We have a targeted agenda for you today, and our objective is to provide clarity and transparency of where our business is going. During the first half, we will provide insights around our strategy, origination, and our investing businesses. Then we will take a short break and then lead into the second half, focusing on our capital formation capabilities, our culture, and our financial outlook. We are incredibly proud of the value that we've been able to create for our shareholders. Since we listed on the NYSE in 2011, our stock has appreciated sevenfold, outperforming the S&P by an average of a thousand basis points per year. Today marks our fourth Investor Day, and you can really see the result of making these opportunities impactful, both in terms of communicating our goals and then delivering results.
Many of you have been with us for a substantial portion of this journey, and we're extremely thankful for your continued support. For those of you who may be newer to our story, we believe we have the most shareholder-friendly structure among our peers, and you can see some of these differentiating characteristics on the page. We are also the largest eligible financial company for inclusion in the S&P 500. So if anyone here would like the address of where you can send a nomination form on our behalf, please see me during the break. And one final note: in addition to all the great live presenters we have for you today, we wanted to showcase a wider array of our high caliber team. So we've pre-prepared a series of short video reels that you'll see woven into the presentation. The first one starts right now. Enjoy.
Apollo is driving the investment universe forward. A real trusting partner and advisor.
Collaborative, entrepreneurial, and dynamic.
Insightful, thoughtful, driven.
Creative, innovative.
Where we look where others don't.
We are constantly evolving, we're constantly looking for new opportunities, and we're constantly pushing the envelope.
Apollo really is an investor's investor.
One of the strengths of Apollo is being able to think with a blank piece of paper about what it is that the client really needs.
Rather than solve for an individual solution, we can actually flip it around and ask, "What do you need?
Our integrated platform is really a unique aspect of Apollo. We are a long-term partner, providing a quantum of capital that makes a difference. The capital needs in certain industries are going to be immense. A global industrial renaissance. There really is a growing home for capital like ours, patient, creative capital. The sustainable investing platform at Apollo is unique because it really is a platform approach. It touches every part of business, it touches people, it touches technology, it touches infrastructure, it touches resources, but it also has the opportunity to invest in the future. Together, the Athene and Apollo platform are really built around empowering retirees. Apollo and Athene are well positioned to help families and individuals achieve their best financial lives. Through our relationships with U.S. pension plans, we are literally serving millions of retirees. We're allowing individuals to invest in their future.
We spent over 3 decades developing expertise in private markets. Today, we're delivering those capabilities to Global Wealth clients. We started out to the U.S., then moved on to Asia, and now are building our capabilities in Europe.
I am extremely proud of the team that we have here. I really enjoy the people I work with.
We are on the forefront of innovation across every different type of asset class.
Whether it's Global Wealth, whether it's serving retirees, whether it's providing Capital Solutions that the banks and the markets are no longer providing.
Ultimate modern, high-performance culture at Apollo.
There's an excitement, there's an energy. You feel it walking around the halls here, that we are building something special. The excitement, you can feel it every single day.
There's a real sense of community, of all of us pushing together to achieve the right goals.
We think it through, then we think it new.
Good morning. For those I don't know, I'm Marc Rowan, CEO of Apollo. I want to thank you all for your interest, and especially your willingness to spend between three and four hours with us. Hopefully, nothing will happen in the world that distracts all of us from the day, because this has been an amazing experience. There is no better time to be the CEO of a business than doing a five-year plan. Anything we wanted to do, we've now compressed into a very short time frame. All the tough decisions have been on the table, the resource allocations, the level of focus. And if I give a top-level remark, what you're going to see in asset management, this is about choices.
There is so much that we could do in asset management that this is about focus. Listen to what we chose not to do. In Retirement Services, we almost have the opposite focus. In Retirement Services, they have been so focused on execution of their business plan, that it's now time to open the aperture and really go after the retirement market, and the two steps to the business, I think, create a very dynamic and exciting plan, so as Noah suggested, this is not our first rodeo.
This is actually our fourth Investor Day. You can see the results that are up there, and I know a number of you, when we spoke in 2021 , thought we were, shall we say, optimistic? I think even some on the team thought we were optimistic. But the team, particularly those of us who have been here a very long time, were supremely confident that we would deliver the goods. And I think, short, we crushed it. Not everywhere, not every day, but for the most part, we feel really good about what we've achieved so far. And a number of us have very, very short attention spans, for those of us, particularly, who work on trading desks or who make minute-to-minute decisions. So if you're looking for an exit, right after this page is a good time to exit.
In terms of what I think you should take away as financial targets, you know, for FRE, we're talking about 20% average growth over the next five years. For SRE, 10% average growth, $15 a share of ANI, $21 billion of capital. Then the only other number I'd really focus you on is the $275 billion of annual originations. I think the word origination and the tracking of origination is gonna become more important to our industry and to the dialogue we have with all of you. We have been incredibly lucky. Reflect back on where our industry has come from. This is revenue, seven times. But let me give you a more interesting stat. In 2008, all of the big firms that you think of as our peer group today, we were all $40 billion of AUM.
Everyone was $35 billion of private equity and $5 billion of something else. In our case, that something else was credit. 2017-2023, when we ended the year, we were $650 billion. We grew assets between 16 and 17 times. No financial services businesses grows like that. We actually outgrew Apple, we outgrew Microsoft, we outgrew almost every growth company you could think of. And I think it's important to ask the question publicly that we ask the team: Were we lucky or smart? We were lucky. We were smart only in that we positioned the business in front of incredible tailwinds, and those tailwinds basically powered our business to 7 times revenue growth, and they powered our business to 16 to 17 times AUM growth.
Those tailwinds, in 2008, every existing financial institution around the globe was playing defense. We were fortunate in that we started a new financial institution, Athene, in 2008, and we basically played offense for 15 years. The other thing that happened is as governments around the world pushed rates to zero, both after the financial crisis and again during COVID, everyone who had made commitments to policyholders, to retirees, to contractual counterparties, found themselves in search of yield, and they found us. Those two tailwinds didn't just power us, they powered our entire industry. But we also have to be clear that those tailwinds are now gone. This is another thing that we're really working on at Apollo. Our industry has been so successful. Our company has been so successful.
How do we get the organization to play to win and not just to play not to lose? Probably consumes most of our management time. We have woken the team up at 4:30 A.M. for meetings to prove to them that we need to do a wake-up call and something different. We've had outside speakers come in to scare the bejesus out of people. We've had cautionary tales. We're here to play to win, and the thing that I keep saying, change is coming. The tailwinds that got us here are not here anymore. They are gonna be new. If we think we're gonna succeed by doing more of the same, I think that's a fallacy, and we have to adapt, and we have to change, and this is not true just for us. This is true for everyone in our industry. How have we evolved?
We've basically evolved, focusing on capabilities and to keep us in front of these powerful tailwinds. Our whole industry and our firm, our founding was private equity. We were a small business with massive opportunity in front of us, so-called black art, not even an asset class yet. Post-GFC, credit, Athene. These were the big drivers of our growth. Over the past few years, many of you at the Investor Day said, "Why merge with Athene? What capabilities? What are you gonna get out of it?" We've gotten a lot out of it. The entire business revolves around the retirement ecosystem, and Athene's centrality to our strategy is irreplaceable. They basically have put us in the platform business, in the Capital Solutions business, ADIP, which you'll hear a little bit about, and wealth allows us to be the most aligned firm in our industry, side by side.
What are the new tailwinds? How do we think about where the business is going? Let's start with a little dose of reality. We are a small asset manager. We are circa $700 billion+ of assets under management. All the Big Four are in the $10+ trillion today. If we are really successful, our business will be twice its size in five years. We still will not be relevant in the scale of the big asset management, and I think in some ways, this is the most exciting and the most comforting part of a strategy. We have four amazing opportunities, tailwinds, that are in front of us that will push our business forward, any one of which, done well, would serve to double our business.
Our job now is focus and execution, and to put ourselves in front of the tailwinds of these four massive opportunities, which I will discuss a little bit more in detail. Global industrial renaissance. The capital that is needed today, in addition to the two trillion that the U.S. government is borrowing to fund on an annual basis, what is it for? It's for infrastructure, it's for energy transition, it is for the next generation, data and power. These are all long-dated. They're complex. They require creativity. In many instances, we're financing consortiums backed by the big companies who don't want assets on their balance sheet, but want the capabilities that are inherent here. These long-term solutions across a variety of cost of capital are not really appropriate for bank balance sheets who fund themselves short. They're not really appropriate for the plain vanilla of the investment-grade marketplace.
We and institutional investors are the long-dated capital necessary to do this. In every society, there are only two choices as to where debt capital comes from. It can come from the banking system or it can come from the investment marketplace. There is no third choice. Everywhere in the world, banks are being asked to do less and investors are being asked to do more. When we did the first investment-grade financing for AB InBev a number of years ago, many in this room and many of our competitors and most of the Street said, "That $4 billion is the last $4 billion that you will ever do." That was $100 billion ago, and $11 billion just for Intel. This is just getting started. We are at the beginning of this trend. This is just a secular trend, a driver of our business.
Most of this is investment grade. Retirement. For better or worse, we're all getting older. We, as a society, have done a terrible job planning for retirement. The statistics are well known. The vast majority of Americans have not made adequate provisions for retirement. What? Think of the largest pool of retirees in the world and how they save. In the US, we have between $12-$13 trillion in 401(k) plans. What are they invested in? They are invested in daily liquid index funds, mostly S&P, for 50 years. Why? We don't know. We basically have the retirement savings of America. 10 stocks are 39% of the S&P. 4 stocks have determined 100% of their returns for the last few years, and I jokingly say sometimes we levered the entire retirement of America to NVIDIA's performance. It just doesn't seem smart.
We're gonna fix this, and we are in the process of fixing this. Every day, we are seeing new products, new approaches, new additions. We don't have to make this up. This is happening. The most successful country in the Western world, from a retirement point of view, is Australia. Australia, forty years ago, adopted something called superannuation, a fancy name for allowing investors with appropriate supervision to include private assets along with public assets in their portfolio. The outcome over forty years of compounding is nothing short of spectacular. I believe we are on the cusp of revisiting this opportunity. More directly, what you, all of you, and we have thought about retirement from the point of view of what Athene does. Athene is just getting started.
If we're very focused on how we succeeded, we essentially took an existing product set in an existing industry dynamic, and we made it better. Don't get me wrong, that's been great, and the team has done a spectacular job, but we have yet to even show what this can be. You're gonna see some of this in Grant's presentation, and more importantly, you're gonna see some of this over the next few years. As our competitors are just thinking about the business that we started and now dominate fifteen years ago, we're moving to other places. Whether it is stable value, tax- advantaged products, going after 401(k) or guaranteed lifetime income, there is no shortage of opportunities in retirement, and we truly have not even gotten started.
We need to imagine this business not as an annuity business, not as a pension buyout business, but as a retirement solutions business. And guess what? Retirement is driven by fixed income, particularly high-grade fixed income with yield. Most of our conversations on our quarterly call revolve around what's happening in individual investors. Think about the following: for forty years, our entire industry has basically been built out of the smallest bucket of our institutional investors, called alternatives. We are now in front of us, with individuals, being presented with a market that is at least as large as the entirety of our industry. We are at the very beginning of attacking this business. We are very beginning of understanding what products and how the delivery to this business works, and I already know we're going to be successful.
