You're talking about like a massive

governance change and for anybody who's

followed what's going on with CalPOs or

other large pension plans in the US to

make a change like that is unexpected

but also just impressive SAA model is

the board owns a lot of that decision-m

whereas in TPA all of that gets

delegated to the investment staff. There

are some TPA firms that we've talked to

who really have plenty of examples of

making kind of bigger uh shorter

medium-term types of bets. I'll give one

example of a firm we talked to where

when rates got to zero, they said, "Why

are we owning bonds with a 0% interest

rate?" So, they literally took their

bond portfolio to zero. From a SAA

standpoint, you're like, "Oh boy, I've

moved 3, four, 5% away from my target.

That's a big deal." For TPA, when we

talk about being tactical, you're moving

the needle.

>> I am joined today by Steve Novakovich,

managing director of educational

programs at Kaya. Thank you so much for

joining me today, Steve.

>> Hey, Max. Thanks for the invite. Really

looking forward to the conversation

today. There's a bunch we're going to be

talking about, but I wanted to jump

right into the meat of it. Trillions and

trillions of dollars of capital are

controlled by institutional investors

like endowments, pensions, sovereign

wealth funds, and and the decisions they

make and the flows that those decisions

drive have a tremendous impact on

markets. And it feels like we are at a

turning point in how those decisions are

being made. Um, I'm talking about the

move from strategic asset allocation to

the total portfolio approach. Am I

feeling this correctly? How big is this

shift and what does it mean for

allocators, managers, and uh, the rest

of us?

>> Yeah, what a great starting question.

Uh, you know, Kaia certainly has been

leading this conversation for the last

year or two. Uh, and it really feels

like over that time frame. uh it's it's

been kind of a ball rolling down the

hill, if you will, culminating recently

with the Kalpers news of them switching

over to that model. Now, part of your

question is is uh does this mean we

should start see a cascading effect of

more allocators going into that? That'll

be interesting to to come out, but I I

think there is a lot there. And I'm not

saying this because of the research that

Kaia is doing. I actually say this as a

former allocator. You know, I I used to

work at a

endowment in the US that was under the

SA model and that is a entrenched model

that has been around for decades and to

change is a big deal, right? These are

like slowmoving ships and take a take

Kalpers as a as a good example here.

you're talking about like a massive

governance change and think and and and

for anybody who's sort of followed

what's going on with Kalpor or other

large pension plans in the US to make a

change like that is

unexpected but also just impressive

because you just wouldn't expect their

governance and and leaders and so forth

to like make that dive and so that's

huge and I think that them doing that

almost I don't know gives permission if

that's the right word to all these other

organizations to start thinking about

doing that and looking at what their

models are like and if there's a model

that might be more appropriate for them.

So no I think it's it's it's big uh for

sure.

>> So they're the first pension who else

had were sort of the first movers in

using TPA and can can you talk about how

the governance changes from strategic

asset allocation which I think people

are relatively familiar with. They're

really the first movers in the US at

least of size, brand name, whatever you

want to call it. Um, TPA's been around

for almost two decades at this point and

really emanated from two geographies.

Uh, one would be Oceanana, Australia,

New Zealand, and then the other one

would be in Canada. And one of the

things that's really interesting about

its origins and roots is that many of

the early adopters that we know today

like the Australian uh future fund uh or

even in Canada CPP part of the their

reason that they were able to kind of

make that change or or even look at that

change was where they were in their life

cycle when it started. So in the case of

Australian future fund literally the

that fund launched day one as TPA. So it

wasn't that they had a legacy system

that they had to switch over to. With

CPP there was a lot of uh change going

on uh organizationally where wasn't um

as complicated if you will to kind of

like come in and be disruptive in that

way. Um, and so, um, for some of the

earlier adopters, there was a little bit

of either fresh piece of paper, if you

will, or external disruptions that were

already happening that this wasn't sort

of introducing something new from a

disruptive standpoint. So, um, now for

some of the newer adopters to kind of

come in and and and change course in the

in the midst of kind of a regular course

of business, you know, that's that's

really what's exciting and very

different. Um but yeah, the the the the

big names, the big adopters early on

really came out of Australia, New

Zealand and in Canada uh and and more

recently then we've also seen a pick up

in in other parts of Asia as well.

>> So what is the actual change being made

in benchmarking how allocation decisions

are being made in the overall portfolio

construction? What is the shift? The

biggest ones, I think they're the most

tangible that people can identify with

is that particularly here in the US, the

traditional model is you've got a board

that is very engaged and takes that

fiduciary responsibility very very uh

seriously to the degree that they own a

lot of the decision-m and so owning the

decision-m can come in a couple

different forms. It can be um almost

universally under the SAA model

decision- making at the or level will be

we will just dictate or or approve

whatever the right word is what the

asset allocation looks like. So you're

going to have 10% here and 30% there and

that is a board level approval decision.

Often it's in conjunction with the

investment team working on it but

sometimes the board will hire

consultants to do that. But then also

there are models where the board has to

approve every investment or maybe every

investment above a certain size meaning

that again like authority is not

delegated to the investment team. and

they're like, you know, they're going

out and doing the research and they're

spending months, you know, figuring out

if this is a great manager and then they

go to the board and do a 10-minute

presentation and the board can say,

"Nah, no thanks." You know, and that's

kind of the that's the traditional SAA

model is the board owns a lot of that

decision- making. Whereas in TPA, all of

that gets delegated to the investment

staff. The investment staff decides what

the asset allocation is going to look

like. They decide what managers or

investments to make. And the thing that

the board owns, which is true in any

model, is they own kind of what the

overall objective is for the portfolio,

meaning like a return objective or a

risk liability objective, whatever the

case may be. And so it sounds like a

small change, but it's again it's a it's

letting as a board it's letting go of a

lot of authority, if that's the right

word and putting a lot of trust and fate

into the investment staff that you've

hired and not micromanaging, not

approving every single decision and

really um uh letting them lead the

decision-m process. That's that's I'd

say the biggest number one impact period

in the story uh that you see in terms of

contrasting the two. There's other stuff

I'm having to talk about as well, but I

want to start start and stop with that

first big one. Now, what about the

benchmarks? Cuz I know strategic asset

allocation, one of the hallmarks of it

were that each asset class was sort of

had its own benchmark. So if your

allocation consultant or your board came

down and said we want 20% in private

equity and we want this amount of it to

be LBO versus venture capital or

whatever there would be a benchmark for

each of those buckets. Maybe private

equity as a whole would have its own

benchmark but even in some cases those

specific substrategies might even have

their own benchmark. How does the

benchmarking change and the as the name

suggests a total portfolio approach

start to come into play? that type of

benchmarking of like I want to see how

my private equity investments did

relative to a private equity benchmark.

