Good day, and thank you for standing by. Welcome to the Partners Group's financial results as of 31st of December 2024 conference call and webcast. At this time, all participants are in listen -only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, please press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. You may also submit your questions via the webcast at any time by typing them in the question box and clicking submit. Please note that today's conference is being recorded. I will now like to turn the conference over to your speaker. Mr. David Layton, CEO, please go ahead.
Welcome to our annual results presentation. I'm Dave, CEO of Partners Group. I'm joined on the call today by Joris, our CFO, and Philip, our Head of Corporate Development, and Roberto, our Head of Portfolio Solutions, will join us for the Q&A. On slide 2, a few key data points from our annual results to kick things off. In 2024, we achieved CHF 1.6 billion of management fees. Management fees grew in line with AUM, with some FX considerations. Our management fees are sticky. They're recurring in nature, and they've demonstrated a lot of stability over time. Our management fee margin was 1.25%, which is in line with expectations. Performance fees ultimately came in at 24% of revenues for the year. Performance fees reached CHF 511 million during the period. That's up 38% from the prior year.
We confirm the prior guidance we provided regarding how these are expected to further increase in future years. We have a continued disciplined approach to cost management, and our EBITDA margin was stable with the prior few years at around 63%. Our profit came in at CHF 1.1 billion, up 12%, and we have proposed an increase of the dividend to CHF 42 per share based on the firm's strong development and our confident growth outlook. Overall, quite solid operational and financial results for 2024. On slide 3, the private markets industry experienced mixed results in 2024. I would describe it as a gradually improving environment. Some spots of the industry contracted. During this period, we were pleased to have been able to grow our investment activity by 66% from the prior year to CHF 22 billion. We build our returns through hands-on active value creation.
Realization activity was up 53% to $18 billion, and our fundraising was up 18% to $22 billion. Our bespoke client solutions continue to differentiate us. Custom portfolio solutions for institutional clients, evergreen solutions for wealthy individuals, these bespoke solutions were 78% of our fundraising for the period. On slide 4, while the industry is still in a period of relatively low liquidity, with industry-wide investors seeing less distribution activity as compared to what they're accustomed to, we did see a pickup in activity later in the year in particular. Some of these exits required multiple iterations over the past number of periods, and it's good to see them finally achieve good outcomes for clients.
We've been working hard on developing our assets, on positioning them to be competitive in their respective industries, helping them to grow and develop, and we're pleased to have been able to lock in some good returns for investors and some well-earned performance fees for employees and shareholders, as shown on slide 5. Performance fees reached CHF 511 million during the period. That is up 38% from the prior year. This was partially driven by some of those performance fee generating events highlighted on the prior slide. Private equity and infrastructure combined to contribute approximately 89% of performance fees reported. We had more than 90 different investment programs and mandates that contributed to performance fees during the year. It is a highly diversified investor base. We also had contributions balanced across both institutional structures and private wealth structures.
On slide 6, here we helicopter out and provide some context for why there is upside in performance fee potential in the future. Over time, not only has the investment portfolio grown, but a decade plus ago, we drove a mix shift towards more direct investments. Direct investments have more performance fee potential than portfolio investments. Now that we have had that higher mix of direct investments for a reasonable amount of time, those investments have matured nicely. Performance fees have tailwind coming from the combination of both the impact of platform growth and the impact of that mix shift. As such, we see upside in the levels of performance fees we've historically generated. As we've previously communicated, we expect that performance fees as a percentage of revenues will increase from 20%-30% this year and historically to 25%-40% in 2026 and beyond.
On page seven, we provide some insight into the current exit pipeline, into how those assets have developed. We have about $19 billion of net asset value that's flagged internally for realization in the medium term. We usually underwrite plans of five plus years, and 83% of this pipeline is older than five years, with 17% that's ready to exit ahead of schedule. 24% of this NAV are in public securities that have a current weighted average multiple on invested capital on these public positions that stands at around 3.4 times cost. Value creation and engagement in developing portfolio assets is never done until we're out, but we have achieved what we set out to achieve on this exit pipeline.
Recent exits have outperformed our book value in several cases, but the point we're making on this slide is that we're not dependent on any further uplifts in order to achieve this higher range of performance fees. There is obviously continued uncertainty on timing. Industry-wide, we're still in a period of relatively low liquidity, but we feel good about the variables that we can control. We have observed improvements in the markets for our recent exit processes. Again, several of those exits were a result of iterations over time. On page eight, here we highlight the U.S. market. We've historically been underrepresented in the U.S. given our heritage. We have put particular emphasis on the U.S. in recent years with more leadership and more resources invested into that market. We had a record 33% of inflows from the U.S., balanced across institutional mandates and wealth.
