Apollo Global Management Q4 2025 Apollo Global Management Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Apollo Global Management Inc Earnings Call
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Operator: Good morning, and welcome to Apollo Global Management's Q4 2025 Earnings Conference Call. During today's discussion, all callers will be placed in listen-only mode, and following management's prepared remarks, the conference call will be opened for questions. Please limit yourself to one question, then rejoin the queue. This conference call is being recorded. This call may include forward-looking statements and projections, which do not guarantee future events or performance. Please refer to Apollo's most recent SEC filings for risk factors related to these statements. Apollo will be discussing certain non-GAAP measures on this call, which management believes are relevant in assessing the financial performance of the business. These non-GAAP measures are reconciled to GAAP figures in Apollo's earnings presentation, which is available on the company's website.
Speaker #3: Apollo Global Management's fourth quarter 2025 earnings conference call. During today's discussion, all callers will be placed in listen-only mode. Following management's prepared remarks, the conference call will be opened for questions.
Speaker #3: Please limit yourself to one question, then rejoin the queue. This conference call is being recorded. This call may include forward-looking statements and projections which do not reflect Apollo's most recent SEC statements.
Speaker #3: Apollo will be discussing certain non-GAAP, guarantee future events, or management believes are relevant in assessing the financial performance of the business. These non-GAAP measures are filings for risk factors related to Apollo's earnings presentation.
Speaker #3: Nothing available on the company's call constitutes an offer to sell or a solicitation of an offer to purchase an interest in any Apollo fund.
Q4 2025 Apollo Global Management Inc Earnings Call
Operator: Also, note that nothing on this call constitutes an offer to sell or a solicitation of an offer to purchase an interest in any Apollo fund. I would now like to turn the call over to Noah Gunn, Head of Investor Relations.
Operator: Also, note that nothing on this call constitutes an offer to sell or a solicitation of an offer to purchase an interest in any Apollo fund. I would now like to turn the call over to Noah Gunn, Head of Investor Relations.
Speaker #3: I would now like to turn the call over to Noah Gunn, Head of Investor Relations.
Speaker #3: Relations. Thanks, operator, and welcome again, website. Also note that nothing on this
Noah Gunn: Thanks, operator, and welcome again, everyone, to our call. Joining me to discuss our results and the momentum we're seeing across the business are Marc Rowan, CEO; Jim Zelter, President; and Martin Kelly, CFO. Earlier this morning, we published our earnings release and financial supplement on the investor relations portion of our website. Our apologies for the later earnings date this quarter. This was principally due to our Partner Summit, which was a fantastic event that we held in Tokyo last week. As you can see, our results reflect the broad-based strength across the business and our team's exceptional execution throughout the year. For the full year, we generated record combined fee-related earnings and spread-related earnings of $5.9 billion, which drove adjusted net income of $5.2 billion, up 14% year-over-year or $8.38 per share.
Noah Gunn: Thanks, operator, and welcome again, everyone, to our call. Joining me to discuss our results and the momentum we're seeing across the business are Marc Rowan, CEO; Jim Zelter, President; and Martin Kelly, CFO. Earlier this morning, we published our earnings release and financial supplement on the investor relations portion of our website. Our apologies for the later earnings date this quarter. This was principally due to our Partner Summit, which was a fantastic event that we held in Tokyo last week. As you can see, our results reflect the broad-based strength across the business and our team's exceptional execution throughout the year. For the full year, we generated record combined fee-related earnings and spread-related earnings of $5.9 billion, which drove adjusted net income of $5.2 billion, up 14% year-over-year or $8.38 per share.
Speaker #4: Everyone, welcome to our call. Joining me to discuss our results and the momentum we're seeing across the business are Marc Rowan, CEO; Jim Zelter, President; and Martin Kelly, CFO.
Speaker #4: Earlier this morning, we published our earnings release and financial supplement on the investor relations portion of our website. And our apologies for the later earnings date this quarter.
Speaker #4: This was principally due to our partner summit, which was a fantastic last week. As you can see, our results reflect the team's exceptional execution throughout the year.
Speaker #4: For the full year, we generated record combined fee-related earnings and spread-related earnings of $5.9 billion which drove adjusted net income of $5.2 billion up 14% year over year, or $8.38 per share.
Speaker #4: And so, given the strength of these results, I've asked the guys to keep our remarks about the event that we held in Tokyo on the tighter side this quarter. But, of course, we make no promises.
Noah Gunn: And so given the strength of these results, I've asked the guys to keep our remarks on the tighter side this quarter, but of course, we make no promises. And with that, I'll hand it over to Marc.
Noah Gunn: And so given the strength of these results, I've asked the guys to keep our remarks on the tighter side this quarter, but of course, we make no promises. And with that, I'll hand it over to Marc.
Speaker #4: And with that, I'll hand it over.
Speaker #5: Thanks, Noah. I will do my best. I have doubts about Jim and Martin,
Marc Rowan: Thanks, Noah. I will do my best. I have doubts about Jim and Martin, though. Again, an exceptional quarter, capping off an exceptional year. FRE for the year, $2.5 billion, up 23% year-over-year. SRE, $3.4 billion, off normalized +9% year-over-year. Business is firing on all cylinders. Origination, record volume across the $300 billion mark. More importantly, robust, consistent spread, 350 basis points over Treasuries with an average rating of triple-B. Capital formation, record inflows, $228 billion, both Athene and Asset Management, ACS, third straight record year. Most important to us, this is all done with strong investment performance without reaching.
Marc Rowan: Thanks, Noah. I will do my best. I have doubts about Jim and Martin, though. Again, an exceptional quarter, capping off an exceptional year. FRE for the year, $2.5 billion, up 23% year-over-year. SRE, $3.4 billion, off normalized +9% year-over-year. Business is firing on all cylinders. Origination, record volume across the $300 billion mark. More importantly, robust, consistent spread, 350 basis points over Treasuries with an average rating of triple-B. Capital formation, record inflows, $228 billion, both Athene and Asset Management, ACS, third straight record year. Most important to us, this is all done with strong investment performance without reaching.
Speaker #5: though. Again, an exceptional quarter, capping to Marc. off an exceptional year. FRE for the year, 2.5 billion, up 23% year over year. SRE, 3.4 billion, off normalized plus 9% year over year.
Speaker #5: Business is firing on all cylinders. Origination record volume crossed the $300 billion mark. More importantly, robust, consistent treasuries with an average rating of BBB.
Speaker #5: Capital formation recorded record inflows, $228 billion. Both Athena and asset management, ACS, had their third straight record year. Most important to us, this is all done with strong—gives you a sense of just how strong—all buckets of credit are up 8% to 12%.
Marc Rowan: To give you a sense of just how strong, all buckets of credit up 8 to 12%, hybrid value up 16% for the year. Fund Ten, our most recent vintage fund, 23, 22% net IRR, strong DPI versus an industry DPI that rounds closer to zero. Looking forward, all of the drivers that powered us in 2025 are going to power us in 2026. In fact, I would say that they're more mature. And if you think about what's happening in our business, we are going from serving one market, institutional alt portfolios, to serving six markets. We now serve individuals, we serve insurance, we serve the debt and equity buckets of our institutional clients, we serve traditional asset managers, and we hope to serve more robustly the 401(k) market.
Marc Rowan: To give you a sense of just how strong, all buckets of credit up 8 to 12%, hybrid value up 16% for the year. Fund Ten, our most recent vintage fund, 23, 22% net IRR, strong DPI versus an industry DPI that rounds closer to zero. Looking forward, all of the drivers that powered us in 2025 are going to power us in 2026. In fact, I would say that they're more mature. And if you think about what's happening in our business, we are going from serving one market, institutional alt portfolios, to serving six markets. We now serve individuals, we serve insurance, we serve the debt and equity buckets of our institutional clients, we serve traditional asset managers, and we hope to serve more robustly the 401(k) market.
Speaker #5: Vintage fund, 23.22% net IRR, strong DPI versus an industry DPI that rounds closer to zero. Looking at what powered us in '25, those are going to power us in '26.
Speaker #5: In fact, I would say that they're more mature. And if you think about what's happening in our business, we are going from serving one market—institutional vault portfolios—to serving six markets.
Speaker #5: We now serve individuals. We serve insurance. We serve the debt and managers. And we hope to serve more robustly the 401(k) market. Each of these markets has the equity buckets of our institutional ability to be roughly the same size.
Marc Rowan: Each of these markets has the ability to be roughly the same size as our original market, which powered the entire industry. Understanding that, these markets require different products, different product structures, different access points, different investments in technology to serve, and you will see these markets mature more and more over time. And so as we look forward, we think the trends that are showing up in 2025 will show up even more in 2026 and again in 2027. To give you a brief sense of progress, in the individual market, more than $18 billion of inflows, now nine strategies in excess of $500 million of annual fundraising. Insurance, more than $15 billion of third-party insurance with a very active pipeline, increasing growth in our fixed income replacement business.
Marc Rowan: Each of these markets has the ability to be roughly the same size as our original market, which powered the entire industry. Understanding that, these markets require different products, different product structures, different access points, different investments in technology to serve, and you will see these markets mature more and more over time. And so as we look forward, we think the trends that are showing up in 2025 will show up even more in 2026 and again in 2027. To give you a brief sense of progress, in the individual market, more than $18 billion of inflows, now nine strategies in excess of $500 million of annual fundraising. Insurance, more than $15 billion of third-party insurance with a very active pipeline, increasing growth in our fixed income replacement business.
Speaker #5: As our original market, which powered the entire industry. clients. markets require different products, different We serve traditional asset product structures, different access points, different investments in technology to Understanding that, these serve and you will see these markets mature more and more over time.
Speaker #5: And so, as we look forward, we think spread. The trends that are showing up in 350 basis points over '25 will show up even more in '26.
Speaker #5: And again, in '27. To give you a brief sense of progress, in the individual market, more than $18 billion of inflows now nine strategies in excess of $500 million of annual fundraising.
Speaker #5: Insurance, more than $15 billion of third-party insurance, with a very active pipeline. Increasing growth in our fixed income replacement business. And what we see is a number of the leading investors in the world moving to this notion of total portfolio approach.
Marc Rowan: What we see is a number of the leading investors in the world moving to this notion of total portfolio approach. Total portfolio approach essentially opens up the debt and equity buckets of these institutions to private assets in competition for what has historically been 100% market share for public assets. Traditional asset managers, you saw the announcement with Schroders this morning, which I expect to grow into a multi-billion dollar partnership, and PRIV, our ETF with State Street, now approaches $700 million in size, and more importantly, it's among the top performers of investment-grade ETFs everywhere. Again, proving that private can be both liquid and illiquid. In this case, private investment grade being fully liquid.
Marc Rowan: What we see is a number of the leading investors in the world moving to this notion of total portfolio approach. Total portfolio approach essentially opens up the debt and equity buckets of these institutions to private assets in competition for what has historically been 100% market share for public assets. Traditional asset managers, you saw the announcement with Schroders this morning, which I expect to grow into a multi-billion dollar partnership, and PRIV, our ETF with State Street, now approaches $700 million in size, and more importantly, it's among the top performers of investment-grade ETFs everywhere. Again, proving that private can be both liquid and illiquid. In this case, private investment grade being fully liquid.
Speaker #5: The total portfolio approach essentially opens up the debt and equity buckets of these institutions to private assets, in competition for what has historically been 100% market share for public assets.
Speaker #5: Traditional asset managers, you saw the announcement with Schroders this morning, which I expect to grow partnership. And PRIV, our ETF with State into a multibillion-dollar Street, now approaches $700 million in size and more investment performance without reaching.
Speaker #5: importantly, it's among the top performers of investment-grade
Speaker #5: ETFs everywhere. Again, proving that private can be both liquid broad-based strength across the business and our investment grade being fully liquid. We're also seeing progress in our To give DC and and illiquid.
Marc Rowan: We're also seeing progress in our DC and 401(k) products in motion with State Street, with Empower, with OneDigital, and with one very large RIA. Everything we're talking about ultimately comes down to the promise of private markets, which is excess return per unit of risk, and our ability to generate assets or originate assets with excess spread at scale is becoming more and more important, and our historical investment in origination has given us a bit of a competitive moat that others are trying to catch up to. Outlook in 2026 for asset management, which will not be a flagship fund year, continues to be 20%+ FRE growth. In retirement services, the demand for retirement income has never been higher. The global retirement crisis is coming much more into view.
Marc Rowan: We're also seeing progress in our DC and 401(k) products in motion with State Street, with Empower, with OneDigital, and with one very large RIA. Everything we're talking about ultimately comes down to the promise of private markets, which is excess return per unit of risk, and our ability to generate assets or originate assets with excess spread at scale is becoming more and more important, and our historical investment in origination has given us a bit of a competitive moat that others are trying to catch up to. Outlook in 2026 for asset management, which will not be a flagship fund year, continues to be 20%+ FRE growth. In retirement services, the demand for retirement income has never been higher. The global retirement crisis is coming much more into view.
Speaker #5: 401(k) products in motion with State Street, with—in this case—private Empower, with OneDigital, and with RIA. Everything we're talking about ultimately comes down to the promise of forward; all of the drivers, one very large per unit of risk.
Speaker #5: And our ability to generate assets in private markets, which is excess return, or originate assets with excess spread at scale, is becoming more and more important.
Speaker #5: And origination has given us a bit of our historical investment in a competitive moat that others are trying to catch up to. Outlook in '26 for asset management, which will not be a flagship fund year, continues to be 20% plus FRE growth.
Speaker #5: In retirement services, the demand for retirement income has never been into view, crisis is coming much more we as a world and we as societies are starting to deal with the higher.
Marc Rowan: We as a world, and we as societies, are starting to deal with the consequences of this. You saw more than $80 billion of inflows in 2025. You should expect approximately $85 billion of inflows in 2026, and more than $5 billion of this will be from markets that we were not in 18 months ago, and that I believe will turn out to be a very large share of our business. Our November teach-in set a very clear path. The SRE growth remains durable. We expect 10% SRE growth in 2026, and we reaffirm the 10% growth on average through 2029, assuming we do what we're supposed to do in the alternatives. We step back and we think about macro. All of this comes down to a focus on risk and reward.
Marc Rowan: We as a world, and we as societies, are starting to deal with the consequences of this. You saw more than $80 billion of inflows in 2025. You should expect approximately $85 billion of inflows in 2026, and more than $5 billion of this will be from markets that we were not in 18 months ago, and that I believe will turn out to be a very large share of our business. Our November teach-in set a very clear path. The SRE growth remains durable. We expect 10% SRE growth in 2026, and we reaffirm the 10% growth on average through 2029, assuming we do what we're supposed to do in the alternatives. We step back and we think about macro. All of this comes down to a focus on risk and reward.
Speaker #5: Consequences of this. You in '25. You should, the global retirement, expect approximately $85 billion in '26. And more than $5 billion of inflows in this will be from markets that we were not in 18 months ago.
Speaker #5: And then I believe we'll turn out to be a very large share of our business. Our November teach-in set a very clear path. The SRE growth remains durable.
Speaker #5: We expect 10% SRE growth in '26. And we reaffirm the 10% growth on average through '29, assuming we do what we're supposed to do in the alternatives.
Speaker #5: We macro. All of this comes down to a focus on risk and reward. Each of us has our own way of expressing what it is we're doing.
Marc Rowan: Each of us has our own way of expressing what it is we're doing. The way I like to express it is to talk about markets that essentially exist on a playing field. For most of my career, 95% of the outcomes have been on that field, and very little has been outside that. In fact, it was such a small percentage chance that we never really thought about it that much and didn't really hedge. And sometimes we liked what was in front of us in terms of valuation, in terms of liquidity, in terms of economic outlook, and sometimes not, but we knew how to navigate those cycles. What we're watching now is just an increased percentage or increased probability of outcomes outside of established lanes or an established playing field.
Marc Rowan: Each of us has our own way of expressing what it is we're doing. The way I like to express it is to talk about markets that essentially exist on a playing field. For most of my career, 95% of the outcomes have been on that field, and very little has been outside that. In fact, it was such a small percentage chance that we never really thought about it that much and didn't really hedge. And sometimes we liked what was in front of us in terms of valuation, in terms of liquidity, in terms of economic outlook, and sometimes not, but we knew how to navigate those cycles. What we're watching now is just an increased percentage or increased probability of outcomes outside of established lanes or an established playing field.
Speaker #5: The way I like to express it is to talk about markets that exceptionally exist on a playing field. For most of my career, 95% of the outcomes have been on that field, and very little has been outside—percentage chance that we never really thought about that much and didn't really hedge.
Speaker #5: And sometimes we liked what was in front of us in terms of valuation, in terms of liquidity, in terms of economic outlook. And sometimes not.
Speaker #5: But we knew how to navigate those cycles. What we're watching now is just an increased percentage or increased probability of outcomes outside of established lanes or an established playing field.
Speaker #5: And one needs to take those, invest, as you think, as you think about factors into account as you risk and reward. And what's becoming clear in our industry is the notion of having a principles mindset versus an agent's mindset.
Marc Rowan: One needs to take those factors into account as you invest, as you think, as you think about risk and reward. What's becoming clear in our industry is the notion of having a principal's mindset versus an agent's mindset. A principal's mindset approaches every asset and every asset class as if they're going to own it for the long term, because they do. An agent's mindset responds to the hot dot in the marketplace and asks more fundamentally, is can the asset be sold? Is the asset popular? I believe a principal mindset will serve us very well. Jim will give you some notion of software, and I will steal only a little bit of his thunder. But in our PE business, our software exposure rounds to zero. In our Athene balance sheet, our software exposure rounds closer to zero than to one.
Marc Rowan: One needs to take those factors into account as you invest, as you think, as you think about risk and reward. What's becoming clear in our industry is the notion of having a principal's mindset versus an agent's mindset. A principal's mindset approaches every asset and every asset class as if they're going to own it for the long term, because they do. An agent's mindset responds to the hot dot in the marketplace and asks more fundamentally, is can the asset be sold? Is the asset popular? I believe a principal mindset will serve us very well. Jim will give you some notion of software, and I will steal only a little bit of his thunder. But in our PE business, our software exposure rounds to zero. In our Athene balance sheet, our software exposure rounds closer to zero than to one.
Speaker #5: A principles mindset approaches every asset and every asset class as if they do. An agent's mindset responds to the hot dot in the fundamentally: can the asset be sold?
Speaker #5: Is the asset going to own it for the long term because popular? I believe a principle mindset will serve us very marketplace and asks more well.
Speaker #5: Some notion of software, and I will—Jim will give you, steal only a little bit of his thunder. But in our PE business, our software exposure rounds to zero.
Speaker #5: In our Athene balance sheet, our software exposure rounds closer to zero than to half the exposure of our large peers. Software is an amazing extreme.
Marc Rowan: In ADS, half the exposure of our large peers. Software is an amazing business. The market's overreaction to software is extreme, but clearly, factors have changed, and we have good software companies and bad software companies, and good valuations and bad valuations. If you were aggressive at a point in time when valuations were very high and not a lot of diligence was being done and people were expecting growth forever, you're playing defense now. I assure you, we are on offense, and software will be a very attractive sector, albeit not at the valuation levels and with the kind of underwriting that has been done previously. To give you a sense of how this principle mindset plays out, take our largest private markets, direct lending vehicle, ADS, now more than $25 billion.
Marc Rowan: In ADS, half the exposure of our large peers. Software is an amazing business. The market's overreaction to software is extreme, but clearly, factors have changed, and we have good software companies and bad software companies, and good valuations and bad valuations. If you were aggressive at a point in time when valuations were very high and not a lot of diligence was being done and people were expecting growth forever, you're playing defense now. I assure you, we are on offense, and software will be a very attractive sector, albeit not at the valuation levels and with the kind of underwriting that has been done previously. To give you a sense of how this principle mindset plays out, take our largest private markets, direct lending vehicle, ADS, now more than $25 billion.
