Matt Bass: Yeah, sure. So I think stepping back, there are various use of proceeds for NAV loans. And I think considered along with a kind of growing and functioning secondaries market, is this just another way to provide liquidity to a growing private equity market, right? So, think of it holistically. NAV loans have been around for a while. They can be used offensively to enable portfolio companies to make acquisitions when capital is not available or funds outside of its investment period. Could be used, defensively to de-lever portfolio companies at a lower cost of capital. Could be also used, your point, as a liquidity tool for GPs to return capital to LPs. So we would look at all three types of transactions. Ultimately, it depends on the quality of the sponsor and the underlying. But there are various use cases that may or may not make sense for different sponsors based on the particular situation. So very, very, very situation-specific, I would say.
Craig Siegenthaler: Thanks, Matthew.
Operator: And we will take our next question from Dan Fannon with Jefferies. Your line is open.
Dan Fannon: Thanks. Good morning. Wanted to talk about the private wealth channel and adviser growth and productivity increased year-over-year, I was just curious, as you think about 2024, how those metrics should track and maybe any changes or plans to accelerate hiring or growth in that segment?
Seth Bernstein: Thanks for the question. Yes, you’re right in pointing out to our consistent growth pattern with the financial adviser, which we now call wealth advisers and the productivity along with that. We take it through the cycle mindset to growing our client-facing headcount, so we’ll continue to stay at that same pace. Obviously, it takes time for the new wealth advisers to become fully productive, but we have high confidence in our long-standing and well-regarded training programs. As you know, we have a heavy bias towards organic growth by hiring new advisers to the industry, which takes time to grow into our culture, but then delivers very strong outcomes, as you have seen on the sales productivity side. In addition to that, we continue to be open-minded about financial advisers with existing clients and books as well as adjacent opportunities in the RIA space [ph].
Again, we are always looking for the best value for our shareholders, and we’ll continue to stay on the organic growth path and be open-minded about any add-ons.
Dan Fannon: Great. And then, Seth, just as a follow-up on your active ETF business. I know it’s small, but you’ve launched a bunch of products here in 2023. How do you think about that landscape over the next several years and your role within that and kind of obviously, some of what the growth potential of those products could be.
Seth Bernstein: Yes. Let me start, Dan, and then I’ll pass it over to Onur to give more color to it. In our view, ETFs are a better wrapper for many of our clients. And we think that increasingly, and in fact, it’s been the case for AB, we are going to introduce new strategies via ETFs to the extent they’re feasible from an underlying securities perspective to do so getting the better tax treatment for taxable investors, as well as just the day-to-day perceptions of liquidity and transparency, which we think actually offers real advantages and comfort to our investing clients. What I would say to you is we continue to plan to expand the range, particularly focused on new strategies and where we see differentiated opportunities that align well with the capabilities that we have.
So to the extent, for example, we see tax aware fixed income as a place where we have an edge, and it’s a very efficient tax vehicle for our clients, we’ll launch strategies like that. And tax key [ph], which is our vehicle has been a successful product in that array. But I think you should expect to see most of our issuance activity through ETFs going forward. Onur, please jump in.
Onur Erzan : No, thank you, Seth. Yes, I mean, our strategy is very clear. We look at basically areas where we can differentiate ETFs allow us to complement, supplement our SMAs, which has been very successful in U.S. retail. So we typically see that pairing quite powerful in the fixed income space, for instance. We also take advantage of conversions when it makes sense. Obviously, like any vehicle, ETFs have their limitations, particularly in the retirement plan space. And as a result, we are mindful about that. But in general, particularly in the non-qualified space, ETFs remain our dominant vehicle preference, along with SMAs and CITs, where we see the future. And then internationally, it’s a little bit more nuanced picture for the active ETFs. The regulatory framework is now catching up, and there might be opening up opportunities where we could potentially leverage our distribution reach to disrupt some markets by offering ETFs, but it’s more exploratory at this stage, and we don’t have any concrete plans.
I would say, it’s an option on the table. Our primary focus remains in the U.S. And you will see us build on the good momentum that you have seen in the last 1.5 years with the 12 ETFs and growing.
Dan Fannon: Great. Thank you.
Operator: And we will take our next question from John Dunn with Evercore ISI. Your line is open.
John Dunn : Thank you. Maybe could you expand a little more on the product demand trends you’re seeing in retail and institutional overseas, maybe ex American income and global high yield funds?
Onur Erzan : Sure. Happy to take that. As you know, in addition to Asia, ex Japan, we have a strong franchise in Japan. We continue to remain very strong in U.S. equities. We have a very dominant position in large cap growth that continues to be a strong area for us. So, definitely, I want to highlight outside Asia, ex Japan, outside the AIP and global high yields. Definitely, our U.S. — sorry, our EMEA business tends to be skewed towards equities as well because the European buyers like the U.S. and global equity products. We continue to see demand in some of the strategies that we offer in the UCIT formats, sometimes more lower volatility kind of strategies that are a little bit more defensive. For instance, would be an example of that.
And then definitely, with the non-traded BDC, we would be targeting the U.K. and Swiss market along with the Asian market. So definitely, we see demand towards private credits. And then finally, we have a strong position in LatAm with the pension systems, whether it’s in Mexico with afores or with the Chilean pension systems, and that tends to be a pretty strong demand for equities, including emerging markets, given their bias towards emerging markets. And then on the institutional side, we touched on it, but private market is a great focus area for us, and I see that as a global phenomenon. Again, there might be different self patterns when you think about different geographies and different types of clients, insurance versus pension plans versus storing wealth, but depending on the risk appetite constraints, yield expectations across middle market lending, real estate lending as well as specialized strategies through CarVal we see demand.
Seth Bernstein: And if I could just jump in, I think longer term, China does present a real opportunity for us. As you may know, we did get our license from the Chinese regulator at the end of the year, and we’re hopeful to launch our first strategy in the near term. China/Asia strategy, sentiment is not great, obviously, in China, but we think there’s strong demand ultimately and we plan to launch a number of strategies over the course of the next two to three years, which would both reflect equities as well as fixed income.
Q – John Dunn: Got it. And then there’s been recently an uptick in private markets firms deciding to join traditionals or other larger oil firms. Maybe just what you guys see a lot of activity. What are you seeing? And any change in your appetite for maybe adding teams or even bolt-ons?
Seth Bernstein: Well, let me start, and Matt or Onur smay join in. But my view is we have a pretty full set of capabilities today in Private Alts, for example, while we’ve had a good start with CarVal, there’s a lot more work to do there and to get private credit investors stuff in our commercial real estate business up to their full scale. That doesn’t mean there aren’t niche services and capabilities, we would not be interested in. We do when we look at them. But I think they would be smaller in size and very specific in terms of the needs, at least at the moment in Private Alts. Switching over to more traditional, as I think we’ve also disclosed, we have acquired a very talented team in Europe focused on global growth and has an excellent European capability as well.