That doesn't necessarily change sort of

at the internal level. The investment

team may very well find that to be an

important and useful exercise. CIO may

believe that that's a really good way to

evaluate the quality of their their

staff. Um but ideally uh under the TPA

model those types of um analysis are are

not really front and center in front of

the board to any degree regularity and

instead the board is thinking at a very

big picture about a benchmark. So some

examples that you'll see from TPA folks

as a benchmark might be just 7030

stocks and bonds and then that doesn't

mean that the portfolio has to then be

70% stocks and 30% public bonds but that

the um underlying risk profile might be

consistent with 7030 or that the

performance that you ultimately are

account held accountable to needs to

stand up relative to us uh the outcome

of a 7030 portfolio. but that the board

is not going to then go and look and

see, okay, I see that you allocated 10%

to real estate. Let's see how your real

estate did against, you know, a real

estate benchmark. It's just going to be

here's your portfolio return. We told

you that you ultimately have to um

achieve a 7030 outcome. Let's see how

you did in that regard. And that's kind

of at the TPA level. That's what a

benchmark is going to look like. It's

going to be not granular. It's going to

be it could be a absolute return number.

It could be liability driven in the case

of a pension plan. It could just be, you

know, a stock bond combo, but internally

there's still definitely going to be

like an interest and desire to

understand how your um allocation

decisions and security selection, but

the board will no longer um should no

longer be uh paying going into those.

>> So, as you said, this change from

Kalpers, let's use them as the example.

You say this change was uh not not

necessarily surprising but not to be

expected when you think about just how

the governance at these organizations

works. My head naturally goes to

something happened. What happened? What

is the the environment of the last 5

years or so? Maybe it's it's further

along than that that is causing this

shift to happen at this moment in time.

>> Yeah, I'm going to butcher it a little

bit. Uh, and I hope that I'm not being

offensive to Kalpers or even

mischaracterizing it, but I guess I'll

say it. Um, is that there's a phrase I

really like, which is you make a change

and the pain of changing is no longer as

great as the pain of staying the same.

And if you look at the history of

Kalpers, I mean, you can go back and see

how many CIOS they've had in the last

number of years or so forth or the

performance uh that they've generated

and how it compares to maybe some of

their peers and so forth. And

my my my hunch is I have no inside

information here so I don't you know not

try to suggest I do but my hunch is is

that there finally was enough

introspection after x amount of time

that we've got to do something

different. we you know you're you've

been spinning your wheels for the last

decade two decades and going through

CIOS going through performance

underperformance whatever the case may

be that you finally that that the pain

of making the change was finally worth

it and they brought in a CIO who um uh

came from a TPA model so we shouldn't

have been surprised that it was likely

for him to then recommend that outcome

um but I I think that's in in the

Kalpers case I think that that's

probably a part of the background and

motivation was that there was just like

we can't keep banging our head against

the wall. I think for other

organizations that might ultimately uh

move in that direction. It it very might

well be just more of an evolution than

like a uh um a step function. Um one of

the things that we uh kind of started

talking about in our research and work

that we're doing on TPA is that there's

different um call gradations if you will

of TPA. And it's not just one or the

other. there's a spectrum and I wouldn't

be surprised if in the next couple years

we see more and more uh allocators just

sort of moving along that spectrum from

SAA towards TPA but not necessarily

going all the way to one end of the

spectrum or completely abandoning some

of the stuff of SAA but in the case of

Calipers it definitely feels like it was

a pretty kind of step function type of

an announcement

>> we've all heard about the rise of of

private credit the slowdown in

distributions from private equity and is

the ability to react to those types of

environmental

uh impacts limited by SAA and and did

factors like that do you think influence

this decision?

>> We're not in the room so hard to say

specifically, but to your point, one of

the um appeals or benefits, if you will,

of TPA is that especially when if and

when you're delegating authority to the

investment staff, you can be more uh

quick moving, more reactive. you don't

have to wait until the next board

meeting to make some suggestion or so

forth. And then similarly, not to

suggest that TPA is defined by short-

termism by any means. Um, but I would

say that there's um more openness or

willingness or ability to be

opportunistic perhaps uh from a TPA

standpoint. My own lived experience

within SAA was if something was an

investment opportunity that was less

than, let's call it 12 months, maybe 18

months, we would just sort of go and

say, "Hey, we're long-term investors and

that's not really us." Um whereas TPA is

more willing and interested in say, "Oh,

here's a six-month thing that could be

pretty interesting. Let's lean into it."

Um or here's a 12-month opportunity. And

to your comment, like the current the

postcoid environment certainly has felt

a little bit more volatile, a little bit

more kind of uh one where um you know

you could benefit from kind of being um

uh nuanced in your decision-m but also

nimble in your decision-m. So it could

be the case that some of the board

members felt like it could be a value ad

for them to unleash the team to be able

to be more responsive and reactive to

the market rather than, you know,

waiting every 3 months for more meeting

or whatever the case may be to talk

about something.

>> Yeah. And what does a tactical more

short-term opportunity look like for an

allocator? you know, for an individual

investor might be like, "Hey, there's a

Dutch tender on this stock I own." And

like I can make some free beer money uh

by by playing this thing. Like obviously

that's not what's happening at an

allocator level. What is a short-term

tactical opportunity that that an

allocator would see.

>> Yeah. And let's be clear, too, like it

there's no and this is something that's

like there's no firm like TPA rule here,

right? So, there are some TPA firms that

we've talked to who really have plenty

of examples of making kind of bigger uh

shorter medium-term types of bets. And

then there's others where it wouldn't

feel the same way. So, like I'll give

one example of a firm we talked to where

when rates got to zero, they made a

decision to um basically um neutralize

their exposure to fixed income. They

said, "Why are we owning bonds with a 0%

interest rate?" So they literally took

their bond portfolio to zero. Now they

did that synthetically. Um so they use

derivatives to offset that. But you know

that's like a crazy decision to all of a

sudden be an allocator that normally had

a 20% allocation to fixed income and

take it to zero uh for like a one or

twoear stretch. Um but uh other the

thing I would point out though is like

under the traditional SA model um

allocators will say oh we are tactical

we make tactical asset allocation

decisions and and that is true but I

want to kind of compare what that means

versus TPA and specifically like when

when within the framework of SAA when

you talk about tactical asset allocation

usually what that means is you set your

target but you've got bands and it could

be our target is 20% private equity, but

we're allowed to float between like 15

and 25. And so tactical asset allocation

might be, oh, now seems like a great

titan to be in private equity. Let's

allow the um weight to go to 22% or 23%.

From a SAA standpoint, you're like, "Oh

boy, I've I've moved three, four, five%

away from my target. That's a big deal."

for TPA. When we talk about being

tactical or when we talk about take

making shorter term decisions from a bet

standpoint, I'm talking about like, oh,

you you're moving the needle, like

you're going from 20 to to zero. You're

going from 10 to 30. Not all those

decisions have to be those big big

decisions, but I don't think you're

finding too many SAA investors that um

make that dramatic of a change to the

profile of their portfolio for a 6, 12,

18 month uh stretch. Um and really it's

sort of the fat pitches, if you will,

which don't come that often. So when you

talk to the TPA folks and you talk about

that opportunism, it might be once or

twice a year. I'm not talking about it

being a regular thing, but it's a once

or twice a year decision that an SAA

investor wouldn't make or couldn't make.