Total U.S. fundraising was up by more than 50% this past year. Our innovation history has given us some great relationships to build on, and the U.S. is now 24% of our total mix, up eight percentage points of our mix since we started our U.S. push about five years ago. On page nine, we expect the growth trajectory for private markets and more specifically for Partners Group to remain intact. We have a strong and diversified client base across regions, asset class, and client types. For the full year 2025, Partners Group continues to expect total new client assets of $26 billion-$31 billion. No change to guidance. We base our forecast on the large and visible pipeline of fundraising opportunities across channels. On slide 10, we look forward to welcoming many of you to dinner tonight and for our capital markets day tomorrow.
We've got a big group joining us, and we trust that you'll find that time well invested. With that, Joris, over to you.
Thanks, Dave. It is a pleasure to be here with all of you in our call today. That said, let me walk you through Partners Group's 2024 financial results on page 11. Let me start with our assets under management. As you have heard, these are diversified across asset classes and regions. In U.S. dollar, they grew 4% year over year. In average AUM in Swiss franc, this translated into growth of also 4%. Management fees generally follow AUM growth in 2024 with a slightly lower rate of 3%. This was primarily due to currency impact in the first half of the year. Total revenues increased 10% to CHF 2.1 billion. Performance fees contributed meaningfully and represented 19% last year. EBITDA followed revenues, increasing 10% at a margin of 63.6% in line with the previous year's period.
While our approach to cost management remains unchanged, we have transitioned to using EBITDA and EBITDA margin as our profitability measure in our external communication. We propose a CHF 42 dividend per share or an 8% increase. The proposal reiterates the board's confidence in the strength of our business, the solidity of our balance sheet, and the structural shift we continue to see towards private markets. On slide 12, let's look at our revenues in more detail. We have two sources of revenue: management fees and performance fees. Management fees represent most of our revenues and are recurring in nature. Management fees grew by 3% in 2024, in line with average AUM growth of 4% year on year. FX negatively impacted management fee growth by 2%, whereas our other operating income positively contributed to management fee growth in 2024.
A strong driver to this were treasury services rendered to our products. Let me talk about our management fee margin on the next slide. Again, in 2024, our management fee margin has been stable at an average of 1.26%. Slight variances between years are driven by the timing of when fees are activated in investment programs or how our mix in asset classes is developing. We expect this stable development to continue. Let's look at the performance fees on the next slide. 2024 saw strong realizations and value creation in the second half of the year, bringing performance fees to 24% of revenues. Private equity was the largest contributor to performance fees, with several exits, as Dave mentioned earlier, driving the increase of 87% compared to previous year's period.
Infrastructure contributed CHF 120 million, or 23% of overall performance fee volumes, which is a decrease of 26% after last year's catch-up effects. Already announced exits like VSB will be realized in 2025 and 2026. Performance fees from private credit increased by 86%, showing another year of strong growth. Credits in private markets are almost exclusively floating rates and hence benefited from increased base rates, allowing us to realize value for our clients. Real estate was the lowest contributor to performance fees as the industry continues to be in a state of transition. Let us move to the operating costs on the next page. Profitability, as mentioned, remains strong with an EBITDA growth rate of 10% at a margin of 63.6%. Total operating costs increased by 9%. 85% of our operating costs are personnel expenses.
As you can see, the increase in performance fee revenues also triggered an equal increase of performance fee-funded personnel expenses. This is because we allocate a fixed proportion of up to 40% to our employees. Management fee-funded personnel expenses were at the level of the previous year. We reduced the average number of FTEs during the period mainly as a result of various initiatives to increase the effectiveness of our organization. The 11% increase in other operating expenses was mainly attributable to our various growth initiatives, both organic and inorganic. Depreciation and amortization increased by 18% with our new office spaces becoming used in 2024. Now let's move to the next slide. Through 2024, we have guided our operations towards a target EBIT margin of approximately 60% for newly generated management fees, assuming stable foreign exchange rates.
Beginning in 2025, we will change our profitability measure from EBIT margin to EBITDA margin in our external communication. Over the last three years, Partners Group's EBITDA margin has been stable at around 63%. Our approach to cost management remains unchanged, and we will continue to apply an operating margin of approximately 60% for newly generated management fees and performance fees. The decision to modify our profitability measure was primarily driven by our increased engagement in M&A activities in a consolidating industry. Acquisitions typically lead to significant amortization charges of newly recognized intangible assets. This distorts the firm's EBIT and EBIT margin, which may no longer accurately reflect the true operational strength and profitability of the business. The same holds true for depreciation driven by our significant upfront office investments over the last five years. Both items have no impact on the cash flows of the operating business.
