00:00So, Tassos, first off, give us the lay of the land here.
00:03When it comes to these go-anywhere funds, what exactly are they and why now are they seeing this uptake?
00:10Well, the reason they're seeing it now is because the market, the credit market, is particularly expensive.
00:15If somebody goes and checks a chart of credit spread, they're going to see them being near the lowest level
00:20since the chart actually goes all the way to the 90s.
00:23So a portfolio manager sees that and says, well, everything is extremely expensive now.
00:30The reward is not there too much.
00:32At the same time, though, there's a lot of potential downside that you can see.
00:36We had it yesterday, for example.
00:38Volatility spiked up after President Trump, for example, made certain comments.
00:41And a number of people said, well, the risk-reward is very skewed here.
00:45I can make a lot right now in the credit market if I just buy an index, but I can
00:50actually lose quite a bit.
00:51Well, talk to us a little bit about those index strategies because a conversation, you know,
00:56that I've been having a lot recently is that as you see all of this massive issuance from some of
01:01these tech giants,
01:03that concentration risks are growing.
01:05So, you know, the growth that we're seeing in these go-anywhere funds,
01:09does that partly link back to, you know, what we're seeing when it comes to passive credit strategies
01:14and these fears of crowding?
01:16Very much so.
01:18And we haven't seen anything like that historically.
01:20The level of crowding that we see in the credit market now is, one could argue, unprecedented.
01:26$25 billion of deals.
01:28That used to be once in a blue moon situation.
01:31And these days, we just see it almost every second month.
01:35So, yeah, for a number of portfolio managers, what they see is a lot of concentration risk,
01:40not just the fact that they have to buy even more of these things,
01:44but as all of the portfolio managers go at the same target at the same time,
01:48the price of these ones actually gets inflated.
01:51So there's a number of risk that's being added in particular because of AI.
01:55And that's a very big reason why investors try to avoid a lot of passive investments these times
02:01and just go with these portfolio managers who can actually look at pretty much everything out there.
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