Uh, and it can be very impactful.

>> Now, we've been talking a lot about the

allocator side, I'm sure the managers in

the audience are hearing this and

saying, "Hey, that personal relationship

I've made with the analyst in charge of

hedge funds or private equity, that

certainly sounds more important than it

did a year ago or two years ago." If if

the if the uh allocator is switching to

a TPA,

should managers be excited about this

change and how should they be

approaching interactions with allocators

to

deal with these shifts?

>> It completely changes the conversation.

So going back to the SA model, it was

pretty straightforward usually to

understand where new money was going to

be invested. You look at your target

weights. You'd look at your actual

weights and go, "Oh, we're slightly

underweight hedge funds right now. I

guess I have to go invest in hedge

funds." And you would literally go out

to the hedge fund universe and say,

"I've got a mandate to invest in hedge

funds right now." And it would be each

hedge fund would be sort of competing

against each other to fill in that that

slot that needed to be filled. Under the

TPA model, it's you're not a hedge fund

competing against another hedge fund.

you know, you're competing against the

rest of the universe for that

allocation. TP doesn't necessarily say,

I need to have X% in private debt or I

need to have Y% real estate. And so it

is a very much kind of a best ideas uh

mentality. And so that the person who

oversees real estate at TPA may get

really excited about a real estate

opportunity, but then when they go to

their internal committee meeting to talk

about what's on the opportunity set,

they might hear a pitch from their

private dev person and go, "Oh, that

sounds way better than this real estate

thing I'm looking at. Let's go in that

direction." And so GPS need to

understand that they're not competing

against like strategies. Number one. So

what that means is number two when

you're GPA really the conversation comes

down to what is it that you're looking

for? What how can we support what you're

doing in your portfolio? So sometimes

the TPA conversation might be you know

we're kind of concerned about inflation

right now. So we're looking for

strategies that we think can be

beneficial in that environment and it

might be that it's a real estate

strategy. It might be that it's a

floating rate debt strategy. Who knows?

And so there might be the conversations

might be a little bit more thematic with

the LP or or sort of objective based or

needs based. And the LP is not concerned

about what bucket they're using to um

meet that objective or or accomplish the

outcome. They're just looking for the

best vehicle, the best investment that

can support whatever it is they're

looking at the moment. And and so that's

what GPS need to think about and have

that conversation, that proactive

conversation with the LP of what is it

that you're needing and how can I then

kind of match that need and have that

conversation with you about the products

that I have that can support whatever

outcomes you're going for at the moment.

>> Do you think that that is beneficial for

any particular subset of GP types? Like

when you're looking at private equity

versus private credit, are there some

firms that maybe were hurt by the

rigidity of SAA that might see greater

flows in a TPA world?

>> I kind of hate to say this, but to a

certain degree, it you'd almost wonder

if it would sort of benefit the larger

GPS who offer different strategies

within their platform because you can

develop a relationship with one of them

and it's like, okay, great. Yeah, maybe

your private debt fund right now isn't

meeting Indeed that we're looking for,

but you know, I know you've got six

other products that you offer. We can

one of those might have a fit for us. I

mean, clearly the ones that um might be

most challenged in the TPA model are

firms that are very much single product

and maybe even a bit niche in a single

product cuz it's like if you're if that

product is sort of meeting one kind of

solution type of a thing and that's not

a solution that the LP is looking for

then it's just you know you have that

one conversation and that's that's it.

you know, it's like, great, now we know

that you do this, and when the time

comes that you do this, we'll have that

conversation. But, you know, in the

meantime, there's nothing to talk about.

So, um, I think if you're a GP who's got

multiple products or multiple

strategies, you might feel like you're

drooling a little bit more because you

feel like you've got to have something

on the menu to offer them. Um, versus

those single product ones where it can

be a pretty quick conversation of it's

obvious that this isn't something that's

going to be um, you know, part of what

you're looking for at the moment. So,

what are people hunting for on the menu

right now?

>> The environment's definitely been uh

kind of evolving uh in the last year.

You know, we've kind of gone from like a

rising high rate market to now what

seems like a declining rate market. So,

that has certainly started to change the

narrative a little around private debt.

Um the economy is doing okay, but you

know, people still have a lot of this

uncertainty on the geopolitical side and

what's going on with tariffs. So, um,

kind of from what I've been hearing on

the ground is there is maybe a little

bit more of a defensive um, bend, uh,

than there has been in the past. Um, so,

you know, it's it's probably those are

going to be maybe more of the

conversations that people are going to

be interested in hearing is, uh, is um,

you know, what what do you offer that,

you know, gives me that um, confidence

around liquidity because if you're

uncertain, you want to make sure you can

kind of make portfolio changes. um you

know where do you how resilient is your

strategy to stress uh that might be

forthcoming. So I think those are kind

of some of the conversations we might be

hearing LPS looking to have uh in in the

next couple months is is those types of

strategies that um might be playing a

little bit more defense than than

offense.

>> We did see cracks in one particular

strategy for the first time since it has

exploded onto the scene in in private

credit. some people arguing uh that the

cockroaches aren't in my house, they're

in your house. We definitely saw some

throwing uh of that line back and forth

between senior executives in the private

credit or syndicated loan world. How

similar those are is not really for me

to say. Um how are allocators thinking

about private credit after they've

really been feasting? Um but we have

seen cracks for the first time. I think

it's pretty popular to sort of talk

about the narrative of concerns around

private credit, but I think when you

look at people's books, I don't know

that it's changing too much and I think

folks are still allocating uh to that

space. Um I think there's room for that

strategy to grow in lots of allocations.

There was an acceleration of like oh my

my historical target was zero. I want it

to be 10. But I don't know that everyone

necessarily got to that target. So I

still expect money to be committed

there. Um, I think the last couple years

there was just sort of lots of checks

being written of just about anybody. Now

it might be that there's more diligence

or prudence around who you're writing

the checks to, but I don't expect that

that the check writing to stop. Um, the

bigger conversations now is just simply

like, okay, hey, we might actually enter

a credit cycle. We've seen a couple of

defaults now, so hope I forgot you could

lose money in credit. Um, and so who are

the managers that maybe um have been

around through a credit cycle? There's a

lot of first-time private credit funds

that launched either postcoid or

certainly post GFC that don't have a

historical track record for you to

evaluate to see how they can handle

distress in their portfolio. Um, so I

think that managers who have a longer

history uh and can point to the work

that they've done to navigate through

credit cycles have a distinct advantage

right now. uh or andor managers who over

the last couple years were disciplined

and maybe didn't just put every single

dollar to work as quickly as possible

and you know showed that they still

invested in loans that had covenants or

you know had uh nicer uh spreads than

because they um you know were were just

sort of bidding to the lowest IRRa. So I

think that's kind of what you're going

to start to see is just more discerning

uh decision- making from LPs. But I

don't think that the private debt, the

music has stopped uh by any means.

