Good afternoon, everyone. I'm Patrick Davitt, the U.S. Asset Manager Analyst here at Autonomous Research. It's my pleasure to welcome back Apollo's President, Jim Zelter. As a reminder, if you have any questions you'd like me to try to throw in, you can submit them through the Pigeonhole portal, and I will get them here on the iPad and try to throw them in, as time allows. Jim, thanks again for joining us. Always a pleasure being here. Appreciate your interest and the folks in the audience learning more about our company. For sure. It does feel like a broken record at this point when we're sitting at this event in terms of another winter and spring of volatile events. As I do, given we have most of the major alternative managers at this conference, I want to start with some higher-level macro questions. We've got a private credit freak-out, concerns about sticky inflation, higher-for-longer rates, risk of slower growth. Do you agree with all of these concerns and what is Apollo's and your current thinking on inflation rates and the economy? Well, I think that just taking a step back, I think every investor in credit post-GFC has a greater ear to the ground on the global macro. Yeah. The interconnectivity of all these markets is critically important and you and I have spent a lot of time, and I'm happy to talk today about some of these big trends, whether it's the global industrial renaissance or the evolving banking system. Yes, I do think that we've been pretty consistent in the last year or so about higher for longer. Torsten's been very public. Marc and I have been very public, about the concern about inflation was much more concerning and pervasive than the concern of just lower rates. That was staying a lot of the talk about from the administration. I use the analogy of golf. I said, in the middle of fairway things are nice, massive CapEx cycle, big M&A cycle, risk on equity mentality, good corporate profits. The challenge is, and in the rough, inflation, global fragmentation. the crisis in the Middle East. The problem is that fairway is getting narrower, and it feels like it's the narrowest fairway we've had in a long time. I just think that when you think about tail risk, not only is it a higher degree of tail risk, but when tail risk comes, you have a higher degree of potential impairment and loss. Putting those together, I just think you have to be very vigilant about how you're investing today, and you have to be very thoughtful about trying to predict the future in terms of these big trends. I do think we are in the business of putting money to work, but again, a lot of it depends on the liability that you've been given. Yeah. If you've been given a PE mandate and your liability is 25, 30%, having a little bit of equity on top of a levered balance sheet, you better be pretty sure right now. If you're investing with investment-grade companies that are taking some of the best business models of all time, you want to be their partner. Again, this all depends, but I think it's the idea that this is a surprising environment, I think you've sort of been asleep if you think this is surprising. Yeah. I think there's a lot of disruption happening around the globe, and I think you just need to really prepare. You can't predict it, but you can prepare for it. That's helpful. Kind of following on that, I think Marc's prepared remarks on the last quarterly call were particularly pointed with the suggestion that Apollo is positioned for some fairly significant social and economic upheaval in the coming years. Could you expand on what exactly you're seeing that has you guys concerned, and how is Apollo positioned with this seemingly quite dour outlook? I think if you have an environment where government balance sheets around the globe are pretty well hocked, you have a rising K-economy. You having arguments about access to opportunity, education is prohibitively expensive. You have to assume a different administration and leadership is going to create different regulatory environments. For us, it's in a world where technology and AI is disrupting, and you don't know what the truth is, things such as brand, reputation, really high ratings, a fortress balance sheet, I think those are strategies that will win in many cases. Tying those together as you execute your business strategy is really important. Okay. Let's switch gears to the investment environment. You posted a very strong origination quarter. Marc's outlook was quite constructive on how things are tracking in 2Q. How would you characterize the origination platform? Where are you seeing the most compelling opportunities? Yeah. From our investor day, we talked about the ecosystem which we've created, and we called it our Mona Lisa. We talked about bank partnerships, our origination platforms, and then what Apollo does on our own, our CRE lending, our CLO lending, our high-grade capital solutions. The area that's the most profound with a pipeline right now is the area of our HGCS, our high-grade capital solutions. Yeah. We've talked about this industrial renaissance, investment-grade-led