Furthermore, EBITDA has emerged as the European standard, with the majority of private market managers now referring to it as a key financial indicator. We believe that this shift enhances comparability and provides a more standardized measure of financial performance across the sector. To be clear, we continue with our current cost management approach, and FX being equal, we currently do not see a reason why the EBITDA margin of our business of around 63% should change. Let's move to the next slide. We are a global business reporting in CHF. However, most of our revenue comes from USD and EUR denominated funds. Unsurprisingly, as the CHF strengthened, this created a negative translation effect on our EBITDA margin of approximately 0.3 percentage points. Let us move to the next slide discussing our balance sheet. We invest around CHF 1.5 billion alongside our clients across various programs.
In 2024, these investments generated a positive performance of 9% or CHF 112 million. The net in financial income translated into CHF 61 million as costs from foreign exchange hedging and higher interest expenses were at the previous year's level. Our tax rate amounted to 18% in 2024 within our previous guidance. For 2025 onwards, we anticipate the tax rate to range within 18%-19% following the OECD Pillar 2 implementation. This leaves us with a profit of CHF 1.13 billion, an increase of 12% compared to 2023. Let us move to the last slide of the presentation. The board proposes a dividend of CHF 42 per share, representing an increase of 8%. As mentioned, it bases the proposal on the solid development of the business and its confidence in the sustainability of the firm's growth.
Following this dividend, Partners Group will have generated a dividend growth of 17% per annum since our IPO and will have paid back more than five times the price of its IPO share price in the form of dividends. This brings me to the end of our presentation. I would like to open up for questions.
Thank you. As a reminder to ask a question, please press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Once again, please press star one and one on your telephone and wait for your name to be announced. If you wish to ask a question via the webcast, please type them in the question box and click submit. Before starting the Q&A session, I will now hand over to Philip Sauer, who will provide you with the process and order of how the Q&A session will be taking place. Thank you.
Yeah, hello and welcome everybody from my side. Just we do this Q&A as we do it always. We start with the questions from the phone. We take the first five phone questions and then move over to the webcast questions, and I will read them down as you present them. With that, I would say we hand over to the phone and the first question, please.
Thank you. We are now going to proceed with our first questions on the phone lines. The questions come from the line of Hubert Lam from Bank of America. Please ask a question. Your line is opened.
Hi, good morning. Thank you for taking my questions. I got three of them. Firstly, can you talk about how you think about the outlook for this year for activity and performance fees? It feels like that the industry is off to a slow start just given the market volatility. Just wondering how you think the year will turn out. If I look at performance fees, the consensus currently thinks you're going to be at the upper end of that 20-30% range. At this stage, do you think that's still doable? Also taking into consideration the exits you've announced previously, but yet to close. The second question is on the recurring management fee margin. That was, I think, 114 basis points in 2024. I think it fell compared to 2023 of closer to 117. Just wondering how you think about that number going forward.
Do you see any potential for that to fall just given the mix shift? Lastly, on the personnel costs, it looks like the management fee personnel costs were flat year on year. Just wondering how you think that should kind of develop going forward. Thank you.
Hi, Hubert. I'll take the first question. Indeed, the industry is in what we consider to be a gradual recovery. Industry-wide, we did see activity levels that were up slightly in 2024 as compared to 2023. We did feel an improvement in, I'd say, the investor sentiment towards the end of the year in particular. Many of the exit processes that we've been talking about with you all have been iterated upon for now a couple of periods. We have a direct benchmark to tell kind of how the investor sentiment has been improving. We did feel some improvement heading into the second half of this year. As we mentioned, our exit pipeline is in a relatively mature place, right? 24% of that pipeline are already in public positions at good marks.
It does require some level of industry support, right, and market support to achieve our performance fee ambitions. Some of it is within our control as well. I would not say that we have any this early into the year, any specific steer to give you other than we continue to feel good about the elements that we can control.
Now let me answer the questions on the recurring management fee margin. As you mentioned, we had 1.14% over 2024. I think we expect this to be stable also going forward, of course, depending on the final product mix at the year end. With regards to the personnel cost development, we see these basically going back into growing in line with the revenue growth.
Great. Thank you.