>> What about uh private equity? Obviously,

the big uh topic for the last few years

has been distributions um and really the

lack thereof. It definitely differs from

fund to fund and vintage to vintage, but

um it has been something that people

have been concerned with on the LP side.

Has there been any light at the end of

the tunnel for the slowdown in

distributions? Yeah. So, I mean, look,

um, PitchBook just came out with some

stats on this and there was an uptick in

distributions in 2025. You know, not not

a massive uptick, certainly not like uh

what we saw in 2021 when it seemed like

every single venture bath company went

public uh for for that year. Um, but um

maybe the news was better than the

headlines would make you think. Uh now

that being said, the one thing we have

to be aware of is how much of that was

driven by stuff like continuation funds.

Um because uh the other thing that a

stat I think I saw from pitchbook uh was

that I think it was about 20 25% of

liquidity events this last year was

through continuation funds. And in that

case, if you're an LP and you're

sticking with that continuation fund,

it's not actually liquidity. is just

left pocket right pocket in terms of

where it's you know where what fund it's

sitting in. So that's kind of a false uh

false um statistic there in that regard.

Um but needless to say uh the headline

on on uh actual liquidity events was

slightly you know improvement in 25

relative to the previous years. Um and

there is just like every year there's

optim optimism coming into this year

around the IPO market. We've heard some

big companies talk about their intention

to go public this year. Um, and

what we know from the past is if those

couple of big ones do come out and have

success, that could open up the spigot,

you know. Um, but if if those big ones

either decide to delay or they come out

and don't have as strong of a showing as

they hope, then that's going to be

pretty problematic, I think, from an IPO

standpoint. Um, so that that's something

I think we all will be excited to watch.

Um, but there's a decent chance that

this year ends up being a pretty good

year for new IPOs.

>> Do you think that this headline, this

turnaround in 2025 is enough to change

the perception? And I think there might

be two perceptions. The perception we

have as the readers of headlines and the

perception um, with the actual LPs that

that you get to speak with. So I guess

how different is the perception from the

outside versus the conversation you're

having with insiders? Well, the other

thing to keep in mind too around the

tune is that that the there's two kind

of things that you're thinking about

when you're limited partner is am I

getting distributions when I think I

should be getting them? You know, you

make an investment in private equity

funds, you know, you're not going to get

a distribution in year one or year two,

right? Like that's we know how it works,

but by the time it gets to year four,

five, six, you're starting to expect

some degree of um um liquidity. So

there's sort of that conversation as to

like is this fund getting to the point

where you're like hey you know you're

six seven years into and I haven't seen

a dollar yet. That's that's a very

legitimate conversation. But then the

other thing that can drive that

conversation could be there can be funds

that are giving distributions in year

six but um you know uh I know we've all

kind of heard and seen headlines around

the denominator effect. As long as the

public markets are continuing to do what

they're doing with, you know, 10, 15,

20% returns per year and if private

equity is also similarly having, you

know, um,

huge returns along with that and they're

not giving

enough distributions to sort of offset

that like nav growth, your issue becomes

like, oh gosh, I'm overallocated. And

this is a SAA problem in a lot of ways,

more so than a TPA problem, but like

it's like the GPS need to overdistribute

to keep the weight where the LPs want it

to be, right? So they might be

distributing at what they feel like is

an appropriate cycle, but if their NAV

growth continues to be so healthy

because, you know, public markets are

doing well or so forth and the

underlying uh value is going up, they're

not like giving back enough money to LPs

that they continue to have this I'm

overweight issue. Um, which um, you

know, is is a is a little bit more of an

LP problem, but might be contributing to

that whole headline of we need

liquidity. we need you to give us money

back because without that we're

overweight and we can't make new

investments and everyone wants to make

new investments. You know,

>> we talked about continuation vehicles a

lot. I mean, there are new entrance into

the world of private markets and

alternatives and that's private wealth

and mom and pop are starting to get in

there. Is that going to be the the big

driver?

Are we really going to see distributions

purely come from IPOs to the public

market or or do you think continuation

vehicles secondary markets are going to

be a bigger part of liquidity and

distributions for LPS moving forward and

that's not changing.

>> One thing that we need to keep in mind

though is a company goes public but it

still is going to be a while before you

actually see distributions from that

venture capital firm. First of all,

they've got lockups. Venture capital

firms do. But then secondly, they um

they may very much val you know with

valid reasoning wish to hold on to that

stock for maybe two years before they

decide it's time to sell and exit. So um

you know they can go public. There might

be a little bit of liquidity potentially

from a secondary if if any shares are

sold second from a secondary standpoint

at at the IPO. But it's sort of funny

that you can we can be like oh great

there's an IPO. I'm going to get my

money. It's like you might not actually

get it for another year or two

depending. Um, so to that point though,

like what's really cool now is two

things. One, LPs have more control, if

that's the right word, over liquidity to

a certain degree in their portfolio.

We've seen a rise of secondary markets.

It's no longer kind of like a novel

thing or like a um for only for some

people type of a thing. If you're an LP,

like part of your liquidity decision

process is using the secondary markets.

So, if you feel like you're not getting

enough distributions or you feel like

you need to rebalance your portfolio,

it's there's no stigma around it.

There's no challenges around accessing

it. Um, you know, depending on what

you're selling, you can still get pretty

reasonable marks for those sales. So, I

think that that's something that's here

to stay and we can probably will

continue to see for a while here is is

LPS sort of taking more ownership or

control, if you will, of their liquidity

by using the secondary market. To go to

your point specifically about the real

investors, what's probably exciting for

LPS is that that's new money that needs

to get put to work. And so, you're

seeing evergreen funds come out or other

types of funds come out that are

catering to the retail investors. They

might

those funds might go and find new deals

that aren't already private equity

backed, but certainly lowhanging fruit

would be to go and uh be an exit for a

fund that's holding on to a company. So,

if I'm a retail investor, one thing that

I'm mindful of is it's very possible

that my money is buying a deal that's,

you know, been trapped in a portfolio

for the last eight years. And that can

be a really great deal, uh, or it could

be that, you know, who knows? Um, but I

do think that the retail money could be

a um a welcome source of capital to help

create exits. Uh, on the GP side, we saw

some headlines this year. I believe it

was Harvard, maybe a couple of other

endowments did go into the secondary

market for some of their private equity

stakes. Um, I believe that the discount

was around 15% to the marks. Uh

certainly depending upon what side of

the aisle you were on, uh some people

were saying, "Oh, this is the endowments

are giving up on private equity and

they're blasting for the door." And then

other people said, "No, this is just

standard uh type of stuff." How did you

view those headlines? And do you think

15% is the the benchmark right now for

what you're going to get if you want

liquidity? The answer sort of depends on

what you're selling, but we have really

good statistics around sort of what the

average price is depending if it's a

buyout portfolio versus a venture

portfolio versus real estate. If you

told me that LP was selling a

diversified portfolio of buyout

investments, I would uh in today's

market, I would say that you know a

discount of kind of 5 to 10% would feel

like kind of the equilibrium if you

will. And so if they sold something at

and it was a buyout portfolio and they

sold it at like a 15% discount, I would

be like, "Oh, that seems like they maybe

kind of, you know, lost a little bit out

on that, unless they were really selling

some drags of their portfolio, if you

will." Um whereas if it was like a

venture portfolio, we know, everyone

knows if you're selling venture, not

because venture is bad, it's just

there's even less liquidity there and

there's um you know, higher risk that

it's you're going to take a different

discount. So I'd have to look at the

exact composition of what they were

selling. But I would say if you're just

talking about middle of the fairway

buyout portfolios that are four, six

years old, probably like if you're

selling for five, eight, 10% discount,

that feels like it's a reasonable price.

