In Conversation with Julie Segal

Julie Segal speaks with Hamza Lemssouguer about the evolution of credit markets and the risks emerging in parts of private credit.They discuss how Europe’s fragmented system differs from the U.S., how the post-2022 shift in rates and liquidity is reshaping opportunities, and why some credit strategies are becoming more dependent on growth, capital markets access, and exit conditions.As Hamza explains that last point, “The true value of credit is that you're not relying on equity growth. If part of your credit portfolio, which is the big problem today, relies on growth, relies on AI disruption not happening… relies on the IPO market for exits, then that's too many conditions. And then those credit investments start to look a lot more like equity.”And that’s a problem.The conversation also explores whether emerging stress in private credit could create new opportunities for investors positioned to be flexible across public and private markets.Take a listen and email me with your thoughts and ideas at ⁠⁠jsegal@institutionalinvestor.com⁠⁠.

After years of directing time, attention, and capital toward private markets, institutional investors are taking a fresh look at whether they underinvested — intellectually and operationally  — in public markets.Gerard O’Reilly, co-CEO of Dimensional Fund Advisors, said many large investors are reassessing their approach after treating public markets largely as a low-cost, passive allocation. With volatility and concentration in major benchmarks rising — and more scrutiny on how portfolios are actually implemented — some are asking whether they left returns on the table.That reassessment is less about shifting from passive to active, and more about how “passive” is executed in practice.Dimensional, which is built around the idea that markets are broadly efficient, does not try to outguess them in a traditional sense. But unlike rigid index-tracking approaches, it allows for more flexibility in how portfolios are constructed and traded.O’Reilly pointed to index rebalancing as one example, where funds tracking an index may be forced to buy stocks after prices have risen and sell after they have fallen. “Those are mechanical trades,” he said. “You’re not necessarily getting the best price — you’re just following the rule.”“You don’t need to add more uncertainty than markets already give you,” O’Reilly said. “The question is whether you can improve outcomes without sacrificing discipline.”For institutions coming back to public markets, that may be less about picking winners — and more about how those portfolios are actually built and traded.

Amherst Group CEO Sean Dobson discusses the push to restrict institutional homebuyers, his work with lawmakers in Washington, and the politics driving the debate over single-family rentals.Take a listen and email me with your thoughts and ideas at ⁠jsegal@institutionalinvestor.com⁠.

I first got to know Soraya Chabarek the way many relationships now begin: entirely on screen. Meeting in person was different. As Soraya notes in this episode, technology accelerates access, but it can’t replace human connection — a belief that has shaped how she invests, leads, and builds organizations. That philosophy sits at the heart of her work as president and CEO of Manulife CQS Investment Management, and it frames one of the hardest problems in asset management: succession. Hedge funds, in particular, tend to live and die by star portfolio managers. Soraya explains why she never believed you could truly “succession-plan” a single person — and instead thought about how teams could be designed to outlast any one individual.She traces that thinking back to the earliest chapters of her career, where mentors emphasized education over selling, long-term relationships over transactions, and a deep respect for risk. We talk about her path through the hedge fund world, what she learned from some of the legends in the industry, and why there are still too few women in the ranks and leadership. “A village needs to come together” to changes things, she says. From there, the conversation turns more technical. Soraya breaks down how CQS institutionalized itself over time and built scale across multi-asset credit, structured credit, and regulatory capital strategies. She explains why European credit has quietly delivered stronger risk-adjusted returns, and how complexity — when properly understood — can create durable return premiums.As the industry continues to consolidate, Soraya talks about what she looked for in a partner in the 18 months leading up to CQS’s acquisition by Manulife. With the industry littered with failed asset management acquisitions, Soraya addresses the importance of culture, and how to identify a good one. The result, Soraya argues, is a rare balance: remaining a boutique credit specialist while gaining the stability, distribution, and patient capital of a global insurer. This is a wide-ranging conversation about how judgment actually shows up — in people, in markets, and in building institutions.