Thank you. We are now going to proceed with our next question. The questions come from the line of Arnaud Giblat from BNP Paribas, who's asked a question.
Yeah, good morning. I've got three questions, please. Could I start with perhaps the distribution in the U.S.? A lot of your U.S. peers have laid the foundations for and put in place a very strong investment in terms of distribution, creating universities, hired hundreds of people. I'm just wondering how you're feeling that competitive dynamic and if you see the need to invest a lot further in the U.S. I appreciate you've done it already, just wondering what the outlook is there. Could you talk perhaps about the product lineup? Are you looking at adding further wealth products in the U.S.? My second question is with the switch to guidance to EBITDA margin on the back of further amortizations to come through, should we take this as a bit of an indication that you'd be open to doing further M&A?
If so, which areas would you be looking at? My final question is on performance fees. I mean, I appreciate what you just said. I suppose there are quite a few processes in place, and there are a number of funds that might be on the cusp of earning catch-up fees. I'm just wondering how safe is the bottom end of the range that you're giving us for 2025? Thank you.
Maybe I'll take the first two, and then Philip, you can take question number three. Distribution in the U.S. is competitive, as you mentioned. I think we're holding our own. We had our strongest year ever with regards to distribution of our wealth-related evergreen products, and the U.S. was a big part of that. This was our strongest year in the U.S. market. When I stepped into this role five years ago, we set an initiative to be more competitive in the U.S. market. Historically, we'd focused on other geographies, and we have made an eight-point mix shift towards the U.S. market since we set that ambition four or five years ago. We are pleased with the momentum that we have been able to create there, but there's no question that it continues to be very competitive. Indeed, it requires investment.
If I look at our pipeline of open positions that we have at the moment and the pipeline of positions that we have invested most in over this last year, U.S. private wealth is the single largest investment that we're making as a firm right now into all sorts of different initiatives. I think that's where the battleground is in the industry, and that's where we're making investments to be competitive. I'm here with Roberto Cagnati. Roberto, do you want to speak to the product lineup? We obviously talked on our last call about the seven new evergreens that we had recently launched. You gave some indications of inflows there. Do you want to speak to any new product development that's in the works?
Happy to. I mean, next, the largest private equity evergreen on the globe as part of the seven new products we have announced last time around and started in 2024, the infrastructure-focused offering and a growth-oriented offering. We are also in the process of launching a direct lending-focused BDC and are considering further asset classes such as royalties coming into the mix.
On point number two about should you read into the switch to EBITDA margin as being an indication that we're more open to M&A, you don't have to read into that. I'll just tell you, we're more open to M&A. The switch to EBITDA margin is just a result of us now having some M&A with the acquisition that we made in December and a little bit of real estate on the books. We're just trying to give you guys the cleanest look at actual results. Nothing more to read into it than that.
Thank you. I take the last question regarding the bottom range of the performance fee. It is still early in the year, right? We had a good head start with Q4 exits, especially VSB, which probably will be recognized partly in H1 or 2025 and beyond. The performance of our evergreens started strongly into the year, especially in January. There are signs to believe that our performance fee guidance holds up, right? The market is expecting the upper end of the range. Nonetheless, we need to convert further realizations of this pipeline, right? It is just too early to say right now whether how safe the bottom is.
Great. Thank you.
We are now going to proceed with our next question. The questions come from the line of Sharath Kumar from Deutsche Bank. Please ask a question.
Thank you. Good morning. I just had one question pending on performance fees. Just a clarification in terms of how do you recognize performance fees on transactions which you have IPO? Do you mark to market your entire investment on the basis of the IPO price, or is it recognized only on the portion that you have sold off the IPO? Thank you.
We have a variety of different performance fee mechanisms within our programs. If you look at our traditional funds, it is based on cash distributions. You do not see kind of the mark-to-market volatility in performance fees with Partners Group. When we report performance fees, it is gold. We really have a high standard with regards to when we report performance fees. No, you do not see kind of the IPO mark influencing it. Obviously, if we sell a portion of the position during the IPO and that results in performance fee payments, then that cash is counted, but not the individual marks. In addition to that, we have a percentage of our investment structures that are evergreen in nature.
Some of those have high watermark features, and those do pay performance fees when you have an IPO that results in a NAV appreciation, which some of ours did. The IPO of several of our companies did help with performance fees, but they helped primarily in the evergreen vehicles.
Thank you.
Thank you. We're now going to proceed with our next question. The next questions come from the line of Angeliki Bairaktari from JP Morgan. Please ask your question.