Speaker #5: But business. overreaction to software is The markets clearly, factors have changed, and we have good software companies and bad software companies. valuations. If you were aggressive at a point in time when that.
Speaker #5: Valuations were very one. In ADS, done and people were expecting growth and good valuations and bad forever. You're playing defense now. I assure you, we are on offense.
Speaker #5: And software will be a very attractive sector, albeit not at the valuation levels and with the—in fact, it was such a small kind of underwriting that has been done previously.
Speaker #5: To give you a sense of how this principle takes our largest private markets direct lending vehicle—billion. For the quarter and for the year, approximately 8% structure, large company, no PIK.
Marc Rowan: For the quarter and for the year, approximately 8% return, lowest leverage, top of the capital structure, large company, no pick. I assure you, ADS is on offense. In hybrid, our largest vehicle there is AAA, which now exceeds some $25 billion. AAA, 12% inception to date return, very low volatility, 43 of 44 positive quarters, including 23 consecutive positive quarters. This is the perfect strategy for institutions who are thinking about Total Portfolio Approach, in that on a risk-reward basis, it has outperformed almost everything else in their book. In our equity business, the 39 gross and 24 net return for our PE flagship funds over the last 3.5 decades just can't be matched. At Athene, while others have reached for spread, we have been positioned defensively. We've built $24 billion position of cash treasuries and agencies.
Marc Rowan: For the quarter and for the year, approximately 8% return, lowest leverage, top of the capital structure, large company, no pick. I assure you, ADS is on offense. In hybrid, our largest vehicle there is AAA, which now exceeds some $25 billion. AAA, 12% inception to date return, very low volatility, 43 of 44 positive quarters, including 23 consecutive positive quarters. This is the perfect strategy for institutions who are thinking about Total Portfolio Approach, in that on a risk-reward basis, it has outperformed almost everything else in their book. In our equity business, the 39 gross and 24 net return for our PE flagship funds over the last 3.5 decades just can't be matched. At Athene, while others have reached for spread, we have been positioned defensively. We've built $24 billion position of cash treasuries and agencies.
Speaker #5: I assure you, ADS is on offense. ADS, now more than 25 vehicles, there is AAA, which is now in hybrid. Our largest exceeds some $25 billion.
Speaker #5: AAA 12% inception to date return. return. Lowest Very low volatility. leverage, top of the capital 43 of 44 positive positive quarters. This is the perfect strategy for institutions who are thinking about total quarters, including 23 consecutive portfolio approach in that on a risk-reward basis, it has outperformed almost everything else in their book.
Speaker #5: In business, 39% gross and 24% net return for our PE flagship funds over the last three and a half decades just can't be matched.
Speaker #5: At Athene, while others have been positioned defensively, we've built a $24 billion position of cash, treasuries, and agencies. While we have reached for spread, we are always willing to have significant firepower and flexibility.
Marc Rowan: While this is a short-term drag, we are always willing to sacrifice short-term profitability for doing the right thing, and gives us significant firepower to redeploy. Athene maintains plenty of flexibility, and some of the levers that we've seen, even industry leaders undertake, whether it's the move to Cayman or asset risk-taking, we have simply not had to do, nor will we do. When you come to work each day with a principal's mindset, you just approach your business very differently. Athene is a very tough competitor with numerous advantages. Let me just wrap up by saying, last week, we had a chance to spend time in Tokyo with our 200 partners, an unbelievable cultural moment. Theme of playing to win.
Marc Rowan: While this is a short-term drag, we are always willing to sacrifice short-term profitability for doing the right thing, and gives us significant firepower to redeploy. Athene maintains plenty of flexibility, and some of the levers that we've seen, even industry leaders undertake, whether it's the move to Cayman or asset risk-taking, we have simply not had to do, nor will we do. When you come to work each day with a principal's mindset, you just approach your business very differently. Athene is a very tough competitor with numerous advantages. Let me just wrap up by saying, last week, we had a chance to spend time in Tokyo with our 200 partners, an unbelievable cultural moment. Theme of playing to win.
Speaker #5: And some of us sacrifice short-term profitability for doing the right thing, and it gives us redeploy. Athene maintains plenty—whether it's the move to Cayman, or asset, the levers that we've seen, even risk-taking—we have simply not had to do what industry leaders undertake, nor will we do.
Speaker #5: When you come to work each day with a principles mindset, you just approach your business very differently. Athene is a very advantages. Let me just wrap up by saying last week we had a chance to spend time moment.
Speaker #5: Theme of playing to win. Tremendous is in the kitchen that we're working in Tokyo with our 200 next six months. Real focus on what makes on, which we expect to roll out over the Apollo Apollo, and responding to the cultural moment and not simply growing our partners.
Marc Rowan: Tremendous excitement, not just about what's happening, but what is in the kitchen that we're working on, which we expect to roll out over the next 6 months. Real focus on what makes Apollo, Apollo, and responding to the cultural moment, and not simply growing our business for the sake of growing our business, but growing our business at scale, with quality, and with intentionality. Jim, over to you.
Marc Rowan: Tremendous excitement, not just about what's happening, but what is in the kitchen that we're working on, which we expect to roll out over the next 6 months. Real focus on what makes Apollo, Apollo, and responding to the cultural moment, and not simply growing our business for the sake of growing our business, but growing our business at scale, with quality, and with intentionality. Jim, over to you.
Speaker #5: Business for the sake of growing—our, an unbelievable cultural business—but growing our business at scale, with intentionality. Jim, over to you, with quality and with you.
Jim Zelter: Thanks, Marc. Over the past several years, we've talked about Apollo's individual capabilities, our credit platform, our equity franchise, and balance sheet, each strong on its own. But I want to take focus for a moment today on how those pieces work together in an integrated system, the connection between origination and capital formation, and why that matters more than ever today. At scale, investing does not get simpler; it gets more complex. What differentiates Apollo is that we built a system designed to absorb that complexity and convert it into consistent, high-quality outcomes for our clients. That is our long-term moat. Origination today is no longer a standalone function. It's bespoke investing. The flywheel that powers our business is now origination, product, and investing teams working in sync across the firm. And capital formation is not something that happens at the end of the process.
Jim Zelter: Thanks, Marc. Over the past several years, we've talked about Apollo's individual capabilities, our credit platform, our equity franchise, and balance sheet, each strong on its own. But I want to take focus for a moment today on how those pieces work together in an integrated system, the connection between origination and capital formation, and why that matters more than ever today. At scale, investing does not get simpler; it gets more complex. What differentiates Apollo is that we built a system designed to absorb that complexity and convert it into consistent, high-quality outcomes for our clients. That is our long-term moat. Origination today is no longer a standalone function. It's bespoke investing. The flywheel that powers our business is now origination, product, and investing teams working in sync across the firm. And capital formation is not something that happens at the end of the process.
Speaker #1: Mark. Over the past several years, we've talked about Apollo's individual capabilities—our credit platform, our equity franchise, and balance sheet—each strong on its own.
Speaker #1: But I want to take focus for a moment today on how those pieces work together in an integrated system—that connection between origination and capital formation—and why that matters more than ever today.
Speaker #1: At scale, investing does not get simpler—it gets more complex. What differentiates Apollo is that we built a system designed to absorb that complexity and convert it into consistent, high-quality outcomes for our clients.
Speaker #1: That is our long-term moat. Origination today is no longer a standalone function. It's bespoke investing. The flywheel that powers our business is now origination, product, and investing teams working in sync across the firm.
Speaker #1: And capital formation is not something that happens at the end of the process. What we originate, in many ways, shapes the connection between origination and capital—the right opportunity quickly and at scale, while maintaining discipline and alignment.
Jim Zelter: In many ways, it shapes what we originate upstream. Understanding this connection between origination and capital formation allows us to deliver the right cost of capital to the right opportunity quickly and at scale, while maintaining discipline and alignment. At the end of the day, our job is to make money for our clients, and that's precisely what we did in 2025, with our scaled, connected platform generating over $60 billion of value to our investors. We've been running our business with the same patient purchase price matters discipline that has driven our investing success through various cycles over the last 35+ years. That discipline is particularly evident in areas like software, where we estimate it represented approximately 40% of all sponsor-backed private credit and 30% of all PE deployment for more than a decade.
Jim Zelter: In many ways, it shapes what we originate upstream. Understanding this connection between origination and capital formation allows us to deliver the right cost of capital to the right opportunity quickly and at scale, while maintaining discipline and alignment. At the end of the day, our job is to make money for our clients, and that's precisely what we did in 2025, with our scaled, connected platform generating over $60 billion of value to our investors. We've been running our business with the same patient purchase price matters discipline that has driven our investing success through various cycles over the last 35+ years. That discipline is particularly evident in areas like software, where we estimate it represented approximately 40% of all sponsor-backed private credit and 30% of all PE deployment for more than a decade.
Speaker #1: At the end of the day, our job is to make money for our clients. And that's precisely what we did in 2025, with our scaled, connected platform generating over $60 billion upstream.
Speaker #1: Billions of value to our investors. We've been running our business with matters of discipline that has driven our investing success through various cycles over the last 35-plus years—the same patient purchase price discipline.
Speaker #1: That discipline is particularly evident in areas like software, where we estimate it represented approximately 40% of all sponsor-backed private right cost of capital to the credit and 30% of all PE deployment for more than a decade.
Speaker #1: As Mark mentioned, industry—it’s really a situation of selectivity versus exposure. Today, it represents less than 2% of our total AUM. In private equity, zero exposure to growth software.
Jim Zelter: As Marc mentioned, our positioning is amongst the lowest in the industry, and it's really a situation of selectivity, both versus exposure. Today, it represents less than 2% of our total AUM. In private equity, zero exposure to software. On Athene's balance sheet, we have de minimis exposure of 0.5%, which is virtually all IG rated, with hyperscalers such as Microsoft and Oracle. And I'd further add that software investments within our credit business, excluding Athene, represent less than 4% of AUM, and within ADS's relative proportion is amongst the lowest, as Marc mentioned, amongst our peers. We have managed ADS, our flagship credit vehicle, in a prudent manner with lower than market leverage, low PIK, and all first lien exposure. In summary, we see parallels between software and prior cycles, where an influx of capital fuels over allocation, dispersion follows, and patience is rewarded.
Jim Zelter: As Marc mentioned, our positioning is amongst the lowest in the industry, and it's really a situation of selectivity, both versus exposure. Today, it represents less than 2% of our total AUM. In private equity, zero exposure to software. On Athene's balance sheet, we have de minimis exposure of 0.5%, which is virtually all IG rated, with hyperscalers such as Microsoft and Oracle. And I'd further add that software investments within our credit business, excluding Athene, represent less than 4% of AUM, and within ADS's relative proportion is amongst the lowest, as Marc mentioned, amongst our peers. We have managed ADS, our flagship credit vehicle, in a prudent manner with lower than market leverage, low PIK, and all first lien exposure. In summary, we see parallels between software and prior cycles, where an influx of capital fuels over allocation, dispersion follows, and patience is rewarded.
Speaker #1: On Athene's balance sheet, we have de minimis exposure of 0.5%, which is virtually hyperscalers such as Microsoft and Oracle, and I'd further, our positioning is amongst the lowest in the—add that—software investments within our credit business, excluding all IG-rated.
Speaker #1: Of AUM, and within ADS its relative proportion is amongst the lowest, as Marc With mentioned, amongst our peers. We have managed ADS, our flagship credit vehicle, in a prudent leverage, low PIK, and all first lien software, and prior cycles.
Speaker #1: Where an influx of capital fuels exposure. In a manner with lower-than-market overallocation, rewarded. We believe we're well positioned for the moment. Turning to origination, in dispersion follows, and patience is 2025. The strength and breadth of our capabilities were on full display.
Jim Zelter: We believe we're well positioned for this moment. Turning to origination, in 2025, the strength and breadth of our capabilities were on full display. As Marc noted, we originated over $305 billion of assets, up nearly 40% for the prior year, and incredibly, that was really the first year of our five-year plan that we presented in Investor Day just 18 months ago. Across that activity, $282 billion was debt, comprised of approximately 80% IG, with an average rating of single A, and 20% sub-investment grade rating, with a rating of single B. Within core credit, volumes were led by large cap direct lending, commercial mortgage lending, residential mortgage lending, and fund finance, a large growth area. Across our platforms, where volumes increased over 30%, the activity was led by our three Atlas, MidCap, and Redding Ridge.
Jim Zelter: We believe we're well positioned for this moment. Turning to origination, in 2025, the strength and breadth of our capabilities were on full display. As Marc noted, we originated over $305 billion of assets, up nearly 40% for the prior year, and incredibly, that was really the first year of our five-year plan that we presented in Investor Day just 18 months ago. Across that activity, $282 billion was debt, comprised of approximately 80% IG, with an average rating of single A, and 20% sub-investment grade rating, with a rating of single B. Within core credit, volumes were led by large cap direct lending, commercial mortgage lending, residential mortgage lending, and fund finance, a large growth area. Across our platforms, where volumes increased over 30%, the activity was led by our three Atlas, MidCap, and Redding Ridge.
Speaker #1: As Mark noted, we originated over $305 billion of these assets, up nearly 40% from the prior year. In summary, we see parallels—really, that was the first year of our five-year plan that we presented at Investor Day just 18 months ago.
Speaker #1: Across that activity, 282 billion was debt comprised of approximately 80% IG with an average rating of single A, and 20% sub-investment-grade rating with a rating Within core credit, buy-ins were led by large-cap direct lending, of single B.
Speaker #1: Residential mortgage lending, and fund commercial mortgage lending, finance—a large growth increased over area. Across our platforms, where volumes—three Atlas mid-cap and Redding—30%, the activity was led by our Rich.
Speaker #1: The scaling, broadening of our offering, expanding our capabilities, and redefining our opportunity that we've seen has been facilitated by an example. We identified sponsors as mid-cap and large-cap direct lending.
Jim Zelter: The scaling that we've seen has been facilitated by a broadening of our offering, expanding our capabilities, and right, redefining our opportunity set. Our success within the sponsor ecosystem is a clear example. We identified sponsors as an opportunity several years ago, and in 2022, it generated $20 billion in volume across mid-cap and large-cap direct lending. Through the broadening and deepening of our sponsor toolbox, which now allows us to offer comprehensive full service solutions, origination volumes in this area totaled nearly $80 billion in 2025, quadrupling in four years. Numerous noted transactions could be put forth, but I'll mention three quickly. In December, we led a $3.5 billion capital solution to support Valor's $5.4 billion acquisition and lease of data center infrastructure to a subsidiary of xAI.
Jim Zelter: The scaling that we've seen has been facilitated by a broadening of our offering, expanding our capabilities, and right, redefining our opportunity set. Our success within the sponsor ecosystem is a clear example. We identified sponsors as an opportunity several years ago, and in 2022, it generated $20 billion in volume across mid-cap and large-cap direct lending. Through the broadening and deepening of our sponsor toolbox, which now allows us to offer comprehensive full service solutions, origination volumes in this area totaled nearly $80 billion in 2025, quadrupling in four years. Numerous noted transactions could be put forth, but I'll mention three quickly. In December, we led a $3.5 billion capital solution to support Valor's $5.4 billion acquisition and lease of data center infrastructure to a subsidiary of xAI.
Speaker #1: Through the broadening and deepening of our sponsor toolbox, which now allows us to offer comprehensive solutions, and in 2022 it generated full-service solutions, origination volumes in this area totaled in 2025, quadrupling to nearly $80 billion in four years.
Speaker #1: Numerous noted transactions could be put forth, but I'll mention three quickly. In December, we led a $3.5 billion capital, $5.4 billion of XAI, this franchise transaction for the firm in the AI space solution to support ballers underscores our role as a leading provider of flexible acquisition and lease of data asset-based capital for the next center infrastructure to a subsidiary assets.
Jim Zelter: This franchise transaction for the firm in the AI space underscores our role as a leading provider of flexible, asset-based capital for the next generation assets. In January, we led a $3 billion convertible preferred financing for QXO, a building products distributor led by Brad Jacobs, a proven allocator with a phenomenal track record, and we were tapped to bring together a blue chip investor group to provide flexible capital to support the company's long-term strategy of growth. And lastly, our hybrid and credit franchise delivered a $1.2 billion in strategic financing for Russell Investments, providing long-term capital and enhanced balance sheet flexibility to support their continued expansion.
Jim Zelter: This franchise transaction for the firm in the AI space underscores our role as a leading provider of flexible, asset-based capital for the next generation assets. In January, we led a $3 billion convertible preferred financing for QXO, a building products distributor led by Brad Jacobs, a proven allocator with a phenomenal track record, and we were tapped to bring together a blue chip investor group to provide flexible capital to support the company's long-term strategy of growth. And lastly, our hybrid and credit franchise delivered a $1.2 billion in strategic financing for Russell Investments, providing long-term capital and enhanced balance sheet flexibility to support their continued expansion.
Speaker #1: In January, we led a $3 billion convertible preferred financing for QXO, a building products distributor led by Brad Jacobs, a proven allocator with a phenomenal track record.
Speaker #1: And we were tapped to bring together a blue-chip, flexible capital to support the company's long-term strategy. Lastly, our hybrid and credit franchise delivered a $1.2 billion strategic, providing long-term capital and enhanced balance sheet flexibility to support the continued financing for Russell Investments' expansion.
Speaker #1: Double-clicking and providing context on the origination spreads for the year, our investment-grade origination generated excess spread of 290 basis points over Treasuries, or approximately 220 basis points over rated corporates.
Jim Zelter: Double-clicking on and providing context on the origination spreads for the year, our investment grade origination, we generated excess spread of 290 basis points over Treasuries, or approximately 220 basis over rated corporates in the index. On our sub-IG origination, we generated excess spread of 490 basis points over Treasuries, or approximately 200 basis points over comparably rated, high yield rated corporates. Again, and importantly, we observed stable spreads quarter-over-quarter over the course of the year, noteworthy in a market environment where public spreads remain near multi-decade tights. Generating excess spread at broad scale while maintaining quality is a clear testament to the breadth and depth of our solutions offered by our origination systems. Simply put, 2025 was an outstanding year where we focused on scale, but also maintaining quality.
Jim Zelter: Double-clicking on and providing context on the origination spreads for the year, our investment grade origination, we generated excess spread of 290 basis points over Treasuries, or approximately 220 basis over rated corporates in the index. On our sub-IG origination, we generated excess spread of 490 basis points over Treasuries, or approximately 200 basis points over comparably rated, high yield rated corporates. Again, and importantly, we observed stable spreads quarter-over-quarter over the course of the year, noteworthy in a market environment where public spreads remain near multi-decade tights. Generating excess spread at broad scale while maintaining quality is a clear testament to the breadth and depth of our solutions offered by our origination systems. Simply put, 2025 was an outstanding year where we focused on scale, but also maintaining quality.
Speaker #1: In the index, on our sub-IG origination, we generated excess spread over Treasuries, or approximately 200 basis points over comparably rated high-yield rated investor group to provide corporates.
Speaker #1: Again, and importantly, 490 basis points over quarter over quarter over the course of the year—noteworthy in a market environment where public spreads remain near multi-decade tights.
Speaker #1: Generating excess spread at broad scale while maintaining quality is a clear testament to the breadth and depth of our solutions offered by our origination systems.
Speaker #1: Simply put, 2025 was an outstanding year where we focused and observed stable spreads while maintaining quality. Turning to capital formation, our fourth quarter results punctuated a record year across the firm.
Jim Zelter: Turning to capital formation, our fourth quarter results punctuated a record year across the firm. We generated $42 billion of inflows in the quarter and $228 billion for the full year. Asset management delivered $100 billion of organic inflows and $45 billion of inorganic inflows, while Athene added $83 billion. Across the firm, we generated record organic inflows during the year, totaling $182 billion, approximately 2/3, which were attributable to third parties, a focused growth of the last several years. Similar to origination, the definition of success within capital formation has expanded with the addition of new capabilities and new sources of demand.
