Kenneth Worthington • JPMorgan Chase & Co.

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Nicholas Goodman, President & CFO, stated that while monetization progress is strong, the timing for a significant step-up in carried interest remains on track for 2026, with 2025 serving as a bridge year. He confirmed real estate fundamentals and capital markets are now supportive of increased transaction activity. Goodman declined to detail the Just Group financing, citing strict UK takeover regulations.

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Nicholas Goodman, President & CFO, stated that while monetization progress is excellent ($55B YTD), the timing for a significant carried interest step-up remains on track for 2026, with 2025 being a 'bridge year.' He noted that conditions are now favorable for real estate transactions. Regarding the Just Group deal, he declined to provide specifics, citing strict UK takeover rules.

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Executive Nicholas Goodman stated the monetization pipeline is active and global, with the bulk of planned sales coming from fund assets, which will drive carried interest growth into the next year. Sachin Shah, CEO of Wealth Solutions, responded to the M&A question by emphasizing Brookfield's value-based approach, noting that current high valuations for annuity platforms (near 2x book) are unattractive. He affirmed that the company is well-positioned to rely on its strong organic growth capabilities instead of pursuing expensive acquisitions.

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President Nick Goodman explained that Brookfield's insurance strategy combines strong organic growth with potential M&A for step-change expansion. For infrastructure and renewables, he noted the opportunity is enormous but stated that capital deployment will primarily be through its listed affiliates and client funds, not directly from the corporation's balance sheet.

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CEO Jon Winkelried emphasized that TPG's strategy remains 'FRE centric' and that the firm is cautious about assuming insurance liabilities where it lacks expertise. He noted that while they would use their balance sheet, they are exploring partnerships to acquire distribution capabilities without taking on the associated business risk.

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CFO Jack Weingart explained that the capital markets team is about three-quarters of the way built out with significant upside remaining, particularly in credit. CEO Jon Winkelried added that the Q1 strength was not due to any single event but rather a broad-based, deeper integration of the capital markets team across all of TPG's transaction and refinancing activities, reflecting growing adoption by deal teams.

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CEO Jon Winkelried outlined five core growth drivers: growing core funds, organic innovation, inorganic additions, private wealth penetration, and insurance. He described insurance as a distinct inorganic strategy, emphasizing that TPG is seeking the right partner for a hybrid, balance-sheet-light model and is actively building its insurance capital base through various partnerships.

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CFO Jack Weingart stated that the Dish deal's capital markets fees were recognized in Q3, while management fees from the deployment will begin in Q4. CEO Jon Winkelried noted that such bespoke financing opportunities constitute the bulk of the current pipeline and represent a multi-year opportunity. President Todd Sisitsky added that TPG's culture actively fosters these cross-platform collaborations.

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President Jim Zelter described the partnership as a key part of their innovation and technology strategy. He explained that GeoWealth, a TAMP, provides the technological framework to deliver Apollo's products with greater transparency and educational resources. This aligns with their vision of using open architecture and technology to enhance client experience and broaden distribution.

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President James Zelter described tokenization as part of a broader 'open architecture' strategy. He suggested that as digital finance platforms and stablecoin issuers seek yield beyond treasuries, they will turn to other assets. He noted that interval funds are particularly attractive to these platforms due to their daily NAV and subscription features, referencing a prior instance of a digital platform investing in one of Apollo's debt funds as an early example of this trend.

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President Jim Zelter stated that Apollo runs a duration-matched business and is well-positioned for the current environment, without making short-term tactical bets on rates. CEO Marc Rowan added that 'higher for longer' has been Apollo's house view, and a higher rate environment is generally beneficial for its credit-oriented businesses, making its solutions more attractive in absolute terms.

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CEO Michael Arougheti confirmed that Europe's relative attractiveness has increased due to its rate trajectory and fiscal policies, driving investor demand and transaction activity. He emphasized that from a credit quality perspective, the U.S. and European portfolios are performing similarly, with strong metrics for LTV, interest coverage, and non-accruals in both regions.

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Michael Arougheti, Co-Founder, CEO & Director, stated that Europe's relative attractiveness has increased due to favorable rate and fiscal dynamics, driving higher investment and investor demand. He noted that credit quality metrics like LTVs, interest coverage, and non-accruals are very similar and strong in both the U.S. and European direct lending portfolios, with pipelines indicating growth across direct lending, real estate, and asset-backed strategies in Europe.

