← Alt Goes Mainstream: The Latest on Alternative Investments, WealthTech, & Private Markets
Alt Goes Mainstream: The Latest on Alternative Investments, WealthTech, & Private Markets
Hamilton Lane's Hartley Rogers - pioneering private markets: Live from iCapital Connect
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When I came into Hamilton Lane 23 years ago, we were, I don't know, 50 people and basically one office. And now we're 800ish people in 22 offices around the world. And so the whole scaling of the industry has made our job very, very different from what it was. I mean, it used to literally be, okay, pick a few funds, assemble me a portfolio. Let's talk about who's good and who's not, what kind of stuff they're doing. You're going to track them for me. You're going to do all that stuff and make my life easier. Because if I'm the treasurer of some corporate pension fund, I'm going to tell you that private markets are 5% of my portfolio and 50% of my time. And I don't want it to be 50% of my time. Hamilton Lane, you do that for me, make my life easy. So that was kind of how it was 20, 25 years ago. Today, obviously, the allocations to private markets have grown enormously as the asset classes have grown enormously. The complexity has grown a lot, but so is the sophistication of the clients. So the clients themselves today, way more familiar with private markets than they were 20 or 25 years ago.
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Everybody's going to eat. We're going mainstream. All my family see. See you on mainstream.
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We're going mainstream. From Wall street to Melrose Avenue,
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venture capitalists to athletes to creators, to person who has collected trading cards in a collision of culture and this episode of AltGoes Mainstream is brought to you by Altimus, the full service fund administrator and transfer agent powering asset managers in private and public markets. As alts go mainstream, you need real expertise to handle complex fund structures, connect with key distribution partners, and handle sophisticated compliance reporting and transparency demands. That's Altimus High tech High touch solutions for over 450 clients and 2,500 funds. With over 775 billion in assets under administration, backed by an expert team of over 1200 employees, they place client service at the core of their business, helping you navigate complexity during your fund structuring or launch, and then supporting you through every stage of growth. Whether you're already in the market or thinking about entering private wealth. You can trust their team's deep expertise in retail alternatives to help you reach your goals. Learn more at ultimusfundsolutions.com or email infoultimusfundsolutions.com welcome back to the Altcos Mainstream Podcast. This great conversation was live from iCapital's Connect conference. Where we sat down in Phoenix with some of the industry's leaders across asset management and wealth management. Hartley Rogers is a pioneer in private markets. He is the Executive Co Chairman of Hamilton Lane, where he plays a significant role in investing and client relationship activities and as well as in strategic and organizational development. He's a member of the investment committee and is Chairman of the Board of Directors. Hartley's wealth and knowledge made for a nuanced discussion that married the evolution of the business of asset management with why and how product structure innovation has unfolded as it has in private markets. We also dove into an area that is Hartley's passion, venture capital and the innovation economy. I'm really excited to share this conversation with you all as it's equal parts invigorating and informative. Thanks Hartley, for sharing your wisdom, expertise and passion about private markets in a collision of culture and fighting Harley welcome to the Alos Mainstream Podcast. We are live here from iCapital Connect. You'll be talking tomorrow. I want to talk a bit about what you'll talk about because I think there's some very instructive things for the industry. But first we we got to get to your background. You're an industry legend and you have been a pioneer, a leader in this space, have so much perspective and purview into what's going on in so many different ways from your perch at Hamilton Lane as a firm. So we'd love to start with your background. How did you get to where you are today?
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Oh, you know, I'm old, so I started on Wall Street 45 years ago in 1981. Ronald Reagan was just inaugurated as president, the hostages had been released from Iran, and Wall street was just getting into its long growth period brought about by deregulation and all the other stuff that happened in the early 1980s and then the flowering of financial technologies that led to where we are today in the hedge fund business and the private markets businesses, all of them so broad. So I really had a very lucky timing to come into the financial industry.
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How have you thought about the evolution of Hamilton Lane's business as the industry has evolved?