companies in a variety of industries and geographies, and those companies are really where we're spending a tremendous amount of our time. If there was one contributing factor to a bit more bottom line origination and spread, it would be that High-Grade Capital Solutions. A handful of deals to date already this year in the second quarter, but probably the deepest pipeline we've had historically in net High-Grade Capital Solutions as we sit here today. Some in the next two to four weeks, some in the next two to four months. Certainly, I think they will have an impact on the second and third quarter in our volumes and numbers. That dovetails nice, I think, with capital solutions fees, your transaction fees. Yeah which I think are somewhat tied to what you just said on the High-Grade Capital Solutions. That result was much better than I think anybody expected, given the environment in the first quarter. Through the lens of what you just said about the pipeline, how should investors be thinking about the trajectory of that fee stream, given the kind of uptick in the pipeline? Yeah, I think I alluded to, a couple of years ago, trying to turn that business. I used the analogy, Goldman Sachs to the Bank of New York. Yeah. Less lumpy, more predictable, more longer term, more consistent. Maybe not the same growth rates, but less volatility. I think we're doing that right now. Yeah. I feel more comfortable with our long-term objectives of what that number could go to, and I feel more confident in terms of the, I hate to use the word predictability, but the comfort that investors should be accustomed to and our ability to do that. I think that a lot of it's tied to the breadth of the business. We don't want it to be four or five large transactions. We'd like to make it 20, 30, 40. The volume and the spread of those volume is consistent with that. I think we feel, I sitting here today, basically end of May, I feel confident about our ability for this quarter and the rest of the year to produce those results. Great. Moving to capital formation, as it seems like pretty consistently now, you gave very constructive comments on the broader base capital formation environment you're seeing across the business. How should we think about capital formation evolving within your six big channels that you've highlighted on the recent calls? Yeah. If I said it, I know everybody in the room is focused on global wealth, global wealth, which I'm happy to talk about, but I would say that institutional's back. Yeah. its demise was predicted and is not happening. When we think about the six channels, whether it's insurance, fixed income replacement, traditionals, and otherwise, I definitely think that institutional demand is very strong across credit, infrastructure, and hybrid. We're getting a good take-up in our private equity vehicles. I think that's the dividend of good discipline over the last several years. We feel exceedingly strong about the year-over-year growth in our broad institutional businesses and the variety of other channels that go along with that. I think to global wealth, certainly one product, the non-traded BDC, has come under some scrutiny more for perceived concerns than actual performance. Yeah. The headlines are certainly louder than the spread widening. That being the case, you saw elevated redemptions in the first quarter. I suspect you will over the next couple of quarters. I don't think it was a one-shot. That being said, I think you're finding underlying performance in March and April and May be solid and consistent. Maybe that'll dampen down some of the redemption. What you're also finding in global wealth is there's differentiation going on between different channels, between the wirehouses, the RIAs, and other independent wealth channels. Some tend to be, depending on the geography, a bit stickier, some depending on the channel and the manner in which you have one decision-maker or many decision-makers. I think we're learning who are our longer-term friends and who are the shorter-term tourists. On that, how would you characterize the pipeline mix of the redemption requests we've seen thus far? Yeah. I would say, I suspect you're going to see it's still early. The way that our vehicles work, you really don't know until basically this week. Yeah a few weeks. I'm predicting, but having done this long enough, I would not suspect a dramatic decrease. I would suspect a maintenance of the levels of the past, maybe even a little bit of an increase as people want to game the system. Yeah. I think that's my professional judgment would say, we're not through the turbulence yet. I meant more like which pipeline is proving to be less sticky, I guess. Yeah. To your point earlier. Yeah. I think it'd be inappropriate before I get the numbers. Okay. I do think there's certainly channels that are much more focused on a portfolio solutions than a product solutions. Okay. Those that are much more focused on portfolio solutions tend to be stickier. Got it. Staying on the wealth topic, obviously, been a lot of noise on one kind of specific