It's not just we, Apollo, although I do think this is a large firm opportunity. This is not for every firm in the alternatives business, and the reason I know we're gonna be successful is I can look at the most sophisticated of the individual investors, called family office. Family offices are now more than 50% private. Family offices, to us, are nothing other than institutions, and they are not generally guided by consultants or by other benchmarking or other restrictions. They are guided by common sense and the risk-reward of the principal. When I say 50% private, I do not mean 50% alternatives. I mean 50% private. Increasingly, they understand that private is not just alternatives. Private is a way for them to get further diversification in their portfolio and to enhance their yield.
We don't often spend a lot of time talking about family offices because in number, they're not that numerous. This is a massive market, and among the most interesting things in the world are happening now in family office, exactly because of the reasons I've said. They are not limited by benchmarking, and they are showing individuals, they're actually showing institutions the future. Let me flip to the bottom of that pyramid there, mass affluent. We do not believe that Apollo or our peers will directly serve the mass affluent marketplace. These people are very difficult to reach. They have entrenched relationships. They are generally well-served. They are not typically served by an individual advisor. They're not advised, and in very limited circumstances without...
In very few circumstances, do we believe they will actually do what is necessary from an education point of view, to participate directly in the private market. That does not mean they are not going to have private assets. Whether it is us with State Street or us with Lord Abbett or our peer group with Capital Group, I believe this mass affluent market is going to be served by their existing asset managers, by their existing advisory relationships, and that the product set is gonna change. We, our industry, and we, Apollo, specifically, are gonna be a part supplier to this portion of the high net worth marketplace. In high net worth, which is typically what all of us talk about on the calls, this is a group that is advised by wealth systems, by RIAs, by advisors. Their adoption of private markets is limited only by education.
It is how many days we're prepared to get on the road and explain this. I was joking with our Head of Wealth that last week I hit Austin, Houston, and Monaco in one twenty-four hour period. Now, luckily, talking to high net worth investors is highly rewarding because you leave and you actually know exactly where you stand. Sometimes you actually leave with a ticket, which is actually quite, quite rewarding. This is a massive opportunity. So if I review, retirement, massive opportunity, lots of demand for fixed income, in particular. Individual investors, lots of demand for alternatives, plus fixed income and other opportunities and just getting started. This business alone, individual, could double our industry and double our firm.
The one that gets me the most excited, because I think it is the most near term and the most tangible, and the one that I think is gonna go faster, is this whole notion of rethinking public and private. Let's face it, for those of us who have been in the business 40 years, we have it beaten into our head that private is risky and public is safe. We know that in our bones, and the reason we know that is that probably was true 40 years ago. Private was three products: private equity, venture capital, and hedge funds, all of which have risk, even if they are, in fact, very good investments. And public, 8,000 public companies, diversified portfolio of stocks and bonds. But what if we're wrong? What if it is not private risky and public safe?
What if private is both safe and risky, and public is safe and risky? We think nothing of NVIDIA going 20%, 30% in a day. Lots of fluctuations in equity. We don't think of that as risk, yet the slightest deviation in private markets, we all lose our minds. I think the world we live in today is private, is both safe and risky, and public is safe and risky. And if that's right, everything we know about portfolio construction makes no sense. When something is risky, you put it in a small bucket. You call that bucket alternatives. You demand really high returns, and you watch it closely. You put it in funds. You worry about your exposure. You worry about your concentration. You worry about your availability—variability, excuse me. That's the world we've lived in, but the world is changing.
Recall that our entire industry has been built out of that small green bucket called alternatives. We are today getting access to the much larger red bucket called fixed income. Fixed income today is generally for our client base, 50% larger than the alternatives bucket, and it is 100% public IG. We are watching replacement take place in real time, and this replacement is something that is being aided by well-known gatekeepers called rating agencies. The presence of rating agencies is actually telling investors that something in the private market and something in the public market are of the same credit quality. So an investor can actually make decisions about liquidity or illiquidity and make explicit trade-offs of risk and reward. I will say something that investors will not know the difference between public and private IG. There will be no difference.
It will not be the size of company, it will not be the size of issue, it will not be the rating, it will not be the provision of financial information, and it will not be the liquidity. Everything that exists in the public market for IG is going to exist in the private market for IG. We're watching this happen every day. But make no mistake, while this is our near-term target, I do not believe that replacement stops in the fixed income bucket. I think eventually replacement goes to the equity bucket. The world we live in has completely changed. The financial crisis, all the rules by which financial markets were governed were completely changed. The problem is, none of us noticed because we printed, as a country, $8 trillion the next day, and everything went up and to the right.
It's only for about the last eighteen months that we've started to experience the world the way it is. Why is this taking place in fixed income first in terms of replacement? It's taking place there, first, because of rating agencies, and second, because there is no liquidity in public IG. It takes five days to sell an investment-grade corporate bond. One of the outcomes of the financial crisis was this massive reduction in dealer capital to support fixed income trading, which has not been picked up by the Jane Street and the Citadel and the Susquehanna, particularly in private markets. We will, as you hear, begin market making. Once we begin market making, I believe others will market make. The eight thousand public companies that used to form diversified portfolios are now four thousand public companies. Fewer than a hundred companies go public every year.
More than a hundred companies go private every year. We take for granted in the technology ecosystem that companies like OpenAI or Spotify can stay private a very long time and raise equity. Well, why doesn't that apply more generally? I think the future. Today, we're going to talk about fixed income replacement, but I think the future, we're going to be talking about equity replacement. What is equity replacement? Think about what's happened to our equity markets. So much of the market is passive today. Active management is a small percentage, but more importantly, active management has actually failed. When you have a business where 90+% of the time for twenty years, you have failed to beat the index, you have to ask yourself whether these people have gotten stupider or whether the structure of the market has changed.
And I assure you, these people have not gotten stupider. The structure of the market has changed. It is just much harder, much more skill required to make money in active management, particularly with daily liquid funds. To those who do it, I say hats off to you because it is a really, really hard task. I think in the future, investors will own equity that is private. Think of that as private equity, not in a fund without the leverage. Active management may actually be both active management of buying and selling of stocks, but active management may also be the active running of companies. We have a business today, $60-$70 billion, of something we call hybrid, which you'll hear will be multiples of its size. Our industry, these four trends, these four planets, they are not only available to Apollo.
They are available to our entire industry, and I expect our entire industry to benefit for what's going on. However, I believe that we have done a better job positioning ourselves to be squarely where we need to be to benefit from where the market is going. What do we think, and what do we think as investors? What do we read in research? We continue to judge our business. We continue to shorthand success by things like AUM and capital raising. I believe that over the next few years, we're actually going to transition to thinking about what really constrains our business.
If we're right, we're going to have demand for private assets coming from retirement, we're going to have demand for private assets coming from individuals, and we're going to have demand for private assets coming from institutional clients, from their fixed income bucket, and eventually from their equity bucket. All of that demand, I believe, will produce an industry that is twice or three times the size of what it is today. That does not mean capital raising is not important. That does not mean partnerships are not important. There's a long way between today and the future, but I believe the trend. We will find ourselves as an industry, short ideas rather than short capital. Origination is, in my opinion, what is gonna allow you to create value and is going to be the limiter of growth in our business.
It is not just origination, for instance, in private equity, it is origination that matches the right cost and form of capital. The world at the investment grade level is much larger than the world at the 20% cost of capital buyout level. In addition, I think we are all, so far, the beneficiaries of culture. We, as an industry, have attracted an amazing group of people to come to work on our platform, most of whom are escaping a larger institution. We should be very careful not to become that. This work on culture, we will not spend enough time on it today, but if I look at how I spend my time, this is half my job. Managing the careers of 200 people represent the leadership of Apollo. It is all about culture.
Single best decision I've made in the past twelve months was to personally buy a frozen yogurt machine. We open the frozen yogurt machine when we have a team win. It turns out people prefer frozen yogurt to money. It's a recognition. I say this as a joke, but I, I wanna give you some insight. We have to be very careful to watch what we do culturally in this business. We want to be on the North Star about how we run the business. We want to be the single best place to be a partner in financial services. If we get, if we get you to spend your whole career at Apollo, we will have your judgment throughout the entirety of your career, and our business is fundamentally built on judgment.
And if our partnership is stable, the next generation will look ahead, and they will say, "This is all worth it." And then young people coming into our business, many of whom work incredibly hard, including the group that helped put together today, they will have two amazing generations of mentors. If our partnership is stable, it all, it all works. If the partnership is not stable, none of it works. Culture, top home for talent. We do that by how we do it, the environment in which we do it, but we also do it in a way that aligns with our investors. No one is more invested in their company, in their funds, in how they're compensated than we are, and this is a hallmark of how we come to market.
If only one thing sticks for the whole day, this is what should stick: I believe, and we believe, that the ability to originate assets that offer alpha excess return is the key driver of our business. For those who don't follow all the machinations that are at Apollo, Chris Edson has now been promoted to head origination. So of the roughly 9,000 people in our ecosystem, 4,500 of them report to Chris Edson. So try to sit next to him at lunch. Me, I check on his health every morning to make sure he just gets to the office. This is an incredibly important part of what we do. I also believe that the dynamics of what's happening around origination is what allows you to keep your fees stable or increasing. Think about the dynamic I've just described.
We have incredible demand coming for private assets from people who have not historically been in private assets. I believe we will have a shortage of private assets. I also have said that the liquidity or illiquidity premium is gonna disappear for a big part of our marketplace. What is going to give you excess return? The capacity to originate, the capacity to structure, the capacity to control a deal, I believe, is what is going to contribute excess return. We judge ourselves, yes, by our financial metrics, but ultimately, it's about the capacity to originate. Building and owning origination is essential to what we do. You'll hear a lot about that today. Four thousand employees wake up every day. They do not carry an Apollo business card. They work in 16 platforms. We've spent more than $8 billion building this over the last 15 years.
This is the largest concentration of employees at Apollo. The entirety of our asset management business, three thousand people. Our retirement services business, less than fifteen hundred people. This is platforms. This is high-grade solutions, the kinds of things we've done for Intel and AB InBev and Air France and AT&T. It is also partnerships with people like Citi. Our industry is really, really dynamic right now. We are not in any way at war with the banking system. We have never been better partners with the banking system. Look at what's happened just this week in terms of announcements with Citi, announcements with BNP. The banking system has figured out that we do not want what they want. We don't want their client. We can't sell their client anything.
We can't sell them advice, or M&A, or foreign exchange, or derivatives, or payments, or credit cards, or any other service. If a bank loses a client to another bank, they lose it all. If a bank loses an asset, which, by the way, they generally do not want under new capital regime, they retain the client, they retain the fee revenue. This is just beginning to be accepted more widely. I think what we've done with Citi, while large and dynamic, I think you'll see lots more of this. We are not the enemy of the banking system. We are, in fact, amazing partners with the banking system. Let's pivot a little bit. Let's talk about the structure of our business. For those who were with us at our last Investor Day, we certainly took a lot of grief for our dog and its tail.