And I'm as a observer uh of this, I

wouldn't say that like that's a a bad

outcome. Um don't forget it's an

opportunity cost. What are you doing

with that money now that you're getting

it right? you might be able to go

reinvest it into something that you

think is going to even do better than

what it was sitting in the first place

and can well overcome that 10% discount.

The other thing to keep in mind too,

part of that discount is sort of the um

prepaying for fees that you know are

going to come, right? Like if I just

hand over that portfolio to someone

else, if there's no change in underlying

NAV, you know, you're paying fees on it

for the next couple of years. So the

buyers usually have to take a pay a

little bit less so they don't sort of um

lose on the fee component to it. So

there is sort of like embedded costs

that's the right word anytime you're

buying a portfolio. So it is natural to

expect there to be a little bit of a

discount which has nothing to do with

the assets but more to just do with the

expenses associated with it. So um at

the end of the day you know Harvard and

those other ones they they'll the way

they'll prove if it was a good outcome

is what they do with the money that they

freed up. they take that liquidity and

make some investments that then kind of

generate, you know, 15% IRS, 20% IRRs,

you know, they'll come out ahead and it

was a good deal for them.

>> That's the question.

>> Who then is the buyer? Who's stepping in

to take that 5 to 8% discounted uh

discounted stake? Is it other

>> LPS who have already been in the market?

are these sort of middle tier LPs who

don't get access to the same quality of

funds or maybe they didn't have access

to the same vintages because they were

entirely they weren't in alts 10 years

ago or whatever it is who who is

stepping in is interested in buying

these stakes on the secondary market.

>> Yeah, there's lots of different good

reasons some of which you already you

know mentioned. So one good reason would

be I'm newer to the strategy and asset

class. I know it's important for me to

be diversified by vintage year. One of

the best ways to do that is through

buying a secondary portfolio because now

you can step in and now all of your

money is sort of lumped into one brand

new vintage and you can get NAV into the

ground right away. If I go and take $10

million and I give it and that's my

allocation to private equity and I give

it to a fund manager, it's going to take

five years for that to get drawn down.

But if I put a portion of that into a

secondary purchase, immediately I now

have NAV in the ground for that

allocation. So anyone who's sort of

starting from zero or near zero, a

secondary allocation can be really

useful to get money into the ground and

get that vintage diversification which

we all talk about as being very very

important to not have all your eggs in

one basket from a time standpoint. So

there's a really good reason on that

side. The other one that you mentioned

which I would also very much affirm is

um it's a good way to get your foot into

the door to certain relationships that

might be close to you otherwise. Once

you become an owner of that stake, um

you you you now are an LP with that GP

um you know and you can start being more

formal in your relationship with them

and maybe that allows you to develop

enough of relationship that in future

fundraising you can you can get that um

ticket with them that you wanted to have

or a larger size you know than you had

before if you would already were in the

door but not not in a meaningful way. So

those are two really really good you

know reasons and then the last one is if

you look at the historical return

profile for secondaries

you know I I can't deny the fact that

the IRRs specifically not the multiples

the IRRs on secondary investing are very

robust. So, if you're somebody who's irr

focused in your returns, um it could be

a really great strategy for you to sort

of meet that kind of benchmark, if you

will, and put some great irra numbers up

uh in your portfolio because that is

something that secondaries have a robust

history of succeeding in terms of uh

creating or in cynically manipulating

high IRS.

>> Are there some sharkier LPs out there

who are like, "Yeah, we'll wait. We'll

wait 5 years. still be somebody who

wants to get out and we'll buy their

stake at a discount, get the same assets

and we're happy to wait and it'll be

shorter time to get our money back.

>> One thing you have to keep in mind with

an LP, the second for the most part, the

second you make that decision to sell on

the secondary market, you're probably

ending that relationship with that GP.

So, you know, if it's a GP you want to

be with long term, and you're just like,

"Hey, I want this liquidity, but I'll

see you for the next fund." you know, I

don't want to guarantee that the GP is

going to be really excited about letting

you in the door the next time around.

Um, so, you know, and I mean, in all

sincerity, you again, take putting my LP

head on. You hope that when you find

that GP that you're partners with them

for the rest of, you know, for the next

20, 30 years, you're not LPs aren't in

the business of turning a portfolio and

finding new GPS over and over and over

again. you know, you really want to make

sure you really hope that you put all

this time of investment into a really

long-term relationship. So, really,

you're only doing that LP uh secondary

sale when um you know that um you're

unlikely to renew that relationship with

the GP uh anytime soon because it's a

pretty big decision that is likely to

sort of

end that relationship for um if not

permanently for a while.

>> Yeah, that's interesting. I was my

question was more about the other side

which would be the the

>> LP who says I'm going to pass on putting

money in on day one because I know that

there is going to be a market for this

down the line and is it allowing

>> is it allowing LPS to actually wait and

see how you deploy the capital uh

whereas in in prior cycles you had to be

there on day one.

>> It's a good question. The one thing to

keep in mind is like it's competitive,

right? So, um

it is possible that you could still get

in at a at a discount. That's that's

true. Um but you're not going to be the

only one bidding on the asset and it's

most likely going to go to the highest

bidder. So, if you're prepared to be the

highest bidder, that's fine. And by the

way, really high quality GPS that are

brand name GPS, there can be times in

the cycle where on the secondary market

their their funds trade above NAF.

You know, I've I' I've been in that

situation where where we've been able to

sort of execute that or see that happen

in the marketplace. So, um you know,

that's something to keep in mind as well

that it it's not always the case that

things trade at a discount. Um, so

I would say if you have the opportunity

as an LP to get into a really attractive

GP that you know is kind of hard to get

into, you're probably going to jump at

it, uh, period in the story and not just

not try to kind of be, um, you know,

slick about it in terms of waiting and

seeing if it comes up on the secondary

market. Um, but to your point, like

maybe for the more uh kind of um generic

names that are out there, you might say,

"Hey, sure, I'm sure, you know, big

asset manager fund X will be on the

secondary market and 5 years from now, I

can get into it then." Um, but you just

have to keep in mind that if you're

going to win that bid, you're paying the

highest price and that doesn't always

mean that you got a deal.

>> So, when I think about the the secondary

market, there's the ability to buy

stakes directly between LPs. So Harvard

sells their stake. There's the

continuation vehicle where maybe the

assets get moved to a new continuation

fund. And then there are these secondary

funds which they're going around and

trying to buy things on the secondary

market and create maybe a more

diversified portfolio of secondaries.