part of the market, direct lending or non-traded BDCs. What are you hearing from your distribution partners in wealth? How is it impacting their view of- Yeah increasing allocations to these products? I think they all believe that their penetration is still low versus institutions, and the long-term penetration will get higher. I think they look at this as a pebble in the shoe. Yeah. It's a little bit painful in the short term, but sooner or later you'll take the shoe off and get rid of the pebble. I do think there'll be a variety of product expansion innovation, and I think there will be, over time, some winners and losers. I just think these periods of disruption create a bit of a moat of intermediaries that aren't as sizable in scale to compete. Yeah. You need to have a lot of resources to be able to respond, and engage, and educate. The requirements are just getting more and more. I think they're looking for long-term partners. Through that lens, it stands to reason the real winners in that channel are probably already decided, and you'll be one of them. I think if you've not really established a large distribution platform, large partnership, education, academic institute, online technology, and a broad suite of products. I think it's very hard to break in now. It's almost like the bulge bracket banks. It's very hard to disrupt the incumbents. I don't think all the seats have been taken. I think a variety of seats have been taken. Now, you can lose a seat. Yeah. You can lose a seat from performance or brand, or not delivering what you've said, but I think it's very hard to gain a seat. Got it. Much easier to lose a seat than gain a seat. One more quick one on wealth. I think a few years ago you were talking about launching one or two products a quarter. You've kind of stuck with that, and you have a nice suite. Are there still any kind of pockets on the wealth side that you think you need to be launching new products for? Or is the suite pretty well-established? I think we're pretty well-established. Yeah. The decisions we've made to not do certain products were conscious decisions. Yeah. That I don't think, notwithstanding some of the more recent fundraising, I think those will be products that still undergo some degree of scrutiny or volatility. If anything, I'm more focused on brand and the client experience than ever before. I think that returns are very important, but there's a variety of other factors that are pretty important as well. I think we're really in execution mode right now. I think there's times when there's market disruption, and it's just really about education, communication, and performance, and I think we're at that period right now. Okay. Especially in the non-traded BDCs. I think we've hit all the concern points out there right now, so let's move to the growth algorithm for Apollo. I like that. You did 12 minutes on the problems and 34 minutes on the opportunity. Yeah. There you go. I'm trying to stay positive. Yeah. You had a great first quarter result. Reiterated 20% + FRE growth for this year and for longer term. For those that might not be as familiar with your story, maybe quickly unpack the key building blocks to that industry leading view, and to what extent this year's volatility has made you more or less confident in hitting those targets. Yeah. For those who are less familiar, we really have the holding company, it's public, two real operating subsidiaries, Apollo Asset Management, that manages all the assets on behalf of third parties as well as our regulated balance sheets. That's the fee-related earnings and the performance incentive income, the PII, two parts of our business. The other part of our business is our regulated balance sheets, Athene, Athora, PIC, and otherwise, that's spread-related earnings. The FRE has historically grown in excess of 20%. The Athene SRE, we signed up to long-term growth around 10% on a compounded basis, both compounded. We've exceeded both of those targets historically. We've, on virtually every occasion, every quarter, exceeded the FRE. There's been some quarters where long-term trend is on SRE growth. I think the fundamentals on the asset management side, you're hitting at it. We see as our business has expanded from our private equity business to private equity, mostly a credit product set, but with infrastructure and real assets. Massive institutional demand around the globe, massive demand from third-party channels, from traditional asset managers, from insurance companies, from what we call fixed income replacement. A lot of drivers to that around the globe. As the demographics of pensioners and retirees gets older, there's a greater desire to de-risk the equity and put more into fixed income and credit. We're getting the benefit of that along with secular trends about the banking system and the role that private capital plays. Just a tremendous amount of drivers from the demand side of those products. On the other side of the equation at Apollo Asset Management, companies right now, we're in this middle of this global industrial renaissance. The