We were trying to explain the benefit of being a principal versus just being a fee provider. But think about the market we've just described. We believe that assets are what is going to be scarce, rather than capital. If we're right, as a business, we should want to make as much money as possible in an aligned fashion on every asset that we originate. How do we do that? Well, for some of those assets, we get a fee plus 100% of the profit. Think of that as Athene balance sheet. The amount we can do there is limited. It's limited by capital, it's limited by diversification, it's limited by our desire to do and grow other parts of our business. For some of our business, we have a full fee plus a third of the profitability. We call that ADIP.
For those who follow our business, this is an insurance partnership where outside investors own two-thirds and we own one-third, and finally, we have a business for which we earn a full fee, and we have no retained interest in the profitability other than a promote or some form of upside. We like all three businesses, but to date, we have, as an industry, and you as analysts and people who follow the stock, we've been focused on capital-light. Some of our competitors do this differently. They hold assets on their balance sheets. Some hold assets elsewhere. We have the most efficient way to hold assets, and that is in partnership with retirees through our Athene retirement services business. This is a partnership that is built on fundamental need. Athene's business basically relies on excess return in investment-grade fixed income.
We start with a belief that there is no excess return in publicly traded fixed income. The only excess return comes from originating investment grade. Therefore, their entire business needs long-term safe yield with spread. What we've done is we've built the capacity to originate. As Athene got bigger, we had to get bigger. This has been a mutually beneficial partnership. It is not a gimmick for asset raising. It is not something one should do lightly. It is a fundamental, full-on activity, and very few, if any, of our competitors actually understand this business and what they are doing. How do you win? Well, to win, I think you need all five of these things. If you don't have these things, and most people who are entering the business and most traditional companies don't have any of these things, what do you do?
What you do is you take assets and liabilities to Cayman, you put up $0.50 on capital, you avoid a bunch of rules, and that's what we're watching. Anytime someone tells you they're taking their business to Cayman, read that as short-lived and lacking in any of these things. These five things, I believe, are necessary to succeed, and in our competitive set, only one of our competitors has actually taken the time to build something of substance. Asset outperformance. Back to this notion of private is risky and public is safe. Look down at the pie charts down below, comparing Athene to the industry. 97% NAIC 1 and 2 , which are the most highly rated categories, approximately 5% alternatives, 1% stocks. If you cannot generate investment-grade private, you do more alts and you do more stocks. This is what our industry has done.
They also own real estate equity, of which we own none. They also own high yield. What we have built is proprietary origination, fixed income, investment grade, and we are earning a 150 basis points + of spread on that for the portion of the portfolio. That is allowing us to de-risk the portfolio rather than risk the portfolio. In every cycle, we have performed better. Our credit losses are fewer, our credit upgrades are more, our attraction of third-party capital is the greatest. This is just an amazing story, and kudos to Jim and Grant and the leadership team at Athene for what they've done. But this is a symbiotic relationship with Apollo. Distribution. The chart moves up and to the right. The team has done an amazing job building a service culture, but at its core, how did we win?
How did we go from zero to better than every brand name you possibly can mention? We took a little bit of the asset outperformance, and we gave it to customers. And guess what? Customers prefer more to less. And over the past fifteen years, we have built the number one market share in retail, and I won't steal any of Grant's thunder as he takes you through this business. But suffice it to say, if you do not have ratings, and you do not have service, and you do not have this, what you're doing is you're buying secondary blocks of business with degraded surrender charges and degraded protection, and you are paying more for them than originating new business. Not a great way to run. Distribution is key. Capital. The reward for good performance is trust with capital.
The entire industry, over the past decade, has raised $28 billion of capital. We've raised $20 billion of capital. We are now the second greatest capitalized business in our industry, and we have the luxury of retaining vast amounts of capital, which Jim will take you through. Capital gives us ratings flexibility, it takes down our cost of funds, but most importantly, it positions us for a rainy day. We grow in stairsteps when the industry is short of capital, because that's when spreads are widest, that's when economics are the best. Cost structure. Other insurance companies have six or seven product lines. We have one product line. We have driven cost to an incredibly low level while retaining a service culture, and the we, in this case, is Grant and the team in Des Moines, where more than 1,200 people work.
It is not we at 9 West 57th who are high-cost producers of everything. None of this, though, is possible without management. If you approach this as an asset-gathering business, you will lose. Anyone who is in insurance to gather assets and try to do it on a regular basis is actually on a fool's errand. Sometimes the market lets you grow, sometimes the market does not let you grow. We are principals in this business. We have been principals in this business. By running it as a principal and taking our foot off the gas sometimes and stepping on the gas other times, we attract third-party capital. We get to do ADIP. We get to grow when no one else can grow. We get wide spreads. What that results in is stairsteps. You should expect us to be in the stairstep business going forward.
We will not grow this business other than if it makes sense to grow this business. The other thing you need to do in this business is you need to manage interest rate risk. The business itself is actually not susceptible to rates. You can look on this page, and you can see that we have had amazing years when rates are low and amazing year when rates are high. In general, we prefer higher rates because that's better than consumers, but it actually does not matter. Because the cost of funds and the rate available in the marketplace essentially track each other. The only place it gets messy is in transition from a high rate to a low rate or a low rate to a high rate marketplace. Management has done an amazing job to do this. When rates were very, very low, we had a massive floater position.
What does that mean? That means we gave up income for every one of those years to position the business to benefit or to protect from rates going up. We paid the tuition, if you will, for doing that. In 2022 and 2023, we got the payoff for that. What did we do after that? We massively de-risked the book because now that rates are high, made no sense for us to hold anything other than a modest floater position. Doing this back and forth, the willingness to give up current income, the willingness to position the business, is actually what management's job is, in addition to growing in stairsteps. What does this mean? It means that we have to accept that we sometimes will consciously take down the profitability of our business. Far from suffering through, "Oh, 2024 wasn't so good," 2024 was actually awesome.
The problem is, we did a poor job adequately explaining that the $3.1 billion that we booked in 2023, we consciously reduced by $300 million to remove the interest rate risk through hedges and portfolio rotation. You can see organic business, optimization of the portfolio, and shockingly, an interest rate benefit, because recall that we actually follow SOFR, not market-based SOFR, for many of our floaters. On a year-on-year basis, from the rebased, up 14% year over year, doesn't make it any less satisfying or any more satisfying that we really rang the bell in 2023, and so the growth from 2023 to 2024 reported more anemic. What do we think goes forward? Essentially, more of the same. We told you at our last Investor Day that we would reach $3 billion in 2026.
I assure you, we will be well above $3 billion in 2026, and that line will continue to be above our projection line from our last Investor Day. Will it be a straight line? I don't think so. I think it will have stairsteps, and it will reflect us risking and de-risking the portfolio to do good things as principal. One of the things that we also need to explain, the ecosystem in which we participate is actually growing much faster than our SRE. This is a choice. If we want to grow faster, we can retain more business anytime we want. If we wanna grow slower, we can give more business within a range to ADIP anytime we want.
And so given the choice and given how much capital Athene will produce, we have a lot of levers at our disposal to figure out where on that 10% growth line, above or below, we want to be. But it all begins and ends with we're in a growing market for retirees, and we have all five attributes of success, which none of our competitors have at any size and scale. In short, just like last Investor Day, the team here is incredibly confident that we will deliver the goods. On average, 20% growth in our fee-related business, on average, 10% growth in our spread-related business, and nearly $21 billion of capital generation. The drivers are everything we've done over the past three years in terms of the foundation that we've built, they will continue to grow.
The accelerated growth, think replacement, third-party credit, equity, Global Wealth, replacement. We're not done there. I believe that at the end of the day, private will win over public. That doesn't mean replace public, it just grows faster. Private will win over banks. Again, they won't replace banks, just grow faster. We are a small asset manager with vast opportunities around us, and for us, the limitations are not the business to do. Particularly in the asset management business, this is a choice of what to do and what not to do. Hopefully, today, you'll take away what we've chosen to focus on and how we're gonna build the plan. As investors, I also step back and think about where this is going. The financials were $2.3 trillion in 2014, they're $3.4 trillion today. All of you have recognized much of what I've said.
Our group has gone from 4% to 12% of the total capitalization, and the capitalization of our indices of our companies in our index have grown five times. I believe this trend will continue for all the reasons that I've suggested. Massive market, I think we're the best position for the tailwinds. I hope the plan is clear. I know it's clear internally. Finally, I'll come back to culture. One of the things I like to say in the business: we get to do this. We really do have a really good time doing what we do, and if you come in too many days in a row and you don't feel this way, it's time for you to do something else at Apollo. Thank you.
Good morning. I'm Jim Zelter, and welcome again, for those who we've not met. Following Marc, we travel a lot at Apollo. Go to a lot of meetings, and everybody, when you walk in, they say, "What is your crystal ball? You see so much, you cover so much in the marketplace, what's going on day-to-day?" And we can either talk about the macro or bring Torsten in, but what really happens is we really end up talking about market structure, and we talk about origination. It was very clear a few years ago where we were going with origination, and today I'm gonna take you on a journey of the best of where that crystal ball tells us the origination and the world of alternatives is going. We are contrarian investors.
We think about the world a bit differently, so it's not a surprise if the world is focused on capital formation, AUM. We turn that upside down. We have a different North Star, as Marc talked about, and clearly, in our view, origination is the lifeblood of the business. With that, it's really the capacity to originate is our North Star, day in and day out, and we're purposely built to create and to lead the industry in that regard. Let me take you on a tour. We sit here today with capital needs that are unprecedented. We talked about what's going on in energy, power, and digital infrastructure, dramatic IG needs across the world, and power alone could keep us busy for a decade. On the right-hand side, you see a variety of things happening in the cyclical nature of the non-IG market.
But certainly, the scale of the left-hand side is what really drives us, and the scale is more important than any one detail. And we've actually seen this movie before. If you go back almost a hundred years ago, the advent of the early 1900s , with railroads, capital needs of utilities, the capital needs were long dated at that point in time. And if you go back in history, the insurance companies and the balance sheets of the insurance companies of Equitable, of New York Life, they were the primary players and providers of capital at that point in time. They played a critical role at that point in time about the growth of America. The next stage, 1990 to 2020 , the period of great globalization in the markets, massive deregulation, lower rates around the world, the capital markets and the banks played a critical role.
And actually, when you think back, what's going on today, the end of Glass-Steagall in 1998 was the conversion of origination and advice, and the advisor and origination, originator coming together, that set the stage for that great term, one-stop shopping. And that was a period of time that certainly, as I said before, the banks and the capital markets grew dramatically. So as you see here today, as we confront the needs of what the world needs today in terms of this secular CapEx or global industrial renaissance, the open question is: who is going to finance it? It's a huge open question, and you don't have to ask us, but actually ask some of these companies in the investment-grade universe, because they're asking themselves the same question day in and day out. At the same time, this globalization of the financial markets, a lot of big, powerful trends.