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Well, Hamilton Lane started out as a consulting firm and I do think that those roots are still really kind of with us today in terms of how we think about things. We are very, very focused on data and tools and really using those to assemble portfolios of private markets investments for people over time. And so our business has gone from being kind of a consulting business to being a sort of outsourcing partner for investors of all sizes and Shapes and nationalities who are trying to build exposure in the private markets. And that ranges from the biggest sovereign wealth funds to the small individual investors.
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So I want to double click on the point about being an outsourcing partner, because the industry has grown larger and that's across different asset classes. There's more funds, there's more capital, there's more investors. Institutional and wealth. How has being a partner or a solutions provider to various LP constituents, how has that changed and what does that look like? Has that gotten easier, harder, different?
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I mean, it's gotten different. It's still fun. It just is different. It's much more scaled than it used to be. When I came into Hamilton Lane 23 years ago, we were, I don't know, 50 people and basically one office. And now we're 800ish people in 22 offices around the world. And so the whole scaling of the industry has made our job very, very different from what it was it used to literally be, okay, pick a few funds, assemble me a portfolio. Let's talk about who's good and who's not, what kind of stuff they're doing. You're going to track them for me. You're going to do all that stuff and make my life easier. Because if I'm the treasurer of some corporate pension fund, I'm going to tell you that private markets are 5% of my portfolio and 50% of my time. And I don't want it to be 50% of my time. Hamilton Lane, you do that for me, make my life easy. So that was kind of how it was 20, 25 years ago today, obviously, the allocations to private markets have grown enormously as the asset classes have grown enormously. The, the complexity has grown a lot, but so is the sophistication of the clients. So the clients themselves today, way more familiar with private markets than they were 20 or 25 years ago.
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B
If that's the case, and I know there are nuances to this, we'll talk about this both on the institutional side as well as the wealth side. But if clients are a lot more sophisticated, where does being a solutions provider come into play for them?
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Well, the whole world has grown so much that even if they're more sophisticated, that doesn't mean they have the staff, the travel budget, the data, the tools, the access to really see the landscape. So private markets has gone from when I came into Hamilton Lane, it was probably 600 billion of NAV, something like that. Today, depending on what number you look at and how you frame it, it's 10 to 15 trillion of NAV. And so these asset classes have just exploded in terms of the complexity, the number of things they do, their reach in the world. And so clients need help understanding that even though they understand better than they did before, they don't have the capability to do what a firm like ours can do.
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How do you think that the evolution of alternative asset management as a business, so large scale players becoming larger, multi strategy, multi product, maybe even trying to cover different parts of the market, how has that changed how you may work with GPS and also where you really serve both GPS and LPs. Middle market is one area that comes to mind. But how has all of that impacted and also some sense has helped your business in terms of where you're really adding value to the LPs, whether institutional or wealth.
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I think the private markets business is really, as I said, gotten very big. There are some very big players in it. Those players have migrated really to having their own investor relations, their own wealth management, their own suites of products around the deals that they do. They have a very particular kind of risk return profile in their portfolios. And so a lot of investors don't need us to tell them they should invest in Blackstone or kkr. What they do need is someone to build the complement to that. Because people just like with anything, you're not just going to invest in Microsoft and Exxon. If you're going to have a stock portfolio, you're going to have a stock portfolio. And so the same is true in private markets. You can have the very big, well known providers that are giving you one flavor of risk and return. But really to access the more interesting dynamic parts of the market, the higher end of the return spectrum, you're going to have to go with smaller managers who are harder to find. And you're going to want to construct portfolios in different ways. And this industry has really morphed to allow much more complicated portfolio construction today.
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For those who are a bit newer to private markets, what do you think are some of the most non obvious features of the middle market that investors looking to invest into? Private markets that could be private equity, could be venture infrastructure, private credit as well. What aspects of the middle market are things that people may not realize but are worth understanding?