Jim Zelter: Turning to capital formation, our fourth quarter results punctuated a record year across the firm. We generated $42 billion of inflows in the quarter and $228 billion for the full year. Asset management delivered $100 billion of organic inflows and $45 billion of inorganic inflows, while Athene added $83 billion. Across the firm, we generated record organic inflows during the year, totaling $182 billion, approximately 2/3, which were attributable to third parties, a focused growth of the last several years. Similar to origination, the definition of success within capital formation has expanded with the addition of new capabilities and new sources of demand.
Speaker #1: We generated $42 billion of inflows in the quarter and $228 billion for the full year. Asset Management delivered $100 billion of organic inflows and $45 billion of inorganic inflows, while Athene added $83 billion.
Speaker #1: Across the firm, we generated a record organic inflows during the year totaling $182 which were attributable to third billion, approximately two-thirds last several years.
Speaker #1: Similar to origination, the definition of success within capital parties—a focused growth of the formation—has expanded with the addition of new capabilities and new sources of demand.
Speaker #1: The scaling that we have seen in on scale, but also driven by moving from a sole source of demand, as Mark mentioned, the alts to six pockets of demand, with new sources including fixed income capital formation has been third-party insurance, traditional asset managers, and 401(k).
Jim Zelter: The scaling that we have seen in capital formation has been driven by moving from a sole source of demand, as Mark mentioned, the alts buckets with institutions, to six pockets of demand, with new sources including fixed income replacement, wealth, third-party insurance, traditional asset managers, and 401(k). Of the $100 billion of organic inflows into asset management during the year, approximately 75% went to credit-oriented strategies and 25% to equity-oriented strategies, supported by strong demand across multiple client types and geographies. Our institutional business had a phenomenal year, posting the strongest year of fundraising on record outside of a flagship year. Within institutional, third-party insurance was a particular highlight, with $15 billion of new mandates...
Jim Zelter: The scaling that we have seen in capital formation has been driven by moving from a sole source of demand, as Mark mentioned, the alts buckets with institutions, to six pockets of demand, with new sources including fixed income replacement, wealth, third-party insurance, traditional asset managers, and 401(k). Of the $100 billion of organic inflows into asset management during the year, approximately 75% went to credit-oriented strategies and 25% to equity-oriented strategies, supported by strong demand across multiple client types and geographies. Our institutional business had a phenomenal year, posting the strongest year of fundraising on record outside of a flagship year. Within institutional, third-party insurance was a particular highlight, with $15 billion of new mandates...
Speaker #1: Of the $100 billion of organic replacement, wealth, inflows into asset management during the buckets, with institutions, 75% went to credit-oriented strategies, and 25% to equity-oriented across multiple client types and geographies.
Speaker #1: Our institutional business had a phenomenal year, posting the strongest year of fundraising on record outside of a flagship year. Within institutional, third-party insurance was a particular highlight, with $15 billion of new mandates, and when combined with $16 billion of growth in our third-party sidecars during the year, this brings our third-party insurance platform to more than $135 billion, across 30 strategic and SMA mandates.
Jim Zelter: When combined with $16 billion of growth in our third-party sidecars during the year, this brings our third-party insurance platform to more than $135 billion across 30 strategic and SMA mandates. We continue to see growing engagement from insurance, who value our origination capabilities and the complete alignment that come with our balance sheet. This is translating into robust and expanding pipeline around the globe, but with particular focus in Europe and Asia. Our global wealth business had an excellent year, with fundraising totaling $18 billion, up nearly 50% year over year. As Mark mentioned, to illustrate the increased diversification of the activities, 9 strategies raised more than $500 million, and 3 raised more than $1 billion.
Jim Zelter: When combined with $16 billion of growth in our third-party sidecars during the year, this brings our third-party insurance platform to more than $135 billion across 30 strategic and SMA mandates. We continue to see growing engagement from insurance, who value our origination capabilities and the complete alignment that come with our balance sheet. This is translating into robust and expanding pipeline around the globe, but with particular focus in Europe and Asia. Our global wealth business had an excellent year, with fundraising totaling $18 billion, up nearly 50% year over year. As Mark mentioned, to illustrate the increased diversification of the activities, 9 strategies raised more than $500 million, and 3 raised more than $1 billion.
Speaker #1: We continue to see growing engagement from insurance, who value our complete alignment that comes with our balance sheet, robust and expanding origination capabilities.
Speaker #1: pipeline around the globe, but with particular focus in Europe and This has translated into wealth business had an excellent year with fundraising totaling $18 billion, up nearly 50% year over illustrate the increased diversification of the activities, nine strategies raised more than $500 Asia.
Speaker #1: Year, million, and three raised more than $1 billion. As Marc mentioned, to quarter record quarter with another $400 million in raise, and we believe our global sustained investor interest reflects the confidence in our origination advantage in the asset-based finance, as investors look to diversify away from corporate credit.
Jim Zelter: ABC followed last year's quarter, record quarter, with another $400 million in raise, and we believe sustained investor interest reflects the confidence in our origination advantage in the asset-based finance as investors look to diversify away from corporate credit. Our global wealth offering is resonating, and partners are increasingly engaging Apollo as a full-service solution provider rather than just for individual strategies. At Athene, full year inflows were a record $83 billion, driven by robust retail inflows of $34 billion, record funding agreement issuance of $35 billion, and strong reinsurance of $12 billion, and a modest contribution from the pension group annuities, as well as a variety of new channels. The global retiree wave continues to build, and Athene remains uniquely positioned to meet the growing demand for long-term security. We did not get here by accident.
Jim Zelter: ABC followed last year's quarter, record quarter, with another $400 million in raise, and we believe sustained investor interest reflects the confidence in our origination advantage in the asset-based finance as investors look to diversify away from corporate credit. Our global wealth offering is resonating, and partners are increasingly engaging Apollo as a full-service solution provider rather than just for individual strategies. At Athene, full year inflows were a record $83 billion, driven by robust retail inflows of $34 billion, record funding agreement issuance of $35 billion, and strong reinsurance of $12 billion, and a modest contribution from the pension group annuities, as well as a variety of new channels. The global retiree wave continues to build, and Athene remains uniquely positioned to meet the growing demand for long-term security. We did not get here by accident.
Speaker #1: Our global wealth offering is resonating, and partners are increasingly engaging Apollo as a full-service solution provider, rather than just for individual strategies. At Athene, full-year inflows were a record $83 billion, record funding agreement issuance of $35 billion, strong reinsurance of $12 billion, and annuities, as well as a variety of modest contributions from the pension group and new channels.
Speaker #1: The global retiree wave continues to build, and Athene mains uniquely positioned to meet the growing demand for long-term security. We did not get here by accident.
Speaker #1: Years the industry leader with multiple competitive advantages, retirees at increasing ABC followed last year's scale. Overall, the road ahead for capital formation is full of opportunity, is global, and the momentum we're seeing gives us confidence we'll see asset management and meaningful, more organic inflows across Athene in every channel into Martin.
Jim Zelter: Years of hard work have established us as the industry leader, with multiple competitive advantages, allowing us to serve retirees at an increasing scale. Overall, the road ahead for capital formation is full of opportunity, is global, and the momentum we're seeing gives us confidence we'll see meaningful, more organic inflows across asset management and Athene in every channel in 2026. With that, I'll turn it over to Martin.
Jim Zelter: Years of hard work have established us as the industry leader, with multiple competitive advantages, allowing us to serve retirees at an increasing scale. Overall, the road ahead for capital formation is full of opportunity, is global, and the momentum we're seeing gives us confidence we'll see meaningful, more organic inflows across asset management and Athene in every channel in 2026. With that, I'll turn it over to Martin.
Speaker #2: Thanks, Jim. of hard work have established us as earnings flywheel benefit of origination. Driving inflows to create And good morning, everyone. management and performance capital solutions fees, and spread assets to create spread-related
Martin Kelly: Thanks, Jim, and good morning, everyone. So our fourth quarter results cap a very strong year of performance and demonstrate sustained execution against our long-term strategy. Particularly evident this year is the earnings flywheel benefit of origination, driving inflows to create management and performance fees, syndication volume to create capital solutions fees, and spread assets to create spread-related earnings. In asset management, we generated increases in AUM and fee gen AUM of 25% year-over-year to $938 billion and $709 billion, respectively. This helps drive record fee-related earnings of $2.5 billion in 2025, up 23% year-over-year. I would note that this level of FRE growth was among the best in sector for 2025.
Martin Kelly: Thanks, Jim, and good morning, everyone. So our fourth quarter results cap a very strong year of performance and demonstrate sustained execution against our long-term strategy. Particularly evident this year is the earnings flywheel benefit of origination, driving inflows to create management and performance fees, syndication volume to create capital solutions fees, and spread assets to create spread-related earnings. In asset management, we generated increases in AUM and fee gen AUM of 25% year-over-year to $938 billion and $709 billion, respectively. This helps drive record fee-related earnings of $2.5 billion in 2025, up 23% year-over-year. I would note that this level of FRE growth was among the best in sector for 2025.
Speaker #2: So our fourth quarter results cap a very strong year of performance and demonstrates sustained execution against our long-term strategy.
Speaker #2: In asset management, we generated increases in AUM and fee generation, allowing us to serve AUM up 25% year over year, to $938 billion, and fees and syndication volume to create, respectively.
Speaker #2: This helps drive record billions in 2025, up 23% year over year. I would note that this level of FRE growth was among the best in the sector for 2025.
Speaker #2: In the year, management fees with underlying strength—we delivered 22% growth in fee-related earnings of $2.5 billion, driven by increasing contribution from third-party asset management deployment and robust growth at Athene.
Martin Kelly: In the year, we delivered 22% growth in management fees, with underlying strength driven by increasing contribution from third-party asset management inflows into both credit and equity strategies, as well as strong capital deployment and robust growth at Athene. Capital solutions fees of $226 million reached a new high in the fourth quarter and drove the full year result to exceed $800 million. The underlying activity driving capital solutions fees is increasingly diversified, with more than 125 transactions in the fourth quarter and approximately 430 transactions during the full year, with full year transaction activity approximately 60% credit driven. This is a strong validation of how our proprietary origination capabilities are continuing to broaden and deepen, resulting in greater fee generation opportunities for ACS.
Martin Kelly: In the year, we delivered 22% growth in management fees, with underlying strength driven by increasing contribution from third-party asset management inflows into both credit and equity strategies, as well as strong capital deployment and robust growth at Athene. Capital solutions fees of $226 million reached a new high in the fourth quarter and drove the full year result to exceed $800 million. The underlying activity driving capital solutions fees is increasingly diversified, with more than 125 transactions in the fourth quarter and approximately 430 transactions during the full year, with full year transaction activity approximately 60% credit driven. This is a strong validation of how our proprietary origination capabilities are continuing to broaden and deepen, resulting in greater fee generation opportunities for ACS.
Speaker #2: Capital solutions fees of $226 million reached a new high in the fourth quarter, and drove the full-year result to exceed $800 million, with inflows into both credit and equity.
Speaker #2: The underlying activity driving capital solutions fees is increasingly diversified, with more than $125 transactions in the fourth quarter, and Particularly evident this year is the transaction activity approximately the full year.
Speaker #2: 60% credit-driven. is a strong validation of strategies, as well as strong capital With full-year are continuing to broaden and approximately $430 transactions during deepen resulting in greater fee generation ACS.
Speaker #2: Fee-related performance fees grew by our proprietary 28% year over year, reflecting continued scaling and diversified wealth products, and perpetual capital vehicles led by ADS and with additional contributions from Redding Ridge, MidCap, and other DIS platforms.
Martin Kelly: Fee-related performance fees grew by 28% year-over-year, reflecting continued scaling of diversified wealth products and perpetual capital vehicles led by ADS and with additional contributions from Redding Ridge, MidCap, and other platforms. In the fourth quarter, growth in fee-related expenses was driven by several factors, including the full quarter impact of Bridge, continued investment in our team, with key senior hires, including our new heads of strategy and Asia, as well as infrastructure investment, particularly on next-generation technology platforms, data and AI initiatives, and further normal course fourth quarter seasonality and some non-recurring non-comp costs. For the full year, our FRE margin was approximately 57%, stable year-over-year and consistent with our previously communicated target.
Martin Kelly: Fee-related performance fees grew by 28% year-over-year, reflecting continued scaling of diversified wealth products and perpetual capital vehicles led by ADS and with additional contributions from Redding Ridge, MidCap, and other platforms. In the fourth quarter, growth in fee-related expenses was driven by several factors, including the full quarter impact of Bridge, continued investment in our team, with key senior hires, including our new heads of strategy and Asia, as well as infrastructure investment, particularly on next-generation technology platforms, data and AI initiatives, and further normal course fourth quarter seasonality and some non-recurring non-comp costs. For the full year, our FRE margin was approximately 57%, stable year-over-year and consistent with our previously communicated target.
Speaker #2: In the fourth quarter, growth in fee-related expenses was driven by several factors, including the full quarter impact of our team, with key senior Bridge, continued investment in strategy and Asia, as well as infrastructure investment, particularly on next-generation technology platforms, data, and AI initiatives. There were also hires, including our new heads of, and further normal course fourth quarter seasonality, and some non-recurring non-comp comp costs.
Speaker #2: For the full year, our FRE margin was approximately 57%, stable year over year and consistent with our previously communicated target. In the first four months post-acquisition, Bridge contributed approximately $105 billion of fee-related revenue and $60 million of fee-related expenses to our 2025 results.
Martin Kelly: In the first four months post-acquisition, Bridge contributed approximately $105 billion of fee-related revenue and $60 million of fee-related expenses to our 2025 results. Quarterizing that contribution is a reasonable way to estimate the run rate contribution over the near term. Excluding the impact of Bridge, our full year FRE margin grew by about 50 basis points, inclusive of the cost of significant investments in our platform. Moving to retirement services, Athene's net invested assets grew by 18% year-over-year to $292 billion. We generated $865 million of SRE for the quarter, with an additional $28 million at our long-term 11% return expectation on the alternatives portfolio. The alts return for the quarter came in slightly higher than our pre-estimate, due to favorable late quarter pricing adjustments.
Martin Kelly: In the first four months post-acquisition, Bridge contributed approximately $105 billion of fee-related revenue and $60 million of fee-related expenses to our 2025 results. Quarterizing that contribution is a reasonable way to estimate the run rate contribution over the near term. Excluding the impact of Bridge, our full year FRE margin grew by about 50 basis points, inclusive of the cost of significant investments in our platform. Moving to retirement services, Athene's net invested assets grew by 18% year-over-year to $292 billion. We generated $865 million of SRE for the quarter, with an additional $28 million at our long-term 11% return expectation on the alternatives portfolio. The alts return for the quarter came in slightly higher than our pre-estimate, due to favorable late quarter pricing adjustments.
Speaker #2: And quarterizing that contribution is a reasonable origination capabilities way to estimate the run-rate contribution over the near term. For Bridge, our full-year FRE margin grew by about 50 basis points, inclusive of the cost of significant investments in the platform.
Speaker #2: Moving to retirement services, Athene's net invested assets year to date are $292 billion. We generated an additional $28 million on our $865 million of portfolio. The long-term 11% return, alt's return for the quarter, came in slightly higher than our pre-estimate due to favorable late-quarter pricing expectation on the alternative's SRE for the quarter, with adjustments.
Speaker #2: The blended net spread ex-notables was opportunities for 120 basis points in the fourth quarter, versus 121 basis points in the prior prepayments and mostly offset by new business growth and higher return on quarter.
Martin Kelly: The blended net spread ex-notables was 120 basis points in Q4, versus 121 basis points in the prior quarter, primarily reflecting asset prepayments, and mostly offset by new business growth and higher return on the alts portfolio. When considering our 11% return expectation on the alternatives portfolio, the net spread in Q4 would have been 4 basis points higher. Both Q4 and the full year SRE landed slightly above our previously communicated expectations. We continue to originate new business that meets our long-term ROE targets, and that is in line with historical averages, supported by our origination capabilities and highly efficient cost structure.
Martin Kelly: The blended net spread ex-notables was 120 basis points in Q4, versus 121 basis points in the prior quarter, primarily reflecting asset prepayments, and mostly offset by new business growth and higher return on the alts portfolio. When considering our 11% return expectation on the alternatives portfolio, the net spread in Q4 would have been 4 basis points higher. Both Q4 and the full year SRE landed slightly above our previously communicated expectations. We continue to originate new business that meets our long-term ROE targets, and that is in line with historical averages, supported by our origination capabilities and highly efficient cost structure.
Speaker #2: The alt's portfolio—when considering our 11% return expectation on the alternative's primarily reflecting asset portfolio—the net spread in the fourth quarter would have been 4 basis points higher.
Speaker #2: Both the fourth quarter and the full-year SRE landed slightly above our previously communicated expectations. We continue to originate new business that meets our long-term ROE targets and that is in line with historical averages supported by our structure.
Speaker #2: The recently announced highly efficient cost transaction with Apollo Commercial Real Estate origination capabilities and Finance, ARI, is one such example where Athene will acquire, subject to ARI stockholder approval, $9 billion of commercial mortgage assets with attractive yields and conservative assets offer approximately 50 to 75 basis points of additional spread versus new issue CMLs LTVs.
Martin Kelly: The recently announced transaction with Apollo Commercial Real Estate Finance, ARI, is one such example where Athene will acquire, subject to ARI stockholder approval, $9 billion of commercial mortgage assets with attractive yields and conservative LTVs. These assets offer approximately 50 to 75 basis points of additional spread versus new issue CMLs today. Importantly, Athene already knows the portfolio well, given nearly 50% ownership overlap with the underlying loans. Turning to principal investing, realized performance fees of $588 million in Q4 were driven by carry from several strategies. Fund Ten appreciated above its escrow ratio for the first time, allowing us to receive a catch-up of carry previously accrued.
Martin Kelly: The recently announced transaction with Apollo Commercial Real Estate Finance, ARI, is one such example where Athene will acquire, subject to ARI stockholder approval, $9 billion of commercial mortgage assets with attractive yields and conservative LTVs. These assets offer approximately 50 to 75 basis points of additional spread versus new issue CMLs today. Importantly, Athene already knows the portfolio well, given nearly 50% ownership overlap with the underlying loans. Turning to principal investing, realized performance fees of $588 million in Q4 were driven by carry from several strategies. Fund Ten appreciated above its escrow ratio for the first time, allowing us to receive a catch-up of carry previously accrued.
Speaker #2: Athene already knows the portfolio today, and importantly, these well-given, nearly 50% ownership overlap with the underlying performance fees of $588 million in the fourth quarter were driven by carry from several strategies. Performance fees grew by 18% year over year.
Speaker #2: Fund 10 appreciated above its escrow ratio for the first catch-up of carry previously accrued. Accord Plus completed a full portfolio monetization following the one-year period, and our credit hedge fund credit strategies recognized its annual crystallization upon generating very strong performance.
Martin Kelly: Accord Plus completed a full portfolio monetization following the one-year anniversary after its investment period, and our credit hedge fund, Credit Strategies, recognized its annual crystallization upon generating very strong performance. Our operating tax rate in Q4 benefited from large deductions related to stock-based employee compensation, due to a higher stock price on delivery. We continue to expect our multi-year tax rate to be approximately 20%, subject to quarterly variability. On capital allocation, we've returned approximately $1.5 billion to shareholders via dividends and repurchases during the year, while also allocating capital to strategically invest in future growth. With respect to dividends, we intend to increase the annual per share amount by 10% from $2.04 to $2.25, commencing with Q1 2026.
Martin Kelly: Accord Plus completed a full portfolio monetization following the one-year anniversary after its investment period, and our credit hedge fund, Credit Strategies, recognized its annual crystallization upon generating very strong performance. Our operating tax rate in Q4 benefited from large deductions related to stock-based employee compensation, due to a higher stock price on delivery. We continue to expect our multi-year tax rate to be approximately 20%, subject to quarterly variability. On capital allocation, we've returned approximately $1.5 billion to shareholders via dividends and repurchases during the year, while also allocating capital to strategically invest in future growth. With respect to dividends, we intend to increase the annual per share amount by 10% from $2.04 to $2.25, commencing with Q1 2026.