In Episode 11, which was recorded live at the Morningstar Investment Conference in Chicago, Julie Segal talked to BlackRock’s Rick Rieder, who created THE buzz at the conference after his morning presentation, which he boldly called ‘What Is Money’ (and which included a prediction that AI would create a 15-hour work week.) Julie got Rick, the CIO of $3 trillion in global fixed income, to finish — at least for now — the conversation he started. The discussion ranged from the existential questions about money, market structure, and the changing nature of global investing to reimagining the 60/40 portfolio. The episode is a masterclass in long-term, contrarian thinking. Oh, and Rick gets to revisit his 2016 interview with Julie where he warned that Investors need to “stay away from the soup of the day.”Take a listen and email me with your thoughts and ideas at jsegal@institutionalinvestor.com.The roadmap: What is money today and tomorrow? Social media and (real) media's role in amplifying noise and shortening time horizons. Explosive growth of financial assets over the last decade. Are we still clear on what money is and what it does? (1:40)Too Much Wealth, Too Few Assets - There are $218 trillion in net worth in the U.S. today and $530 trillion globally today. How can this money be invested? Using the credit markets to create more assets. (4:36)Inflation and Tariffs - The short to medium term of tariffs and deglobalization. And the impact of tariffs and the world of automation. By 2050, we will be going down to a 25-hour week. (7:50) What does that mean for the markets and why we are not going into a recession? (9:50)For the first time in 20 years, we can get yield in fixed income and private credit has firmly taken its place in the fixed Income sector. Creating the balanced and stable portfolio. What are my institutional clients asking me? (18:45)Internationally, they are asking about the dollar for the first time in a long time. In the U.S., investors are looking at diversified portfolio in a very different way today.An alternative to 60:40 (21:00)

Imagine waking up to discover that decades of data on stocks never included key industries (technology anyone?), making every major index misleading and leaving people to question everything about their equity portfolios, including how much they’ve invested, the risk. and expected long-term returns. With hedge funds, this isn’t just a thought experiment—it’s an unsettling truth. And a fix matters to both hedge funds and investors.  In episode 10, Julie talks to Jon Caplis, CEO of PivotalPath, which was built for institutional investors to do due diligence on hedge funds. PivotalPath, which Jon founded in 2013, now serves institutions with a total of $400 billion in hedge fund investments. In today’s episode, Jon discusses how incomplete data has fed flawed benchmarks and how it all turned into a nagging problem and open secret for the industry. Jon gives his view on how it happened in the first place, why resolving the problem now is particularly important and has gained support, recent research that quantified the detrimental effects for both investors and managers, and what could happen to landmark academic studies on hedge funds that have been based on incomplete data. Take a listen and email me with your thoughts and ideas at jsegal@institutionalinvestor.com.  Links:  II Article: Everything Investors Know About Hedge Funds Is Based on Flawed Data https://www.institutionalinvestor.com/article/2d7om8w3w5brlcvefot1c/portfolio/everything-investors-know-about-hedge-funds-is-based-on-flawed-data Study: What Do We Know About Institutional-Quality Hedge Funds? https://uncipc.org/index.php/publication/institutional-quality-hedge-funds/  PivotalPath Index App https://www.pivotalpath.com

In episode 9, Julie talks to Robert Goldstein, who has been the chief operating officer of BlackRock for 10 years and who started as a ‘green package’ analyst 30 years ago in 1994. Rob, who was part of groups that built the iconic green package into Aladdin as well as BlackRock Solutions, talks in detail about what carries over from the early days of the company to inform what it does now (a lot) and why everyone claims to be a technologist in financial services now. He also discusses artificial intelligence, why he still expects to have more engineers working for the company in the future than it does now, and how AI will never be able to do a COO’s job.    But any investor interested in why private equity, private credit, and private everything will become (almost) as transparent as public assets needs to listen to this conversation. Assumptions that managers and investors have made about private equity and similar funds are plain wrong. Rob says there’s just too much money in private markets for investors not to have the information they need to get a detailed picture — particularly of the risks — in their portfolios. “The gap between what investors could get today on the public market side of their portfolio relative to the private market side… is just too big. And that gap is going to be filled,” Rob told Julie.  Many people have long assumed that private markets would stay opaque. (Private is the operative word here.) But BlackRock has always been about portfolio transparency — for good reason. “Because…. if you don't understand the risk in a portfolio, you actually can't understand or manage the portfolio,” Rob says. Sounds pretty basic of course, until you think of BlackRock’s history in complex mortgage-backed securities, which were a new invention at the time of the firm’s founding. Naturally, not that many investors or managers understood how these securities worked, had good information on them, or knew how they could fit into their portfolios. BlackRock changed all that and structured products are now mainstream.  Rob stresses that the same will happen in private markets, where information is fragmented, closely guarded in many cases, and not standard. As a start, BlackRock will build on its acquisition of Preqin, which has been collecting data on alternatives. To be sure, more transparency will create winners and losers, but it’s not okay for these investments to have a veil of secrecy over them. “That just isn't going to happen. That is not how anything in the year 2024 works,” he says. If your doctor can give you the results of 12 tests on the same day during an office visit, surely investors can get an MRI on 100 percent of their portfolios, including the private equity and real estate funds they own. I think transparency of private markets is likely to be one of the biggest investment transformations of the next decade. 