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Well, there's a lot of growth there and there's a lot of economic growth in that part of it. So as the public markets have shrunk and there are fewer and fewer public companies, it's not fun to be public. It's expensive, expensive to be public. It's hard to maintain a kind of long term view. The real dynamic parts of the economy are in these private areas. And those are often companies that we would call within the construct of private markets, middle market type companies. So just the sheer economic opportunity for
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growth is there, is the growth in the industry and the larger funds getting bigger, has that given a tailwind to the middle market where they now have more buyers and buyers at scale who can pay more, maybe pay a higher price? How has that dynamic of the market unfolded?
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It is absolutely right that as the industry has grown, big get bigger. And so the definition of big changes over time. And so what we would consider a middle market fund today, an upper middle market fund today, 25 years ago you would have called a mega fund, a huge fund. So if you took a $12 billion fund today from a very good middle market fund firm, that's a middle market fund. Whereas a 25 or $30 billion fund is obviously the big end of the market. So the whole industry has kind of scaled up, but that's also created dynamics that allow for new entrants at the bottom. You know, it's true in venture capital, it's true in buyouts. You do have this sort of churning of the participants in the industry over time. And if you looked at the biggest private equity firms 30 years ago, there are a lot of firms there that aren't there anymore.
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On that point, how do you think the skill set of a gp, the executive or the investment team has changed and evolved?
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Well, they've had to become managers themselves. So the GPS always had to have the basic investment skills, the basic investment judgment. Is this a good time? Is this a good industry? Is it a good management team? Is it a good financial structure? Those are kind of table stakes. But to really run a successful GP today, you've got to have investor relationships, you've got to have portfolio management, you've got to have operating management that you can put into companies. The whole thing has changed from a leverage game, where it was in kind of the 80s and early 90s, to a game of operating improvement of these companies. So you're looking at revenue growth, EBITDA margins, stuff like that.
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How much has the underwriting of a GP changed? Because the way that the business of alternative asset management has changed.
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Oh, it's changed a lot. I mean, for the same reason. And also because today there's so much more data available and there's very broadly across. So you can really look the underwriting today. It's almost. Maybe we can talk about AI But a lot of it is almost AI like where we are importing using some of the kind of companies that you invest in, Michael. Companies like a Canoe or some of the other ones that we were Talking about before.
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73 strings.
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73 strings. Their ability to pull in data from GPS about portfolio companies and things like that is just. It's radically different today than the way it used to.
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On the point about data, because Hamilton Lane has been a pioneer on the data side. You've both invested in and or built or acquired companies to be able to track, manage and analyze fund co investments to be able to help with your underwriting. And I think it's also worth noting on that point too that the ability to take that data as you invest in managers helps you with co invest secondaries and in ways that others can't have that advantage. Yeah. How much has the way that data is now applied to private markets changed how the industry operates both in terms of how you think about underwriting, but then also how you think about different ways in which you can invest in secondaries?
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It's huge, right? I mean it is exactly. The use of data in the secondary market is an enormous thing because the secondary market, it's an unregulated market and it's a market of trading interests and funds or companies. And so having a data advantage is huge when you're investing in the secondary business. The secondary business growth has also allowed the creation of the evergreen markets which are providing access to the wealth channel, which is a really, really important thing for the evolution of the industry.
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On that point, do you think there are certain strategies that, that make sense in evergreen structures?
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I think evergreen structures work for pretty much all private market strategies. I think you're going to have different design elements. So for example, some parts are going to be less liquid than others. So for example, in the venture capital area, Evergreen funds in the venture area tend to have gates, the famous gates that are lower than the gates that are on a more mature buyout or private credit type of of evergreen fund.
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As you think about the evolution of evergreens, how do you think investors going forward, particularly in the wealth channel, will think about investing in private markets? Will it mainly be through Evergreens?
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I think so.
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Why?
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Because Evergreens are a structure that allows you not to deal with the mechanics of drawdown funds. Being in drawdown fund is painful. I mean, you know this. You're signing subscription agreements and partnership agreements and you're funding capital calls and you're getting distributions and you're trying to calculate all different Things. It's very hard to manage liquidity in the context of a drawdown fund. It's fine if you're CalPERS or some big endowment where you've got a chunk of liquid stuff here that you find your liabilities with and then you can invest over here in this illiquid stuff that has a very long time threshold. The most individual investors can't do that and don't do that. So they need to be able to do something that's simpler. And the beauty of the evergreen funds is they're simple. You send in your money, you it's invested, you sit on it for a period of time, you watch it grow, and then when you're ready to start trimming the position, you trim the position and take it out over time.