Speaker #2: Our operating tax rate in the fourth anniversary after its investment quarter benefited from large deductions related to employee stock compensation due to a higher stock price on delivery, allowing us to receive a timing benefit.
Speaker #2: We continue to expect our multi-year tax rate to be approximately variability. On capital allocation, we've returned approximately 1.5 billion to shareholders via dividends and repurchases during the capital to strategically invest in future growth.
Speaker #2: With respect to dividends, we intend to increase the annual per-share amount by 10%, from $2.04 to $2.25, commencing with the first quarter of 2026, while also allocating accordingly for the year.
Speaker #2: This continues our commitment to returning capital annually, or roughly half the growth rate, share repurchases to immunize approximately 10% equity-based compensation. As we enter 2026, we do so with significant embedded momentum across the platform and a clear line of sight to continue earnings growth.
Martin Kelly: This continues our commitment to returning capital through dividends, which we intend to grow approximately 10% annually, or roughly half the growth rate of FRE, as well as share repurchases to immunize equity-based compensation. As we enter 2026, we do so with significant embedded momentum across the platform and a clear line of sight to continued earnings growth. As we previously communicated, we expect FRE to grow by 20%+, with 75% of the revenue contribution coming from well-established core businesses such as asset-backed finance, direct lending, multi-credit, and hybrid, as well as the annualization of growth already in the ground. The remaining 25% of top line growth we expect to come from newer initiatives such as Apollo Sports Capital and Athora's pending acquisition of PEC.
Martin Kelly: This continues our commitment to returning capital through dividends, which we intend to grow approximately 10% annually, or roughly half the growth rate of FRE, as well as share repurchases to immunize equity-based compensation. As we enter 2026, we do so with significant embedded momentum across the platform and a clear line of sight to continued earnings growth. As we previously communicated, we expect FRE to grow by 20%+, with 75% of the revenue contribution coming from well-established core businesses such as asset-backed finance, direct lending, multi-credit, and hybrid, as well as the annualization of growth already in the ground. The remaining 25% of top line growth we expect to come from newer initiatives such as Apollo Sports Capital and Athora's pending acquisition of PEC.
Speaker #2: As previously communicated, we expect FRE to grow by 20% plus, with 75% of the revenue contribution coming from well-established core businesses such as asset-backed finance, direct lending, multi-credit, and hybrid, as well as the annualization of growth already in the ground. Through dividends—which we intend to grow—as well as FRE, we remain focused on delivering consistent shareholder value.
Speaker #2: The remaining 25% of top-line growth we expect to come from newer initiatives, such as Apollo Sports Capital and Authora's pending acquisition of Peck. We expect low double-digit growth in non-comp costs, inclusive of a full year of Bridge.
Martin Kelly: Specific to FRE expenses, we expect low double-digit growth in non-comp costs, inclusive of a full year of Bridge. Compensation cost growth will reflect investments in the build-out to support the six markets and further senior hires in specific areas, as well as a full year of comp costs associated with Bridge, in sum, growing at a high single-digit growth rate. For SRE, we anticipate 10% growth and assuming an 11% alts return, or approximately $3.85 billion in 2026. This outlook is consistent with our detailed retirement services business update from last November. Since the merger with Athene, which closed at the beginning of 2022, we have generated compound annual growth in adjusted net income of 17%, more than double that of S&P 500 companies over the same period.
Martin Kelly: Specific to FRE expenses, we expect low double-digit growth in non-comp costs, inclusive of a full year of Bridge. Compensation cost growth will reflect investments in the build-out to support the six markets and further senior hires in specific areas, as well as a full year of comp costs associated with Bridge, in sum, growing at a high single-digit growth rate. For SRE, we anticipate 10% growth and assuming an 11% alts return, or approximately $3.85 billion in 2026. This outlook is consistent with our detailed retirement services business update from last November. Since the merger with Athene, which closed at the beginning of 2022, we have generated compound annual growth in adjusted net income of 17%, more than double that of S&P 500 companies over the same period.
Speaker #2: Compensation specific to FRE expenses, we cost growth will reflect investments in the build-out to support the six specific areas as well as a full year of comp costs associated with Bridge.
Speaker #2: In sum, growing at a high teens growth rate. For SRE, we anticipate 10% growth and assuming an 11% alt's return, or approximately 2026. This outlook is consistent 3.85 billion in with our detailed retirement services business update from last November.
Speaker #2: beginning of 2022, we the merger with Athene, which closed at the Since have generated compound annual growth in adjusted net income of of S&P 500 companies over the same 17%.
Speaker #2: period. As we enter 2026, we are extremely well-positioned to continue delivering durable performance and compounding value for our shareholders. And with that, I'll hand the call back to the operator.
Martin Kelly: As we enter 2026, we are extremely well positioned to continue delivering durable performance and compounding value for our shareholders. With that, I'll hand the call back to the operator. We appreciate your time, and we welcome your questions.
Martin Kelly: As we enter 2026, we are extremely well positioned to continue delivering durable performance and compounding value for our shareholders. With that, I'll hand the call back to the operator. We appreciate your time, and we welcome your questions.
Speaker #2: We appreciate your time, and we welcome your questions.
Speaker #1: Thank you. Press star one on your telephone keypad if you would like to ask a question. This will indicate that your line is in the question queue.
Operator: Thank you. The floor is now open for questions. If you would like to ask a question, please press star one on your telephone keypad at this time. A confirmation tone will indicate that your line is in the question queue. You may press star two to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. As a reminder, we are asking you to limit yourself to one question and re-queue for any additionals. Our first question is coming from Mike Brown of UBS. Please go ahead.
Operator: Thank you. The floor is now open for questions. If you would like to ask a question, please press star one on your telephone keypad at this time. A confirmation tone will indicate that your line is in the question queue. You may press star two to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. As a reminder, we are asking you to limit yourself to one question and re-queue for any additionals. Our first question is coming from Mike Brown of UBS. Please go ahead.
Speaker #1: You may press star, then two to remove your question from the queue. A confirmation tone will sound. For participants using speaker equipment, it may be necessary to pick up the handset. A reminder: we are asking you to limit yourself to one question and requeue for any additionals.
Speaker #1: Our first question is coming from Mike Brown of UBS. Go ahead, please.
Mike Brown: Great. Good morning, everyone.
Mike Brown [Managing Director: Great. Good morning, everyone.
Speaker #3: everyone.
Speaker #4: Good morning, Great.
Speaker #4: Good morning, Great.
Martin Kelly: Morning.
Martin Kelly: Morning.
Marc Rowan: Morning, Mike.
Marc Rowan: Morning, Mike.
Mike Brown: So I wanted to start on, Martin, you commented on the ARI transaction. I actually wanted to start there. Can you just unpack a little bit of the implications to SRE here? Just looking at the loans, they have a nice high yield of about 7.7%. So just thinking through that, how can that help with the spread? Can that drive spread higher? Or is it something that kind of just helps drive growth for Athene? And then what are some of the offsets that we need to consider when we think about how that could play through for SRE?
Mike Brown [Managing Director: So I wanted to start on, Martin, you commented on the ARI transaction. I actually wanted to start there. Can you just unpack a little bit of the implications to SRE here? Just looking at the loans, they have a nice high yield of about 7.7%. So just thinking through that, how can that help with the spread? Can that drive spread higher? Or is it something that kind of just helps drive growth for Athene? And then what are some of the offsets that we need to consider when we think about how that could play through for SRE?
Speaker #3: On Martin, you commented on the ARI transaction. I actually wanted to start there. Can you just unpack a little bit of the—Good morning—the implications to SRE here?
Speaker #3: Just looking at the loans, they have a nice high yield of about 7.7%. So just thinking through that, spread? Can that drive spread higher?
Speaker #3: Or is it something that kind of just helps drive growth for Athene? And
Speaker #3: Or is it something that kind of just helps drive growth for Athene? And for—
Speaker #3: SRE? So it's marked to start, and then
Marc Rowan: So it's Marc to start, and then we'll get to the specifics of your question. If you think about what's going on, institutions are looking really hard for durable spread, safe yield, if you will. Individuals or at least retail investors in stocks trade these vehicles at a discount. The notion of us continuing to invest into vehicles that don't create value to shareholders didn't make a lot of sense to us. And so for us, the best outcome was to transfer the portfolio at fair market value from the public company, which is trading at a discount to NAV, to primarily Athene, but will ultimately be other third-party buyers for loans that they already know that offer them spreads in excess of what's available in the current market. This is just, for us, just common sense.
Marc Rowan: So it's Marc to start, and then we'll get to the specifics of your question. If you think about what's going on, institutions are looking really hard for durable spread, safe yield, if you will. Individuals or at least retail investors in stocks trade these vehicles at a discount. The notion of us continuing to invest into vehicles that don't create value to shareholders didn't make a lot of sense to us. And so for us, the best outcome was to transfer the portfolio at fair market value from the public company, which is trading at a discount to NAV, to primarily Athene, but will ultimately be other third-party buyers for loans that they already know that offer them spreads in excess of what's available in the current market. This is just, for us, just common sense.
Speaker #4: If you think about what's going on, we'll get to the specifics of your hard-for-durable spread. Safe yield, if you will. Individuals, or at least institutions, are looking—really, retail investors in stocks trade these vehicles at a discount.
Speaker #4: The notion of us continuing to invest into vehicles that don't create value to shareholders didn't make a lot of sense to us. And so for us, the best
Speaker #4: to transfer the portfolio at fair market value from the public company, which is trading at a
Speaker #4: discount to NAV, to primarily Athene, third-party buyers for loans that they how can that help with the excess of what's available in the current market.
Speaker #4: This is just for us, just common already know that offer them spreads in
Speaker #4: Sense. Again, just to focus, and we see then what are some of the offsets that we need to consider when this is across some of these vehicles, particularly the business.
Marc Rowan: Again, just to focus, and we see this across our business. The structure of some of these vehicles, particularly the closed-end vehicles, just historically have traded at discounts at a point in time when the assets themselves are very scarce. As we transfer those assets to Athene, it will not be a full net benefit of, for instance, $9 billion with excess spread because we maintain a diversified portfolio. It will displace other forms of SRE lending. And Martin's comments and our confidence in the 10% SRE for the year embeds the notion of this portfolio as opposed to it being additive. I don't know if either Jim or Martin you want to-
Marc Rowan: Again, just to focus, and we see this across our business. The structure of some of these vehicles, particularly the closed-end vehicles, just historically have traded at discounts at a point in time when the assets themselves are very scarce. As we transfer those assets to Athene, it will not be a full net benefit of, for instance, $9 billion with excess spread because we maintain a diversified portfolio. It will displace other forms of SRE lending. And Martin's comments and our confidence in the 10% SRE for the year embeds the notion of this portfolio as opposed to it being additive. I don't know if either Jim or Martin you want to-
Speaker #4: The structure of closed-end vehicles, just historically have traded at discounts. At a point in time when the assets themselves are very scarce. those assets to Athene, it will As we transfer not be a full net benefit of, for instance, $9 billion with excess spread maintain a diversified portfolio.
Speaker #4: It, of SRE lending, will displace other forms. And Martin's comments, and our confidence in the 10% SRE for this portfolio as opposed to it being additive, support the notion.
Jim Zelter: Yeah, I think, listen, Marc has captured the philosophy of getting the right cost of capital and the right investor capital on certain assets. And again, this is just a basic philosophy about how we approach all of these vehicles. And so the idea of having a pool of assets that are institutionally in high demand in a vehicle trading at a historic discount does not make philosophical sense for us. So it goes into a principal mindset and alignment at the core of what we do. And I'll let Martin talk about the philosophy and/or the specifics, excuse me.
Jim Zelter: Yeah, I think, listen, Marc has captured the philosophy of getting the right cost of capital and the right investor capital on certain assets. And again, this is just a basic philosophy about how we approach all of these vehicles. And so the idea of having a pool of assets that are institutionally in high demand in a vehicle trading at a historic discount does not make philosophical sense for us. So it goes into a principal mindset and alignment at the core of what we do. And I'll let Martin talk about the philosophy and/or the specifics, excuse me.
Speaker #5: Yeah, I
Speaker #5: think listen, Mark has captured the philosophy of getting the right cost of capital and the right investor capital on certain assets. And again, this is I don't know if either Jim or Martin, you want to.
Speaker #5: how we approach all of these vehicles. And so the idea of having a pool of assets that are institutionally of high demand in a vehicle trading at a historic discount does not make philosophical sense for it.
Speaker #5: So it goes into a principal mindset and alignment, and talks about the philosophy or the specifics, excuse me.
Speaker #3: Sure. So it's I think it's clear, Mike,
Martin Kelly: Sure. So it's, I think it's clear, Mike, that our objective here is to deliver 10% SRE growth. And so this transaction, while not contemplated in the prior guidance we gave, certainly sort of helps de-risk the year. And so that's... I would view it as, you know, as a part of a step to delivering 10% SRE growth, but don't assume it's more than that. You know, we're focused on 10% annual growth, over time.
Martin Kelly: Sure. So it's, I think it's clear, Mike, that our objective here is to deliver 10% SRE growth. And so this transaction, while not contemplated in the prior guidance we gave, certainly sort of helps de-risk the year. And so that's... I would view it as, you know, as a part of a step to delivering 10% SRE growth, but don't assume it's more than that. You know, we're focused on 10% annual growth, over time.
Speaker #3: that our objective here is to deliver 10% SRE growth. And so this the core of what we do.
Speaker #3: The guidance we gave certainly sort of helps de-risk the year. And so—I’ll let Martin—That’s, I would view it as a part of a step to delivering 10% SRE growth, but don’t assume it’s more than that.
Speaker #3: We're focused on 10% annual growth over time.
Speaker #1: Thank you. The next question is coming from Alex Blowstein of Goldman Sachs. Please go ahead.
Operator: Thank you. The next question is coming from Alex Blostein of Goldman Sachs. Please go ahead.
Operator: Thank you. The next question is coming from Alex Blostein of Goldman Sachs. Please go ahead.
Speaker #6: Hey, good morning, everybody. Thank you for taking the questions. Well, I was hoping we could spend some time on the non-traded BDC space, and a minute on dynamics and ADS, and your comments there specifically.
Alex Blostein: Hey, good morning, everybody. Thank you for taking the questions as well. I was hoping we could spend a minute on dynamics in the non-traded BDC space and ADS and your comments there specifically. So obviously, it's been a little bit more turbulent with redemptions picking up and growth sales have generally slowed down, and that's really even before all the software headlines from the last week or so. To your point, ADS, I think, is in mid-teens exposure to software, and you talked obviously about other features that make the product perhaps less risky than what's out there. Is that resonating with advisors in the channels? How do you think the competitive position of ADS will look over the next sort of six to 12 months from a net flow perspective when it comes to this part of the market?
Alex Blostein: Hey, good morning, everybody. Thank you for taking the questions as well. I was hoping we could spend a minute on dynamics in the non-traded BDC space and ADS and your comments there specifically. So obviously, it's been a little bit more turbulent with redemptions picking up and growth sales have generally slowed down, and that's really even before all the software headlines from the last week or so. To your point, ADS, I think, is in mid-teens exposure to software, and you talked obviously about other features that make the product perhaps less risky than what's out there. Is that resonating with advisors in the channels? How do you think the competitive position of ADS will look over the next sort of six to 12 months from a net flow perspective when it comes to this part of the market?
Speaker #6: Sales have generally slowed down, and that's turbulent with redemptions picking up and gross really even before all the software. So obviously, it's been a little bit more headlines from the last week or so.
Speaker #6: exposure to software. To your point, about other features that make the than what's out there. Is that product perhaps less risky resonating with advisors in the position of ADS will look over the next sort of 6 to 12 months from a net flow perspective when it comes to this part of the market?
Speaker #6: How do you think the competitive—
Speaker #3: Yeah, Alex,
Jim Zelter: Yeah, Alex, it's Jim. Yes, there's no doubt that what's happening today, we have been consistent for the last 24 months, if not longer, about the philosophy in terms of portfolio construction with regards to ADS. 100% senior secured, first lien, no pick, no ARR, and all of those themes have resonated historically, but certainly resonating currently as well. You know, we had a net, even though with a small below the line redemption in the fourth quarter, net new assets were up every quarter last year, over $5 billion of net inflows. And yes, it's resounding to many of the distribution channels that it's the alignment and philosophy, but it's return without reaching.
Jim Zelter: Yeah, Alex, it's Jim. Yes, there's no doubt that what's happening today, we have been consistent for the last 24 months, if not longer, about the philosophy in terms of portfolio construction with regards to ADS. 100% senior secured, first lien, no pick, no ARR, and all of those themes have resonated historically, but certainly resonating currently as well. You know, we had a net, even though with a small below the line redemption in the fourth quarter, net new assets were up every quarter last year, over $5 billion of net inflows. And yes, it's resounding to many of the distribution channels that it's the alignment and philosophy, but it's return without reaching.
Speaker #3: it's Jim. Yeah, so there's no doubt that what's happening today we have been consistent for the last 24 months if not ADS, I think, is in mid-teens the philosophy in terms of portfolio construction with regards to longer about ADS 100% senior secured, first
Speaker #3: lean, no pick, no channels?
Speaker #3: All of those themes have resonated ARR historically, but certainly are resonating currently as well. We had a net, even though with a small below-the-line redemption in the fourth quarter, net new assets were up every quarter last year, over $5 billion of net inflows.
Speaker #3: And yes, it's resounding to many of the distribution channels that it's the alignment and philosophy, but it's return without reaching. So yes, we, as you mentioned, were a little—expect the numbers, a bit over double-digit in terms of aggregate software exposure. It's real exposure.
Speaker #3: And yes, it's resounding to many of the distribution channels that it's the alignment and philosophy, but it's return without reaching. So yes, we, as you mentioned, were a little—expect the numbers, bit over double-digit in terms of aggregate software exposure.
Jim Zelter: So yes, we expect the numbers as you mentioned were a little bit over double digit in terms of aggregate software exposure. But when you really take... Again, it's really more about selectivity than it is real exposure. And when you look at our software pick exposure, negligible. When you look at our software ARR exposure, negligible. When you look at our pre-2021, 2022 software exposure, negligible. And so those folks who really are students of the product are able to really differentiate, and we expect to be picking up share in that product.
Jim Zelter: So yes, we expect the numbers as you mentioned were a little bit over double digit in terms of aggregate software exposure. But when you really take... Again, it's really more about selectivity than it is real exposure. And when you look at our software pick exposure, negligible. When you look at our software ARR exposure, negligible. When you look at our pre-2021, 2022 software exposure, negligible. And so those folks who really are students of the product are able to really differentiate, and we expect to be picking up share in that product.
Speaker #3: Exposure, negligible. When you look— but when you really take, again, it's really more about selectivity than it is exposure, negligible. When you look at our software ARR, pre-21-22 software exposure, negligible.
Speaker #3: And so those folks who really are students of the product are able to really differentiate, and we expect to be picking up share in that product. But also, we've been clear in the last 24 months that, look, our software pick investors should diversify away from their corporate exposure in terms of a broader portfolio approach.
Jim Zelter: But also, we've been clear in the last 24 months that investors should diversify away from their corporate exposure in terms of a broader portfolio approach, and that's why we're so excited about ABC, really the flagship vehicle in the marketplace in terms of asset-backed portfolio construction. So we, we couldn't be happier about our current position and feel like we'll accelerate, capture greater market share, and investors are really seeing that rather than chasing the hot dot.