amount of companies that are looking for large scale solutions that they can get done in the IG market, in the bank market, and private credit. None of those markets are big enough on their own. to solve all these problems. I think there's a greater awakening that the CapEx needs are so great, it's a combination of those things. To your point, all the demographic trends, all the secular trends, and the execution of our model is hitting all strides on the asset manager. I think that the perpetual capital benefit of our vehicles, people are seeing the benefit of that flywheel in our AAM business. On the other side of the business, the regulated balance sheet, spread-related earnings. Annuities do well. They've done well the last 10 years. They continue to fulfill a need for a population that's getting older, some part of it's getting wealthier, and they want more predictable income, and annuities are a great product there. We're the leading annuity player in the U.S. We're the leading market share, low double digits. Our ability to bring in liabilities from retail, from PRT, pension risk transfer, as well as the FABN, fixed annuity backed notes. those all increased. A lot of just great demographic drivers to our business. On the balance sheet side, on the SRE side, slower growth because of the regulatory capital that's needed, and we're just talking about a smaller margin business of you're trying to make 120 basis points- 130 basis points on the annuities. Very good demographic drivers. I do believe that the ability for the asset management and the retirement services business to create products in the future, between the chocolate and the peanut butter, and I think that's still very early days. I think that when we think about one of the big challenges around the globe is we've done a terrible job in dealing with preparing retirees, broadly speaking, for post-retirement. Yes, people are getting older. Some countries have done a good job, Canada, Australia, in terms of the super funds, the other pension vehicles. Post-retirement, how is that dealt with? How do you deal with guaranteed lifetime income? How do you really prepare people to be comfortable to spend what they've saved without running out of capital? I think there's a whole host of growth options there, but the businesses you described right in front of us, and I try to describe Apollo in a very simple fashion, is we're the box in the middle between companies needing to raise capital for growth, expansion, diversification, and retirees around the globe that need either pension or retirement solutions. Both the left side and the right side, we have a great secular tailwind to our back. I think that's what we make our business much better, but we also have to execute, and that's the secret sauce. On the insurance points, Apollo and Athene, for better or worse, receive a lot of attention in the press, and in some ways, I think are seen as the poster children for the alts and insurance business model. To your credit, you've been kind of an industry leader in terms of transparency and disclosure, and there's a lot of presentations on both Apollo and Athene's website. As you read through this barrage of press, what are the major misperceptions from your point of view, and do you have any incremental thoughts on what else you guys could do to help assuage those concerns, despite already doing a lot? Yeah. Let me tell you what I think we're doing, that I think that you can either fight the conversation or engage in the conversation. We probably try to do a bit of both, but first engage. To your point, about three or four weeks ago, we put out on a Friday what I would think is the seminal piece on the portfolio breakdown of the Athene book, all the sub-asset classes in granular detail. We put out a second piece on our alternatives book, the granular detail, and the third piece was all the affiliated or related parties. The compendium of all three was, I don't want to say a shot across the bow, but it was our attempt to say, "Listen, if you want to shed light on it, let's shed the light on the facts." We've had a universal great response from regulators, from industry, consultants, and folks that are in the know on really what matters. I'll give you a great example. On the related party transactions which sound really bad, a lot of the transactions we've done, Intel per se, that we actually issued and actually monetized to a great return because we couldn't own the whole thing for good diversification reasons. That gets tied up in a related party transactions because a strip of the investment is equity, and we needed to account for that. A lot of times it's actually not a flaw, it's an attribute. I think our choice has been just to really engage. Now, in the world that we are in today, a lot of folks who cover these complicated businesses don't have the historical benefit, and I'm being very polite here, to understand really how these businesses work. I think the thing that if I could push back on one thing, I would push back on PE controlled. The idea that Apollo happens to