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B
Where my mind goes when I'm listening to you talk about this is you need to have a large enough platform and enough deal flow to be able to properly construct a portfolio in an evergreen structure. How do you think about one deal flow and two portfolio construction as it relates to evergreens?
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Great question. It is absolutely critical that the evergreen products are much more diversified than a regular drawdown product. So a typical buyout fund or a venture fund is going to have 20 positions, 25 positions, 30 positions in it. Whereas an evergreen fund that's appropriately diversified and big can have thousands of underlying positions in it. So there's a huge difference in the portfolio construction. In order to be able to construct that evergreen fund thing and pick the good deals, not every deal you need a huge deal flow. And so that is the kind of special sauce of firms like Hamilton Lane and some of our competitors in that solutions area that we have the access to the deals that allow us to pick and choose a few to still have a very diverse evergreen portfolio.
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From that perspective, how should LPs, particularly those in the wealth channel, then think about their allocation to private markets? Should they think of this as a single solution? This is how you get access. Single ticket, one click. Or they think about other funds as kind of a satellite to this core. Like put me in the mind of how an allocator might want to think about.
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I mean, no, that's a great question too. It really depends on who you are. Right. So if you are a big family office, then starting with Evergreens is a great way to start because you build a baseload of that, you get familiar with the asset class. It's almost like saying, I'm going to start building a long only portfolio with some ETFs before I then Go and invest in some hedge funds. So it's sort of the same thing, but on the private market side. So for a bigger family office, you can start with the evergreen stuff and then as you get comfortable with it, you can make some commitments to some other funds that you've gotten to know. For smaller investors, the evergreens are just a great way to do it for everything.
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How do you think portfolio construction will evolve over time? Is this the type of thing for many investors? And this could be institutional investors too. Like we go back to some of the things you said earlier in the conversation, like what you said earlier about a small endowment treasurer or small pension treasurer. They don't have the ability and the time to find all these managers, underwrite them, and then manage all the positions. So it's not that much different even on the institutional side, particularly the longer tail of the E and F market. Do you think that most investors, whether institutional or wealth, will end up being majority evergreen, or is there an optimal balance between evergreen exposure, drawdown fund exposure?
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I think it depends who you are. I think the drawdown funds are going to be largely the province of larger investors and more sophisticated investors that can kind of do it themselves or hire someone like us to do it for them. Whereas I think everybody's going to use evergreens to one extent or another. I think the evergreen market, though, is evolving. It's not just one thing. It's a lot like the ETF market, actually. If you kind of go back in history and look at it where ETFs originally, you had a few that were kind of these big things like Spider or what a QQQ, whatever it was, these ETFs that are kind of broadly based on what they do. But then today there's this proliferation of them. So wealth advisors can construct portfolios for their clients, or clients themselves can do it using all kinds of different ETFs to create the exposures they want. I think that's going to happen in the private markets evergreen as well.
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What do you think that will look like? Because I think there's a few interesting things there. One is to me, when I hear that, I say, okay, maybe people will not just allocate based on brand. Two is they may want customization within the evergreen or evergreen structures amongst multiple managers. Three is like, how do they get access to the lower middle market? They need to go to a solutions provider. So how does all of that unfold as it relates to how they'll think about constructing portfolios, exposures, access to different managers?
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I Mean, it's still really early days is the answer to that. So I don't actually have the brilliant answer to that. I think today firms like ours, we're running different experiments with structures, not so much with the investments themselves. We know the investments. We wouldn't launch something that we weren't comfortable with, didn't have a track record doing, didn't believe we were going to see a ton of deals that we could pick the best ones and so on. But in terms of the structures themselves, where are you accessing the market? Are you looking at the upper end of the wealth channel, because that's one kind of structure? Or are you going to go down and look more at accredited investors or mass affluent down at that end of it? That's going to be different kinds of structures. So there's a lot of thinking and experimentation that's going on today around that. And you see us and other firms active in the private markets trying all kinds of different things.