Three that I'll talk about this morning. The evolution of market structure. You know, we think about ETFs, you think about daily liquidity, you think about the single manager hedge fund business to the multi-manager. Really dramatic change in how the markets operate. The second is the changing and evolving environment of the banking system, financial regulation on all the continents, and as Marc talked about, the massive transition of human capital from the sell side to the buy side. The bottom line of all these trends, great for investors, great for liquidity, great for transparency in a very, very narrow portion of the market, and there was a great benefit to investors, but there was unintended consequence. The unintended consequence is you can borrow as much as you want in a very, very short duration. Ask Mars. They just borrowed $34 billion in a 364-day facility.
The reality is, this migration to short-term capital has flooded the market, and it leaves a massive unintended consequence for capital formation and capital raising. So with this paradigm shifting, it's obvious to us in our crystal ball that private capital is going to play a critical, pivotal role. It's all about having the long-term capital, having the unlevered capital, having the capital, deep client relationships. And if you put this all together, in our view, Apollo and Athene are the partner of choice. We have the flexibility on term and structure. We have the ability to interact as a solution provider, and certainly that combination of breadth of capital as well as that principal mindset. That's the solutions approach that really drives our business and is a differentiating factor, which we're going to talk about.
So let me talk to you a little bit about where I've been. I've been at Apollo almost 20 years. When I got to Apollo, the traditional way, it was really about the primary or secondary call. What could you do to make sure that Goldman, JP, and the various institutions made you a prioritization? And that was a traditional manner to source. And we saw where the industry was going, and we have built a special machine that you'll see is irreplaceable. The first thing, and Marc touched upon it, so I'll go quickly, 16, it's our origination platforms. Every day, these 4,000 people coming in, generating senior secured risk at spreads 200, 300, 400 over the comparable treasury or the comparable investment grade. They do it every day. They have great insight, Wheels with fleet leasing, with PK on the aviation side.
You see their names, MidCap, Redding Ridge, and again, we spent a decade building this. We spent $8 billion of capital. We built some, we bought some, we grew some, but for many of our peers, this is where origination starts and stops, and we've, many have tried to follow. We see from Investor Day presentations the banging of the drum about we now have these platforms, but for Apollo, it's really just the beginning. What we've done over the last several years, we've brought this toolbox, this integrated solutions approach, to create great investment grade, private investment-grade returns of + 200-300 over comparables. You've seen the names. Don't need to replicate them, but this is in the early stage, and we've taken an open architecture view of this.
At the same time, we've done the same thing in the, in the sponsor universe, bringing an open architecture to sponsors of all of our products, not sourced by a fund or a narrow team, but by the, by the breadth of our platform. And this is... When you come in, you'll see that not every transaction where it starts is very different than it ends. If you talk to the management team of any of our investment-grade companies, they had a need, they didn't know how they were going to solve it, and through our process and people, which I'll talk about, they've ended up at a, a very, very creative, thoughtful scale solution. This is a massive, stark contrast to others who have bespoke platforms, bespoke products, and serving one product at a time to a group of clients.
The final piece is the open architecture with banks and our clients. This is very important. This is the importance of this mirrors what was going on with Glass-Steagall years ago. This open architecture and BNP in the asset-based business and Citi in direct origination, these are landmark transactions that will be replicated, but we are certainly out first. At the same time, what we've done with our clients in open architecture, with Mubadala and ADIA and AIMCo and BCI, they are now partners with us in critical parts of our business to originate and scale and build our third-party business up. Where we sit here today, this is the decade of work, massive execution. But what is clear is Apollo now is the must-call if you are a CFO around the globe with a capital need.
If there's one slide to remember of the presentation today, it's this slide. We believe this is our Mona Lisa. It's irreplaceable. Others will try to create it. They'll try to hire small teams. But we have set the stage for the evolution of our industry. You know, intel is critical because you see all the numbers on the right-hand side. The last Investor Day, we talked about Hertz, and the numbers are important in terms of the years of dialogue, the number of teams, the amount of people that touched this. But really, what we're really talking about here is the breadth and depth of our business is really incomparable. We're the envy of our industry right now, but this is what Marc used this term, principal.
We operate as a principal with our business, we operate as a principal with SRE, and we operate as a principal when it comes to origination. And this is what a principal originator does, and this is our vision of how it's all come together because of our open architecture, our integrated platform, the five wheels of success in origination. And again, it brings together asset management, origination as a principal advisor. That's a killer combination and a killer app as we think about the objective and challenges ahead. Another benefit of owning origination, one of the most popular investments out there today, and we are an active player in it, is the concept of synthetic risk transfers.
It's simply how a bank takes a variety of their loans, a hundred loans at a time, packages them in a structure, and sells the bottom piece to a sophisticated investor like us. And they are interesting, but the reality is you don't have any control, you're not fully aligned, and there are some counterparty issues. But this is where banks are turning their attention to reduce their RWAs, and we do pivot, and we participate in this. But in owning origination, with what we did with Atlas, it turns this whole equation upside down. We put that collateral together. We make the hundred loans. We have full control, full alignment. There's no counterparty issues, and we can customize that bespoke structure.
Time and time again, it's the ability to go from a retail buyer, where your only differentiation is how much money you're willing to spend, is the marginal buyer, versus owning origination and scale across the platform that we've done. It takes a great concept and really alters the risk-reward. As we transition from origination to the clients, this unified front end, it really is a product-driven comparison that we feel that we have been able to lead with these capital formation pillars. Clients are embracing this. As you see on the left-hand side, we've been very clear, and John will talk about how we've organized our business. Really, in our perspective, the ability to organize our business this way, the pathway is very clear for a broad solution in the public and private markets, but clearly, fixed income replacement is a massive focus.
David and Matt will talk about the equity ecosystem and how we've organized our pillars, and certainly in due course, in due time, equity replacement will be a target which we will make sure that we've committed the resources and are paving the path for that to succeed in the future. But leading from the front with the broadest base of capital, the flexibility, it allows us to be solutions-oriented than really trying to tie our narrow product into a client, which really doesn't work over a long period of time. Why do you want to be our partner? Why do you want to be a shareholder? Because we control our destiny. If our vision is right, it's not just about AUM, it's about origination. We have led the way to make sure that we control our destiny in terms of the best way to achieve our vision.
We've created a moat with scale, with capital, and with talent, and as you can see, an originated transaction touches every part of our financials. First and foremost, excess return to us and our balance sheet with SRE, but also to our third-party clients. Obviously, what it does to Athene and ADIP in terms of that spread, and then the third-party syndication between FRE, SRE, ACS fees, and certainly our overall principal promote. It touches every part, and it's a very logical approach to our business, and this is why you want to be our partner, so as I think ahead, and I think about our crystal ball, we clearly, when we came up here for you three, four years ago, we had a vision of where we wanted to take the business. We've executed it, but our crystal ball is actually very clear.
Last Investor Day, we targeted $150 billion in origination. This year, we'll come in $160-$165+ billion, and $275 billion is clearly in our target for the future. So that is our story on origination. We are leading the pack. It's irreplaceable. And with that, I'll pass it along to John to talk about the credit business.
23 million people played tennis last year. How many people do you think played pickleball? A sport I hadn't even heard of five years ago. 36 million people played pickleball last year, and I attended the Central Park Major League Pickleball Tournament two weeks ago, and I'm looking around, sold out, and I'm like: How did this possibly happen so quickly? And you looked around, and it was just a little bit of change, a little bit more dynamic, a little bit just adaptability around the sport, a little quicker. Also solved a little bit of retirement problems, but it just made it so accessible. It was exactly what the market needed. Four years ago, we did a transaction for InBev.
It was a $6.4 billion transaction for an S&P 500 company, and it was a private investment-grade transaction that Apollo led. At the time, no one thought of us really as a investment-grade lender, let alone a very large retirement service business. And I received calls from every single market participant saying, "Nice job on InBev. Last time you're going to be doing an investment-grade company financing," I suspect. And they kind of blamed COVID, and they blamed other things. But the reality of that transaction, you saw all of the great things about Apollo. You saw the creativity, you saw the duration of our capital, the matching of our ability to actually meet with a corporate and actually design something that fit their needs.
You saw what was going on in the market backdrop with the capital. It was a great outcome, both our investors, but also for the client, and that led to $100 billion of private IG in the last four years. Obviously led with Intel, but it's our capital, it's our DNA, it's how we grew up in the business. It's something that I don't think you can create again, and it's what makes us so unique, and it's exactly what the market needed. Traditional credit managers, you know, you can see the top of the page. Loans, high yield, IG, emerging. We've been doing this. The market's been doing this for decades. When we walk in every day, we come in with a very principled mindset, but obviously an asset management mindset.
We want to take the single best risk reward every day. How do you do that? You do that by having lots of options. We call it origination, but you can see on the bottom of the page. I am fortunate enough to sit in a seat that we have teams that have been doing this on behalf of our own balance sheet for 15 years, sourcing balance sheet and understanding a framework for risk reward that fits our balance sheet and fits our asset management balance sheet, that enables us to make the best decisions every day and allows us to take the most appropriate risk. If you don't have all those options, you really can't do it.
In the future, where we're going, all the things that Marc and Jim are talking about, you have to be able to make the best decision on behalf of your own balance sheet, but also on behalf of clients' balance sheets, 'cause that's going to result in the best risk-adjusted returns over time. I think we've built all the capabilities to do that and actually executed that in a way, in the way that we've built our business. We manage $562 billion. Everyone knows we are one of the largest, we are the largest alternative manager in the credit business today. What's unique about us is over half our capital is our own balance sheet. We're $365 billion in corporate, just under $200 billion in asset-backed, and we have a whole, whole.
All the products are on the bottom of the page you'll see here, but we're broadly diversified. What's unique about us is that many of the businesses we start, we don't start till we've invested hundreds of billions of dollars on our own balance sheet. We don't just launch products. In asset-backed, we launched a product ten, fifteen years after investing on our own balance sheet, hundreds of billions of dollars with tons of data. We work it all out on our own balance sheet. We understand what works and doesn't work. And with that, I think that's the most exciting part of our story. And I'll go through that in a bit more detail, but very diversified across all the different asset categories. I'd focus on the right side of the page here.
One thing that is unlike anyone else, and what I think exactly what the market needs, is we lead in debt origination, $151 billion in the light blue, but we also are a top five market participant in the secondary market with $134 billion of transactions. Every one of our competitors either is a leader in the light blue and nowhere in the orange, or a leader in the orange and nothing in the light blue. We're both. So we can go between markets at any time, and you really saw this during 2020. Private markets shut down. We were the largest market participant in secondary volumes, and we were able to achieve, earn great risk-adjusted returns during that time period, where if you only had a private mindset...
And it's hard to describe, but it's a very DNA-focused mindset around risk reward and primary and secondary, and not looking at things as private and public. It's looking at things just as credit, as just open architecture. And we touch every single sponsor. We have 4,000 originators. I joined here over 12 years ago, and we had less than 50. And we touch every one of these companies with 3,900 companies covered today. So when we go into a company, when we go into Intel, we're already one of their largest lenders. It's not like we go in without any understanding. We are talking to the company every quarter, whether or not we're doing a private IG transaction or we own that debt in some part of the capital structure. Again, I mentioned this earlier, but we have the widest funnel.