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CEO Michael Arougheti noted that investor appetite for European products has marginally increased recently. He described the European market as more fragmented, which gives Ares a competitive advantage due to its scale and established relationships. He reported a modest acceleration in European deployment, with LTM deployment up 20% year-over-year, and expressed confidence that this positive trend will continue.

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CEO Michael Arougheti acknowledged that 2024 was a four-year low for the gross-to-net deployment ratio (37%) due to slow M&A. He noted an improvement in Q4 (42%) versus Q1 (22%) and expects a meaningful improvement in 2025 as transaction volumes are anticipated to increase.

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CEO Michael Arougheti stated that the wealth distribution landscape is becoming more sophisticated and concentrated, not an 'all-you-can-eat' environment. He noted that Ares's cost per dollar raised is decreasing due to scale. Regarding secondaries, he explained that returns lag by a quarter and that inception-to-date returns, which are a more relevant metric for such funds, are performing as expected.

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President and CEO Jennifer Johnson outlined a multi-pronged strategy for monetization. This includes white-labeling their patented, multi-chain wallet and platform for other distributors, a service for which they are already in discussions. She also highlighted existing revenue from managing reserves for four stablecoin providers and being selected by the first state to issue its own stablecoin, positioning them as a key partner as regulatory clarity increases.

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CEO Douglas Cifu provided a detailed history of Aaron Simons, whom he hired in 2008, describing him as the "smartest guy at Virtu" and a key member of the leadership team for the past six years. Cifu explained the transition has been a gradual, long-term process. Co-President & Co-COO Joseph Molluso added his full endorsement for Simons' appointment, stating it is the best move for the company's future.

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CEO Douglas Cifu and Co-President/Co-COO Joseph Molluso affirmed that the core noncustomer businesses are vibrant and growing. Cifu explained that growth is driven by heavy investment in technology, improved connectivity to a growing number of exchanges and ATSs, and enhanced internalization across the firm. Molluso added that nearly all of the company's described organic growth initiatives, such as in options, ETF block, and digital assets, fall within this non-retail, noncustomer category, underscoring its importance.

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CEO Douglas Cifu stated that while Virtu looks at every opportunity, participation in betting markets would require credible venues and index-like products with sufficient volume, similar to futures. Regarding the election, he explained the impact wasn't a single-day event but rather a sustained buildup of market exuberance, confidence, and participation that began in November and has continued, driven by a more positive market outlook.

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CEO Douglas Cifu explained that the expansion of retail offerings into futures is a complementary opportunity that leverages Virtu's long-standing relationships with retail brokers and is unlikely to cannibalize the cash equities business. Regarding brokerage costs, he attributed the increase to the lumpy nature of Section 31 transaction taxes, which are measured in arrears, and the recent introduction of some cash fees.

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Deborah Cunningham, EVP & CIO of Global Liquidity Markets, stated that the T-bill supply, supported by the debt ceiling renewal, is sufficient to meet the expected demand from a growing stablecoin market. J. Christopher Donahue, Chairman, President, & CEO, added that since stablecoins cannot pay interest, they compete more with low-yield bank deposits than with money funds. Regarding MDT, Mr. Donahue confirmed that they do not currently foresee any capacity issues with those funds despite strong inflows.

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Chief Investment Officer for Money Markets, Deborah Cunningham, explained that Q1 inflows were tempered by seasonal corporate tax payments and institutional margin calls due to market volatility. CFO Thomas Donahue clarified that average money market assets grew substantially quarter-over-quarter. CEO John Donahue attributed the fixed income outflows primarily to the Total Return Bond and High Yield funds, noting that the Total Return Fund's defensive positioning is beginning to improve its relative performance.

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CEO John Donahue stated that, unlike past reforms, clients have remained in prime funds, with FHI's assets in the category growing 25% over the year, outpacing the industry. CIO for Money Markets, Deborah Cunningham, confirmed no shareholders left due to the new rules and described the new daily monitoring process as having a very low probability of resulting in fees. CFO Thomas Donahue clarified that the entire $5.9 million in proxy costs was recognized as a contra-revenue in Q3 and will not recur in Q4.