Jim Zelter: But also, we've been clear in the last 24 months that investors should diversify away from their corporate exposure in terms of a broader portfolio approach, and that's why we're so excited about ABC, really the flagship vehicle in the marketplace in terms of asset-backed portfolio construction. So we, we couldn't be happier about our current position and feel like we'll accelerate, capture greater market share, and investors are really seeing that rather than chasing the hot dot.
Speaker #3: And that's why we're so excited about ABC—really the flagship vehicle in the marketplace in asset-backed portfolio construction. So we couldn't be happier about our current position and feel like we'll accelerate, capture greater market share, and investors are really seeing that, rather than chasing the hot
Speaker #3: dot. Thank you.
Operator: Thank you. Our next question is coming from Glenn Schorr of Evercore ISI. Please go ahead.
Operator: Thank you. Our next question is coming from Glenn Schorr of Evercore ISI. Please go ahead.
Speaker #1: Our ahead.
Speaker #6: We would just continue your ongoing theme of the total portfolio approach, excess return per unit of risk. I would imagine at times like this, we're going to see some really differentiated performance.
Marc Rowan: Maybe just continuing your ongoing theme of the Total Portfolio Approach, the excess return per unit of risk. I would imagine at times like this, we're going to see some really differentiated performance, and it goes across all your asset classes. So I guess I'm curious-
Glenn Schorr: Maybe just continuing your ongoing theme of the Total Portfolio Approach, the excess return per unit of risk. I would imagine at times like this, we're going to see some really differentiated performance, and it goes across all your asset classes. So I guess I'm curious maybe more on the institutional side. What was the interaction with LPs over the last week or two like? And where I'm coming from is, are there any bigger implications from what happened? Meaning, are LPs rethinking size of allocation to privates in general, or just maybe a switch in terms of structure and having more liquid vehicles as part of their mindset? I'm just curious if you'd opine on that. Thanks.
Speaker #6: Asset classes. So I guess that goes across all your—I'm curious, maybe more on the institutional side, what was the interaction with LPs over the last week or two?
Glenn Schorr: ... maybe more on the institutional side. What was the interaction with LPs over the last week or two like? And where I'm coming from is, are there any bigger implications from what happened? Meaning, are LPs rethinking size of allocation to privates in general, or just maybe a switch in terms of structure and having more liquid vehicles as part of their mindset? I'm just curious if you'd opine on that. Thanks.
Speaker #6: And where I'm coming from Evercore ISI.
Speaker #6: Are there any bigger implications from what happened—meaning, are LPs rethinking the size of allocation to privates in general? Or maybe just a switch in terms of structure, and having more liquid vehicles as part of their allocation on that?
Speaker #6: mindset?
Marc Rowan: So, it's Marc, Glenn, and then I'll turn it over to Jim after it. A lot of what's playing out is playing out in the public markets. Recall, and I know the concern on BDCs and private credit, direct origination as it relates to software, but I always remind people that that is first lien. Most of the investments that are made into these private BDCs are de-risking for the individual making the investment. They are not selling their treasury exposure. What they're doing is they're selling their equity exposure, and they're making an intelligent decision that they can earn roughly long-term equity returns in first lien debt versus in equity. The equity exposure and the pricing of what's happened in software-related and other related has been extreme. We're talking, in some instances, quality companies down 50% to 70%.
Marc Rowan: So, it's Marc, Glenn, and then I'll turn it over to Jim after it. A lot of what's playing out is playing out in the public markets. Recall, and I know the concern on BDCs and private credit, direct origination as it relates to software, but I always remind people that that is first lien. Most of the investments that are made into these private BDCs are de-risking for the individual making the investment. They are not selling their treasury exposure. What they're doing is they're selling their equity exposure, and they're making an intelligent decision that they can earn roughly long-term equity returns in first lien debt versus in equity. The equity exposure and the pricing of what's happened in software-related and other related has been extreme. We're talking, in some instances, quality companies down 50% to 70%.
Speaker #3: Mark. I'm Glen. And then I'll turn it.
Speaker #3: Over to Jim after it. A lot of what's playing out is playing out in the—I'm just curious if you'd opine, and I know the concern on BDCs and private credit and direct origination as it relates to public markets.
Speaker #3: that is first Recall, lean. Most of the investments that are made into these private BDCs are de-risking for the individual making the investment. They are not selling their treasury exposure.
Speaker #3: What they're doing is they're selling their equity exposure, and they're making an intelligent decision that they can earn lean debt versus in equity. The equity exposure and the pricing of what's happened in software-related and other-related has been roughly long-term equity returns in first extreme.
Speaker #3: Quality companies down 50 to 70—we're talking in some instances percent. This is why people are in first lien to begin with. On the institutional side, you have a little bit of the same phenomenon.
Marc Rowan: This is why people are in first lien to begin with. When you translate it over to the institutional side, you have a little bit of the same phenomenon. And so I do think that there is going to be increased dispersion amongst managers. It's been easy for a really long period of time, and as Jim suggested, in private markets, particularly private equity, it had been almost 30% of the market, software had been almost 30% of the market for a decade. Software is still an amazing business, but you may not like the purchase price at which you entered because you get to now look at the same companies down 50% to 70%. And that's the public companies, and I have to believe the private marks with leverage will go down equally as much.
Marc Rowan: This is why people are in first lien to begin with. When you translate it over to the institutional side, you have a little bit of the same phenomenon. And so I do think that there is going to be increased dispersion amongst managers. It's been easy for a really long period of time, and as Jim suggested, in private markets, particularly private equity, it had been almost 30% of the market, software had been almost 30% of the market for a decade. Software is still an amazing business, but you may not like the purchase price at which you entered because you get to now look at the same companies down 50% to 70%. And that's the public companies, and I have to believe the private marks with leverage will go down equally as much.
Speaker #3: And so I do think that there is going to be dispersion amongst managers. It's been easy for a really long period of—be it increased suggested in private markets, particularly private equity—it had been almost 30% of the software, had been almost 30% of software. Software is still an amazing business, but you may not like the purchase price, at which—at the same companies—down 50% to 70%.
Speaker #3: You entered because you get to now look at the public companies. And I have to down equally as much. And so I expect that we will believe the private marks with leverage will go be along with a handful of other managers prettier than we have been, time and as Jim historically.
Marc Rowan: And so I expect that we will be, along with a handful of other managers, prettier than we have been historically. The other thing to think about is, so much of the conversation has taken place around the alternative bucket. And what we see, the vast majority of growth going forward is gonna take place outside of the alternative bucket. Some of the wins in fixed income replacement, some of the wins into PRIV, some of the wins into AAA are institutional. And we see, and I think you will see, an acceleration of the institutional business going forward. I'm gonna belabor this a little bit because this will be a theme across our business. Going back to the six markets, the first, of course, is the institutional alternatives portfolio business. The second has garnered most of the attention, which is the wealth business.
Marc Rowan: And so I expect that we will be, along with a handful of other managers, prettier than we have been historically. The other thing to think about is, so much of the conversation has taken place around the alternative bucket. And what we see, the vast majority of growth going forward is gonna take place outside of the alternative bucket. Some of the wins in fixed income replacement, some of the wins into PRIV, some of the wins into AAA are institutional. And we see, and I think you will see, an acceleration of the institutional business going forward. I'm gonna belabor this a little bit because this will be a theme across our business. Going back to the six markets, the first, of course, is the institutional alternatives portfolio business. The second has garnered most of the attention, which is the wealth business.
Speaker #3: The other thing to think about is so much of the conversation has taken place around the alternative bucket. And what we see the vast majority of growth going forward is going to take place outside of the alternative bucket.
Speaker #3: Some of the wins in fixed income replacement, some of the wins into PRIV, some of the wins into AAA are institutional. And we see—and I think you will see—an acceleration of the institutional business going forward.
Speaker #3: I'm going to belabor this a little bit because this will be a theme across our business. Going back to the six markets, the first, of course, is the institutional alternative portfolio business.
Speaker #3: The second has garnered most of the attention which is the wealth business. But if you buckets, insurance, that's an institutional business. If you think about the debt and think about the other an institutional business.
Marc Rowan: But if you think about the other buckets, insurance, that's an institutional business. You think about the debt and equity portfolios of institutions, that's an institutional business. The serving of traditional asset managers is an institutional business. 401(k), while we think retail is making a choice, it's actually not. It's an institutional business because it's being made primarily by trustees, by consultants, and by other forms of gatekeepers. I think you're gonna see a change in the dialogue amongst the managers of private assets as they fully embrace this, which is not that wealth is not important, not that it's not gonna grow, it's just the most visible. These other markets have every bit as much opportunity, and I continue to come back to the theme I've been on for quite a while.
Marc Rowan: But if you think about the other buckets, insurance, that's an institutional business. You think about the debt and equity portfolios of institutions, that's an institutional business. The serving of traditional asset managers is an institutional business. 401(k), while we think retail is making a choice, it's actually not. It's an institutional business because it's being made primarily by trustees, by consultants, and by other forms of gatekeepers. I think you're gonna see a change in the dialogue amongst the managers of private assets as they fully embrace this, which is not that wealth is not important, not that it's not gonna grow, it's just the most visible. These other markets have every bit as much opportunity, and I continue to come back to the theme I've been on for quite a while.
Speaker #3: The serving of traditional asset business. 401(k), while we not. It's an institutional the market for a decade. business because it's being made primarily by trustees and by consultants and by other forms of gatekeepers.
Speaker #3: I think you're dialogue amongst the managers of private assets as they fully embrace this, which is not that wealth is not important, not that it's not going to grow.
Speaker #3: It's just the most managers is an institutional visible. These other going to see a change in the opportunity and I continue to come back to the theme I've been on for quite a while.
Speaker #3: Our business at the end of the day will vary from quarter to quarter, but it is not ultimately constrained by capital. There's plenty of demand for private assets.
Marc Rowan: Our business, at the end of the day, will vary from quarter to quarter, but it is not ultimately constrained by capital. There's plenty of demand for private assets. What it is constrained by is the ability to originate things that are worth buying. We are so focused on getting this origination side right, not just in terms of volume, but with a principle mindset where we're originating risk we are prepared to own. Turns out clients like when you are side by side with them as opposed to selling to them.
Marc Rowan: Our business, at the end of the day, will vary from quarter to quarter, but it is not ultimately constrained by capital. There's plenty of demand for private assets. What it is constrained by is the ability to originate things that are worth buying. We are so focused on getting this origination side right, not just in terms of volume, but with a principle mindset where we're originating risk we are prepared to own. Turns out clients like when you are side by side with them as opposed to selling to them.
Speaker #3: What it is constrained by is the buying. We are so focused on ability to originate things that are worth markets have every bit right, not just in terms of volume, but with think retail is making a choice, it's actually a principal mindset where we're getting this origination side originating risk, we are prepared to own.
Speaker #3: Turns out clients like when you are side by side with them, as opposed to selling to them. I'd also add—and I put so much of the conversation in—about a quick reset of prices in the public equity market and then the impact. I think I'm taking a step back here: non-investment-grade software lending, which has been particularly focused on by the non-traded BDCs.
Jim Zelter: You know, I'd also add, I think there's a pause here, but so much of the conversation in the last several weeks has been about a quick reset of prices in the public equity market, and then the impact to non-investment grade software lending, which has been particularly focused well by the non-traded BDCs. We put out a deck in December, and all the conversation recently has been about the narrow sector, the $2 to 3 trillion of private credit, and it's really not touching the $35 to 40 trillion opportunity in investment-grade private credit. In the last 18 months, short duration IG vehicle strategy we really started 18 months ago, is up to over $7 billion in assets. And again, that's private investment grade across the board, a variety of industries.
Jim Zelter: You know, I'd also add, I think there's a pause here, but so much of the conversation in the last several weeks has been about a quick reset of prices in the public equity market, and then the impact to non-investment grade software lending, which has been particularly focused well by the non-traded BDCs. We put out a deck in December, and all the conversation recently has been about the narrow sector, the $2 to 3 trillion of private credit, and it's really not touching the $35 to 40 trillion opportunity in investment-grade private credit. In the last 18 months, short duration IG vehicle strategy we really started 18 months ago, is up to over $7 billion in assets. And again, that's private investment grade across the board, a variety of industries.
Speaker #3: We put out a deck in December, and all the conversation recently has been about the narrow sector, the $2 to $3 trillion of private to $40 trillion opportunity, not touching the $35 trillion in investment-grade private credit.
Speaker #3: In the last 18 months, short-duration IG vehicle, a strategy that we really started 18 months ago, is up to over credit and it's really $7 billion in assets.
Speaker #3: And again, that's private investment-grade across the board, a variety of industries. And so, it just seems like the headlines are focusing on the small pond, and there's no doubt there's going to be dispersion amongst various debt and equity managers who have pursued growth in technology in the last several years, are fund beneficiaries of the value versus understanding how the big boulders are—I really think taking a step back and really about pebbles.
Jim Zelter: And so it just seems like the headlines are focusing on the small pond, and there's no doubt there's gonna be dispersion amongst various debt and equity managers who have pursued, pursued growth in technology in the last several years. Our Fund Eleven - Fund Ten, Eleven, are gonna be big beneficiaries of the value versus growth mentality. But again, I, I really think taking a step back and really understanding how the big boulders are moving, this is discussion when we talk about non-traded BDCs. That's about pebbles. What Mark is talking about, about boulders, it's much more thematic, and it's really what's driving our business over the next five and ten years.
Jim Zelter: And so it just seems like the headlines are focusing on the small pond, and there's no doubt there's gonna be dispersion amongst various debt and equity managers who have pursued, pursued growth in technology in the last several years. Our Fund Eleven - Fund Ten, Eleven, are gonna be big beneficiaries of the value versus growth mentality. But again, I, I really think taking a step back and really understanding how the big boulders are moving, this is discussion when we talk about non-traded BDCs. That's about pebbles. What Mark is talking about, about boulders, it's much more thematic, and it's really what's driving our business over the next five and ten years.
Speaker #3: growth mentality. But again,
Speaker #3: What Mark is talking about is thematic, and it's really what's driving our business over the next five and ten years. About boulders—it's much more about non-traded BDCs, that's—
Speaker #3: years.
Speaker #1: Thank you. The next
Operator: Thank you. The next question is coming from Patrick Davitt of Autonomous Research. Please go ahead.
Operator: Thank you. The next question is coming from Patrick Davitt of Autonomous Research. Please go ahead.
Patrick Davitt: Hey, good morning, everyone. I have another question on the total portfolio changes, and I agree that that could be a big opportunity for alternatives and specifically Apollo. Big step last year with CalPERS announcing their shift. So curious to what extent you're hearing other large pensions planning to follow suit, and how quickly do you think we'll start to see meaningful reallocations of that capital around the new approach? Thank you.
Patrick Davitt: Hey, good morning, everyone. I have another question on the total portfolio changes, and I agree that that could be a big opportunity for alternatives and specifically Apollo. Big step last year with CalPERS announcing their shift. So curious to what extent you're hearing other large pensions planning to follow suit, and how quickly do you think we'll start to see meaningful reallocations of that capital around the new approach? Thank you.
Speaker #4: Hey, good morning ahead, everyone. I have another question. Question is coming from
Speaker #4: on the total portfolio changes and
Speaker #4: I agree that that could be a big opportunity for Patrick David of Autonomous Research. Alternatives, and specifically—
Speaker #4: Apollo, big step last year with CalPERS announcing their shift. So, curious to what extent you're hearing other large pensions planning to follow suit, and how quickly do you think we'll start to see meaningful reallocations of that, you know?
Jim Zelter: You know, I would just say, you know, it's really important when Mark laid out the five additional channels, the speed at which they all individually and collectively adopt is gonna be start/stop. The public institutional marketplace is not known to be a business where those who are in charge take historic institutional risk. And so it's gonna be measured. It's going to be... That's why we're focusing on all six, not just one. But I'll give you one example. Like, the conversations that have been going on in the industry, and in particular with us, with our Apollo Sports Capital, those are areas where institutions are trying to figure out where the opportunities are, not in the narrow definitions of asset classes.
Jim Zelter: You know, I would just say, you know, it's really important when Mark laid out the five additional channels, the speed at which they all individually and collectively adopt is gonna be start/stop. The public institutional marketplace is not known to be a business where those who are in charge take historic institutional risk. And so it's gonna be measured. It's going to be... That's why we're focusing on all six, not just one. But I'll give you one example. Like, the conversations that have been going on in the industry, and in particular with us, with our Apollo Sports Capital, those are areas where institutions are trying to figure out where the opportunities are, not in the narrow definitions of asset classes.
Speaker #3: I would just say it's really important when Marc laid out the five
Speaker #3: Additional channels, the speed at which they capital around the new approach? All individually and collectively.
Speaker #3: Adopt is going to be institutional marketplace, it's not, thank business, where those who are known to be in charge take historic institutional risk.
Speaker #3: To be measured, it's going to—And so it's going to be six, not just one. That's why we're focusing on all. But I'll give you one example: like the conversations that have been going on in the industry and, in particular, with us, with our Apollo Sports Capital, those are areas where institutions are trying—opportunities are not in the narrow definitions of asset classes.
Speaker #3: What we’ve done on the insurance, a theme, sidecar, ADIP. Those are all areas where to figure out where the—let—how can I make sure that the normal institutions have said, how can I fix income definitions of equity and ability to perform?
Jim Zelter: What we've done on the insurance Athene sidecar, ADIP, those are all areas where institutions have said: How can I make sure that the normal definitions of equity and fixed income, traditionally, are not going to limit my ability to perform? And I think whether it's family offices, whether it's institutional buyers, whether it's those at traditional asset managers, they're all trying to find areas outside the norms of the boundaries, and that's what's gonna drive this over time. It's really about how to create better risk-adjusted returns and not being a prisoner to the barriers of adoption in terms of your mandate.
Jim Zelter: What we've done on the insurance Athene sidecar, ADIP, those are all areas where institutions have said: How can I make sure that the normal definitions of equity and fixed income, traditionally, are not going to limit my ability to perform? And I think whether it's family offices, whether it's institutional buyers, whether it's those at traditional asset managers, they're all trying to find areas outside the norms of the boundaries, and that's what's gonna drive this over time. It's really about how to create better risk-adjusted returns and not being a prisoner to the barriers of adoption in terms of your mandate.
Speaker #3: It's family offices, whether it's— and I think whether institutional buyers, whether it's traditionally— are not going to limit my— they're all trying to find areas, those at traditional asset managers, boundaries, and that's what's going to drive this over time.
Speaker #3: It's really about how, outside the norms, to create better risk-adjusted returns and not being a prisoner to the barriers of your mandate, in terms of adoption.
Marc Rowan: If anything's gonna speed it up, Patrick, it'll be volatility. Public market volatility is ultimately a significant impediment or an accelerant to people's changing of mindset. Trustees and heads of plans who have watched assets grow pretty consistently over a long period of time get a little bit of shock when they see the kinds of volatility in their portfolio and in public markets, and they look for the same return or more return, but with less risk.
Marc Rowan: If anything's gonna speed it up, Patrick, it'll be volatility. Public market volatility is ultimately a significant impediment or an accelerant to people's changing of mindset. Trustees and heads of plans who have watched assets grow pretty consistently over a long period of time get a little bit of shock when they see the kinds of volatility in their portfolio and in public markets, and they look for the same return or more return, but with less risk.
Speaker #4: If anything's going to speed it up, Patrick, it'll be volatility. The public significant imperative we're seeing—and ultimately, market volatility is an accelerant to people's changing of mindset.
Speaker #4: Trustees and heads of plans who have watched assets grow pretty consistently over a long period of time get a little bit of shock when they look at their portfolio and in public markets, and they look for the same return or more return, but with less volatility.
Speaker #4: risk. Thank you.
Operator: Thank you. The next question is coming from Bill Katz of TD Cowen. Please go ahead.
Operator: Thank you. The next question is coming from Bill Katz of TD Cowen. Please go ahead.
Speaker #1: The next TD Cowan. Please go ahead.
Speaker #1: ahead. Great.