You mentioned being able to get in in

the secondary market as an opportunity

to develop a relationship with um a GP.

I guess that's really only the case if

you become the actual owner. What about

uh the these other funds out there that

are separate from the original GP?

>> So the continuation vehicle is

definitely one that could work in your

favor as an LP. This isn't universal for

every single continuation fund, but

there certainly are continuation funds

that are being uh offered to

non-existing LPS. So you could um

because not every single existing LP

will um say yes to the continuation

vehicle and maybe not every existing one

that is saying yes will want to go above

their prata. So there might be

allocation left over and the GPS will

fill that by bringing in new outside

LPS. So no question absolutely you as an

LP can be optimistic in that way and

make your first kind of relationship

with that GP be through one of their

continuation vehicles and then let that

be your kind of entry into future fund

investments. Um to your point if you go

with sort of one of the um standard

secondary fund managers uh it that's

probably a little bit harder of a way to

build those relationships with the

underlying GP depending on who that

secondary fund manager is. if they're

maybe smaller and nicher, they might be

willing to be open and working with you

to make introductions. Um, you know,

maybe if you are trying to partner with

that secondary fund manager around

offering co-investment dollars or other

kind of things that they can do that's a

little bit more bespoke with you that

gets you to kind of have a more direct

relationship with the GP. Uh, but I

would say it's probably the harder

avenue. you'd have to be more creative

with those secondary fund managers to

kind of have them intermediate that

introduction and and make you be more of

the face of the dollars rather than that

secondary fund manager. But continuation

funds absolutely that could be another

great way to get directly to that GP.

>> I want to switch to uh slightly more

liquid alternatives and hedge funds.

It's the end of the year or beginning of

the year and that means we're getting uh

performance numbers and certainly in

years like we had in 2025 where equity

markets have performed well on the back

of multiple years of equity markets

performing well. People love to compare

hedge funds to the S&P 500 and you start

to see that commentary. Well, why would

anybody invest in these vehicles when

this is what I did in my PA which was,

you know, 50% Nvidia or something like

that. Yeah.

>> Um and and so that it's a perennial

conversation that happens when hedge

fund returns come out, especially in up

years. And I always think it's just

helpful to get the LP perspective. You

know, you've been in that seat and

specifically looked at hedge funds. What

is attractive about hedge funds to LPs?

In theory, the hedge funds should be an

area that would be able to take

advantage of some of the greatest sort

of alpha creation opportunities, if you

will. Uh, dispersion in markets, the

issues with fundamentals across

different companies, so you can kind of

go long and short and take advantage of

those dislocations that might exist and

so forth. Um, but when you have beta

driven markets, dispersions low,

everyone's fundamentals are on. So, you

know, you're not getting that or the

ones that are like overpriced, just

continue to be overpriced and become

more overpriced or whatever the case may

be. And so, one of the things that's

been really challenging for hedge funds

over the last decade plus, is that

much more of the returns in the market

have been driven by beta than alpha.

And then the way the model is set up for

hedge funds in terms of how they're

compensated is, you know, you're paying

them 2 and 20 on the returns and then

you're looking at your returns about I'm

paying it 20% on a lot of beta. And as a

and as an LP, that's not something that

you're like, well, if I'm just going to

get a bunch of beta, no, and not

necessarily the fault of the hedge fund,

just more the underlying environment.

You're like, I should just go long only

then. Um, and so what the market really

needs from a what the hedge fund market

really needs is to see some of the uh

elements that are conducive to creating

more alpha opportunities to kind of

reappear. um for beta to not be the

dominant driver, if you will, not just

continue to have equity markets go up 15

20 plus percent per year or whatever,

actually have dispersion, actually have

um uh opportunities where where where um

you know, you you can can generate

returns on both sides of your book. Um

but uh until that happens, I think that

um there's going to continue to just

sort of be a lack of love uh for hedge

funds, frustrations about the

performance that they're generating.

I'll quickly just mention like you

mentioned kind of the year- end review.

I was just looking at hedge fund

benchmarks recently to see how they

finished the year and I'm sure that

hedge fund advocates will point out to

hey look at equity long short it was up

10 12% or even some strategies are doing

more than that. It's like okay yeah well

that was driven by the beta right? You

know the S&P was up whatever 17 plus and

if you to your point were in a bunch of

growth stocks and then Nvidia that's

what drove your portfolio. It wasn't

like you got of that 12% return. It

wasn't like 8% of it was the alpha that

you generated. It was predominantly

theta. And most sophisticated LPS can

kind of go through and look and

disagregate how those returns were

generated and go, "Oh, okay. Well, it

looks like you just sort of had exposure

to markets and that's what drove your

return and now I'm paying you 20%

incentive fee for you having beta

exposure." Um, and so that's I think

that's the real uh kind of issue uh that

needs to be um figured out here and

markets need to be be more um available

from an alpha standpoint for hedge funds

to to really shine.

>> Yeah. On the long only front, it's

interesting because I think we've all

seen the studies that show that mutual

funds, public public equity funds in

general on the whole underperform their

benchmarks. Um, and yet there is 28

trillion in active management um, in

mutual funds and ETFs. And uh, I'm

citing a study from Goldman that uh,

came out looking at 5-year returns

ending in 2024. And they looked at hedge

fund long only products and they found

200 to 300 basis points of

outperformance in a in a group that has

600 billion in assets under management.

So, I just have to wonder

and and I'm sure many of those managers

after fees

got paid for beta like there was beta

they got paid for. Is there just a

philosophical

um

resistance to paying for beta even if

the net result is better, right? Like

yes, the manager did get overcompensated

for the beta in the portfolio, but the

net result is still better. Why why does

it matter that this person is getting

rich?

>> So when I started in the industry, uh

when we evaluated

um hedge funds that were more equity

oriented, our we we we knew they had

beta like that wasn't like a question.

That was part of the model. But our

attitude was that even if they have 50%

of the beta to the market that over the

long term 3 five years their returns

should be the same as the market. So

half the beta but they have so much

alpha that even after 2 and 20 they're

they're meeting the market return. And

then the real appeal is that they're

doing so with so much less volatility.

So your downside risk in theory is

lower, your volatility is lower, your

sharp ratio for people who are really

excited about sharp ratios is is through

the roof in that regard. And to be

frank, so this is like 2005, that was

realistic. It was something that equity

oriented hedge funds had done up until

that point. Um, but you haven't really

seen that be accomplished often uh since

then. uh partly because um of how much

beta there's been. Like if you know the

equity market's up 20%, you're capturing

10 of it. Like good luck getting 10% of

alpha after fees. Like that's crazy. Um

but so but also I think that there's

been you know the hedge fund market from

2005 to to today is you know gone from

what a trillion some dollars to four

plus trillion5 trillion dollars. And

there are some strategies that are

scalable to a certain degree like I

could be long short but like you know

merger arb convert arb whatever like

there's only so much so many deals out

there you can't just like and so spreads

have narrowed for sure in some of the

more niche strategies so the amount of

alpha that exists in some of those

strategies especially when markets

aren't dislocated is a lot smaller so I

think there's just sort of been um you

know kind of a perfect storm of asset

growth compression spreads these big

beta rallies that have made it so

there's just less alpha

sort of on a year-to-year basis uh for

hedge funds to go capture in in certain

markets. And then to your point like the

big ones that are now 30 50 hundred

billion dollar hedge funds, you know,

the headline that you see is that you

you know you you just made that manager

of a billionaire off of the 2%

management fee and the 20%

interest or incentive fee that you're

paying them for the beta that they're

producing. And for a lot of LPs, that

just is kind of like that's that's not

what I'm signing up for.