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How do you think about the different types of exposures you may want to give to different clients? Or do you think that no matter what client size or scale, they should have similar exposure, just obviously appropriately sized to how much capital they can put in, how much risk they can take, liquidity, etc. But is this the type of thing where whether you're a QP client, QC or an accredited investor, you should have exposure to lower mid market private equity or early stage venture? Do you have a view on that?
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Well, I think that the more sophisticated investors can take a little more risk and so they can probably do things that are both a little bit farther out of the risk return spectrum and they can also do things that are a little more individual in terms of what they're picking and choosing. Whereas I think for smaller investors, private markets, even average private markets, historically, particularly private equity, has been very good, you know, and we can show Hamiltonians, all kind of data this over time, just looking at averages, beating the public markets in almost every year by quite a lot. The famous illiquidity premium that some of the people were talking about earlier today, Some. So I think for smaller investors, just being in at all is important. And for more sophisticated bigger investors, they can really do a little more customization themselves.
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You see hundreds of managers a year, you have probably thousands actually. You have relationships with I think over 900 managers, if I'm not mistaken. You know, what it takes to be a great manager. As someone with that perch, I'd love to ask the question, what do you look at to discern a Manager's edge. And what in your mind defines a manager's edge?
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Well, I think it depends a lot on the piece of the industry. So, for example, in private credit, as you know, the whole thing in credit is you don't really have the upside, so you want to avoid the downside. So portfolio construction and private credit is a lot about risk control and making sure that you're not exposing yourself overly to losing in that area. So if you're looking at private credit funds, you're looking for one kind of person, that kind of credit mindset. I mean, honestly, it's a different kind of person. If you go all the way to the other end of venture capital, there you're really looking for people that have the access to the founders, have the credibility with the founders, that they're going to get into interesting deals and have the judgment to be able to know, okay, this might work and that might not work. Buyouts are kind of in the middle. There's kind of a mixture of that risk control with what, you know, will this management team that I'm investing in be able to do what I think they can do?
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When you're meeting with a manager and deciding whether or not you want to allocate to them, is there a question that you'd ask or like to ask each of those managers to understand what makes them different or unique?
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Yeah, I mean, I'm really focused on how committed are they, how aligned are they? And so the question I usually ask the most is, is really how much of your own personal net worth and time and focus are you putting into this? And you want to be with people who are just absolutely committed 100%.
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How do you think about that in two slightly different contexts? I think the industry is evolving to where this is not necessarily a negative signal, although maybe at one point was seen as one, but one, the evolution of GP stakes and that aspect now making its way into managers and how they build and run their business. Again, I don't think it's necessarily a negative signal at this point, but probably way back when, and certainly in the venture world that for quite some time was. And then two, how focused managers are on building out their own evergreen business or wealth businesses. How do those things in your mind impact what you just shared about a manager's commitment to the fund, the strategy, their business?
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So I think the evergreen one is a little easier to answer, actually, because most funds should not be doing their own evergreens. They don't have the deal flow. If you're in the business of every Three or four years, I raise a fund. In each of those funds, I'm putting 15 or 20 deals. And then I go on and go from that. You're never going to be able to construct an evergreen portfolio that has the right kind of liquidity to meet some of the liquidity parameters that people have. So for me, that's pretty straightforward. The GP stakes thing is more complicated because it really depends. There's good ones, bad ones, good reasons. I don't mean all the funds are fine, but the deals. There are times you look at a GP stakes deal and you're like, well, that's just the guy taking money off the table and not really investing in the future of the firm. But there are plenty of other ones where it's actually very thoughtful for a GP commit.
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Great, because the fund's gotten so big that they do.
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And also to allow the next generation to step into the ownership in a good way. I mean, not every firm is the money machine that say Hellman and Friedman is where the people have been so successful that they're able to buy out the previous generation. That's really not true in a lot of the firms.