be an alternative manager, we happen to have a PE business. Yeah The idea that the PE funds control our insurance activities, that couldn't be further from the truth. I just think it's a massive amount of education. We spent a lot of time talking about private credit. We think we wrote the seminal white paper on private credit. Most people define private credit as your non-investment grade direct lending. We think that's a historical term that's not really relevant today, but it's a name that the moniker has stuck. We talk about private credit being the investment grade $40 trillion in activity set. I think that it's going to take just time and more folks to get up to speed and educated. I have the good fortune of going through, been a junk bond trader, and then I was a high yield trader, and then I was in leverage finance. My job didn't change, but the nomenclature of my job changed. Right. Fair point. You touched on retirement a little bit. I want to unpack it a bit more. You've obviously put a lot of material out there kind of citing this $45 trillion global retirement market, a billion people worldwide reaching retirement age. How more specifically is Apollo and Athene pursuing this opportunity? How does that differ across the different regions? Given you always say the real constraint on your growth is the ability to originate good assets, are there even enough good assets out there to truly address? No the volume of TAM you're talking about here? No. I think that to answer your question directly, there aren't enough good assets, but we're not in the market share game. Right. We're just trying to make sure that those investors that we offer a retirement solution for, that we have the tools of our origination at their disposal as part of their proposal, part of their portfolio. Not all of their portfolio, but a portion of their portfolio. Turn a 5% - 6% distribution rate into a 6%, 7%, 8%, and that's real dollars and cents for your average retiree around the globe. I do think that working with the embedded infrastructure of Australia, the U.S., and Canada, our move in the U.K. on PIC to be part of the pension risk transfer market, there's no one solution that's the silver bullet around the globe. It's really working within different countries, different geographies, different regulatory regimes to be part of that. Our biggest focus is on the U.S., is on the U.K., a bit of Western Europe, Korea, Hong Kong, Singapore, and Australia. We're not spending a lot of time trying to figure out retirement solutions in Latin America, which is really a very robust marketplace and a lot of reforms taking place. We are spending some time in Japan, but we're not spending time in China, we're not spending time in Eastern Europe, or Southern Europe. I do think we choose with our locations, yes. Got it. The most tangible impact in your results from the insurance business is spread earnings. The tone on the earnings call, I think suggests that maybe we've turned a corner after some challenges that that business faced over the last couple of years. Could you walk us through the underpinning assumptions and confidence behind the new outlook there? Yeah. I think that we had a swath of some very high spread business. Yeah that we originated in COVID, that between the product set happened to roll off, and we had a compression of spreads. When we think about our ability to, during either Liberation Day or other periods of time, either use a variety of market moves to actually source a variety of assets or our origination kicking in, I think we feel comfortable that we are in a more balanced situation now and have gone through that little bit of that pig in the python in terms of the marginal returns being a little bit lower than our long-term average. I think we feel comfortable with it right now. It is a more competitive space with folks entering the marketplace. I find it strange that people celebrate their entry into the marketplace and not their success at the marketplace. Yeah, I think over time, you need to generate mid-teens return on your ROE or the capital you have is going to disappear. We have a success of doing that, and I think that we're not in the view that we have to grow at all costs. It's actually smart growth and shrewd growth. I think that our model has shown we've been able to generate that kind of spread return, and make it appropriate. The other thing I would say is, by deciding how you want to issue business, that does release some capital, so we can be thoughtful about releasing capital if the growth options aren't as profound. On the competition issue, Apollo has been quite vocal about the capital arbitrage in the Caymans, which I imagine is helping those more marginal players stay more competitive with Athene. Is that a fair view, and what are you doing to raise the issues with regulators? Yeah. I think we've been very transparent and very public how equal capital for equal risk. Like the banking system, those that are large and well-capitalized, we pay the bills when someone else goes off the rails. We've gotten bills in the