In episode 8, Julie talks to Ignacio Jayanti, CEO of private equity firm Corsair Capital, which spun out of J.P. Morgan Chase in 2006. Before that, Jayanti had been on the investment team of the predecessor Corsair funds and managed the operations of the business for almost a decade. Jayanti covers a lot of ground in this conversation, including how the model of private equity buyouts that took shape from about 2000 to 2021 depended on a growing number of potential PE acquirers for companies and a never-flagging IPO market where PE could cash in on investments. But he thinks that IPOs will remain “subdued” and that sweeping changes in the public markets since the early days of PE have added a lot of volatility and risk to this exit strategy. Private equity firms can no longer count on selling their companies to competitors either. That bit was founded on cheap money and constant deal making, says Jayanti. Money is no longer cheap — and deals have slowed dramatically. In particular, tune in to hear Jayanti’s view of all that dry powder — commitments from investors — that has accumulated at private equity firms. That will “reach its end of life…  some time over the next three years,” he says. The industry must be watching and trying to forecast what investors will do at that point. They have every right to walk away from unfunded commitments. And if they do the industry will contract dramatically. “I'm just highlighting the fact that there's a very long cycle and rhythm to this market of fundraising and deployment and exiting, which has been very significantly affected to the point where there could be a period of time where the next upturn is actually quite a bit further away in terms of aggregate market size. Ignacio touches on plenty of other topics as well, including a nuanced discussion about due diligence that you may not have heard before and the transformation that secondaries could kick off (in a good way.) Thanks for listening. And let me know what you think, what questions I didn’t ask, and when I should have pressed for more. My email is open: jsegal@institutionalinvestor.com.

David Hunt, president and CEO of PGIM, addresses how economies are being funded differently, what that means for investors’ portfolios, and how to foster contrarian thinking.Listen to Julie and David discuss: The rise in private market investments and how that reflects a fundamental change in how economies are being funded. And why an understanding of that dynamic is necessary to answer the question of whether or not investors have too much in alternatives. How to create a place where investors can outperform by being encouraged to come up with “ideas that aren’t necessarily accepted as truth at the time” An answer to one of “the fundamental conundrums of investing: that size can be the enemy of performance but businesses need scale Why net flows don’t tell you much, and what measure is valuable How investors can have the cash to be opportunistic even as illiquid private assets become a bigger part of institutional portfolios Why insurance needs third-party capital to help people fund their retirement.

In episode 6, Julie talks to John Wright about why it’s not enough anymore to just pick the best credits. While clearly counterintuitive statement, John, who is global head of credit and a partner, does go on to explain the alpha-generating techniques that now go into managing private credit portfolios. In the hyper-competitive world that private credit has become, John says “It’s harder to differentiate solely on the basis of credit selection.”Julie and John also discuss CLO investors and how their irrational behaviors make these markets inefficient; the long relationship between private credit and regulators; and why he’ll always choose to invest in markets that are complex and illiquid. John also talks about the top questions he gets from allocators these days, the opportunities for private credit among more mainstream investors, and how he’s always thinking about how to attract a new generation that thinks differently to Bain Credit. Part of that is letting junior people into the rooms where decisions are being made and apprenticeships (hint, these won’t work on Zoom). This episode is sponsored by Bain Capital Credit.