90% of that income distributed to you on a monthly or quarterly basis, or for US clients to think about insurance dedicated funds or other areas of the market, I do think the rise of these evergreen portfolios started in credit, as well as some of the non-traded REITs, and now is moving more into people and fund managers and fund complexes, that we think can do really well on the equity side.

So folks that maybe had a small, mid, or large cap focus in enterprise software or in private equity, I think, are really beneficial to our portfolios. What did I miss?

It's not a new thing. And today, we've been largely focused on private markets. But KK alluded to it a bit more that in as we've had conversations about portfolio resilience, especially after the last few years where you've seen a relatively high correlation between stocks and bonds, we have seen more and more of our clients gravitate towards reallocating a portion of their portfolios to hedge funds.

And so it's something that I think we'll be reintroducing more into the conversation, diversified exposure to hedge funds that provide less correlated returns to both stocks and bonds on an absolute return perspective without sacrificing material returns. So we have seen flows into that space that we will continue to advise around this year.

And one of the changes in that space, just for folks to know, we've been investing in that space since the '90s as a firm. There are tens of thousands of hedge fund managers out there. It's an industry, not an asset class. Within that, we allocate to about less than a hundred or so managers because we think there's a wide dispersion of outcomes.

We've been more focused on the uncorrelated return streams and strategies like Quant, relative value, et cetera. And last year, we brought together our asset management and wealth management engine of identifying great managers and building portfolios, even though we had a long-term partnership, but really uniting us, allows us to do things like seed emerging managers, which the asset management team had done for so many years, especially in places like Quant, relative value, macro, some of those areas that are harder to invest behind.

And they've done a pretty fantastic job building portfolios that are based on whatever the client's needs are. So you'll hear a lot more about that because I think some of our largest families are considering adding those back to portfolios and back to the family office report that we started at the beginning.

It's been about 6%, and most of it's been funded from fixed income. So really thinking through the funding sources on a go-forward basis.

Yeah, absolutely. You've given us a lot to think about. And even on that comment about what the family offices are doing, it is a significant portion of our client base. But of course, we work with families of every shape, way, and size.

But in the family office space, just as much as they are looking to these themes to make sure their investments have great growth potential, they are thinking about what is the structure in which they're investing.

So the evergreen funds, you might think that that may be for a broader client base. But guess what? They love that way of investing because it allows them to catch up, get money on the ground faster to participate in those returns. And then on the tax efficiency, that's a big deal for our clients across the US. And thinking about how do you take a typically tax-inefficient asset class, whether it be hedge funds or private credit. And can you make it more tax-efficient via an insurance wrapper, as you mentioned.

So a lot of great things. The five themes that I'll leave you with today-- think about dealmaking in the US, capital investment, real estate. Of course, AI is not going away, but don't forget about the follow-on opportunities. And then, of course, the interest rate environment.

And we will continue to be your partner in constructing your portfolios. Thank you to both of you.

Thanks for having us.

And thank you to all of you for joining. We hope you will join us for our next Ideas And Insights call.

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