last couple of years when insurance regulators in North Carolina or other states had to come on in, and we'd prefer not to pay those bills. No different than the incumbent large financial institutions, i.e. banks, when they bark about an unlevel playing field, which I would say we actually are regulated. This idea that we're not regulated is not correct. Certainly, when we see what the regulatory arbitrage with the Caymans is, we don't think that's long-term healthy for our business. It allows incremental capital that's not as deep and broad and experienced to compete, and there will be a time when that's a problem, and we will certainly be called on to fix it. We'd prefer to snuff it out before it becomes too big of a problem. Got it. Marc has been very vocal. In our allocation of responsibilities, Marc takes more of the regulatory. I do it as well, but not to the degree, but he has certainly been a leading voice. Yeah in that mantra. Do you think there's movement on that issue, or is it hard to say? I think that regulators, you first have to engage with them, and you have to dialogue with them publicly and privately. I think regulators going after regulators is probably a hard thing for them to do. Yeah. I do think that, yeah, I'm optimistic, but I'm not optimistic in the next quarter. Yeah. Right. I think it's a longer term. I think we're on the right side of history. It's always nice when you're on the right side of history. For sure. I don't think it's going to happen tomorrow. Last point on kind of the spread earnings build. There's obviously, kind of, I guess, perennially, a lot of focus on the ALTS return, the 11% target. Could you walk through again what caused that to come so far below target in the first quarter, and why you're still confident in kind of hitting that 11% long-term target? I think that we're not immune to market moves. I think we buffered the moves that were because of some of the volatility in the equity market. We hit a little of those air pockets. I think that if you look since origination day one, or AAA since day one, we've been able to exceed that target. I think we've been very thoughtful about in the protective nature of having a lot of liquidity and a lot of excess capital to make sure that we don't get offsides. We maybe were a little bit too protective, but I still feel that the objective is appropriate for the long term. Got it. Okay. One of the more interesting announcements on the call was your new AMAPs product. Yeah. Created a little bit of buzz, at least in my conversation. I think it'd be helpful to quickly give this audience an overview of, one, what exactly the product is, two, how big you think this opportunity is, and three, how it differs from CLOs, and four, how it provides excess spread without incremental risk. Just to level set the room, CLOs, Collateralized Loan Obligations, that really is, over the last 10-20 years, has developed into a $1.5 trillion asset class that really is the home for a lot of the Broadly Syndicated Loan activity coming out of the banks for the buyout activity. It's the rigorous rules around the CLO market and bank balance sheets that led to the direct lending market, but that's another story. Over the last 7-10 years, Athene, desiring to not just buy corporate investment-grade debt, we bought a lot of CLO liabilities that, through the GFC, were never really impaired, but they were all rated as structured credit, AA, A, BBB, et cetera. The marketplace has gotten so large and vibrant and so efficient, and the pricing of the liabilities on the debt side has come down, that it's driven a pricing down in the broadly syndicated loan market to SOFR 300 or so on an asset that probably should be priced wider, but there's lots of demand. Last 10 years, Apollo's been a big, Athene and Apollo, have been a big buyer of these CLOs. We were doing some work last year and said, "Wait a second." Isn't this strange that after 20 years, the application is only on the underlying assets single B and some double B-rated loans? What if we could expand the purview of the assets of a structured vehicle like that, some investment grade, some non-investment grade, some public, some private. Instead of operating at 10 times levered, operate like at half the leverage. Broader diversity, less leverage. What if we could create the debt stack that works more for insurance companies rather than banks? The way a CLO works is a AAA piece is what the banks want, 0-65, about 125 over. Great for banks, not for many other folks. We went to the agencies and said, "We have this idea." We worked with them. We structured one that worked on paper between less leverage, the tranching that we liked that worked for an insurance company, and putting it into a variety of evergreen products at Apollo that led to a lot more diversity. Agencies gave us a sign-off, signed off on all the ratings, and then we went to a partner and said, "We want to do four or five of these over the next year, $5 billion a clip. Will you be our 50/50 partner?" They said yes. As of today, we've done four. We call it