Bill Katz: Great. Thank you very much, and good morning, everybody. Wanted to maybe tie some big picture, some of the boulders together, to use Jim's analogy. I like that one. Could you talk a little bit about where you might be on the origination opportunity? Clearly running, what, four years ahead of schedule already, on how that may influence the opportunity set in ACS, and then maybe how we should think about the margin profile as we look into 2027 and 2028 FRE margin profile. Thank you.
Bill Katz: Great. Thank you very much, and good morning, everybody. Wanted to maybe tie some big picture, some of the boulders together, to use Jim's analogy. I like that one. Could you talk a little bit about where you might be on the origination opportunity? Clearly running, what, four years ahead of schedule already, on how that may influence the opportunity set in ACS, and then maybe how we should think about the margin profile as we look into 2027 and 2028 FRE margin profile. Thank you.
Speaker #5: Thank you very much, and good morning, everybody. I want to maybe tie some—to use Jim's analogy. I like that one. Could you talk a little bit about where you might be on the origination opportunity?
Speaker #5: Clearly running, what, four years ahead of schedule already? How might that influence the opportunity set, big picture, some of the boulders together in ACS, and then maybe how we should think about the margin profile as we look into '27 and '28—FRE margin profile.
Speaker #5: Thank you.
Speaker #3: Great. Think, Bill, the easiest way to answer that is, if—so, if you look at the $305 billion, $245 [billion] was really last year, North America, $40 billion Europe, $15, $20 billion in Asia.
Jim Zelter: Great. So I think, Bill, the easiest way to answer that is if you look at the $305 billion last year, $245 was really North America, you know, $40 billion Europe, $15 to 20 billion in Asia. We're taking this strategy global. The answer to your question, big picture, is we're gonna take a very successful strategy of integrating origination to every aspect of our business. We're taking it global, and we're gonna make sure that in Europe and Asia Pac, that the same tools, the same partnerships, the same platforms, are executing in that part of the globe, but we're really focused on quality as well as scale.
Jim Zelter: Great. So I think, Bill, the easiest way to answer that is if you look at the $305 billion last year, $245 was really North America, you know, $40 billion Europe, $15 to 20 billion in Asia. We're taking this strategy global. The answer to your question, big picture, is we're gonna take a very successful strategy of integrating origination to every aspect of our business. We're taking it global, and we're gonna make sure that in Europe and Asia Pac, that the same tools, the same partnerships, the same platforms, are executing in that part of the globe, but we're really focused on quality as well as scale.
Speaker #3: We're taking this strategy global. The answer to your question, big picture, is we're going to take a very successful integrating origination to every aspect of strategy of our business.
Speaker #3: We're taking it global, and we're going to make sure that in Europe and Asia-Pac that they are executing in that part on the same tools, the same partnership, the same platforms, and certainly have shown an ability globally.
Speaker #3: Quality as well as scale to originate, but we're really focused. We scale, but it's really growth with intention and point. We have a ton of robust yield, robust spread, and that's what we're—so I want to make sure that we're trying to do.
Jim Zelter: We certainly have shown an ability to originate scale, but it's really growth with intention, and so I wanna make sure that we're not overemphasizing the growth from this point. We have a ton of robust yield, robust spread, and that's what we're trying to do. So in my mind, it really is the globalization of the strategy, and it's also into these ecosystem activities like you see in Apollo Sports Capital. I would suspect to see a handful more of those ecosystem strategies, where we can be completely relevant in terms of the cost of capital and the toolbox to the companies that are embedded in that ecosystem. And why it works so well for sports is very simple. It's one where the quality of cash flows are not a regular manner. They are irregular cash flows.
Jim Zelter: We certainly have shown an ability to originate scale, but it's really growth with intention, and so I wanna make sure that we're not overemphasizing the growth from this point. We have a ton of robust yield, robust spread, and that's what we're trying to do. So in my mind, it really is the globalization of the strategy, and it's also into these ecosystem activities like you see in Apollo Sports Capital. I would suspect to see a handful more of those ecosystem strategies, where we can be completely relevant in terms of the cost of capital and the toolbox to the companies that are embedded in that ecosystem. And why it works so well for sports is very simple. It's one where the quality of cash flows are not a regular manner. They are irregular cash flows.
Speaker #3: the strategy. And mind, it really is the globalization of not overemphasizing the growth from this these ecosystem So in my see a handful more of Sports Capital.
Speaker #3: It's also relevant in terms of the activities, like you see in Apollo. I would suspect, too, that ecosystem. And why it works so well for sports is very cost of capital and the simple.
Speaker #3: It's one where the quality of cash flows are not in a regular manner. Companies that are embedded in—they are regular cash flows. The area has so many, the actual funding and lending in focus, so many have focused on the equity returns.
Jim Zelter: There's been a tremendous amount of growth in valuation. There's a limitation to the actual funding and lending in the area, as so many have focused on the equity returns. And so we're just finding with a holistic toolbox, like we did for sponsors, there's a great deal of reception. So the answer is global. The answer is focusing on quality and as well as scale, and these focused ecosystem strategies.
Jim Zelter: There's been a tremendous amount of growth in valuation. There's a limitation to the actual funding and lending in the area, as so many have focused on the equity returns. And so we're just finding with a holistic toolbox, like we did for sponsors, there's a great deal of reception. So the answer is global. The answer is focusing on quality and as well as scale, and these focused ecosystem strategies.
Speaker #3: And so we're just finding, with a holistic, those ecosystem toolbox like we did for sponsors, there's a great deal of reception. So the answer is global, the answer is focusing on quality as well as scale, and these focused—
Speaker #3: ecosystem strategies. I'm going
Marc Rowan: I'm gonna just take the liberty of maybe going off-piste a little bit. We've seen over the past month or so a number of acquisitions in our industry. I wanna just say that from our point of view, if you think about where our business is going, it's all about origination and having the product, and then building the capabilities to serve five markets that we've never served before as an industry. So all of the firms were built to serve the institutional alternative bucket: draw down funds, product-specific sales forces, relatively slow-moving, fine with quarterly marks. These five markets are totally different. You're seeing some of the firms build out significant wealth strategies. But you have yet to see the rest of the industry build out to serve the other markets that are now available to us.
Marc Rowan: I'm gonna just take the liberty of maybe going off-piste a little bit. We've seen over the past month or so a number of acquisitions in our industry. I wanna just say that from our point of view, if you think about where our business is going, it's all about origination and having the product, and then building the capabilities to serve five markets that we've never served before as an industry. So all of the firms were built to serve the institutional alternative bucket: draw down funds, product-specific sales forces, relatively slow-moving, fine with quarterly marks. These five markets are totally different. You're seeing some of the firms build out significant wealth strategies. But you have yet to see the rest of the industry build out to serve the other markets that are now available to us.
Speaker #4: To just take the liberty of maybe going off-piste a little bit. We've seen over the past month, or from our point of view, if you think origination and having the product and then building the capabilities going, it's all about—so a number industry.
Speaker #4: Firms were built to serve the institutional alternative, to serve five markets. That we've forces, relatively slow moving, fine with quarterly funds, product-specific sales marks. These five markets are totally bucket.
Speaker #4: Draw down. And I want to just say that markets that are now available to us of acquisitions in our U.S. And so when you think about what we're trying to do—valuation.
Speaker #4: Wealth strategies. But you have yet to see the rest of the industry. You're seeing some of the industry.
Marc Rowan: And so when you think about what we're trying to do, we're trying to make sure that we don't grow too fast, that we can only grow as fast as we originate. Therefore, if we want to grow, we have to originate at scale, in quality. At the same time, we understand that every time you buy something, it comes with people, and integration on a cultural basis is very difficult. And so unless something is exceptional, we just prefer to build it ourselves. Sports capital is a really good example, not to say that there are not... there's not value in acquisition if you need to, but the ability to put a team on the ground in an industry that is very valuable, growing very fast, that produces uneven cash flows, therefore, is not a great industry to bank or for public markets.
Marc Rowan: And so when you think about what we're trying to do, we're trying to make sure that we don't grow too fast, that we can only grow as fast as we originate. Therefore, if we want to grow, we have to originate at scale, in quality. At the same time, we understand that every time you buy something, it comes with people, and integration on a cultural basis is very difficult. And so unless something is exceptional, we just prefer to build it ourselves. Sports capital is a really good example, not to say that there are not... there's not value in acquisition if you need to, but the ability to put a team on the ground in an industry that is very valuable, growing very fast, that produces uneven cash flows, therefore, is not a great industry to bank or for public markets.
Speaker #4: Don't grow too fast, that we can only grow as about where our business is, as fast as we originate. We're trying to make sure that we, therefore, if we want to—
Speaker #4: in quality. every time you buy At the something, it comes with There's a limitation to people. And integration on a is exceptional, we just prefer cultural basis is very difficult.
Speaker #4: To build it ourselves. Sports. And so, unless something—it's not that there's no value in, for example... Not to say that there are acquisitions if you need to.
Speaker #4: But the ability to put a team on the ground—valuable, growing very fast, that produces in an industry that is really not a great industry to bank, or for uneven cash flows, therefore is public markets—in addition, capital is a really good in the Sports Capital Fund. To deploying the six or so billion, I believe this ecosystem will generate $30 to $50 billion of origination opportunities.
Marc Rowan: In addition to deploying the $6 billion or so in the sports capital fund, I believe this ecosystem will generate $30 to 50 billion of origination opportunities. I think you are more likely to see us grow, as Jim said, globalizing what we have and then building organically the platforms that we need to, to penetrate industries that require specialized knowledge and deserve a specialized pool of capital. And so we often say the strategy here, let's look through the windshield, not through the rearview mirror. We have so much white space in front of us. It's up to us to now prepare the business, not just to hit the 5-year plan, but for what comes next.
Marc Rowan: In addition to deploying the $6 billion or so in the sports capital fund, I believe this ecosystem will generate $30 to 50 billion of origination opportunities. I think you are more likely to see us grow, as Jim said, globalizing what we have and then building organically the platforms that we need to, to penetrate industries that require specialized knowledge and deserve a specialized pool of capital. And so we often say the strategy here, let's look through the windshield, not through the rearview mirror. We have so much white space in front of us. It's up to us to now prepare the business, not just to hit the 5-year plan, but for what comes next.
Speaker #4: I think you are more likely to see us grow, as Jim have, and then building organically the platforms that we need to, to penetrate industries that require specialized knowledge and deserve a specialized pool of said—globalizing what we windshield, not through the rearview mirror.
Speaker #4: We have so much white space in front of us. And so we often say, it's up to us to now prepare the business, not just to hit the five-year plan, but for what comes.
Martin Kelly: And Bill, let me address your talking question on margins, because it's important, obviously. So you should expect a free margin expansion over time. And we're always balancing, as you know, investing in new capabilities to build a platform with extracting efficiencies from the current business. So I, you know, I would think something like 100 basis points annually as we go forward, that's sort of the guidepost that we set for ourselves, with the puts and takes netting into that.
Martin Kelly: And Bill, let me address your talking question on margins, because it's important, obviously. So you should expect a free margin expansion over time. And we're always balancing, as you know, investing in new capabilities to build a platform with extracting efficiencies from the current business. So I, you know, I would think something like 100 basis points annually as we go forward, that's sort of the guidepost that we set for ourselves, with the puts and takes netting into that.
Speaker #3: And Bill, let me address your you're talking question on margins. Because it's important, obviously. So expect FRE margin expansion over time. And we're always balancing, as you know, investing
Speaker #3: in new capabilities to build the
Speaker #3: Current business. So, I would think something like 100 basis points annually as we go forward, next, ourselves. With the puts and takes netting into extracting efficiencies from the current business.
Speaker #3: That you should expect, you should—
Speaker #1: Thank you. The next question is coming from Michael Sybers of Morgan Stanley. Please go ahead.
Operator: Thank you. The next question is coming from Michael Cyprys of Morgan Stanley. Please go ahead.
Operator: Thank you. The next question is coming from Michael Cyprys of Morgan Stanley. Please go ahead.
Michael Cyprys: Hey, good morning. I wanted to ask about fundraising. You've had a very strong year in 2025, over $180 billion organic inflows. I think you mentioned you're targeting $150 on an annual basis. So just curious how you think about the outperformance this past year relative to that $150 guide. To what extent does that make sense? What might be areas where flows could be slower, I guess, if that does make sense, but then at the same time, it sounds like you're pretty confident in 2026, maybe even being better, particularly in Athene. So maybe you could speak to the confidence there, what you see contributing, and maybe you could elaborate on what's in the kitchen in terms of things that might be rolling out. Thank you.
Michael Cyprys: Hey, good morning. I wanted to ask about fundraising. You've had a very strong year in 2025, over $180 billion organic inflows. I think you mentioned you're targeting $150 on an annual basis. So just curious how you think about the outperformance this past year relative to that $150 guide. To what extent does that make sense? What might be areas where flows could be slower, I guess, if that does make sense, but then at the same time, it sounds like you're pretty confident in 2026, maybe even being better, particularly in Athene. So maybe you could speak to the confidence there, what you see contributing, and maybe you could elaborate on what's in the kitchen in terms of things that might be rolling out. Thank you.
Speaker #5: Fundraising—you've had a very strong year in.
Speaker #5: '25, about $100 [million] over $180—that's sort of the guidepost that we set for billion organic inflows. I think you mentioned your basis. So just curious how you think about the outperformance this past year relative to platform—would that make sense?
Speaker #5: Targeting 150 on an annual—hey, good.
Speaker #5: What might be your guess, if that does make sense? But then at the same time, particularly in Athene. So maybe you could speak to the confidence there, what you see contributing, and maybe you could elaborate on what's in the areas where flows could be slower. I mention in terms of things that might be rolling '26, maybe even being better, out.
Speaker #5: Thank you.
Speaker #3: Yeah. So Mike, I would say we feel like we have tremendous wind at our back across the—let's
Jim Zelter: Yeah. So, Mike, I would say we feel like we have the tremendous wind to our back across the, let's separate Athene and Apollo Asset Management for a moment. On the Apollo Asset Management side, global wealth, prime for continued growth, and on the institutional business, we do have fund eleven in the marketplace, but also when you think about the product set of the asset-backed ecosystem, the hybrid ecosystem, sports capital, and such, you know, we believe that this year will be the strongest year on record for us in that area. So we're unambiguous about our ability to outshine on the Apollo Asset Management side. Again, on the Athene side, you know, strong numbers across their four channels. We expect that to replicate it.
Jim Zelter: Yeah. So, Mike, I would say we feel like we have the tremendous wind to our back across the, let's separate Athene and Apollo Asset Management for a moment. On the Apollo Asset Management side, global wealth, prime for continued growth, and on the institutional business, we do have fund eleven in the marketplace, but also when you think about the product set of the asset-backed ecosystem, the hybrid ecosystem, sports capital, and such, you know, we believe that this year will be the strongest year on record for us in that area. So we're unambiguous about our ability to outshine on the Apollo Asset Management side. Again, on the Athene side, you know, strong numbers across their four channels. We expect that to replicate it.
Speaker #3: Growth. And on the institutional moment. On the Apollo Asset Management and Apollo Asset Management for a separate Athene asset-backed ecosystem, for continued growth about the product set of the side, global wealth prime hybrid ecosystem, business, we do have Fund 11 in the U.S. in that area.
Speaker #3: So we're unambiguous about our ability marketplace, but also, when you think Apollo Asset Management Sports Capital and such, we believe that this year will be the strongest year on record for that—to replicate it.
Speaker #3: So when you do, when you're solidly north of 150, there are four channels. We expect to outshine on the Athene side, and I would say we feel like we're actually grabbing our fair share in not done before.
Jim Zelter: So when you add those two together, we're solidly north of 150 again for the Apollo and Athene side in collective shape. You know, I would say we feel like we're actually grabbing our fair share in a variety of asset classes that we had not done before. When we think about our whole fixed income replacement product suite, things like the short duration IG vehicle, core IG, the asset-backed area, among many, we're just seeing a variety of ability for us to pick up. And again, that's the conversation we want to be having with this group. As you talk about private capital and private credit, the natural tendency is to focus on the small, non-investment grade, $2 trillion. I urge all of you on this phone call, focus on the $40 trillion. That's the opportunity set.
Jim Zelter: So when you add those two together, we're solidly north of 150 again for the Apollo and Athene side in collective shape. You know, I would say we feel like we're actually grabbing our fair share in a variety of asset classes that we had not done before. When we think about our whole fixed income replacement product suite, things like the short duration IG vehicle, core IG, the asset-backed area, among many, we're just seeing a variety of ability for us to pick up. And again, that's the conversation we want to be having with this group. As you talk about private capital and private credit, the natural tendency is to focus on the small, non-investment grade, $2 trillion. I urge all of you on this phone call, focus on the $40 trillion. That's the opportunity set.
Speaker #3: When we think about our product suite, things like the short duration IG vehicle, core IG, the, amongst many. We're just seeing an asset-backed area. And again, that's the conversation we want to—tendency is to focus on the trillion pond.
Speaker #3: Of you, on this phone side, strong numbers across call, focus on the $40 variety of ability for us to pick up. I urge all small, non-investment-grade, $2—that's what's driving volume.
Jim Zelter: That's what's driving volume, that's what's driving profitability, that's what's driving scale. And so I know it's great, it's great headlines about the software, bump in the road, but, you know, there will be dispersion, but there's a bigger, bigger picture, and don't miss that.
Jim Zelter: That's what's driving volume, that's what's driving profitability, that's what's driving scale. And so I know it's great, it's great headlines about the software, bump in the road, but, you know, there will be dispersion, but there's a bigger, bigger picture, and don't miss that.
Speaker #3: Software bump in the—that's headlines. About the dispersion. But there's a bigger, bigger picture. And what's driving profitability. That's—
Speaker #1: Thank you. The next question is coming from
Operator: Thank you. The next question is coming from Ken Worthington of J.P. Morgan. Please go ahead.
Operator: Thank you. The next question is coming from Ken Worthington of J.P. Morgan. Please go ahead.
Speaker #1: JPMorgan. Please go ahead. Ken Worthington of JPMorgan.
Marc Rowan: Hi. Good morning, and thanks for taking the question. As we think about performance fees for 2026, you highlighted in the deck that 2025 was light in part to sizable PE and hybrid activity that was prudently delayed. With market conditions better, can you help us think about your pipeline of deal activity should market conditions remain accommodative, and how you see this flowing through into carry and performance fees? Thanks.
Ken Worthington: Hi. Good morning, and thanks for taking the question. As we think about performance fees for 2026, you highlighted in the deck that 2025 was light in part to sizable PE and hybrid activity that was prudently delayed. With market conditions better, can you help us think about your pipeline of deal activity should market conditions remain accommodative, and how you see this flowing through into carry and performance fees? Thanks.
Speaker #6: Hi. Good morning, and thanks for taking the question. Was light in part too, was prudently delayed.
Speaker #6: And how do you question, as we think about performance fees?
Speaker #6: You see this flowing sizable PE and hybrid activity that fees for 2026. You, through into carrying performance activity, should market.
Martin Kelly: ... The most unpredictable part of the equation, that's the multiple. Ken, you know, I think we see the optimism in the marketplace, particularly with the bank community. Activity levels are high. There's different ways to exit assets. You know, going through a public process is one, and private processes are more complicated. So I, you know, I would say we are more cautiously optimistic as we sit here now about the year ahead. But it's, you know, it's difficult, it's difficult to predict.
Martin Kelly: ... The most unpredictable part of the equation, that's the multiple. Ken, you know, I think we see the optimism in the marketplace, particularly with the bank community. Activity levels are high. There's different ways to exit assets. You know, going through a public process is one, and private processes are more complicated. So I, you know, I would say we are more cautiously optimistic as we sit here now about the year ahead. But it's, you know, it's difficult, it's difficult to predict. So, you know, that's why, you know, we have anchored ourselves to a long-term guidepost around PII of $900 million, and that remains our target, but it's not gonna be a straight line, clearly, to get there.