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Co-President Navid Mahmoodzadegan detailed his focus on investing in large total addressable markets (TAMs), hiring 'difference-making' elite talent, and maintaining a collaborative culture with a strong internal talent pipeline. CEO Kenneth Moelis indicated the overall hiring pace would feel similar, though with aggressive acceleration in specific areas like PCA. Mahmoodzadegan added that hiring is opportunistic, driven by talent availability rather than market timing, and enabled by a strong balance sheet.

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Chairman and CEO Kenneth Moelis suggested that Europe's M&A market may be more resilient as it is less directly affected by the recent policy-driven volatility. He believes the primary factor determining a deal's viability is not client type or size, but its exposure to supply chain disruptions. Moelis noted that larger companies are inherently more likely to have complex supply chains, potentially making their transactions more vulnerable to being put on hold.

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CFO Joe Simon advised using the full-year 2024 comp ratio as a starting point for Q1 2025. He acknowledged that the first quarter typically sees a higher ratio due to the accounting for annual equity grants and retirement-eligible accelerations, combined with seasonal revenue patterns.

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CEO Ken Moelis identified the primary factor that could temper the M&A recovery in 2025 as the health of the LP capital market. He stated that the ability of private equity firms to successfully raise their next fund is a critical leading indicator, suggesting that a slow fundraising environment would likely result in a more mediocre M&A recovery, as it impacts firms' capacity to deploy capital for new deals.

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Lynne Fitzpatrick, President & CFO, explained that total collateral averaged $316 billion in Q2, up from $290 billion in Q1. Of this, $133 billion was in cash, representing about 48% of required collateral, well above the new 30% soft minimum. She noted that higher market volatility contributed to the increased cash postings. Suzanne Sprague, COO, added that firms tend to hold more cash in uncertain environments.

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President & CFO Lynne Fitzpatrick reported that average total collateral rose to $316 billion in Q2, up from $290 billion in Q1. Of this, $133 billion was in cash, representing nearly 48% of the required amount, well above the 30% soft minimum. She and COO Suzanne Sprague noted that higher market volatility during the quarter also likely contributed to the increased cash holdings as firms tend to stay more liquid in uncertain environments.

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Terrence Duffy, Chairman and CEO, explained that the joint venture became very lucrative after partnering with S&P Global, and management saw a good opportunity to monetize the asset for shareholders. He stated that CME would not be at a competitive disadvantage by selling, as they can still use the services if needed, calling it a "very smart business decision."

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Tim McCourt, Global Head of Financial & OTC Products, confirmed that the launch of crypto ETFs has helped grow the futures complex, with crypto futures ADV up 285% to a record 102,000 contracts in the quarter. He explained that futures are central to the ETF ecosystem for hedging and inventory management. Regarding perpetuals, McCourt noted they exist on unregulated platforms, and CME's focus remains on offering trusted, regulated products while continuing to engage with customers on their needs.

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President and COO Emilie Choi outlined the strategic benefits, including commanding greater trading volume from shared customers and providing greater capital efficiency. CFO Alesia Haas confirmed the deal is expected to be accretive on an adjusted EBITDA basis, pending final purchase accounting. CEO Brian Armstrong added that enabling traders to hedge futures with options on a single platform improves efficiency and should drive volume.

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CEO Brian Armstrong identified two top priorities: passing market structure legislation to clarify token classification (i.e., which assets are securities vs. commodities) and establishing a clear legislative framework for stablecoins. Chief Legal Officer Paul Grewal supported this, underscoring the need for a functional 'bill of rights' for crypto users and noting the promising early work of the new SEC crypto task force.

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Chief Legal Officer Paul Grewal stated that the goal is 'clarity,' not 'accommodation,' which would unlock innovation, accelerate asset listings, benefit stablecoin payments, and potentially reactivate staking services in certain states. He noted that states often take their cue from federal regulators, so federal clarity would create positive follow-on effects and consistency for consumers.

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CEO Harvey Schwartz stated that he does not view a potential shift by endowments as a broad-based or material risk to the industry or Carlyle's fundraising. He acknowledged that such a trend would create a short-term opportunity for the AlpInvest secondaries platform to deploy capital, as its brand and scale ensure it would see all related deal flow, but he does not see it as a significant overhang.