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You mentioned something interesting and I think instructive to how the evergreen market, particularly with larger solutions providers, may unfold when it relates to middle market managers. So you shared something that I think is an interesting perspective, which is many managers should not be doing evergreens, don't have the deal flow to do it. How do you think about how you can help these managers access capital they may not be able to access, but then they can still continue to do their job. What they're great at doing, which is, is finding and sourcing and managing deals and outcomes with those deals, is that how this market unfolds, where the middle market ends up working, not they haven't in the past, but continues to work with, maybe even more so with solutions providers that have complexes.
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I do, because I think middle market funds, they don't have IR staffs, they don't really have the ability to go on the wealth platforms, partly for the reason we just said, in terms of the diversification of the underlying pools, but also because there's only so many spots on the shelf at a big RAA or wirehouse or one of these things. They're not going to be able to take hundreds of funds and put them in. They're only going to take a few. So if you're a middle market fund manager, the right way for you to access the money coming from the wealth channel, which is the fastest Growing part of the money coming into private markets is to go through someone like, like us that has the spots on the shelf. So we're getting the money from the wealth channel and then we're turning around and giving it to you as through secondaries, through continuation vehicles, through co investments and through fund investments to a certain extent as well, depending on which evergreen structure you're talking about.
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How is the institutionalization of the wealth business in two contexts? One, the centralization of the CIO function in large part because many of these, these platforms are getting so large that they need more centralized investment functions. Or acquiring OCIOs, right? Serity, acquiring Agility, Hightower, acquiring any PC, et cetera. How is that impacting how they are thinking about finding interesting differentiated, unique managers and or partnering with solutions provider like Hamilton Lane to access something like market?
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No, that's a great question. I mean, I think it's still early days. It's very interesting to see that you kind of had this group of wirehouses here and then you had all these RIAs, smaller things here and they're coming into the middle together where the wirehouses are growing and going a little bit down market in a way in what they're doing. And these RIAs are then getting together and then they're getting their own research functions. That's really what it is. When you see an nepc, what you see really are people buying that research capability. So it's no longer just the person out in the specific RIA office who's looking at the different investments and deciding what's on the platform. You're seeing a much more centralized capability. I don't really see it as changing us very much because we are somebody who's very deep in the private markets. Whereas these OCIO type businesses, they're okay in private markets, but they're not deep like us. They don't have the scale to drive the deal flow that we have have.
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B
How much do you feel like you need to help, particularly the wealth channel, understand kind of holistic portfolio construction as it relates to how they should think about private markets? How much does that factor into how you think about both productization and then implementation of that productization?
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A ton. And the technology part as well. All of that is super, super important. The educational challenge is not to be underestimated in terms of helping people really think about how they're constructing portfolios and how those fit with the other pieces of their investment portfolio. And so iCapital of course has put a lot into this. They're very good at it we help them, we work with them a lot and some of the stuff that they do and it's something that we spend a lot of time on as well. Everybody's thinking this way because if you're going to have instead of 2% of your assets on the wealth channel that are invested in private markets, if that number is going to go to 50 or 20 or 25% over time, you have to have the capability of doing portfolio planning, marrying private and public market.
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B
That gets me to another point, another trend that we're seeing in the market, which is I think true with institutional LPs. It seems like it also is true with the wealth channel, which is LPs want to do more with less, more with less firms. What does that mean for you and your business as you think about how you continue to evolve? Hamilton Lane and as it relates to the broader industry of people are having less and less relationships with different GPs.
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I think the danger of that from an LP standpoint is you don't want to get stagnant because the private markets are very dynamic. There are winners and losers all the time. There are people that are doing a great job, there are people that are getting in trouble, there are people that are speaking, spinning out and starting some new thing. I mean, you really want to make sure you're keeping an eye on what's going on because the best returns are in the small and mid part of the market. Also the worst returns are in the small and mid part of the market. So you want to make sure you're in this part of the distribution and not this part of the distribution. But if you ignore it altogether and just focus on the big, you're going to be leaving something on the table. And so from our standpoint, I think you'd be a little careful with this notion of I'm trying to simplify and have fewer relationships. However, it's also just a fact of life that people are trying to do that. They're trying to get more bang for their buck from their staff and things like that. And that is where the solutions providers come in because we are kind of the conduit to the middle market and our job is to make sure we understand that dynamic of who's winning, who's losing, who's coming up, who's fading.