We have the ability to make the single best decisions every single day. It's not about private and public. It's not about corporate or asset-backed. It's about what is earning relative to the risk, relative to the shape of the risk, what is gonna earn the best risk-adjusted return? And it sounds kind of obvious. I know it sounds kind of obvious. Of course, let's take the best risk-adjusted return. But the entire industry, mostly partly because I'd say investors are set up this way, it's very narrow, very siloed. You have a private business, you have a public business, you have an asset-backed business, you have a corporate business. We have none of that. We just think people are gonna come to us and say, "Here's a credit allocation.
Team, do the best you can," very similar to what you do for your own balance sheet. And you've seen some very large sovereigns set themselves up this way, and I think you're gonna continue to see a framework where people change the way they look at the markets. So Marc mentioned this a little bit, but we've done a fantastic job of servicing the green. Really, in our equity and high-returning franchises, the industry has serviced the green in a way that has achieved great risk-adjusted returns for people. The dark blue has been the fixed income business, has effectively been a liquidity provider to the markets. It's been zero innovation.
The people who work in credit have probably, if you ask who sits in the fixed income business, it's probably someone who you wouldn't think as the innovator of any firm. And what I love about our firm is that in our credit business, we've been trying to innovate for the last fifteen years. In our origination business, we've tried to innovate in the last fifteen years. And I think in fixed income, you're gonna see some of the most... You've seen it with Intel and some of the high grade, but you'll see some of the most innovation in product design, in origination, in the way that you invest capital, the people that are investing that capital. It's gonna be way more interesting of a business. It's gonna require super high touch in terms of how you originate assets.
It's just different than anything that you'll see, and it's a huge opportunity for us, given our balance sheet and given where I think all the innovation is gonna come. So this is just a small subsegment of what we're doing. What's unique, again, about us is we own all of the investment grade on balance sheet today. So if we wanna create a product that is 100% originated by Apollo, but also monthly liquidity, we can do that because we have demands for that product. So you see in our IG business versus the benchmark, you can buy our total return investment grade fund. It's effectively 100% originated assets by us. You have to go from daily to monthly liquidity, but you pick up close to 200 basis points of yield.
We think we're gonna create replacement product after replacement product. It'll be investment grade, it'll be B B. You can see our single B products. But the investment grade part of the world, where we already own several hundred billion of the risk, we're gonna share in some of that risk in owning a vertical slice in a fund format, and we're gonna provide monthly liquidity, and we're gonna be obvious, as Marc mentioned, provide more liquidity around some of these assets. This is gonna be completely unique.
It's gonna take a little bit of time, but when people realize it, they'll realize that going from daily to monthly for 200 basis points of yield is an extreme outperformance over a 10 and 20 year period and will be solving a lot of the retirement problems we have today in the system. If you showed me the page from 1994 to 2022 , and this is the allocation of fixed income, I would have told you it would be a horrific career decision to be in fixed income from 1994 to 2022. We built our business as everybody was taking money out of fixed income. We've had a ton of tailwinds, and I Marc talked about them at length. This was not exactly one of the tailwinds.
This forced us to innovate in a way. It really bolstered our liability business. It really forced us to be super creative around how to generate returns. And for the last two years now, and I think on a go-forward basis, you're gonna see a much more balanced approach. The last 15 years was the anomaly in terms of asset allocation. There are many of our investors literally do not have a credit allocation team because they got completely out of the business. They're just starting to build the business back up. And many of our projections do not anticipate any sort of tailwind in terms of just asset allocation, which I think will further the acceleration of our business. Again, the markets we touch are very large.
The direct lending business, the sub-IG market, which we call you see, has really penetrated with private assets in the last decade. Since two thousand and ten, we've gone from effectively zero of the $3 trillion to $1 trillion penetrated. But again, IG is a $9 trillion market, barely, barely penetrated. Huge TAM for us over the next, over the next 10 years. And in terms of product design, again, direct lending, we've designed incredible products. The industry has done a great job servicing the sub-investment grade space. It's penetrated $1.7 trillion over the $3 trillion addressable market. But in asset backed, no one's really done it. It's very small. We think it's one of the biggest drivers of our business over the next decade.
We feel like we've invested the capital through our $8 billion in platform acquisition, our 4,000 originators, managing those assets on our balance sheet for fifteen years already and having the same team in place. Again, I think this will be our, this will be our market-leading product, and you've already seen that with the design of our, our asset-backed business, and, and you'll soon see a, a wealth product. Since our Investor Day, you can see we've grown by one and a half times in non-third party and three times in third party. In the future, I suspect these numbers to be significantly higher in terms of growth. The next five years, we could see north of three to five times in terms of our growth over the next on the third party AUM over the next five years.
And this is happening in other businesses. We didn't have a non-traded BDC. We didn't have. We traditionally did most of our direct lending in specialty finance company, which has been fantastically, fantastically successful. But we launched a non-traded BDC 3 years ago. We targeted first lien, top of the capital structure, and senior. We've raised $12 billion in 3 years, and this will be the one of the largest businesses at Apollo in the next 3 to 5 years. And five years ago, people told us that going over two times in five years from 248 to 562 was very ambitious. As Marc likes to say, we believed in the numbers, and we achieved the numbers, but we think we'll go over two times in the next five years again.
Both a combination of everything going on in Athene, a full acceleration of our third-party business. If I could tell you the amount of investors that still, we've yet to penetrate globally, both in wealth, Asia, Europe. Europe could be one of the largest, fastest-growing markets for us in the next five years, and you can see it here. Many people look at our growth, and they'll always say, "Okay, it's driven by Athene, not third party." You're seeing we grew third-party revenues in the last five years by 20%. The next five years, we anticipate third-party revenues to grow by 25%. We are just starting with in terms of penetrating many of the institutional and wealth markets, and we're pretty excited about new markets, particularly fixed income replacement.
So the private and public markets, they're clearly converging. We've made a bet that we've set up our business to actually win when that happens. Many people in the industry have yet to get there. I think it's completely clear that that's where it's going. We think we're ready to win, and you don't have to really believe us. Just think about, it's pretty much like pickleball. It's kind of what the market needs. So thank you.
All right. Good morning, everyone. I'm David Sambur, co-head of Private Equity, along with my partner, Matt Nord. And we're happy to talk to you about all the exciting growth opportunities in our equity business. Before we start, I just want to say that Invited Clubs, a Fund IX portfolio company, is the largest operator of pickleball courts in the United States of America, so it shows you the fantastic synergy of our business. I'd like to start off challenging convention. So challenging convention is one of our corporate values here at Apollo. I'd like to challenge one right now. So the firm's entering its thirty-fifth year of existence. We got our start in 1990, and we got started with a very simple idea that permeates almost every one of our businesses. Marc talked a lot about culture. This is the bedrock of our investing culture.
It's this notion of flexibility, this notion of capital preservation and downside protection, this notion of leaning in when other people lean out and being contrarian. We rode that unique investing culture to a preeminent position in our private equity business and now across our credit business. We built $135 billion of assets under management in our equity business, developing products with this investment culture in mind, and penetrating the alternatives buckets of capital allocators over the last 35 years. Our 39% gross, 24% net compounded return since inception have really been the rocket fuel that's driven our business. We think there's a lot of exciting growth left yet to be had by consolidating our share in what is still a growing market.
But I'll submit to you that misses the much bigger opportunity, and the much bigger opportunity is the big picture that Matt and I are so excited to talk to you about today. So a very exciting and compelling growth story for our equity business. It starts with our corporate private equity business. And you're going to hear a little bit more about this later, but yet again, 2022 marked that moment in time, that pivotal moment in the market, when our patience and persistence was rewarded yet again. Matt and I chuckled a lot in 2020 and 2021 when all the crazy stuff was going on, cryptocurrencies, memes, NFTs. Are we stupid by not following the herd? And then twenty-two happened, and we said, "No, we're not stupid for not following the herd." And investors appreciate our consistency. That's the bedrock of our business.
That's what drives our strong returns in any market environment, and we continue to believe that we will take share in our growing private equity business. On top of that bedrock foundation, we have four really exciting businesses that are hitting that inflection point, where you're going to see massive growth over the next five years. Two of them are in what we call hybrid and equity replacement. These are the products that are going to start us on our journey, and we already are market leaders, to penetrate individual investor portfolios and institutional investor portfolios that are simply put, looking for better products than what exists in the private and public markets.
And then these other two products are very closely aligned with big mega trends that Apollo's focus on, our climate and infrastructure business and our secondaries business, which falls under the umbrella of the convergence of public and private, and providing liquidity to otherwise illiquid markets. And then on top of that, we've got really compelling long-term, what we call upside drivers, namely our equity replacement mission, and it is a mission, and then penetrating retirement markets, where we already have products in our product suite that are now being allocated into 401(k) plans, 401(k) plans in America. All right, this is gonna be a fun one. So on the left-hand side of this page, this shows you from 2013 to 2023, how the private equity industry performed. What were the sources of value creation?
Even though from 2013 to 2022, the industry had very strong returns, I would argue the quality of those returns was very poor. The mission of our business, I think, we think, is supposed to be superior risk-adjusted returns, excess returns per unit of risk. You have to be able to do that in all market environments. If you look at the industry, 50% of returns over the decade that we just experienced were driven by multiple expansion, tremendous historical amounts of multiple expansion, and the other 50% was driven by top-line growth. Almost no return was generated by operational improvement or alpha. That is not a high-quality return. That's not a sustainable, repeatable investment model.
If you look at our business, to the right of that, 85% of our returns were driven by repeatable building blocks that we could access in any market environment. Indeed, we actually produce better returns when the market is poor. This is the bedrock. This is this investing culture that I'm talking about. I think the industry has to look itself in the mirror and really ask itself, and indeed, our clients are asking us: What's the purpose of investing in private equity if it's just levered beta on steroids? We don't want to be levered beta on steroids. If you look at our returns, if you look at all of our investing products, it's all about simple, repeatable processes that will allow us to generate superior risk-adjusted returns in any market environment. Matt?
Great. Thank you. So we are incredibly proud of our private equity business. For thirty-five years, we have maintained our discipline and used our creativity to generate excess returns. Private equity continues to be an important driver of our business, not just in the financial sense, but in all the ways that the private equity DNA permeates the broader Apollo ecosystem. Private equity has been an incubator of talent, and many of our senior leaders started their careers in the private equity business, and we are using the capabilities that we've honed in PE to grow our entire platform and build on that history of innovation, and we are particularly proud of our performance in our two most recent private equity funds, Funds IX and X.
So as David alluded to, when the rest of the industry was paying 11 or 12 times cash flow for assets, we were paying six or seven, and we were using less debt, and we were executing our value creation plans. And so, as a result, we have massively outperformed. Fund IX's IRR is currently 29%, Fund X's IRR is currently 47%, and Fund IX has also returned $14 billion of capital so far. So DPI, which is a measure of realizations for the industry, Fund IX's DPI is three times the industry average, and Fund X has gone off to a very good start as well. All of that is to say that we are really well-positioned for Fund XI. So for Fund X, we've currently deployed about half the fund.