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CFO John Redett expressed high confidence that CP 7 will hit its carry hurdle, citing its dramatic performance improvement. For the Asia fund (CAP), he attributed the performance decline primarily to volatility in its public equity holdings, particularly those in China.

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CFO John Redett acknowledged the firm's focus on improving private equity performance and highlighted strong appreciation in U.S. and Asia funds driven by operational improvements. For CP VII, he explained the fund is still in its catch-up phase, which is why the net IRR has not yet materially changed, though the gross IRR increased by 100 basis points in the quarter. For the newer CP VIII fund, he advised focusing on the gross IRR since it is not yet fully deployed.

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CEO Scott Adelson attributed the strong FVA performance to a convergence of factors. He highlighted the steady growth in the less-cyclical portfolio valuation business, solid performance from the opinion business, and a ramp-up in the more cyclical transaction advisory services as M&A activity begins to recover.

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CEO Scott Adelson acknowledged the favorable conditions but emphasized that acquisition timing is driven more by the individuals involved than market factors, stating the firm now has 'better sonar' in its acquisition approach. Regarding geographic trends, Adelson confirmed the pickup in M&A sentiment is broad-based across all regions, with both private equity and strategic clients showing increased activity.

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Chairman and CEO Michael Sacks stated that while GCMG has low direct exposure to endowments, it can capitalize on the trend through its secondaries business, which benefits from increased LP-led sales, and its ARS business, which could attract capital seeking more liquid alternatives. President Jon Levin explained the fee dynamic is expected, as specialized funds are concentrated in higher-fee direct strategies, while separate accounts have a broader mix and are subject to volume discounts. He anticipates fee rates will remain stable for both.

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Chairman and CEO Michael Sacks explained that the conversion pace depends on a mix of fund structures and hasn't fundamentally changed. President Jonathan Levin noted that the 2024 conversion rate was consistent with expectations. Regarding ARS, Michael Sacks confirmed that strong performance has improved client conversations and the business outlook is the best it has been in a long time, with a solid pipeline.

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President Jon Levin explained that partnership economics are comparable to internal distribution at scale, with structures varying from sub-advisory models to revenue-sharing joint ventures. Chairman and CEO Michael Sacks stated that Q4 closes for the Elevate and IAF funds would be key determinants for the full-year private markets fee growth and that most funds would continue fundraising into the next year.

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An Unknown Executive provided the investment levels: Infra 5 is 50% committed, BGTF II is at $5.2 billion of its $17 billion target, and BCP VI is about 60% committed. They explained the wealth solutions fee dynamic is due to a deployment lag, with commitments at ~10% while deployed capital is lower. The firm is constantly deploying new annuity inflows, but the long-term target allocation to private strategies remains in the 25% to one-third range.

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CEO James Flatt attributed the low Q4 infrastructure deployment to timing, stating the pipeline remains robust and noting that large power investments supporting AI are classified separately. President Connor Teskey explained the Q4 credit outflow was impacted by the planned reallocation of capital from the Brookfield Wealth Solutions portfolio and monetizations that immediately reduce fee-bearing capital, while newly raised capital only becomes fee-bearing upon deployment.

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President Connor Teskey attributed the wealth fund's growth to strong investor demand, noting future expansion will include new private equity and credit products for the wealth channel. He and CFO Hadley Peer Marshall explained the BPG fee increase was driven by catch-up fees on new capital raised in flagship funds and fees earned from moving assets to Brookfield Wealth Solutions.

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Global President David Howson described a dynamic process where investors used VIX calendar spreads for positioning in Q1, followed by monetization and rolling of those hedges in April. He emphasized the fluid movement of activity between VIX products and the SPX complex based on the market environment, rather than providing specific open interest figures.

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Global President Dave Howson reaffirmed that the European derivatives initiative is a long-term, patient investment to bring U.S.-style market structure to the region. He cited recent milestones, like the onboarding of Interactive Brokers and IMC, as validation of the strategy. He noted that June ADV was around 850 contracts and that the initiative is an incremental investment built upon Cboe's existing scaled infrastructure in Europe, giving them confidence to continue the course.

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CEO Robert Sharps explained that the approach is bespoke for each country, as international DC markets are at different stages of development. He cited partnerships with local managers in Korea and Japan for target-date series, a partnership with a life insurer in Canada, and a custom target allocation product with a private bank for distribution in Asia, the U.K., and the Middle East. Head of Global Investments Eric Veiel added that the strategy is increasingly focused on providing capabilities, such as strategic and tactical asset allocation expertise, rather than just products.