>> I'm talking about the funds where it's

like yes, it has a beta.

>> It has a 100% beta, right?

>> And the market did 20 and after fees

they did 25.

>> Yeah.

>> Right. And they consistently over over

full equity market cycles outperform.

But yet I mean clearly active management

in mutual funds is still being allocated

to

>> and ETF increasingly ETFs are being

offered like they're still getting them

and yeah the fee is lower. It's

>> 60 basis points or less or you know

maybe it's 100 basis points but on the

whole like they're still

underperforming. Is it just that these

other long only hedge fund products

don't scale or is there just a a

reticence to pay for that even if there

is proven outperformance?

>> I'll admit like the one thing that

always confused me is that um people

couldn't look past the difference

between the gross and the net returns.

Like my attitude was if I'm getting a

hot a great net return that do I feel a

little bit sick about the fees I'm

paying to get there? Maybe. But at the

end of the day, the net return is what I

earn. And for whatever reason, there are

some people who just

um I don't know if it's a principal

thing or what, but like if you don't

mind me stepping over into the venture

capital world for a moment, like you

know, some venture capital funds are

three and 30, right? That's insane. But

then those fund managers might get a 5x

net return. Where else are you going to

get a 5x net return? But then if you're

like, well, what would that return if I

wasn't paying 3 and 30? it could have

been like six, seven, whatever x and

you're giving up quite a bit. But yet

people aren't complaining as much about

that because they're getting like a 5x

out of that investment. And so to go

back to your analogy of like, you know,

markets are doing 20 and I did 25 as on

a net basis. I feel like the best thing

to do is go and say, okay, well that's

good. 25 is better than 20. But I don't

know why. I can't explain it, but

there's just a cohort of people who just

get sick to their stomach to be like,

"But look at all the fees I had to pay

for that."

>> Yeah. It's funny, too, because there is

a cohort of managers in the public

equity world that love to talk about

like there are marketing rule

requirements that say you have to talk

about your net return if you talk about

your growth. But they believe and and

people have written about this that the

gross return is the true measure of

skill. And so they're obsessed with

talking about their skill. like you're

telling people how much they're giving

away in fees. Like you don't have to

market your gross return. You only have

to give people net. And in fact, it's

what matters most. And by showing that

you did gross, you know, a,000% since

inception and your LPs have received

700, you're telling them how much

they've paid you in fees. And it's it

can be a nauseating number for people

despite how good that net return might

be.

>> Yeah. I always, to your point, I always

found it silly when a manager would talk

to me about their gross returns because

they're like, I don't care. That's not

what I'm getting. Like, you know, and

you can pat yourself on the back for

that number, but um I don't get to see

it. I know you do uh in your own book

because you're not paying yourself fees.

That's really funny. I have a friend who

works in the hedge fun industry and I'll

like catch up with him like, "Oh, how's

the year going so far?" And he's like,

"Oh, I'm I'm up 10." I'm like, "Oh,

yeah. Is that gross?" Like, "Yeah." I'm

like, "Okay, so you're actually up seven

or whatever, you know." And he's like,

"Oh, yeah, I guess so." No. But and so

the what I'm trying to get at with that

is I don't think that the the average

sort of GP

looks at performance on a net basis that

regularly. Certainly the people who are

sitting in front of the Bloomberg

terminals and and looking at their own

P&L, they're not even it's not even in

their mind that that like their number

is less than what it is because, you

know, it's it's something else that

someone else has to deal with. But it is

very true that as an LP like it could be

nauseating to kind of see the difference

between the gross and the net and also

to have a GP tell you about how amazing

they are because of their gross return

and you're like I don't care that's not

what I get and your fees take away all

of that alpha that you're talking about.

You know

>> I want to move a little bit more towards

education and the role that you and Kaia

specifically are playing. We talked

about the growth of the private wealth

capital in the alternative space and

certainly I imagine that that is the

group that needs to be educated the most

when you think about um you know there's

certainly new entrance into alts from

the endowment sovereign wealth fund

world but the resources they have

everything I I imagine private wealth is

where a lot of that is going

>> as an individual investor I'm excited

about the opportunity that you know my

portfolio can be opened up to more

investment options. So I I always will

be an advocate of of making more

available. Um you know, but then the

thing that gives me the greatest fear is

people who invest in things that they

don't know anything about. That's the

easiest way to lose money, right? Is to

kind of invest in something that you're

not familiar with. And so that's where

sort of that intersection lies is like a

you want to be supportive of the

democratization, if you will. Um but

then B, you want to make sure that

people are doing it for investing in

those because it has a appropriate role

in their portfolio. It has the right

fit. They're doing it for the right

reasons. It's etc etc. Um and so you

know what what we are are doing is

giving some of that base knowledge to

investors who aren't familiar with what

private credit is, what real estate is,

what private equity is, how to put it in

their portfolio, what role it plays in

the portfolio, what you can expect from

it. I think a very easy tangible example

right now is we've already sort of

talked about these evergreen funds you

know it's like oh cool I could have

private equity and liquidity

okay may pro probably like for a little

bit but not always and suddenly like

there's some dislocation in the market

and an investor goes all right great I'm

going to sell my evergreen private

equity fine get my money back no that's

not going to happen right what will

happen it's like oh because you know

what like private equity actually isn't

liquid and you can't just like sell a

company like that and these evergreen

funds aren't going to necessarily be

able to give everyone their money back

when they're all coming to the door at

the same time. And so sort of those

types of conversations that need to be

had to like truly inform people of what

they're getting into, what the risks

are, what to be aware of, what role it

can play in the portfolio, and and what

to um keep your eyes open for. Uh you

know, and we've already alluded to some

of those things. Are Evergreen Funds the

marginal buyer of private equity deals

right now? What does that mean in terms

of the types of deals they're getting?

Does that mean you actually kind of that

this is a good time to be in those funds

or are you kind of getting castoffs? Um,

evergreen funds may say they're liquid

and you can get your money every

quarter, but the reality of it is there

will be a time where you won't get your

money in a quarter because it just won't

be available. So on and so forth. So,

um, being able to really kind of inform

the private wealth world, the retail

investor on kind of what those, uh,

strategies are, how they f the

portfolio, why it would make sense for

you to have it in your portfolio versus

not, and some of the things to keep your

eyes open to. Uh, very important.