We're two years in, so we're right on pace, and I would expect us to come back for Fund XI late next year, and based upon our performance and all the positive receptivity we've received, we would expect Fund XI to be larger than Fund X, and so that is the foundation, continued execution in Funds IX and X, and positioning ourselves for a very successful Fund XI fundraise. Building on that foundation, we've positioned ourselves for growth in huge markets, infrastructure, climate, secondaries. There is a generational need for capital, which we've been talking about this morning, and our platform is incredibly well-positioned to capitalize on that opportunity because of our scale of capital, our creativity, our ability to play up and down the capital structure. We have raised funds in each one of these scaling strategies, and in some cases, we've already raised multiple vintages.
Performance is strong, and we currently have $20 billion in assets under management across these strategies. We would expect these businesses to be two to three times their size over the next couple of years. Even with that level of growth, we would just be scratching the surface relative to the $100 trillion market opportunity ahead of us. The other market opportunity that we're very, very excited about is hybrid. As you heard us talk about this morning, for investors who are beholden to benchmarks, equity allocators have been looking for 20% + rates of return. While that worked in a low-rate environment, chasing those returns, being forced to try and chase those returns today doesn't make sense.
because debt is more expensive and it limits your flexibility, you have less downside protection. And so we see a sweet spot in less levered equity and structured equity, where you're still generating mid-teen rates of return, but you're doing that with much more downside protection, much more flexibility. It's the best risk reward we see, and that is the hybrid opportunity. And sophisticated investors, those who are not beholden to benchmarks, want access to this because they also recognize it's the best risk reward. The supply-demand dynamics for hybrid are incredibly favorable. Demand, because there's enormous demand for the flexibility that hybrid offers, and a historical lack of supply or capital formation, because hybrid hasn't fit neatly into either credit or equity buckets. We are also uniquely positioned to capitalize on this hybrid opportunity.
We've built our entire business on being unconstrained, thinking about intrinsic value, pivoting to where we see the best risk reward at any one time, and we already have a massive head start. $70 billion in assets under management to hybrid-related strategies, including our hybrid value funds, where we're getting ready to launch Hybrid Value Fund III, hybrid SMAs, where we've already raised several billion dollars in hybrid SMAs, and then the growth of AAA, which is already one of the largest funds across our entire platform, so as Matt explained, we define hybrid as superior risk-adjusted returns in equity, less levered equity, structured equity, and it's how we've invested our own balance sheet for the last decade.
We made the decision to open up our alternatives balance sheet, which we call Apollo Aligned Alternatives, or AA A, to the market just two years ago, and we gave investors, both institutional investors and individual investors, access to the very way we invest our own capital in alternatives, and the results have been fantastic. You could see that this is already now the second-largest fund at our firm, and we think very soon it'll be the largest, and there's a lot more to go. The reason is very simple. We're offering something unique, something special that the market needs and they're just not getting. This is a product that we've developed that's got a fantastic track record investing in lower risk, less volatile equities. It's produced S&P plus rates of return over the last decade with a fraction of the volatility.
This is a product that's had one down quarter in the last decade. A tremendous track record that now is available to qualified purchasers and to institutions, and they're coming in, and they're investing alongside of us. And this and the hybrid structure is the bedrock of what we're talking about with hybrid and equity replacement. And the real opportunity is this: if you think back thirty-five years ago to when our business got started, you know, it wasn't even an industry. It wasn't even a business, it was a fund. And a lot of pioneer work was done by some folks that are in this room to go out and to get people excited, get institutions excited about investing in alternatives.
They put those allocations, as Marc said, in a very small bucket that has grown over time, and our penetration of that bucket has fueled our growth and the industry's growth. But our market opportunity is multiples of that going forward, and that really is what our plan is going to deliver. If you think about the opportunity to penetrate with these products and other products that we're working on, the equity bucket, which I would argue is the bucket that people are least satisfied with, where they've generated the least alpha, the least excess returns, the market opportunity for the next thirty-five years is gonna make the last thirty-five years look like a tiny dot in that solar system that we're talking about.
I know there's some public equity folks in the room, so I'm gonna be careful not to offend, but most people that we talk to, it's not a hard argument to win when we talk about how the public equity markets are simply put broken, right? You've got almost 60% of public equity markets being indexed. You've seen active management fail to perform over the last twenty years, as Marc said, not because people suddenly didn't get good at their jobs, because simply put, the structure of markets have changed and made doing that job so fundamentally difficult. But the products haven't changed. The products haven't changed, yet everyone that we talk to recognizes a need for retirees, for pensions, for endowments to get diversified equity exposure, and they're simply put not getting it.
They're investing in seven companies that are a third of the index, and they're not getting the exposure they want. In defined contribution, we now are live with AAA as of August, with one of our wealth partners. We've got a long pipeline of opportunities after that. This is gonna be the product that allows us to provide better income and better capital appreciation for retirees in America. That is a multitrillion-dollar opportunity that we are uniquely well suited to penetrate.
So to summarize, we have a high-growth equity business. Five years ago, we had $84 billion in assets under management. Today, that's $135 billion, and we would expect the business to double again over the next five years. So not only do we have a growing business, but the rate of growth is accelerating as well. And this is high-margin AUM, which obviously drives returns to shareholders. So the roadmap is simple: continue execution in Funds IX and X , raise Fund XI. That's the foundation. Continue to scale in our scaling strategies across climate, infra, secondaries, and then execute and capture the entire hybrid opportunity. In each of those strategies, we have funds. We're raising new funds. Those funds are going to get larger in subsequent vintages, so the seeds have already been planted.
You already have that built-in growth, and that is going to provide the vast majority of the growth that we see over the next couple of years, and then the longer-term upsides, that next step function increase in equity replacement, retirement, and some of the new products that David talked about, so we're going to continue to use all of the capabilities that we've built over the last thirty-five years to action this, and we have a lot of conviction in hitting our plan, so to wrap up, David started by talking about today's perspective, but if we zoom out a little bit further and look at that longer-term perspective, assets are going to continue to move to the private markets. We're positioned to capitalize on the big macro trends.
We are aligned with our investors, and we're going to use all of our capabilities and, again, build on that history of innovation. So thank you very much. And with that, we're going to introduce our partner, Olivia Wassenaar. Thank you.
Good morning. I'm Olivia Wassenaar, and I run what we call Sustainability and Infrastructure at Apollo, so you've heard from some of my colleagues about this concept of the industrial renaissance and how it creates this massive opportunity for us to invest like in sectors like infrastructure, power and utilities, digital, energy transition, and real estate. The reality is, the world is in a state of transformation. We're thinking differently about energy, sources of clean energy, reliable energy, energy security. We're thinking differently about technology, about how we provide it, about how we consume it, about how we provide robust digital infrastructure. The reality is, the energy transition is still in early stages. If you think about it, the global energy systems were created over centuries, and we're trying to transform them over a matter of decades. Meanwhile, our planet continues to expand. We've got population growth.
We are changing the way we live, we work, we consume technology. At Apollo today, we have over $100 billion in real assets, but we look at these opportunities and we think in-
Please take your seats. The program is about to begin. Please take your seats. The program is about to begin.
What's extraordinary about working with Apollo and everybody that we've worked with at Apollo is this commitment to collaboration.
Apollo, like Mubadala, is characterized not only by the strength of its people, but also the strength of its ideals and values.
Probably the thing that has impressed me the most is the degree to which the leadership team feels cohesive. I've known people at Apollo for three decades, and they're uniformly very strong, very straight, very commercial, and in my experience, completely honest.
Apollo distinguishes itself through its agility and innovative approach to structuring deals. While many firms can provide capital, Apollo goes a step further by offering tailor-made solutions that are unique to our specific challenges. They think beyond the numbers, offering strategic insights that align with our vision and helping us navigate complexities in a way a few other firms can.
Apollo distinguishes itself from its peers by consistently bringing fresh ideas and opportunities to us. Strategic alignment is also often one of the key things that we value as part of our relationship. They think and act quickly. There's a proven track record of unique problem-solving capabilities.
At Apollo, there seems to be much more awareness of what other teams are doing and how to connect the dots, so to speak, across the platforms in bringing solutions to institutional investors.
Apollo creatively, I thought, said, "Not only will we buy a significant portion of this debt, but we will underwrite the whole thing through our insurance partner, Athene." It was a constant collaborative effort between my management team and the Apollo team. They worked intimately with my team. You know, we talk on a regular basis, and I talk to them as part of the Novolex family. I said, "Now you're in our family. We're all in this together.
Apollo is among the most important and the most strategic partner that Mubadala has, and that's built on not only an entrepreneurial mindset but a deep understanding of Mubadala.
I value the relationship with Apollo. That Apollo's followed me throughout my career in roles big and small, and has never ceased to be, you know, available to me and collaborative and inspirational.
I just can't say enough about how much we've enjoyed working with the people at Apollo. We learn from you every day, and you make us better, and it's only because of the people at Apollo.
Please welcome Scott Kleinman.
Okay, well, welcome back, and hopefully you enjoyed that video. Actually, if we can go back... Oh, one slide. That video is actually a great example of what we do and how we connect with CIOs and our investors. And it's a good segue into the next section that we're going to be talking about, which is capital formation. So for the next half hour, you'll hear from me and the department heads of each of our capital formation segments, really taking you through where we've been, where we're going, and where we see the big opportunities. But I thought I would start with this slide that you've now seen a couple of times today, right?
You know, you hear us say often that an asset manager should not be constrained by how much capital they raise, but actually by their capacity to originate. How many good assets they can invest in. But the corollary to that is that you can't ignore capital formation. In a growing asset manager, it's been critical to continue to invest in this part of our business to be able to keep up with the scale and the aspirations of where we are taking our business. And equally as important, as Marc alluded to earlier, it's not just raising capital, it's raising that capital in the right form at the right cost of capital. And this is something I think Apollo has done and understood better than just about anyone. Okay, there we go.
So I wanted to just flag a couple of metrics from our last Investor Day. When we spoke last at Investor Day, we had a couple of key targets. Wealth, we had a $50 billion cumulative target over five years, and happy to say we are well exceeding that. We will hit that target early. On the Capital Solutions side, it was a $500 million revenue target by year five. We hit that in year two, and we'll be showing you some new targets as well. And institutionally, while we didn't put a specific number, we are well ahead of what the forecast that we embedded in those projections would show. Here are some of the numbers. I mean, you can see the growth is just astounding, right?
On the wealth side, less than five years ago, we came from a standing start to where we are today, $11 billion raised in the LTM period. I'll show you shortly where that's headed. On the institutional side, as another example, five years ago, we were already one of the largest institutional players in the alt space, and we've tripled our annual capital formation since then. The important thing to understand is that our clients have fundamentally evolved and stratified and gotten more complex over the years, right? It wasn't too long ago where we were serving broadly defined institutional clients who basically wanted the same thing out of their alternatives investments. Today, that's much more stratified on the institutional side, whether it's consultants, third-party insurance, sovereign funds, pension funds, each of them are different.