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Head of Global Investments Eric Veiel described strong performance as necessary but not solely sufficient, emphasizing the need to meet clients with the right vehicles, price points, and tax efficiency, such as ETFs and SMAs. CEO Robert Sharps added that strong 3- and 5-year performance is highly influential on flows and noted that strategies with good performance, like Capital Appreciation, have maintained positive flows.

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CEO Rob Sharps stated it's a mix of both expansion and cannibalization. He believes a substantial portion of ETF flows are incremental, as they are reaching new ETF-exclusive advisors and offering strategies not available in mutual funds. He noted that tax implications with embedded gains deter many existing mutual fund clients from switching. Regarding costs, he said distribution economics are largely the same for ETFs and mutual funds, varying by platform, with the main difference being the absence of certain non-management fee structures in ETFs.

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Co-CEO Marc Lipschultz clarified that while the firm raises capital globally and deploys internationally in select strategies like digital infrastructure and European real estate, they are strategically committed to the U.S. for the majority of deployment. He emphasized the safety and downside protection of being inside 'fortress USA,' stating that approximately 90% of the firm's capital is deployed domestically. He concluded that they have no ambition to expand globally simply for the sake of it, preferring to avoid unnecessary risk.

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CEO Ali Dibadj explained that the CLO ETF franchise, which constitutes about 80% of the market, has shown resilience with redemptions being absorbed as expected during recent volatility. He noted that the underlying assets are liquid and the in-kind ETF structure functions well. Regarding the institutional channel, Dibadj highlighted a building pipeline, a 100% quarter-over-quarter increase in U.S. RFP activity, improved consultant relations, and broad-based demand across strategies like technology, healthcare, small-cap equities, and securitized products.

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CFO Roger Thompson stated that while positive equity markets are a tailwind, the fee rate has been broadly flattish, declining only one basis point in two years, and will depend on the future mix of business. CEO Ali Dibadj explained the Anemoy partnership is a core part of their innovation strategy, allowing them to be at the forefront of blockchain and tokenization to meet an emerging client need for yield-bearing digital assets. He sees it as a low-cost way to gain critical experience in what he believes will be a transformative technology for asset management.

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Executive Ali Dibadj explained that while the pipeline is still being rebuilt, leading indicators like RFP activity are up over 30% in the U.S., EMEA, and LATAM. He highlighted strong interest in hedge funds, small/mid-cap equities, and global fixed income, while stressing a disciplined focus on profitable AUM rather than pursuing low-margin mandates.

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President Benjamin Jackson stated the deal validates ICE's strategy of building a neutral, end-to-end platform, highlighting recent wins like United Wholesale Mortgage. CFO Warren Gardiner quantified the revenue exposure, noting Flagstar is ~1% of Mortgage Technology revenue and Rocket/Cooper is under 3%. He added that Rocket/Cooper recently signed a multi-year contract, so any transition would take years with no impact to 2025 guidance.

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President Benjamin Jackson stated that major clients signed after the Black Knight acquisition are now in the 12-18 month window to go live, with a build-up expected throughout 2025. CFO Warren Gardiner added that these wins are contributing to revenue stabilization and growth, but noted headwinds from the Flagstar attrition and some Encompass renewals will temper the overall growth rate.

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COO Stuart Williams explained that the high volume-to-capacity ratio is driven by several factors. These include the long-dated nature of the futures curve, which allows for hedging up to 10 years of supply, and the market's modernization, where more physical contracts are indexed to benchmarks like TTF. This creates more hedging needs as cargoes are rerouted to capture the best price, increasing the number of transactions per molecule.

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CEO William Hult acknowledged the 'unprecedented' market moves but stated his inclination is that no long-term damage has been done to the 'U.S. brand.' However, he stressed the importance of Tradeweb's business diversity as a key strength in such an environment. He highlighted that international business now represents 38% of revenues, up from less than 30% in 2016, and that emerging markets revenues grew nearly 55% year-over-year. This global, multi-asset footprint provides resilience regardless of conditions in a single market.

