Everyone knows why that happened. The fixed income space for years did not
really offer the yield or the return that many funds like yours needed.
Have you found that in the private markets here?
The promise of that at the time and the returns that you're getting now, are
they in sync? I think they are, you know, we've moved
up with our credit allocation, so we're suddenly looking around for both
portfolios we can buy as well as doing one by one investments through a team
we're looking to build. I think the thing with our private
portfolio more broadly as it's performed really well over the last 20, 30 years.
So it's well proven to us and on our plan.
When you look at new credit opportunities, are there specific
pockets that you're finding a little bit more resilient, a little bit more
attractive? Well, the debate we're having is
probably to an extent we want to move into sort of more that private equity
credit portfolio because we already have knowledge around who manages to operate
there as well as our own investment activities.
The other one we've been talking to a banks who are probably looking to share
some of their portfolios to see whether or not we can do some sort of joint
deals where it's actually we can acquire a larger portfolio on attractive terms.
Is private equity specifically private equity?
Is this the environment where you wouldn't want to increase allocations
for that? Well, I think we'd like to look at
private equity to do more credit. If we felt that the equity returns
didn't look as attractive, we're still finding equity returns on
private equity investments. And again, I think the real challenge
there is actually the transaction volumes really come down, mainly because
there's not so much leverage data. Right.
Available. Are you anticipating a recession here in
North America or globally? So we're a global investor.
North America has been a fabulous market for us.
We would probably anticipate a softer recession in Canada and in the US and
we'd probably be anticipating overall a recession worldwide, particularly in
Europe. Doesn't mean we stop investing.
We just alternate our approach in terms of what we want to buy.
What about diversification? What's the approach there now?
What is diversification in this environment?
So for us, we invested about 50 companies as country sorry around the
world. We have 10 that we've listed as being
strategically interesting and we try to make sure and by and large, we have
people on the ground in those 10 countries.
It allows us to be able to look across our product range from venture to real
estate and find the right product for that particular market.
Is that a bet, though, on the idea that the cord that the economic correlations
from country to country are a little bit looser today than maybe what they were a
few years ago? I think that's right.
If you look at the volumes that we're investing, he can get overexposed to any
one market, both from a to a geographic, from a political, from an economic point
of view. We also try to look at currency and say,
does that actually work for us? So some countries are quite interesting
from an investment return standpoint, but the currency isn't very favorable
once you convert it back to Canadian dollars.
What about the geopolitical situations right now?
I mean, growth in the developing world, but also in the developed countries to.
You know, it's really tough. I think the geopolitical risks make life
much more complicated to be an international investor.
And you also have some countries where you might say there's more key man risk
around one individual as well as the party in power.
So you might say from that perspective, India has some key man risk about Modi.
What we try to do is work closely with governments and try and understand where
they're looking to take the economy next.
But also how they see inward investment from foreign capital.
Well, with regards to India, though, so many people have talked about this idea
that some of the opportunities that folks on China a few years ago, but now
those opportunities, at least on a valuation basis, can be found in India.
India, not just because of the population, but in theory that rising
middle class is that. Are you seeing that?
Do you have confidence in that? Well, I think I think there's certainly
the demand driver based on the growing population, the young population.
And there's also a lot of infrastructure opportunities in India for us.
I think the question is by two companies, to what extent valuations
reflect that. And actually, many private equity and
public equity valuations in India are still pretty fully priced.
Do you have exposure to China right now? Any direct exposure?
We have nominal exposure. What I would call is something that we
can we can run with. We're trying to be careful with how we
direct capital around Asia. Certainly at the moment and I'm curious,
back here in the U.S., your exposure to any of the banks, the regional banks
here in the US, like SBB, like. Where Vonnie Quinn got no exposure.
We we take said about counterparty risk exposure pretty carefully.
And also, you know, it's not probably an entity we would do a lot of business
with because we're more into some of the larger banks or some of the larger
programs.