They need different things out of their investments and different things out of their partners. Same thing on the wealth side. We talk about a Global Wealth opportunity, but that's really multiple markets. That's family office, that's ultra-high net worth, that's high net worth, that's mass market. All of these things are different and need to be served in different ways with different products. And we talk about the future. You know, I'll start by saying the future is now. We are touching all the things you see here, whether it's 401(k) , mass affluent, direct to consumer through long-only partnerships. This is only evolving and getting more complex. And as we think about that complexity, the way you serve these clients is also more complicated, right?
Funds have always been a core part of what we do and will always be a core part of what we do, but you have to now be able to provide co-investments, co-underwrites, direct investments, strategic partnerships. You know, many of our partners and clients, they want deeper relationships, knowledge sharing, secondment. They want to co-create products with us, and only the largest folks like ourselves will be able to handle that complexity. You can see here, it seems like every month we're developing a new type of partnership, a new relationship with a new client in a completely new way. And why do we do all this, right? It's about diversity of our capital base. Apollo has the most diverse capital base in the industry.
In addition to what we've built out in wealth and institutional, obviously, retirement creates such a stable and growing base of capital inflows on different cycles, on different drivers than everything else you're typically used to, and nobody has the diversity that we have. Right, this doesn't come for free. We've had to make massive investments to be able to achieve what I just showed you, right? Since we talked last, we've added over 230 people in the capital formation area. We've built out a service center in Mumbai. We've built a digital marketing effort to be able to sell our products to our clients. This is a massive undertaking, again, only going to be available to the largest firms. So just marching through each of these areas quickly. Wealth, like I said, has been nothing short of amazing.
You can see from a standing start three years ago, $11 billion in the LTM period. We're forecasting $30 billion average over the next five years. Now, that's a growing number, so year five will be larger than the average. Today, this represents 25% of third-party capital, but by year five, we expect that to be 50% of third-party capital. Today, we are a top three player in the Global Wealth market, and our aspirations are even bigger. We want to be a top three player in every product that we offer, if not a top two or top player. On the retirement services side, you'll hear from Jim and Grant shortly, but again, it's well understood we are a market leader in every channel we operate, and we continue to push into new areas.
Our Asia business is strong and growing. Defined contribution is the next frontier, but you'll hear more of that from Grant shortly. Let's not forget our traditional alts business to institutional clients, right? This is a big and growing market, and alts continue to penetrate into overall asset allocations. We intend to get our fair share of that, and then some, as we continue to scale a number of the products that John, Matt, and David talked about earlier. And lastly, of course, the replacement opportunity, the convergence of first fixed income and then equity, a $50 trillion opportunity. This is massive, and no one is better suited to start penetrating this than Apollo, and we are just scratching the surface of this. So this will provide additional growth over the next decade plus.
ACS, a fourth multiplier, right? You think of ACS as a revenue line item, and of course, it is a revenue line item. It's a really important revenue line item to us. But for me, as a manager, as a leader, as a client relationship person, this is a key cog in the flywheel of being able to bring on new clients, start them off as transactional partners, and then grow into whether SMAs or fund investors, et cetera. So an incredibly important part of the client relationship process. So closing out on the numbers. You can see here, $69 billion on average over the last five years of capital formation, $125 billion today. Average over the next five years, $150 billion, scaling over time. So year five, again, will be higher than that number. And these are the takeaways.
$1 billion of ACS revenue by year five, $150 billion of cumulative capital raised in our Global Wealth business, and $150 billion per year on average from our total capital formation. So with that, I'll turn it over to Chris. Thanks.
Good morning. My name is Chris McIntyre. This is our first time together. I joined earlier this year, and I am the institutional client guy, which means it's my job to bring a little bit of energy into the room. I think I have maybe the best job at Apollo in a way, 'cause I get to represent our amazing platform, and just by way of background and a little bit of a confession, I'm an asset management geek. I spent the last twenty years working in this space, working on this space. Over the last five years, I was the head of asset management in North America for the Boston Consulting Group, and my literal job was to go find winning business models. I think you can see where I'm going with this one.
So I think I found home, and I, for one, feel very privileged to get to do this. So let's talk with some numbers. If I have one message for you, it's the number two, the numbers on this slide. We're gonna double growth in our segment of the business over the next five years. That's a choice. As we've talked about, we are not constrained by capital formation. We are only constrained by our ability to originate great assets. We're gonna do that for, I think, three very straightforward, compelling reasons. One, we're gonna be talking about doubling our addressable market. You've heard about this today, where an incumbent in alternatives will continue to win there. We're also going to invent a whole new space over the course of this next five years, called replacement. We'll talk more about that.
We have two big growth engines, one on the alternative side, one on the retirement side. We'll talk about that. The spring-loaded portfolio, we'll talk about in just a minute. We've already doubled down on our capabilities. We saw this moment coming, so we've pre-built the team. Some of the stats that Scott shared a few moments ago about the team, the capabilities that we've started to build to serve our clients, to win these kinds of outcomes. But I have to say, this capital formation is really... I like to call it an earned outcome. It's not a right, it's an earned outcome, and it's an earned outcome of everything you've heard up to this moment about the uniqueness of the Apollo platform. It's proprietary origination. You heard the number, 4,000 people.
Go look up the headcount of most of our peers. This is just origination, right? It's product innovation, not just any products. We're not a product supermarket. We choose very carefully where to offer products to our clients because we are deeply aligned with them. We have our own balance sheet. When we win, they win. When they lose, we lose. So our interests are highly aligned. That sets us up for great client relationships and allows us to achieve, we think, these kinds of numbers. So I mentioned I'm an asset management wonk. I think it's important to tell the story of why we are all in this room today, at this moment in time, actually, and it goes back a hundred years. So this is the history, in illustrative terms, of the institutional segment. Started off in the early days, the foundations.
Basically, you could achieve your goal, the 8%, by holding fixed income. It's all you needed to do, right? That was the era of return at no risk. It's a good time. Didn't last very long. Then we go through the 1980s. Rates go up, rates start to come down. The need for equity exposure emerges. Public equity markets develop. All of a sudden, the 60-40, which we've all come to know and love, emerges, right? That was the era of return with some risk, mostly equity risk, as it turns out. What we've just lived through, and most of what we've talked about today, is a very unique period, which I like to call return at any risk. Almost by structure, all of our institutional clients who have basically that same 8% goal had to stretch. Why did they have to stretch?
Because of the picture on the bottom. The risk-free rate, which I like to say risk-free is destiny in institutional investing, hit the floor. Mechanically, not by choice, mechanically, they had to go up and to the right. Alternatives, zero to twenty in twenty years. It was a necessity. What also happened? We printed money, passive. Why did that do so well? The period between last year and the 10 years prior was one of the best ten-year periods in public market recorded history. You had to do nothing. It was great, and it was great for savers. It's tough on the industry. So as we've talked about extensively, we're no longer in that world. That world ended a couple of years ago when rates went back up, back up to normal ranges, ranges we've seen in our lifetime.
We think that is going to mark the beginning of what we call a fourth evolution or revolution in the institutional marketplace. I like to call it the fourth replacement. As you can see, each of these has been a replacement of existing technology with new technology. Here, we think we're gonna start to think about not return at any risk, but importantly, as you've heard today, return per unit of risk. That's the new mantra, right? Every single CIO we speak to is reexamining fundamentally where they want to earn their return and where best to take that risk. The bar for the whole industry has gone up, big time. We think we're well positioned to take advantage of that. That's point one. Point two, the idea of liquidity is being fundamentally reexamined. Marc talked about it. Investment-grade bonds, we can already see it.
You already see it a little bit in private equity. There's a thing called the secondary market. Where did that come from? Right. We're also gonna start to fundamentally, fundamentally revisit this idea of public being safe and private being risky. We think this is basically the definition and the future of the asset management industry for the next 20 years. Obviously, we're excited about it, and we'll talk more about why. So let's talk numbers. We've got a lot of analytical folks in the room. What does this mean for our industry? If you look at the institutional-only asset management industry in alternatives, it's about 20 trillion as of last year, plus or minus. If you add up all of the active management in public and fixed income, it's almost exactly 20. Coincidence? So our TAM, from our perspective, is doubling.
To achieve our numbers, I just showed you on this page, all we really have to do is keep our market share plus or minus a little bit in the bottom twenty. The rest is upside. We're gonna go get it in this period, but it's all upside. So we're exceptionally excited about both of those opportunities. You're gonna hear us talk a lot about that over our subsequent conversations together. So let's talk about us. We have two big growth engines. Engine one, which you've come to know, alternatives, where we are going to differentiate, and in replacement, where we're gonna innovate. On alternatives, you can see we have credit and equity. The team has talked extensively about that, including real assets.
These businesses are 15-20 years in the making, $8 billion of investment, 4,000 people, $150 billion-$200 billion of origination. You can't just show up and replace that. That's as good as it gets in competitive advantage in asset management. And our equity business, 35 years of private equity. Excellence. And by the way, DPI, who knew that'd be the new IRR? The guy showed the numbers. It's 2x the industry. We're actually doing what we said we're gonna do. When we come back to market, you're gonna hear us say that loud and clear, we think we're gonna win. On the replacement side, some coded language in there. Private investment grade, how's that gonna happen? You heard it.
Market making, fixed income, investment grade, private, origination, coming together in packages for solutions where we can show up to a CIO or head of fixed income and say, "Would you like 200 basis points for a little give up in liquidity?" Very compelling. And the good news is, this is already happening. This is not just talk. $10 billion of assets into fixed income replacement related strategies already, 9 consultant approvals. As we've talked about, the reasons are mechanical. People have been in the red, they're moving to the green. That explains basically the movement of private credit, and we're gonna move them up to replacement. Higher return per unit of risk. That's the equation. Finally, as I mentioned before, we saw this moment coming. We've been preparing for many, many years. These are all numbers that we've already invested in the business.
You can see the date of 2020, so we're preparing for this growth for the next several years, and we think we're ready to go. Thank you for your time.
Cool. Good morning. I'm Eric Needleman. I recently joined Apollo to lead our Capital Solutions team. While I'm new to Apollo, I'm certainly not new to the industry. I've held various capital markets roles over the last thirty years, and I can tell you firsthand, the opportunity here is massive. I truly believe Apollo is changing the landscape of the financial services industry. In the center of that evolution is Apollo Capital Solutions. ACS is the connective tissue of the firm. We have forty investment professionals across the firm and across the world, embedded in and alongside our deal teams. So what does this look like? We're coordinating with origination, we're assisting in structuring, and we're leading the efforts on execution, financing, syndication, and co-investment. In tandem, we're managing our relationships with the banks, advisors, LPs, and strategic partners.
Because we're deeply integrated in all aspects of the business, we can act with speed, certainty, and scale. The outcome? We're not just creating assets for Apollo and Athene, but for our syndication partners as well. This results in the stronger returns for both us and our partners, creating a multiplier that accelerates our growth. Our philosophy is simple. You've heard Marc say it many times, "We want to own 25% of everything and 100% of nothing." We achieve that through a broad reaching, highly curated distribution network. But what really sets us apart is we're there with our clients, investing alongside with our own funds and on behalf of Athene. This alignment deepens our relationship and creates trust between our team and our strategic partners. The more services we provide, the more stability we add to our growth.