Speaker #3: The most unpredictable part of the earnings conditions remain accommodative?
Speaker #3: Activity levels are stuck with a portfolio of things that
Speaker #3: Hi. There’s different ways, Ken, I think, to exit stream—that’s the multiple one. And private optimism in the—we see the marketplace, particularly with the bank.
Speaker #3: About the year ahead, processes are more assets, difficult to predict. And going through a public process is complicated. That's why we have anchored ourselves to a long-term. So I would say we $900 million.
Martin Kelly: So, you know, that's why, you know, we have anchored ourselves to a long-term guidepost around PII of $900 million, and that remains our target, but it's not gonna be a straight line, clearly, to get there.
Speaker #3: Remains our target. Guidepost around PII of
Speaker #3: It's not going to be a straight line, clearly, to get.
Speaker #3: It's not going to be a straight line, clearly, to get there. Are more cautiously optimistic as— and I'd say this in the—
Marc Rowan: I'd say this in the portfolio. Fund Ten, which is the most recent fund, is already 0.3+ DPI versus an industry that rounds to zero. At the end of the day, when you buy things at reasonable multiples, you can sell them at reasonable multiples. That's what we've seen, that's what we've experienced, that's what I continue to experience. We are not stuck with a portfolio of things that were purchased at very high prices, that now have been reset in the market, where they're gonna go into perma-hold. We're in the business of creating value and moving it out. If the market is accommodative, we're gonna make it happen. If the market's not accommodative, we will, I believe, do better than everyone else.
Marc Rowan: I'd say this in the portfolio. Fund Ten, which is the most recent fund, is already 0.3+ DPI versus an industry that rounds to zero. At the end of the day, when you buy things at reasonable multiples, you can sell them at reasonable multiples. That's what we've seen, that's what we've experienced, that's what I continue to experience. We are not stuck with a portfolio of things that were purchased at very high prices, that now have been reset in the market, where they're gonna go into perma-hold. We're in the business of creating value and moving it out. If the market is accommodative, we're gonna make it happen. If the market's not accommodative, we will, I believe, do better than everyone else.
Speaker #5: Most recent fund is already 0.3.
Speaker #5: plus DPI versus an industry that rounds to zero. At the end of the day, when
Speaker #5: You buy things at reasonable multiples, you can out. If the market is
Speaker #5: Sell them at a reasonable experience. Experienced. We are not community.
Speaker #5: Multiples. Market's not accommodative. That's what we've seen. That's what we've—
Speaker #5: Reset in the market hold. We're in the business of where they're going to go into perma.
Speaker #5: else. Creating value and moving it.
Speaker #3: I would just add this. Our
Speaker #3: I would just add this.
Jim Zelter: I would just add this, our performance in 26 is not gonna be market dependent on the equity market or the equity capital markets.
Jim Zelter: I would just add this, our performance in 26 is not gonna be market dependent on the equity market or the equity capital markets.
Speaker #3: Capital profitability—you get to keep doing, see, interesting. So, I think we have more than enough: an asset origination machine, by having a low OPEX.
Operator: Thank you. The next question is coming from Ben Budish of Barclays. Please go ahead.
Operator: Thank you. The next question is coming from Ben Budish of Barclays. Please go ahead.
Speaker #7: Hi. Good morning and thank you for taking the
Ben Budish: Hi, good morning, and thank you for taking the question. I wanted to ask maybe a two-parter on just some of the dynamics going on at Athene. I guess, first, in the pension risk transfer segment, looks like there's been some, you know, positive momentum with a number of the cases out there. Any thoughts on, you know, your expected contribution from that channel, in particular in 2026, or does that require a little bit more time? And then just curious, your latest thoughts on competition in the retail side. It feels like, three or four quarters ago, that was a bigger issue. Doesn't seem to have, you know, been rearing its head as much more recently, but, you know, similarly high level, you know, thoughts on the current state of competition in that channel. Thank you.
Ben Budish: Hi, good morning, and thank you for taking the question. I wanted to ask maybe a two-parter on just some of the dynamics going on at Athene. I guess, first, in the pension risk transfer segment, looks like there's been some, you know, positive momentum with a number of the cases out there. Any thoughts on, you know, your expected contribution from that channel, in particular in 2026, or does that require a little bit more time? And then just curious, your latest thoughts on competition in the retail side. It feels like, three or four quarters ago, that was a bigger issue. Doesn't seem to have, you know, been rearing its head as much more recently, but, you know, similarly high level, you know, thoughts on the current state of competition in that channel. Thank you.
Speaker #7: just some of the dynamics going on at Athene. I
Speaker #7: Guess, first, in the pension risk transfer, some positive momentum with a number of the cases.
Speaker #7: retail side. It feels like three or out there. Any thoughts current state of competition in that channel. Thank on your expected contribution from that four quarters ago, that was a bigger issue.
Speaker #7: Retail side. It feels like three are out there. Any thoughts on the current state of competition in that channel? Thank you. On your expected contribution from that, four quarters ago that was a bigger issue.
Speaker #7: Doesn't seem to have been bearing its
Marc Rowan: So, the volume targets for 2026 are not dependent on PRT picking back up. You're right, the legal situation around PRT is improving. However, this is all about spread. We do not underwrite to volume, we underwrite to profitability. And if you underwrite to profitability, you get to keep doing business. So I think we have more than enough at-bats, lots of new initiatives, broad distribution. I believe the target we've set out, which is roughly $85 billion, will be the target that we deliver. Demand for retirement products is off the charts, but it has to be done at a margin that makes sense. In terms of competition, we continue to see interesting competition in some of what I would call the lower quality broker channels, which are not as credit dependent.
Marc Rowan: So, the volume targets for 2026 are not dependent on PRT picking back up. You're right, the legal situation around PRT is improving. However, this is all about spread. We do not underwrite to volume, we underwrite to profitability. And if you underwrite to profitability, you get to keep doing business. So I think we have more than enough at-bats, lots of new initiatives, broad distribution. I believe the target we've set out, which is roughly $85 billion, will be the target that we deliver. Demand for retirement products is off the charts, but it has to be done at a margin that makes sense. In terms of competition, we continue to see interesting competition in some of what I would call the lower quality broker channels, which are not as credit dependent.
Speaker #3: On PRT picking for '26, are not dependent, not underwrite to volume.
Speaker #3: Profitability, done at a margin that makes— and if you underwrite to, you know, what I would call the lower quality broker channels, which are not as credit-prior business.
Speaker #3: At-bats. Lots of new distribution. I believe the target we've set out,
Marc Rowan: As I've warned on prior calls, the business is ultimately about earning spread. Spread is created by having an asset origination machine, by having a liability origination machine at a low cost, and by having a low OpEx. Most of the companies competing in this industry, including the established players, with very few exceptions, do not have origination of appropriate assets, they do not have a low-cost liability factory, and they do not produce at an efficient level. The only way return can be achieved is by giving away asset management fees and by moving the business offshore to Cayman, to places like that, that do not require capital. This is not a recipe for success.
Marc Rowan: As I've warned on prior calls, the business is ultimately about earning spread. Spread is created by having an asset origination machine, by having a liability origination machine at a low cost, and by having a low OpEx. Most of the companies competing in this industry, including the established players, with very few exceptions, do not have origination of appropriate assets, they do not have a low-cost liability factory, and they do not produce at an efficient level. The only way return can be achieved is by giving away asset management fees and by moving the business offshore to Cayman, to places like that, that do not require capital. This is not a recipe for success.
Speaker #3: Most of the calls, the business is ultimately about earning, have origination of appropriate factory. And they do back up. You're right, not produce at an efficient—the legal situation around PRT is success.
Speaker #3: The companies competing in this industry, these firms will hit escape level. The only way return can be achieved is by
Speaker #3: Like that, that do not require very strong asset origination year, which capital. Capital. This is not a recipe for Athene is a really tough originate.
Speaker #3: Ultimately, I believe, ultimately, we need to come back for more, having a liability origination machine at a low cost—and by that, it will end badly.
Marc Rowan: Ultimately, I believe that will end badly, hopefully not badly for the industry, and I do not believe that many of these firms will hit escape velocity because they will ultimately need to come back for more capital. Athene is a really tough competitor, and as Jim said, this is something we've worked on for the better part of 15 years with the team to put it in the position it's in. I like our chances. Martin gave the guidance for 26, and we're working hard to achieve what we've said we're gonna do.
Marc Rowan: Ultimately, I believe that will end badly, hopefully not badly for the industry, and I do not believe that many of these firms will hit escape velocity because they will ultimately need to come back for more capital. Athene is a really tough competitor, and as Jim said, this is something we've worked on for the better part of 15 years with the team to put it in the position it's in. I like our chances. Martin gave the guidance for 26, and we're working hard to achieve what we've said we're gonna do.
Speaker #3: velocity.
Speaker #3: Because they will
Speaker #3: something we've worked on for the better part of a—second part of this question, if you could talk a bit about
Operator: Thank you. The next question is coming from Wilma Burdis of Raymond James. Please go ahead.
Operator: Thank you. The next question is coming from Wilma Burdis of Raymond James. Please go ahead.
Martin Kelly: Hey, Pam, good morning. Just following up a little bit on the last question. We did see an improvement of PRT volume for the first time in two years. You know, maybe you could go into a little bit more detail there. And then as sort of a second part of this question, if you could talk a bit about the ABF environment and the lower flows there, and any drivers, whether it's credit spreads or anything else you're seeing in the market. Thanks.
Wilma Burdis: Hey, Pam, good morning. Just following up a little bit on the last question. We did see an improvement of PRT volume for the first time in two years. You know, maybe you could go into a little bit more detail there. And then as sort of a second part of this question, if you could talk a bit about the ABF environment and the lower flows there, and any drivers, whether it's credit spreads or anything else you're seeing in the market. Thanks.
Speaker #8: Morning. Just following up a little bit on the last there, and then, as sort of...
Speaker #8: like an improvement in PRT volume
Speaker #8: for the first time in two years.
Speaker #8: any drivers, whether it's credit spreads or anything,
Speaker #8: else you’re seeing in the market, flows there.
Marc Rowan: So again, this is a story of assets and of liabilities. On the asset side, it's all about the capacity to originate. As Jim suggested, this year was a very strong asset origination year, which led to the outperformance of the target. I expect, based on what we've seen thus far, 26 to be an equally strong asset origination year, augmented, or I should say, protected by the ARI transaction, which will give us some initial excess flow early in the year. On the liability side, having multiple channels is a godsend. There are places sometimes you don't want to do business. I personally don't think we've missed much in PRT over the past year. Not only have there been fewer transactions, but the spreads on those transactions, when one ultimately shines a light on them, are poor. Winning business is not about volume.
Marc Rowan: So again, this is a story of assets and of liabilities. On the asset side, it's all about the capacity to originate. As Jim suggested, this year was a very strong asset origination year, which led to the outperformance of the target. I expect, based on what we've seen thus far, 26 to be an equally strong asset origination year, augmented, or I should say, protected by the ARI transaction, which will give us some initial excess flow early in the year. On the liability side, having multiple channels is a godsend. There are places sometimes you don't want to do business. I personally don't think we've missed much in PRT over the past year. Not only have there been fewer transactions, but the spreads on those transactions, when one ultimately shines a light on them, are poor. Winning business is not about volume.
Speaker #5: As Jim suggested, this year was a
Speaker #5: Target. I year. Augmented, or I should say—
Speaker #5: Expect, based on what we've seen thus far—strong asset origination—to be equally strong in '26.
Speaker #5: Protected by the ARI. On the asset side, it's—thanks. Transaction, which will give us some—winning business is not about year; not only have there been—all about the capacity to—so again, this is a story of assets and of liabilities.
Speaker #5: fewer transactions, but to be on our front business. The spreads on those transactions, when every point we're offered the opportunity to do,
Speaker #5: One ultimately shines a light on channels; it is a godsend. There are
Marc Rowan: Winning business is about capturing profitability. At every point, we're offered the opportunity to do something that's expedient versus something that will build the book of business over the long term. Having a principles mindset is a very, very healthy way to run the business.
Marc Rowan: Winning business is about capturing profitability. At every point, we're offered the opportunity to do something that's expedient versus something that will build the book of business over the long term. Having a principles mindset is a very, very healthy way to run the business.
Speaker #5: a very, very healthy way
Speaker #5: to run the market, the
Operator: Thank you. The next question is coming from John Barnidge of Piper Sandler. Please go ahead.
Operator: Thank you. The next question is coming from John Barnidge of Piper Sandler. Please go ahead.
John Barnidge: Good morning, thank you for the opportunity. My question is focused on being on the offense. If we can go back to software, digging in that a little bit more could be interesting. Maybe, is it private equity, credit, both? And kind of what areas of software do you find appealing? Thank you.
John Barnidge: Good morning, thank you for the opportunity. My question is focused on being on the offense. If we can go back to software, digging in that a little bit more could be interesting. Maybe, is it private equity, credit, both? And kind of what areas of software do you find appealing? Thank you.
Jim Zelter: Yeah, I'm just going to answer that generically. You know, we've historically, if you go back in our 35 years, whenever there's an over allocation of capital, we tend to be defensive, and whenever there's a withdrawal of capital, we tend to be on our front foot. If you look at the repricing that's happened very, very quickly in the equity market, the valuations are certainly lower, but they're not cheap. They're still very, very high from an earnings multiple and such, but many companies had plans to either, you know, grow because of organic cash generation or equity origination, and those companies may not be able to do so.
Jim Zelter: Yeah, I'm just going to answer that generically. You know, we've historically, if you go back in our 35 years, whenever there's an over allocation of capital, we tend to be defensive, and whenever there's a withdrawal of capital, we tend to be on our front foot. If you look at the repricing that's happened very, very quickly in the equity market, the valuations are certainly lower, but they're not cheap. They're still very, very high from an earnings multiple and such, but many companies had plans to either, you know, grow because of organic cash generation or equity origination, and those companies may not be able to do so.
Speaker #3: Historically, if you go back in
Speaker #3: there's an
Speaker #3: Overallocation of capital, we tend to
Speaker #3: …foot, led to the outperformance of the—if you look at the repricing, that's—personally, I don't think we've missed much in…
Speaker #3: Valuations are certainly a sector that were equity, particularly from the world, priced or purchased, or opportunities from the world of. And whenever there’s a valued at revenue.
Jim Zelter: So there's no doubt that our screen of opportunities from the world of equity, particularly from the world of hybrid, and in some degrees in the world of credit, we are as busy as we've ever been because there will be a dispersion of returns. Some business models will continue to thrive, some will be more challenged. But what Marc talked about earlier, I'm just going to remind folks on this call, you had companies in this sector that were priced or purchased or valued at 15x revenue several years ago, maybe even 20x revenue, and now they're trading at 12 to 16x earnings. And so there's a very large difference in that valuation gap. It doesn't say they're not good companies, but the growth trajectory and the capital, availability of them to, you know, acquire capital to grow has changed.
Jim Zelter: So there's no doubt that our screen of opportunities from the world of equity, particularly from the world of hybrid, and in some degrees in the world of credit, we are as busy as we've ever been because there will be a dispersion of returns. Some business models will continue to thrive, some will be more challenged. But what Marc talked about earlier, I'm just going to remind folks on this call, you had companies in this sector that were priced or purchased or valued at 15x revenue several years ago, maybe even 20x revenue, and now they're trading at 12 to 16x earnings. And so there's a very large difference in that valuation gap. It doesn't say they're not good companies, but the growth trajectory and the capital, availability of them to, you know, acquire capital to grow has changed.
Speaker #3: Of hybrid and in cheap. Some will be more challenged from an earnings multiple, and they're still very, very high. Mark talked about earlier—I'm just going to, because there, will remind folks on this: be defensive.
Speaker #3: Credit, we are as busy as we've ever been. A dispersion of some degrees in the world of returns—some business models will see withdrawal of capital; we tend to continue to thrive.
Speaker #3: 15 times several years ago, maybe even 20 times revenue. At 12 to 16 times, a very large difference in that. And now they're trading—valuation gap—earnings.
Speaker #3: 15 times several years ago, maybe even 20 times revenue. At 12 to 16 times, that's a very large difference in that. And now they're trading—valuation gap.
Speaker #3: And so, there's— it doesn't say they're not time, and plays into how we want to more on the offense, but there's more of a dispersion over. So yes, there's no community or the corporate either, grow because— be a real.
Speaker #3: To acquire capital to trajectory and the capital availability of them, good companies. But the growth doubt that we're going to be much going to announce—this is just—grow has changed.
Jim Zelter: So yes, there's no doubt that we're going to be much more on the offense, but there's nothing that's going to happen tomorrow that we're going to announce. This is just more of a dispersion over time and plays into how we want to be a real partner, whether it's the sponsor community or the corporate community, as they need capital.
Jim Zelter: So yes, there's no doubt that we're going to be much more on the offense, but there's nothing that's going to happen tomorrow that we're going to announce. This is just more of a dispersion over time and plays into how we want to be a real partner, whether it's the sponsor community or the corporate community, as they need capital.
Speaker #3: partner, whether it's a sponsor, thank you.
Speaker #3: community as they need
Speaker #3: capital.
Operator: Thank you. The next question is coming from Brennan Hawkin of BMO Capital Markets. Please go ahead.
Operator: Thank you. The next question is coming from Brennan Hawkin of BMO Capital Markets. Please go ahead.
Speaker #1: Good morning. The next question is coming.
Speaker #1: Ahead, from Brennan Hawken of BMO Capital Markets.
Brennan Hawken: Good morning. Thank you for taking my question. I just had a couple on spread within SRE. I want to follow up from Mike's questions. He spoke to the 50 to 75 basis points, greater spread versus new issue, but how should we think about that on the net spread as you reported? Totally appreciate that it fits into the 10% total expectation for the year. And also, maybe a bit more broadly, how should we think about the cost of funds side? It sounds like there's a great deal of optimism on the origination and the asset side. Cost of funds, though, has steadily gone up. We hear about competition in some of those markets.
Brennan Hawken: Good morning. Thank you for taking my question. I just had a couple on spread within SRE. I want to follow up from Mike's questions. He spoke to the 50 to 75 basis points, greater spread versus new issue, but how should we think about that on the net spread as you reported? Totally appreciate that it fits into the 10% total expectation for the year. And also, maybe a bit more broadly, how should we think about the cost of funds side? It sounds like there's a great deal of optimism on the origination and the asset side. Cost of funds, though, has steadily gone up. We hear about competition in some of those markets. And so is the expectation that the cost of funds increases will stop, or is it more around the ability to outpace it on the asset side? Thanks for taking my question.
Speaker #9: Question. I just had a spread as you, but how should we think about that on the net for the year? Totally appreciate that it fits into the, broadly, how should we think about the cost? And steadily gone up.
Speaker #9: SRE. We want to follow up from Mike's 75 basis point question. So, you spoke to the 50 to points greater spread versus new issue. Thank you for taking my reported?
Speaker #9: of fund side? It
Speaker #9: We hear about competition in some of those markets. And so is the expectation that the cost of funds increases will stop? Or is it more around the ability to outpace it on the asset side? Sounds like there's a great deal of good side?
Brennan Hawken: And so is the expectation that the cost of funds increases will stop, or is it more around the ability to outpace it on the asset side? Thanks for taking my question.
Speaker #9: Thanks for taking my side. Cost of funds, though, has
Speaker #9: question. So it's Mark.
Marc Rowan: So it's Marc. I'll give you a business side, and then Martin will dig in a little bit. Cost of funds is ultimately a function of bond yields. Historically, it's moved around the triple B corporate spread. Having said that, in individual channels and individual times and individual quarters, it tightens or loosens. We run a business that is competitive in the marketplace with the highest quality companies, and liability side spread in mainstream markets are market determined. Most of the new entrants who are paying significant premiums for their cost of funds, and you can see this in any industry publication, are in the broker channel, and so it will not surprise you that as a percentage of our business, we do less in the broker channel.