AMAPs, Apollo Multi-Asset Portfolios. We then, in the last month or two, have gone out to syndicate the investment grade and other rated pieces. A bunch of banks have come in, and we've gone out to say, "You all should do this for other managers. This is a better application of the CLO engineering, and we believe this is where CLO market could go and be CLO 2.0 for a broader application." I'm happy to report in the last couple of months, a bunch of banks have come in and helped participate on these debt pieces. We've kept our pieces. We've taken our direct CLO exposure down from $46 billion to about low $30s billion. We've said to a lot of the banks, "You all should go out and do this with many of our peers." It's a new marketplace. We feel like we're a leading player, but we don't want it just to be Apollo. Go to B, go to C, go to A, go to K, and they should do it as well. Okay. We think it's a great product. We think it has a lot of applicability. We think the banks should like it because they get to underwrite and trade more. There's a lot of I'll use the word second and third derivative applications. Probably not appropriate in this audience, just let's absorb the idea first. Yeah. I think there's just a lot of applications how this could really expand how we capital raise, and how people get access to private credit. Interesting thing. Exciting time. Yeah. Apart from AMAPs, I think the other big news coming from the call was your plan to provide daily pricing for all of your credit positions. All the IG stuff. All the IG stuff. Yeah. Okay. By June 30th. I thought the September date included everything. September 30th. It doesn't include everything? Yeah. Well, by September 30th, it'll include a broader array. Yeah. I think some of the non-investment grade direct lending will take a bit longer. Oh, okay. it's probably in that ZIP code, 9/30. Okay. Yeah. Since most private credit is designed to be held to maturity and generate excess yield for investor, I think it would be helpful to get an update on why you believe this is the right path forward and what you're ultimately trying to accomplish. I don't think all private credit's created to hold to maturity. I think private credit's been created to offer issuers an alternative to the public IG issuance market. In turn, it offers investors an ability to harvest extra yield if they don't need all the liquidity that they might need out of their most recent IBM bond. I think that what investors do realize that while there may be a CUSIP on a variety of their investment-grade debt, it's not as liquid, not every investment as liquid as they may perceive it to be. I think we've found a variety of investors who think like us, that have said, "Let's take a portion of that IG bucket. Let's trade for liquidity that's not there and make an incremental yield. They like that idea, but they don't want to sign up to something that potentially could be mismarked, i.e., if it trades down or should trade down. or trade up, shouldn't be just marked at par forever. I think that people are questioning just because it's private, does that mean it has to be held at par forever? We're challenging some of the assumptions. I think that if you look at any asset class over time, Broadly Syndicated Loans, CLO liabilities, the more the transparency is on pricing, maybe not liquidity, but if nothing else, pricing, I think that gives investor more confidence they know what's going on. More investor confidence means more capital coming in, and I think that we, as a participant in that market, benefit from more players than we might have in the past. I think this is just the natural evolution of time and markets and how they operate, and so we think this is good for our position. We think this is good for the breadth of the markets and investors' confidence, and I think that when you dissect what we're doing, we're on the right side of history. Yeah. It's like what happened, as I said, in other asset classes. There's some folks that are very focused on the non-investment grade private direct lending that want to hold onto the concept that the issuers don't want that to happen. I think that's not incorrect, but I think that over time it's the investors that will demand how the market operates rather than the issuers. On that, I've sensed at least that there are some or maybe many investors that see the lack of visibility on marks as a feature more than a bug. Yeah. Are you concerned at all that there could be some investor backlash from providing this information? Yeah, I think that those investors who just thought the real benefit is low or no. Yeah I'm not sure that that's a robust argument over time, and I'm not suggesting there has to be volatility. I'm just thinking that I think the product set will benefit from a greater degree of transparency and education. Yeah. The idea of taking asset from par to zero, I think is an unsettling one, and I don't know anybody that would advocate that's a good-. Yeah prudent management. Yeah. Fair. In the vein of everything we just talked about, Apollo, I think has been one of