WEBVTT

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So I'll take the other
side of the premise of your question.

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What is, I think, surprising to us?

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What's shocking to us, frankly, is
how little volatility there has been.

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So I think it's, it's
a bit of an indication

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of how much people have craved,

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I think a certain amount
of market disruption

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that everybody has glommed
on to 1 or 2, accidents

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in what has otherwise been a relatively,
calm period, for the market.

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And it's particularly
all the more surprising,

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you know, given the amount
of geopolitical uncertainty and given

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the amount of, macroeconomic uncertainty,
given AI disruptions and obviously,

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the unfortunate events,
in the Middle East.

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So for us,
I think, the volatility is welcome.

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And it's also,

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I think a bit of a of a shot
across the bow,

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I think, from people who have leaned
into the low volatility story.

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I think the reality is,

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if you think about, you know, in
particular middle market direct lending,

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there are a lot of people who I think lean

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with the idea that you get these 10% IRR’s
and no volatility

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and kind of monotonically
increasing asset prices.

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And I think that was a false premise.

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And so if you know, the other part
of your question was, you know,

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where should the focus fall?

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I think it needs to focus on, valuation,
for sure, particularly

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as we look to find ways to offer
alternatives to, a retail audience.

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I think we need to look at valuation.

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I think, you know,
the focus needs to fall a little bit

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on the asset management industry
and also the regulatory construct.

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Right.

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Because a lot of the problems
we've seen so far

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have been liquidity related, haven't they,
rather than to do with actual losses,

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which either are so far
apparently non-existent or quite small.

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But do you think then,
that we need to move into

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a period of being a bit more, knowing more
about what the valuations actually are?

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Well, I think it depends a little bit
on the construct of the funds.

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I think product design matters
a tremendous amount. Right?

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So I think from a PGIM perspective,
right,

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we take our responsibilities
incredibly seriously.

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We're a 150 year old company

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that wants to be around
for another 150 years.

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So for us, particularly
when you're talking about retail alts,

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and I know the premise here
is more institutional capital,

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but when you're talking about retail alts,
some of that is a very retail

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oriented sale, and some of that is
a very institutional oriented sale.

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And I think you have to gear,

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your product, you know, differently
depending on whether this is, you know,

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a small sleeve of a target date fund,
which is much more of an institutional

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quality sale versus

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whether it's a very retail
oriented product

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where retail investors
can get in and out at will.

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And then I think,

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you know, if it is the latter,
then I think you need to be particularly,

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in both cases,
you have to be honed in on valuation.

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But I think the disclosures obviously
matter a great deal in product design.

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And and the quality of the conversation
with the retail

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investor needs to be incredibly
well thought through.

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So I think the, the nature of that retail
sale matters a lot.