Marc Rowan: So it's Marc. I'll give you a business side, and then Martin will dig in a little bit. Cost of funds is ultimately a function of bond yields. Historically, it's moved around the triple B corporate spread. Having said that, in individual channels and individual times and individual quarters, it tightens or loosens. We run a business that is competitive in the marketplace with the highest quality companies, and liability side spread in mainstream markets are market determined. Most of the new entrants who are paying significant premiums for their cost of funds, and you can see this in any industry publication, are in the broker channel, and so it will not surprise you that as a percentage of our business, we do less in the broker channel.
Speaker #3: I'll give you a business side, and then Martin will dig in a little.
Speaker #3: A function of bond optimism on the origination and the asset yields. Historically, it's moved around the BBB corporate spread. Having said that, in individual channels and individual times and individual quarters, it tightens or loosens.
Speaker #3: We run a business that is competitive in the companies.
Speaker #3: And liability side spread are market determined. Most of the new entrants who marketplace with the highest quality for their cost—in their cost of capital on spread within funds, and you can see this in any industry publication—are in the broker channel.
Speaker #3: And so it will not surprise you that, as a percentage of our business, we do less in the broker channel. At the end of the day, the ability to have a low OPEX and higher-than-average asset spread allow us to win the fair share of business that we want to win, and we want to win it in a mix.
Marc Rowan: At the end of the day, the ability to have a low OpEx and higher than average asset spread allow us to win the fair share of business that we want to win, and we want to win it in a mix. We want some long-dated business, some short-dated business, some policyholder-dependent business, behavior-dependent business, some non-policyholder-dependent business. And ultimately, as I suggested, this iteration of the business, of the retirement, is a fascinating business. Retirement products are in amazing demand. Having said that, the next leg of this business is not the product set that exists today. It is creating the product set that serves the needs of retirees, that is simpler, easier to deliver, and that relies more heavily on the things we do well, OpEx and the origination of spread.
Marc Rowan: At the end of the day, the ability to have a low OpEx and higher than average asset spread allow us to win the fair share of business that we want to win, and we want to win it in a mix. We want some long-dated business, some short-dated business, some policyholder-dependent business, behavior-dependent business, some non-policyholder-dependent business. And ultimately, as I suggested, this iteration of the business, of the retirement, is a fascinating business. Retirement products are in amazing demand. Having said that, the next leg of this business is not the product set that exists today. It is creating the product set that serves the needs of retirees, that is simpler, easier to deliver, and that relies more heavily on the things we do well, OpEx and the origination of spread.
Speaker #3: Short-dated business, some policyholder-dependent in mainstream markets. We want some long-dated business, some behavior-dependent business, some non-policyholder-dependent business, and some business where clients are paying significant premiums. And ultimately, as I suggested, this iteration of the retirement business—retirement products are in amazing demand.
Speaker #3: It is a fascinating business. Having said that, the next leg of this business is not the product set that exists today. It is creating the product set that serves the needs of retirees that is simpler, easier to deliver, and that relies more heavily on the things we do well.
Speaker #3: OPEX and the origination of spread—building out unique or less trafficked liability channels—is something that we're focused on, and that will be important not just over the next five years, but for the five years after that.
Marc Rowan: Building out unique or less trafficked liability channels is something that we're focused on that will be important not just over the next five years, but for the five years after that.
Marc Rowan: Building out unique or less trafficked liability channels is something that we're focused on that will be important not just over the next five years, but for the five years after that.
Speaker #4: On the spread question, Brennan, we operate the business on a net spread basis. So the cost of where we write liabilities and the associated cost of funds is connected to where we can invest against that.
Martin Kelly: ...On the spread question, Brennan, we operate the business on a net spread basis. So the cost of where we write liabilities and the associated cost of funds is connected to where we can invest against that. And we, you know, we create a net spread, which after costs and on a return on equity basis, gets to a mid-teens return. So, you know, in terms of guidance, we were quite specific at the November day on where we expect the spread to come out, assuming ultra 11 percent, and that was 120 to 125 basis points. That's what we printed for Q4 at 124 basis points.
Martin Kelly: ...On the spread question, Brennan, we operate the business on a net spread basis. So the cost of where we write liabilities and the associated cost of funds is connected to where we can invest against that. And we, you know, we create a net spread, which after costs and on a return on equity basis, gets to a mid-teens return. So, you know, in terms of guidance, we were quite specific at the November day on where we expect the spread to come out, assuming ultra 11 percent, and that was 120 to 125 basis points. That's what we printed for Q4 at 124 basis points.
Speaker #4: And we create a net spread which, after costs and on a return on equity basis, gets to a— So, in terms of guidance, we were quite specific at the November day on where we expect the spread, mid-teens return.
Speaker #4: To come out, assuming also 11%. And that was 120 to 125 basis, Q4 at 124 basis points. And given the comments that we've made about ARI earlier on the call, I would assume that the same holds true for the year.
Martin Kelly: And given the comments that we've made about AROI earlier on the call, I would assume that the same holds true for the year. So, you know, in the 120 to 125 ZIP code on a reported net spread basis and where we write business and where we can invest against it.
Martin Kelly: And given the comments that we've made about AROI earlier on the call, I would assume that the same holds true for the year. So, you know, in the 120 to 125 ZIP code on a reported net spread basis and where we write business and where we can invest against it.
Speaker #4: So, in the 120 to 125 zip code, on a reported net spread basis, and where we write business and where we can invest against,
Speaker #4: it. Thank you.
Operator: Thank you. The next question is coming from Brian Bedell of Deutsche Bank. Please go ahead.
Operator: Thank you. The next question is coming from Brian Bedell of Deutsche Bank. Please go ahead.
Speaker #1: The next question is coming from Brian Bedell of Deutsche Bank. Please go ahead.
Speaker #5: Oh, great. Thanks. Thanks for the morning. Thanks for taking my question. Maybe just shifting to the 401(k) market, Mark, if you can just talk about what kind of progress you're seeing in the DOL and for plan...
Brian Bedell: Oh, great. Thanks. Thanks, good morning. Thanks for taking my question. Maybe just shifting to the 401(k) market, Marc, if you could just talk about what kind of progress you're seeing, and, you know, in the DOL and for plan sponsors, in terms of their appetite to adopt alternative products. And then if you can add in your strategy with, you know, collaboration with different managers. You had the Schroders announcement this morning, obviously, Lord Abbett and State Street as well. Should we expect more of these types of announcements, or do you view yourself as sort of an open architecture collaborator, if you will? Or, do you feel like you've got, you know, the partners you need, you know, for the future game plan here?
Brian Bedell: Oh, great. Thanks. Thanks, good morning. Thanks for taking my question. Maybe just shifting to the 401(k) market, Marc, if you could just talk about what kind of progress you're seeing, and, you know, in the DOL and for plan sponsors, in terms of their appetite to adopt alternative products. And then if you can add in your strategy with, you know, collaboration with different managers. You had the Schroders announcement this morning, obviously, Lord Abbett and State Street as well. Should we expect more of these types of announcements, or do you view yourself as sort of an open architecture collaborator, if you will? Or, do you feel like you've got, you know, the partners you need, you know, for the future game plan here?
Speaker #5: sponsors in terms of their appetite to adopt alternative products. And then if you can add in your strategy points.
Speaker #5: With collaboration with different managers. You had the Schroders announcement this morning. Obviously, Lord, you're— that's what we printed for— of these types of announcements?
Speaker #5: Abbott and State Street as
Speaker #5: Should we expect more
Speaker #5: you view yourself as sort of an open Or do architecture collaborator, if you will? Or do you feel like you've got the partners you need for the future game plan here?
Speaker #3: So let me work backwards in this. We are open architecture, and we are a product supplier to numerous traditional asset managers, particularly through our ACS business.
Marc Rowan: So, let me work backwards in this. We are open architecture, and we are a product supplier to numerous traditional asset managers, particularly through our ACS business. That is one level of collaboration with traditional asset managers. The next level of collaboration is the creation of a partnership and the creation of joint product. I think you're starting to see that in a couple of partners you've mentioned. I think we're going to continue to see that blossom. Having said that, we're all learning right now, and what has to happen in the business is we, as an industry, we need to adapt our business to the ways traditional asset managers work. Moving your business to daily NAV is a big deal for our industry.
Marc Rowan: So, let me work backwards in this. We are open architecture, and we are a product supplier to numerous traditional asset managers, particularly through our ACS business. That is one level of collaboration with traditional asset managers. The next level of collaboration is the creation of a partnership and the creation of joint product. I think you're starting to see that in a couple of partners you've mentioned. I think we're going to continue to see that blossom. Having said that, we're all learning right now, and what has to happen in the business is we, as an industry, we need to adapt our business to the ways traditional asset managers work. Moving your business to daily NAV is a big deal for our industry.
Speaker #3: That is one level of
Speaker #3: Collaboration with traditional asset managers. The next level of
Speaker #3: collaboration is the well.
Speaker #3: And the serving of joint—the creation of a partnership joint product. I think you're starting to see that in a couple of partners you've mentioned. I think we're going to continue to see that blossom.
Speaker #3: Having said that, we're all learning right now. And what has to happen in the business is, we, as an industry, need to adapt our business to the ways traditional asset managers work.
Speaker #3: Moving your business to daily NAV is a big deal for our industry. We are in the process of moving, as I—particularly our high-grade credit suggested in our last call—business to daily NAV.
Marc Rowan: We are in the process of moving, as I suggested on our last call, particularly our, a high-grade credit business, to daily NAV. That is an unlock. Providing liquidity in markets, which many in our industry have spoken against, is an unlock for traditional asset managers. And so I expect, and I've said this previously, I think traditional asset managers done well could be the single largest opportunity. I expect them to be among the largest buyers. Some of that will be in the existing mutual fund complexes and ETF complexes. Some of that will be through new products, and some of that will be through 401(k).
Marc Rowan: We are in the process of moving, as I suggested on our last call, particularly our, a high-grade credit business, to daily NAV. That is an unlock. Providing liquidity in markets, which many in our industry have spoken against, is an unlock for traditional asset managers. And so I expect, and I've said this previously, I think traditional asset managers done well could be the single largest opportunity. I expect them to be among the largest buyers. Some of that will be in the existing mutual fund complexes and ETF complexes. Some of that will be through new products, and some of that will be through 401(k).
Speaker #3: That is an unlock. Providing liquidity in markets, which, again, is an unlock for traditional asset managers. And so I expect—and I've said this—done well, could be the single largest opportunity.
Speaker #3: Be among the largest buyers. Some previously, I think traditional asset managers of that will be in the—I expect them to—existing mutual fund complexes and ETF complexes.
Speaker #3: Some of that will be through new products, and some of that will be through 401(k). 401(k), in my opinion, are not going to specifically, the big volumes in come until there is a rulemaking.
Marc Rowan: On the 401(k), specifically, the big volumes in 401(k), in my opinion, are not going to come until there is rulemaking or at least guidance that will give more clarity to the executive order that has come down. Having said that, Jim and I are the recipients of numerous call reports. If I had to give you my email inbox, the amount of activity taking place in DC, in all its quadrants, is just off the charts. Every conference, every industry get-together is literally just overwhelmed with the discussion of private assets, and for very good reasons. The addition of private assets to a portfolio, given the length of time these employees will be in these plans, are 50 to 100% better outcomes.
Marc Rowan: On the 401(k), specifically, the big volumes in 401(k), in my opinion, are not going to come until there is rulemaking or at least guidance that will give more clarity to the executive order that has come down. Having said that, Jim and I are the recipients of numerous call reports. If I had to give you my email inbox, the amount of activity taking place in DC, in all its quadrants, is just off the charts. Every conference, every industry get-together is literally just overwhelmed with the discussion of private assets, and for very good reasons. The addition of private assets to a portfolio, given the length of time these employees will be in these plans, are 50 to 100% better outcomes.
Speaker #3: Or at least guidance that will give more clarity to the executive order that has come down. Having said that, Jim and I are the recipients of numerous call reports.
Speaker #3: If I had to give you my email inbox, the amount of—many of our industry have spoken—DC in all its quadrants is activity taking place in just off the charts.
Speaker #3: Every conference, every industry get-together is literally just overwhelmed with a discussion of private assets and for very good assets to a portfolio, given the length of time these employees will be in these reasons.
Speaker #3: Plans are 50% to 100% better outcomes. And the other interesting piece of this is not so much the addition of private, focused on in the executive order, is the opening of 401(k) to guaranteed income, particularly guaranteed lifetime income.
Marc Rowan: And the other interesting piece of this is, and not so much focused on in the executive order, is the opening of 401(k) to guaranteed income, particularly guaranteed lifetime income. We moved as a world for something that was really good for employees. We've moved from defined benefit. Employees loved it, guaranteed lifetime income. Companies hated it. We then moved to a world of defined contribution, where all of the risk was essentially on the employee and not on the company. Been great for companies, but not so good for employees. Most employees have not made a proactive investment decision within their 401(k), ever. They are guided by the alternatives provided by the trustees of that plan.
Marc Rowan: And the other interesting piece of this is, and not so much focused on in the executive order, is the opening of 401(k) to guaranteed income, particularly guaranteed lifetime income. We moved as a world for something that was really good for employees. We've moved from defined benefit. Employees loved it, guaranteed lifetime income. Companies hated it. We then moved to a world of defined contribution, where all of the risk was essentially on the employee and not on the company. Been great for companies, but not so good for employees. Most employees have not made a proactive investment decision within their 401(k), ever. They are guided by the alternatives provided by the trustees of that plan.
Speaker #3: We moved as a world for something that was really good for employees. We've moved from defined benefit. Employees loved it. Guaranteed lifetime income. Companies hated it.
Speaker #3: We then moved to a world of defined contribution, where all of the risk was essentially on the employee and not on the company. It's been great for companies, but not so good for employees.
Speaker #3: A proactive investment decision within their 401(k) is something most employees have never made. They are guided by the alternatives provided by the trustees of that plan.
Marc Rowan: I believe the world we're heading to is more of a hybrid world, to use a term that we use a lot around here, where we will end up with something that looks more closely to defined benefit, but will not be provided by the employers. It will be provided by the marketplace. Right now, we're in the baby step phase, where every day we're making progress. It will be north of $1 billion this year. It might have even been, I don't have the number in front of me, north of $1 billion last year, but I can see it taking shape.
Speaker #3: I believe the world we're heading to is more of a hybrid world, to here. Where we will use a term that we use a lot around, end up with something that looks more closely to defined benefit, but will not be provided by the marketplace.
Marc Rowan: I believe the world we're heading to is more of a hybrid world, to use a term that we use a lot around here, where we will end up with something that looks more closely to defined benefit, but will not be provided by the employers. It will be provided by the marketplace. Right now, we're in the baby step phase, where every day we're making progress. It will be north of $1 billion this year. It might have even been, I don't have the number in front of me, north of $1 billion last year, but I can see it taking shape.
Speaker #3: Right now, we're in the baby step phase, where every day we're making progress. It will be provided by the employers. Be north of a billion—it will be dollars this year.
Speaker #3: It might have even been—I don't have the number in front of me—north of a billion dollars last year. But I can see it taking shape.
Speaker #3: And just managers, these people need to be not just daily NAV. They need to be daily liquid. The ability to do this, the ability to create the structures, the ability for our industry—not just for us—to adapt our product set to serve these markets, in addition to the rulemaking or guidance, is going to be what unlocks this opportunity.
Marc Rowan: And just like the comments around traditional asset managers, these people need to be not just daily NAV; they need to be daily liquid. The ability to do this, the ability to create the structures, the ability for our industry, not just for us, to adapt our product set to serve these markets, in addition to the rulemaking or guidance, is going to be what unlocks this opportunity. But you can hear from what we're doing and from the comments around margin. We've gone from a business with one market to six markets. The problem is, or the opportunity is, five of those markets require different product set, different delivery mechanisms, and different surroundings in terms of daily NAV and liquidity.
Marc Rowan: And just like the comments around traditional asset managers, these people need to be not just daily NAV; they need to be daily liquid. The ability to do this, the ability to create the structures, the ability for our industry, not just for us, to adapt our product set to serve these markets, in addition to the rulemaking or guidance, is going to be what unlocks this opportunity. But you can hear from what we're doing and from the comments around margin. We've gone from a business with one market to six markets. The problem is, or the opportunity is, five of those markets require different product set, different delivery mechanisms, and different surroundings in terms of daily NAV and liquidity.
Speaker #3: But you can hear from what we're doing, and from the comments around margin, we've gone from a business with one market to six markets.
Speaker #3: The problem is, or the opportunity is, five of those markets require different product sets, different delivery mechanisms, and different surroundings in terms of daily NAV, and our industry and our firm liquidity, and how fast pivots to that is going to be how fast we're able to grow, along with Jim's comments around origination—I like the comments around traditional asset quality.
Marc Rowan: And how fast our industry and our firm pivots to that is going to be how fast we're able to grow, along with Jim's comments around origination at scale, but with quality. At the end of the day, the thing that is not changing here, we come at this business with a principled mindset. Whether you are an institutional client, a retail client, a 401(k) client, or an insurance company client, you are side by side with us. We're eating our own cooking. It keeps us really focused on the quality of what we do. There is no amount of fee that we can make from an asset that will overcome a bad principled decision. We reinforce that every day. It's why we're going to be on offense and software. It's why we have the opportunity set we have today. Couldn't be more enthusiastic.
Marc Rowan: And how fast our industry and our firm pivots to that is going to be how fast we're able to grow, along with Jim's comments around origination at scale, but with quality. At the end of the day, the thing that is not changing here, we come at this business with a principled mindset. Whether you are an institutional client, a retail client, a 401(k) client, or an insurance company client, you are side by side with us. We're eating our own cooking. It keeps us really focused on the quality of what we do. There is no amount of fee that we can make from an asset that will overcome a bad principled decision. We reinforce that every day. It's why we're going to be on offense and software. It's why we have the opportunity set we have today. Couldn't be more enthusiastic.
Speaker #3: At the end of the day, the thing that is not changing here is that we come at this business with a principles mindset. Whether you are an institutional client, a retail client, a 401(k) client, or an insurance company client, you are side by side with us.
Speaker #3: We're eating our own cooking. It keeps us really focused on the quality of what we do. There is no amount of fee that we can make from an asset.
Speaker #3: That will overcome a bad principal decision. We reinforce that every day. It's why we're going to be on offense in software. It's why we have the opportunities that we have today.
Speaker #3: Couldn't be more enthusiastic.
Operator: Thank you. That brings us to the end of the question and answer session. I would like to turn the floor back over to Mr. Gunn for closing comments.
Operator: Thank you. That brings us to the end of the question and answer session. I would like to turn the floor back over to Mr. Gunn for closing comments.
Speaker #1: Thank you. I would now like to turn the floor back over to Mr. Gunn for closing comments.
Speaker #4: Great. Thank you, everyone, for joining us this morning and for all your time you're spending with us. If you have any follow-up questions, as usual, please feel free to reach out on anything we discussed.
Noah Gunn: Great. Thank you, everyone, for joining us this morning and for all your time you're spending with us. If you have any follow-up questions, as usual, please feel free to reach out on anything we discussed. Thank you very much.
Noah Gunn: Great. Thank you, everyone, for joining us this morning and for all your time you're spending with us. If you have any follow-up questions, as usual, please feel free to reach out on anything we discussed. Thank you very much.
Speaker #4: Thank you very much.
Speaker #1: Ladies and gentlemen, this concludes today's event. You may disconnect your lines or log off the webcast at this time. And enjoy the rest of your
Operator: Ladies and gentlemen, this concludes today's event. You may disconnect your lines and log off the webcast at this time, and enjoy the rest of your day.
Operator: Ladies and gentlemen, this concludes today's event. You may disconnect your lines and log off the webcast at this time, and enjoy the rest of your day.