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B
Well, and as it relates to the middle market, they may have interesting co investments, they may want to size up. How does the increasing amount of capital going in impact how a GP can run their business if they're smaller fund in the middle market and now have access to co invest or CVs.
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A
Well, there isn't really an increasing amount of capital. If you look at the industry overall today, the drawdown, fundraising in private markets last year was the same level as it was was in 2017. And yet NAV and the overall footprint of the industry is much, much larger than it was in 2017. So what's filling the gap? Secondaries and co investments. But even in secondaries that is a massively under capitalized market. So we look at this statistic of dry powder in the different sub asset classes of private markets. How many years of dry powder sits in venture, in buyouts, in private credit, in secondary, the average say in buyouts, three or four years. Kind of what you'd expect, right. If you look at a five year investment period and so on, secondaries is less than a year of dry powder. And so secondaries has been and continues to be a really, really interesting area. And it's also the area that allows these evergreen vehicles to exist because of the duration matching.
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B
In your mind, are secondaries the best on ramp for many new investors to to access private markets?
- [32:46]
A
Well, I think evergreens have secondaries in them, but they also have co investments in them. At least the way we do it, they have a little bit of private credit in them. And so if you're trying to create a particular risk return profile, secondaries are a very important core piece of it. But they're not the only piece of it.
- [33:05]
B
Are secondaries going to become an increasing proportion of many evergreen funds in your mind just because of what you said, the dynamic it's the dry powder's much lower, the J curve is much shorter and you may have better idea of when that might be able to come in and out of a portfolio.
- [33:25]
A
There are evergreen funds that are just secondaries. We have one and there are plenty that are out there that are like that. The ones that are a little more thematic from a standpoint of I'm doing infrastructure, I'm doing venture, I'm doing mid market buyout, I'm doing Asia, whatever it is. Those are probably going to not just be secondaries, they're also going to have a co investment aspect as well because the co investments add something that secondaries don't have, which is they have a higher ultimate return potential.
- [33:54]
B
What are some of the biggest misconceptions about secondaries and evergreens that people should know?
- [34:00]
A
Oh, well, I think the biggest misconception about evergreens is that somehow they are a piggy bank that you can get your money out of whenever you want because I think that's really not what they're set up for. Evergreens are set up to allow people to participate in the easy way in the private markets and taking a long term view to be able to get their money out over time. They're not set up as an atmosphere.
- [34:27]
B
Final question, what strategies within private markets are you most excited about right now?
- [34:33]
A
Honestly, it's not going to surprise you. Venture capital is a great area. It's one of my favorites. Hamilton Lane's done it for 35 years and it's a tremendous area. So that's a big one. And mid market infrastructure is huge because the opportunities in the middle market and infrastructure away from where the big boys are playing are wonderful. And they are tied because a lot of the infrastructure opportunities relate of course to data centers and things like that.
- [34:59]
B
I think that's such a great way to end this conversation. We talked a lot about the middle market and how hard it can be to access different parts of the market. So I think this kind of encapsulates all of that. And you really do need a solutions provider to be able to understand what's going on in the market. Ties in the data side, everything you're doing with data analytics infrastructure, not just infrastructure, the strategy, the infrastructure on the data, on the private markets. Infrastructure and kind of ties everything together. So Harley, this is a fantastic conversation.
- [35:27]
A
Thanks Marlon. It was great. Really enjoyed it.
- [35:29]
B
Likewise. Thanks for listening to this episode of Alt Goes Mainstream. I hope you enjoyed it. You can read more about Alts at my substack altgoes mainstream.substack.com Thanks a lot and have a great day.
- [35:42]
A
We're going mainstream.