>> What are the other things that you think

uh, newer investors to the alternative

space should be paying attention to? If

you're used to looking at a mutual fund

or an ETF performance page or perspectus

and you get the one, three, fiveyear

return that everybody has to present,

it's it's very different in the

alternative space and you can even mean

very similar offerings get extremely

different marketing materials and

statistics based off of what they

believe is important or representative.

>> How should uh investors be dealing with

that variability and and newness?

>> Yeah, I mean there's a couple things. I

mean, number one, how you measure

performance is different in private

markets. The common term is IR. We've

been using the term IRRa throughout this

conversation. Um, but IRRa doesn't

exactly perfectly translate to time

weighted returns. So, you might say,

hey, the S&P was up 15% this year. And

then you'd say this fund had an IRRa of

13%. That's not an exactly apples to

apples comparison to use. And I would

say the average investor probably

doesn't understand how ILR is created as

a number and what that exactly means and

how it can be um manipulated for a lack

of a better term. So that's number one.

But then number two, also benchmarking

to a certain degree. Again, like um I'm

not saying that it's unfair to say

benchmark private debt to the S&P. Uh

but if you're going to evaluate the

success of an individual investment, you

might want to compare it to what it's,

you know, universe is. And so in that

case, like, all right, great. I went

into this private debt evergreen fund.

Um how do I know if it if it did well or

not? What am I comparing it to? Because

I probably shouldn't just compare it to

the S&P. That's not exactly like kind of

its its universe. So I don't know that.

Um so that's something that people

probably have to kind of figure out to

understand because you think, oh, I

invested in Nvidia and it did better

than S&P. that is fair and act but like

maybe not for some of these evergreen

things. And then the last thing is this

is something I think evergreen funds do

well as a solution is that they can

because of the way they are structured

and the evergreen nature of it they will

be time diversified but for some of the

bigger investors who may not just use

evergreen funds but go into funds them

directly themselves. You can't just say

oh I invested in this one private equity

fund that's it I'm done I have my

exposure. you have to be time

diversified and I think that's a really

difficult thing for people to understand

growing into the allocation as opposed

to going from 0 to 10. You can't go from

0 to 10 overnight. Secondaries is part

of a solution for that. But then you've

kind of got that ongoing commitment as

well where you're going to kind of have

to regularly commit the money to keep

that allocation. And that's something

that people it's very foreign to people

because in the public markets it's okay

great I want to be in this stock. you

can put it all your money into it in one

fell swoop in one day and have it there

and there's your allocation. Um, but

private markets there's a lot of work

that goes into managing the size of the

commitment, the pacing of the

commitment, the time diversification.

Evergreen funds are a really awesome

solution for that. But for people who

are looking outside of evergreen funds,

there's a lot of work and um, expertise

that goes into that. So, what about

resources and and educational materials

that you have through Kaia for people

who do want to learn more about alts and

add this type of stuff to their

portfolios or their clients portfolios?

>> We welcome anyone who's interested and

for the most part a lot of our uh sort

of informal um materials is available to

the broad universe. We've got podcasts

and blogs and webinars that anybody can

go to and learn about these topics. And

then we have more formal um certificate

and micro credential learning programs

that are online

self-guided five six hours of watching

uh tutorials and training videos on

stuff and so forth. So it's kind of

depends on how deep and technical you

want to get and how um sort of formal in

the learning you want to be. But we um

but for folks who are interested in like

for example learning about private

equity, we've got a 7-h hour

microcredential program that you can pay

for to really learn about private

equity. Um but if you're interested in

just sort of getting a little bit more

of a conversation around what the heck

secondaries funds are, go we've got a

two-hour podcast that talks about

secondaries and then and what's

happening in the market and why

investors might choose to use a

secondary fund or not or so forth. So um

you know we tried to be uh make our

material sort of available to everybody

and and inclusive and then it just sort

of comes down to um how deep of a

learning experience you want, how formal

of a learning experience you want um in

that regard.

>> Yeah. Going all the way up to getting

your Kaya designation and being a a

chartered alternative investment uh

analyst.

>> Yes. And I I sort of gloss over that one

because that's the 200 plus hour time

commitment that uh you know a select few

make that decision on. Um I don't know

that a lot of retail investors are going

to say to themselves I want to go get my

Kaya charter before I uh you know invest

into an evergreen fund. Uh but that is

also available for sure and a lot of

folks who work in the institutional alts

world um pursue the Kaya charter and

getting a Kaya designation. But on the

retail private wealth side, those

certificates, micro credentials, and

other learning experiences really kind

of fit that profile quite well.

>> Yeah. And that is uh the the Kaya NXT

program. Um we do actually have a a

special offer for everybody listening

today um that if you go to the link in

the description, we have a 10% off

coupon. It's coupon code MM10 that you

can get to get uh 10% off on any of

those microcredential programs. and we

have, you know, private debt, private

assets or digital assets, real estate,

private equity, and uh I'm sure there is

more to come in 2026. What is next

coming down the pike for for Kaya NXT

and some of the other programs you have?

>> Yeah. Um so, uh the the one that is

coming out now is called portfolio

implementation. And so, a lot of it's

what we've been talking about today.

Hey, I now kind of understand that I

want private equity in my portfolio. I

want real estate in my portfolio. how do

I do it? How do I think about how to how

much to allocate? Uh where the

allocation comes from the time

diversification stuff. So uh that

portfolio implementation that credential

is a 9-hour long one filled with a bunch

of expert interviews where we're

bringing in industry practitioners to

sort of talk about how they actually do

this with the practices that they do and

so forth. So really excited about how

kind of practical and industry oriented

that one is. And then uh what's what

what else you'll expect from us in 2026

is um we're doing a micro credential on

TPA uh for people who are interested in

in getting more on that. We're going to

do a micro credential on infrastructure

uh which complements well kind of the

real estate private equity private debt

ones that we've already done. And then

um this is uh something that uh we're

really excited about because we're a

global organization and we're seeing a

lot of interest outside of the US of

course in terms of adoption of alts and

um access to alts. And so um we're doing

a microcredential later this year um

that's targeting around Islamic finance

and its application in the world of

alternative investments. Um there's a

lot of growth happening in the Middle

East. Um, Islamic finance is also

relevant in parts of Apac, Malaysia,

Indonesia, so forth. And so, um, not

everyone listening to this will

necessarily find that to be, uh,

relevant for them. Uh, but from our

standpoint, we're, um, tapping into a

universe that, uh, is a rich universe in

terms of, uh, people and and and

interest and education, uh, that we

really feel like can benefit from

understanding, uh, that that connection.

>> Very cool. Well, thank you so much for

joining me today, Steve. It was a lot of

fun. And again, reminder to everybody,

if you are interested, go to the link in

the description, learn a little bit more

about Kaya NXT, learn a little bit more

about alternatives, and uh take

advantage of that special offer.

>> Well, Max, thanks so much for having me

on. It was a great conversation. I

really appreciated it. Oh, it's my

pleasure,