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CFO Sara Furber emphasized that a large portion of Tradeweb's growth comes from market share gains, not just market volumes, citing that 60% of swaps growth and 40% of credit growth were from non-market factors. CEO Billy Hult expressed confidence in continued volume growth in mortgages and identified interest rate swaps (due to low electronification) and treasuries (via the r8fin integration) as key areas for market share gains. Furber added emerging markets as another area of high conviction for growth.

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President and COO Jonathan Gray clarified that the 'golden moment' of high absolute returns has evolved into a 'golden arrow' of a durable spread premium over liquid markets. He attributed this to the 'farm-to-table' model connecting investors directly to borrowers. He sees a long runway for growth, driven by structural tailwinds like bank optimization and financing needs for data centers and energy transition, especially in the early-days area of investment-grade private credit.

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Michael Chae, CFO, specified that the "Big 4" relationships accounted for $156 billion in AUM at year-end 2024. Jonathan Gray, President & COO, added that relationships are "rock solid" and capital has often been allocated faster than contractually required. He views the Nippon Life acquisition of Resolution as a positive development that will accelerate growth, reinforcing the success of Blackstone's capital-light, third-party asset manager model.

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President & COO Jonathan Gray and CFO Michael Chae defended the business's strong long-term track record. Chae explained the recent lag is due to cyclical factors: lower volumes of new discounted deals, which is now accelerating, and the underperformance of more mature funds that comprise the portfolios. They view these as temporary issues, not structural problems.

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CFO Jason Warnick stated that the credit risk is 'very similar' for both on- and off-balance sheet holdings and that Robinhood retains this risk. He also noted that the economics are similar and that the team is continuously evaluating the structure to optimize it over time.

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Luke A. Sarsfield, Chairman and CEO, responded that the focus is diversified across the platform. He highlighted momentum in RCP strategies (co-investment, secondary, primary fund-of-funds), TrueBridge's blockchain and seed funds, a new credit strategy from Five Points, and upcoming news from Bonaccord later in the year. He emphasized the platform's diversification as a key strength.

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Co-Chief Executive Officer Erik Hirsch explained that the trend is driven by clients' growing awareness of the benefits of secondaries and co-investments for J-curve mitigation and diversification. He noted that while institutional clients currently pay higher rates for Evergreen funds, some fee compression is expected over time as the market matures. The firm's strategy focuses on offering more choice and achieving massive scale.

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Co-Chief Executive Officer Erik Hirsch described the expansion into the mass affluent market as a long-term 'marathon,' noting the vast potential as individual investor portfolios begin to mirror institutional ones. He stated that client needs are consistent across all platforms, focusing on education, transparency, and high-quality, accessible products. Hirsch emphasized that Hamilton Lane's success is driven by its strong client service DNA and its advanced data and technology capabilities, which help differentiate the firm.

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Martin Small, an executive, predicted continued strong demand for fixed income, stating that investors are generally under-allocated. He anticipates that capital from the nearly $10 trillion in cash will shift to intermediate and longer-duration fixed income to capture yield. He also noted that the 2024 equity market run-up has left many investors overallocated to stocks, necessitating a rebalancing into fixed income. Strong 2024 flows of $164 billion were driven by demand across ETFs, index, and active strategies.

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Vice Chairman Dean Allara provided directional guidance, stating that a notable increase in logistics fundraising would make Q4 stronger than Q3. He mentioned that all four key strategies (debt, workforce, logistics, and Newbury) are in the market and will contribute. Regarding compensation, CEO Jonathan Slager explained the increase is a strategic investment to maintain morale and ensure teams are motivated and staffed for an anticipated upswing in business volume. CFO Katherine Elsnab reinforced this, stating, 'our employees are our greatest asset and now is the time to invest in them.'

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CEO Jonathan Slager responded that the deal pipeline is moderately picking up and expects transaction volumes to improve as the market adjusts to interest rates. Executive Chairman Robert Morse added that Bridge will remain selective. Regarding the Sun Belt, Slager noted that while new supply is peaking, strong demand has allowed for continued rent growth and stable occupancy in their portfolio.

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Executive Chairman Robert Morse explained the new product is an accredited investor-compliant private REIT, differing from past qualified purchaser vehicles, and is in its early launch phase. CFO Katie Elsnab clarified that the profit interest collapse only impacted fee-related earnings, not performance allocations, and detailed how realized performance revenue flows to the Operating Company.

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