Good morning, and thank you for taking my questions. Just to follow up on the management fee outlook, can you give us some color on how we should think about the other revenues going forward that were quite strong in 2024 and sort of form part of the overall management fee rate? Also, are you seeing or do you expect any pressure on the management fee margins industry-wide given the sort of competition on the evergreen product side in particular, or perhaps in the bespoke mandates based on the conversations that you're having with your LPs at the moment? Secondly, with regards to the D&A, I do hear you on the EBITDA margin shift. I was just wondering, can you tell us how much of sort of the how much will the Empira acquisition contribute to sort of incremental D&A from 2025 onwards?
One last question on headcount. I mean, your FTE number seems to have been flat versus the H1 stage, but it is obviously down quite substantially year on year, which we had already discussed back in September. What do you expect in terms of hiring over 2025, please? Is that going to be mainly concentrated on the private wealth segment, or are you also looking to increase your investment professional capabilities? Thank you.
Angeliki, hello. It's Philip. Regarding your other revenue questions, the best way to approach this, and as yours earlier elaborated, right, this is stemming from Treasury Management Services. There is a certain interest rate differential we earn, and as long as interests are high, there's also a bit of higher outcome on this. Long story short, how you should look at this, I would take the last three years on average also for looking ahead. That's the best way to look at it.
If you look at industry-wide margins in the evergreen market or on mandates, you asked about kind of developments in margins. We do not see anything substantially different than what we have seen in prior years. The evergreen market is a very competitive market, and you do see some players who are being very aggressive in that. We feel good about our positioning. We feel good about where we stand and our ability to maintain our historical fee margins. You guys know that we have evolved our business in order to maintain that fee margin, going more direct, more customized for clients. That has been how we have fought fee pressure historically within the industry. We anticipate continuing to be able to maintain our fee margin over this current time period. With regards to FTEs, we are indeed investing into private wealth.
We continue to be quite well invested on the investment side of the business. We do have some strategic hiring that we're doing and a couple of core positions that we're developing. It is not a broad resource need that we see in the current investment portfolio. Much of the new investments, and we do have a substantial list of open positions at the moment, and a lot of that is focused on distribution and on wealth.
Now, with regards to the amortization charges of the Empira acquisition, now the final purchase price allocations are, of course, not yet done. Still, we expect that could very well lie in a range of up to or around CHF 20 million of amortization.
As a reminder to ask a question, please press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. If you wish to ask a question via the webcast, please type them in the question box and click submit. Thank you. We are now going to proceed with our next question. The questions come from the line of Nicholas Herman from Citi. Please ask your question.
Yes, good morning. Thanks for the presentation and taking my questions. Can you hear me okay?
Loud and clear.
Perfect. Thank you. Three from me, please. One on value creation, one on evergreen distribution, and then a follow-up on performance fees. On value creation, I saw that you generated 9% performance on balance sheet returns. That looks pretty solid. How does that compare to the broader portfolio? Just how are you thinking about convergence between value creation and underlying portfolio performance for this year? On evergreen distribution, I've seen some pretty broad spread of figures reported by peers on the number of distribution agreements that they have. I mean, can you give us a sense of how many distribution agreements you have in North America and how that compares to maybe some of your larger U.S. peers? I assume they would be more than yours, but just if you could give us some kind of sense, that might be helpful.
I think just more broadly, you've onboarded a large number of distributors in the past couple of years. How many of those were in North America? Could you also give us a sense of what kind of traction and pipeline you've seen from those recently onboarded distributors? Finally, on performance fees, I think I heard you say that for the VSB deal, you expect to realize some performance fees in 2025 and 2026. Could you just remind us which vehicles that will be from? Is there a certain number of exits required in the main fund to enter carry mode and to begin recognizing performance fees? Thank you.
Sorry. In terms of value creation of the current exit pipeline versus what we've seen historically, obviously, we're coming off of an up-and-down market environment, and it's taken us, in some cases, a year or two longer to develop our portfolio assets. We do believe that they've developed to a place that is comparable with the exits that we've experienced in years past. We're quite happy and quite pleased with where some of these outcomes have come out. It's kind of par for the course, I would say, the development of this current exit pipeline versus what we've seen in some years past. With regards to performance fees and VSB, you asked about specifically. If you look at the performance fees that were generated in this period, many of them were coming out of 2015, 2016 vintage funds, right, and were 2018-ish, 2017, 2018 vintage investments.