the most innovative asset managers out there. You were a first mover on high-grade solutions, to your point, hybrid strategies, AAA, which is now I think your largest strategy. AAA and ADS are both $25 billion. Yeah, okay. $30 billion. Now AMAPs, what we just talked about. You probably don't want to show all your cards. Okay Is it fair to assume there's a pipeline of these in the lab? Yeah, I think we are focused on market-moving impact ideas, and you can only come up with so many in the course of a year or so. I think AMAPs and AAA are two good ones for right now. I think there's a lot of things we're doing in terms of thinking about in a world of disruption, in a world of what's the truth and what really withstand that type of environment. I think things that are more infrastructure equity that turn into more like yield products. Are one. Yeah, I think that we've always been on the cutting edge. It's sort of our curious creativity that drives us. There are not a lot of patents on Wall Street. I think there's a lot of folks in our industry that would like time to stand still. I think that's a romantic concept, but I don't think it's practical. Yeah. The reality is, as a public company, you have to think about the evolution of creation and how to evolve, and I got to Apollo 20 years ago, we were a PE firm that had a credit business. Now we're a much different firm 20 years hence, I think that there will be a time in the future where people might say, "Wow, they actually started out as a PE firm. Oh, I didn't know that." That's not our objective, but I just think that's reality about where the industry's going and the solutions that we can provide on both sides of the equation, so That's helpful. Before I get to my concluding questions, I want to make sure I address the last one on the iPad from the audience, which as I read it, I think is probably more focused on direct lending type loans. This person wants you to expand on the private credit woes we've been seeing and what Apollo is expecting in terms of loss rates going forward. Well, there's lots of predictions from the big banks about where high yield and loan defaults will be over the next three to five years, and I'd use those as a starting point. Just because of the nature of direct lending, and it was concentrated in software, I think you probably got to add a few hundred basis points of potential losses. Yeah in direct lending to the high yield and loan markets. I would say the high yield and loan market has been pretty benign the last several years, and there's a massive CapEx cycle. I think there was some estimates that, I think one of the banks, UBS, said 15%. That just seems extreme to me. I suspect the disruption will cause a variety of defaults, across all three product sets, high yield, BSLs and direct lending. I think if I had to guess, if the 30-year average is around 3%-3.5% default rates, the likelihood of the five-year trend being higher than that long-term trend. is probably in the cards, but I don't have enough to say that it's going to be dramatically higher than that right now. Yeah. Got it. A couple more before we finish. On capital, can you refresh us on the capital allocation framework? What would allow you to lean in more heavily on share repurchases and in terms of inorganic opportunities, where are you most focused? Well, I still think, we put out our five-year plan a few years ago with increasing our dividend, buying back our stock as the two priorities, and buying back our stock with immunizing our stock from stock-based comp as well as other areas. I think right now we're focused on those two at this point in time. We did a small acquisition last year in Bridge. I think acquisitions are hard. I think there may be some things that merit it. We're not saying no to it, but we want to make sure that we are very focused on capital allocation at the holding company with a dividend and stock buybacks, and that's our primary focus right now. Makes sense. To conclude, your culture is well known across the business. Your team recently posted a culture deck for investors. Yeah. What do you think are the most important takeaways for the investor community on your culture and how it differentiates from the industry? I think how we operate and how we manage is the same. We talk about clean sheet thinking, right over easy, no walls. All those things are how we operate, and that's easy because you don't have to translate how you operate to how you manage and how you integrate with the outside world. I think we find it a very consistent strategy. I think it's going to be more important how you recruit and retain individuals in a world of technology disruption. I think it's very, very important, it's very consistent, and we love all our investors and our clients to know how we run our business. It's sort of consistent with open architecture and alignment long term. We're very proud of it. Okay. The more people that read it, the better off we like it. We like it. Thank you. Well, thank you for the time, Jim. Appreciate it. Appreciate your audience time. Thank you.