Just to give you a sense for when kind of the vintage years that are coming online. Those are mature portfolios, by and large, if you look at those portfolios and are actively paying performance fees, as demonstrated by the performance fees that we paid out in this period of time. VSB was a little bit of a later investment, but is in a fund that I do believe is in performance fee mode, although we'd have to look into it and get back to you on the details. It's important to keep in note, though, that with Partners Group's approach to managing many different structures at the same time, any allocation that we make to any particular investment will be spread across, literally, in some cases, dozens of different underlying investment structures.
It will be sometimes concentrated in one of our traditional limited partnerships, but it is a more nuanced story than just, "Is this in a fund that is paying carry?" Sometimes it is 50 different structures that will fund a single position.
This is Roberto. With regards to your question on distribution partners, we indeed have distribution agreements with more than 100 distributors across the globe. I'd estimate around 30-40% of those relationships to be in the Americas and the rest on a global basis. I think with regards to your question about how we expect the split and how we expect it to evolve, I think it's worthwhile to take a step back. We expect 2025 fundraising to consist of about 80% of our more established evergreen funds and about 20% of our new funds. The new funds will consist, on one hand, maybe about half in terms of share of new distribution partners, but a good part will also be cross-selling, where someone who had us on the platform for private equity will add an infrastructure campaign, for example. That's something that's very common to see.
When it's about the current funds, there's always a bit of a combination of existing distributors that are in a steady-state type of flow rate. You also will have the new relationship that we have specifically added with more than 20 over the last year. We expect somewhat of a campaign to start those and increased activity from that side. As such, I do think that also for the existing funds, the new distributors will be a meaningful part of 2025 onwards.
Very helpful. Thank you.
Nicholas, very quickly, just to last one where you said the 9% balance sheet performance, which generated the $112 million, it is a bit stronger than the overall more mature performance you can observe, right, in our evergreen funds from very mature funds, simply because we have worked over the last two years very much on a good and strong performing seed portfolio in our balance sheet, for instance, one of which is the new fund now launched on the infrastructure side, which basically pushes this performance slightly higher than what you would see now for more mature vehicles in the market.
Very clear. Thank you.
With that, we have all phone questions answered. We would move now to one question on the webcast. This question relates to how we see—and maybe, Dave, this is more related for you—how we see the exit environment 2025 and how this impacts performance fee. I think we answered that, but more specifically, kind of how we see the geopolitical issues in the world affecting our portfolio companies.
Yeah. If you look at the exit outlook for 2025, we're less kind of focused on any one particular year, 2025, 2026, and more focused on developing our portfolio in an attractive way for clients, generating good returns. We give you guys quite a bit of transparency into that exit pipeline on this presentation. That pipeline is in a good place and has already developed to a place that we feel like we're prepared to lock in returns for clients at those levels. It is not dependent on future developments. We obviously have a lot of value creation efforts going on in the portfolio. We've got also assets that are much younger and require more development to get them to a place where we can potentially exit.
We feel good about the mature portfolio that we have, how it's developed, and we'll be focused on driving liquidity to the extent that the market supports it. There are a lot of geopolitical topics at the moment, and we're working, I think, very closely with our management teams in order to navigate the current environment. I think this is one of the things that is pushing people more towards private investments, right? This historical pattern that you see with investors becoming more and more passive in their forms of investment, I do think you're starting to have them question that, right, and then wanting to put their investment dollars in the hands of the manager that has their hand on the wheel and is capable of steering around some of these topics.
We have a regular cadence with our various teams on their various portfolio companies, how they're navigating these challenges. We share best practices across the board. Of course, there will be some impacts anytime you put a tariff in place or anytime there's tension between trade partners that could impact flows, but we're confident that we'll be able to navigate around it and continue to generate strong returns.
Dave, there is the last one on what are your recession fears in the U.S. regarding Trump's policy? Any impact on portfolio companies? What's your take?
I think it's a mixed bag. There is obviously some downside to some of these topics, but there's also some real upside. You see some indications that their current administration is also supportive of opening up access to private markets to a broader universe of investors. I do think it's not a one-dimensional perspective that you can take, but you have to look at the upside of bringing literally trillions of dollars of new investment capital online for our industry and balance that against maybe some of the headwinds that might be faced as a result of some other topics. With that, it looks like we've come to the end of the questions. We want to thank you for your engagement, for your participation.
Again, for those of you that are participating in the Capital Markets Day tomorrow, we kick off at 9:00 A.M. For those of you who are joining us for dinner today, we will open the doors at 4:45 and start the program at about 5:00 P.M. Thank you very much.
This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you and have a good rest of your day.