As we grow ACS, we're de-risking by building recurring, repeatable business lines, and as AUM grows, there are embedded capital markets activities that will grow as well. Our syndication services are scaling rapidly. We're consistently active in the market, placing more products year after year. To put that in perspective, in the first half of this year, we've syndicated volumes on par with the largest of our bank partners, and we're not just interested in large scale transactions. Our focus is on a diversified transaction base across all asset classes and throughout the Apollo ecosystem. We're supporting more deals across more business lines. Nearly 300 fee-generating deals in the last 12 months alone. You may have heard last week, we announced a $25 billion private credit program with Citibank. This is the largest private credit partnership ever.
This collaboration enables Citi to enhance their client offering with more private solutions, while allowing Apollo to boost its origination flow and tap into Citi's extensive client relationships. By combining Citi's broad banking client reach and capital markets expertise with Apollo's scaled capital base, this partnership is a win-win. Looking ahead, there are significant drivers to continuing scaling our business. Managing nearly $700 billion in assets means significant embedded capital markets activity. As our capital formation partners succeed, we'll continue to grow. Our diverse pools of capital make us well-positioned to provide the flexible, creative solutions that the market demands. Strategic partnerships continue to expand our deal flow and reach, and our team serves as an incubator for new services and revenue streams that contribute consistent, scalable growth.
At our last Investor Day, we set an ambitious five-year goal to reach $500 million in revenue. Just three years later, and we've already achieved that. Now we're raising the bar, and our new five-year goal is $1 billion in revenue. What my team has accomplished in the last three years is nothing short of incredible. But what really excites me most is the potential ahead. Thank you for your time this morning. Please welcome Stephanie Drescher.
Hello, everyone. Wow, that's loud! Good to see you. As many of you may remember, when I started back at the firm in 2004, I led the build-out of the institutional side of the business. Today, as I look at Global Wealth, what's striking is that the assets held by individuals are at least as large, if not greater than, what's held by the institutions. Yet, importantly, the allocations to private markets are just a small fraction, grossly underallocated to the opportunity in private markets today. Our goal, as we build out Global Wealth, is to ensure that individuals, families, can in fact plan for their retirement, can build wealth with the help of private investments in their portfolio. We believe in this market. We're committed to it for the long term.
In fact, when we look over the next decade, we recognize that with the increase in allocations, there should be $10 trillion of money in motion on behalf of this segment. Private markets are no longer a nice-to-have in a portfolio. Advisors and their clients now recognize that public markets alone will not allow them to achieve their long-term financial goals. Private markets are a critical replacement to a portion of their public fixed income and equity allocation. We just have to look at the public equity markets and how the number of companies have been reduced by half. Or when you look at the global number of companies today, 90% of them are, in fact, private, not public. So the private market investments can help Global Wealth clients-...
Increase diversification, lower volatility, and deliver the excess return per unit of risk that we've all been speaking about. So this seismic shift in private market allocation is underway, and we're seeing it in our results. So from a white sheet of paper just three years ago to a world-class Global Wealth business today, we are exceeding our targets that we laid out to you in the 2021 Investor Day across the board. First, the team is now a 140 people strong. We had fewer than 10 when I saw you last. We have delivered 11 billion in capital raise over the last twelve months. We are well on track to exceed the 50 billion cumulative five-year capital raise. And this year, we will, we expect to be 25% of third-party capital flows. There is a lot to be excited about here.
There is tremendous momentum, but the best part is that we are just getting started. We are playing to win. I think you've heard that today. We've spent the last three years building an incredibly strong foundation off of which we can now scale and build step function growth. As you'll see here, our goal is to grow the business by AUM five times over the next five years, and we are positioned as the partner of choice to our clients. Only a few can do this successfully. It's a big lift. It takes a commitment that starts at the top and permeates throughout the entirety of the organization, and we have that. We also have spent $1 billion of our balance sheet in support of the Global Wealth business.
We now have a global footprint of hundreds of firms that trust to partner with us as they build out their private markets exposure. We've also built a full suite of wealth-focused solutions. We have greater than 10 fintech companies that we partner with to deliver best-in-class client service. The experience for our clients is critical. And finally, we've built ApolloAcademy.com. It's publicly available. If you had not yet visited, please do. We now have greater than 60,000 active users that are engaging with our content as they learn more and more about the role of private markets in their portfolios. So the client is at the core of what we do. In less than three years, we have built out deep and meaningful relationships with every channel, wires, private banks, registered investment advisors, the independent broker-dealer, global family offices here in the U.S. and around the world.
This provides an incredibly strong foundation for us to deepen those existing relationships and add new ones. There's so much room to run. We are a solutions provider across asset classes. We are delivering the best of the investment capabilities that we have honed now for greater than 30 years, and delivering it in a tailored way that meet the needs of the individual. When we met last in 2021, we did not yet have a semi-liquid offering. Our first was Apollo Debt Solutions that launched soon thereafter, and we are now $12 billion strong. Across the suite of solutions, we now have 11 semi-liquid strategies in addition to the flagship drawdown offerings that we hold and offer. We offer the advisor community, financial professionals, solutions for the entirety of their client base.
So we look across a range of suitability, qualified purchaser, accredited, sub-accredited, and importantly, we are meeting clients and their advisors where they are. We have over thirty access points today for these strategies designed to match their regulatory, tax, currency, and other needs. Innovation is in our DNA. I'll admit it excites us. We like to focus on where the puck is going, and since we last met, we've had a lot of firsts. I've chosen a few to highlight today. You heard earlier about Apollo Aligned Alternatives, a first in delivering this type of diversified private market exposure, highly aligned with our own capital, as a replacement to a portion of the public equity portfolio. ABC, that's our, and the market's first pure-play, asset-backed, semi-liquid strategy. It builds on the strength of the origination engine that you've heard throughout the day. Alto.
It provides a tax advantage solution and access point that helps individuals build for their retirement, build wealth. And as mentioned, we've launched a collective investment trust, which is an access point to deliver private markets to defined contribution plans to 401(k) plans. And finally, we've had a number of partnerships with long-only traditional asset managers that allow us to bring private markets to the mass affluent. We are seen by our partners not only as helpful to co-create for where their businesses are today, but importantly, for where the opportunities lie ahead. We see many new frontiers, each representing trillions of dollars of market opportunity, largely untouched by private market exposure and in need of a solution. We believe we are uniquely positioned to deliver. Nearly every client conversation I have these days touches on one or more of these very deep opportunities.
The ability to integrate private markets into retirement accounts, manage accounts, lending facilities, et cetera. These new frontiers will help to fuel the growth of our Global Wealth business for many years to come. So, in conclusion, hopefully, you realize we are extremely well-positioned to turbocharge this business. Over the next five years, we plan to more than double our talented resources on the team, increase our AUM by 5x to $150 billion, bring our average capital raise to approximately $30 billion a year, and by 2029, we anticipate that the Global Wealth business could represent 50% of our third-party capital raise. So the best is yet to come. Thank you, and I'd now like to welcome my partners, Jim Belardi and Grant Kvalheim.
Good morning, everybody. It's great to see the big turnout, both in person and remotely. Of all the presenters, Grant and I have the best job today, which is talking about Athene. We love talking about Athene. Athene and Apollo have built the premier retirement services company. We put in fifteen years of hard work, consistent, excellent execution, and discipline to build the machine. We've grown from a startup to the industry leader by leveraging our competitive advantages. We have an efficient model with a superior asset management strategy. This creates better outcomes for policyholders and shareholders. We're incredibly proud of our franchise and our positioning. Our track record is very hard to replicate. Nobody else in the industry can show a chart like this.
We always think and act like owners, and this is demonstrated through our consistent, profitable growth over time, with periods of stairstep increases as we lean in and out of attractive opportunities. Recently, organic growth has been the most attractive. There's a deep moat around our business with five key competitive advantages, bolstered by very strong ratings, which are a significant barrier to entry for others. Our advantages are very difficult to replicate, starting with our ability to generate yield. We have an incredibly efficient and scalable operating platform, product and channel diversification that is expanding, financial flexibility from fortress balance sheet and sidecars with a strong and improving ratings profile. And finally, we have the best management team in the business, and we have an intense drive to compete and to win, and our culture is a meritocracy.
We target higher, sustainable, risk-adjusted returns by taking some structure and liquidity risk, not incremental credit risk. Our access to Apollo's proprietary investment-grade origination provides differentiated value-added asset opportunities. No one else has that. Our portfolio construction on the asset side is focused on high-grade, almost all fixed-income assets and investment-grade. We've consistently produced attractive growth and returns. We have a higher allocation to assets which provide excess return per unit of risk. This results in Athene taking less risk relative to others. We are under-allocated to high-yield assets, and we have no, zero real estate equity, unlike others. We outperform on both asset yields and impairments, which is a very powerful combination. From 2019 to 2023 , we've generated 40 basis points of asset outperformance with only 11 basis points of credit losses.
Scale is one of our competitive advantages, and it's very important to our platform. Athene was built to have high efficiency and productivity. We benefit from not being burdened by legacy business that we don't want. And this final point I'm going to make on this slide is pretty impressive. We have five times the earnings per employee than the industry. Each and every person in our company is highly valuable. These competitive advantages drive positive outcomes. For the customer, better pricing, and for the shareholder, better returns. Our number one priority is maintaining a fortress balance sheet. This means we are steadfast in ensuring that there is excess capital and excess liquidity at all times.
We have a variety of liquidity sources, from our cash on hand, our liquid public investment-grade portfolio, our committed repo lines, our operating company, credit facilities, and our traditional holding company capital facility. On the capital side, in the last twelve months, we've created over $3 billion of spread-related earnings, $70 billion of organic inflows, and 17% growth in gross invested assets. These resources provide the flexibility needed to execute on the significant opportunity in the retirement services market. We always run the business as owners, which allows us to consistently achieve very strong returns, and because of those returns, we're able to raise third-party capital to support our growth. Others can't do that. We've successfully raised over $9 billion in third-party assets, including the largest sidecar in the industry.
The amount of business we can support with just third-party capital is now greater than the entire asset bases of many firms. Since 2010, Apollo and Athene are the largest contributors of capital to the retirement services industry at about $20 billion. We've raised 40% of all the private capital and 50% of all the public capital in the industry since 2010. Meanwhile, at the same time, the broader industry has returned to investors 80% of their total market cap because they haven't had the same ability to grow profitably because they don't have the returns that investors want. The last time I checked, companies can't grow without capital. Our superior financial strength is recognized by the rating agencies. We have a clear upward ratings trend, and we believe we're on a path to A A across the board.
Noteworthy is the fact that today, we hold billions of dollars of excess capital above greater than the S&P AA A level. Our track record of execution has led to increasing recognition, including an AM Best upgrade to A +, which, under their hierarchy, puts us into the A A category, and we think there's more of that to come. Athene is the largest retirement services company rated A +, with $33 billion of regulatory capital. For years, we've been running the company to greater than AA A standards. And with that, I'll turn it over to Grant.
Thanks, Jim, and good morning, everyone. We serve a societal need, which is helping people save for retirement and then turning that savings into guaranteed income in retirement. This business has a substantial tailwind behind it of an aging population that is unprepared for retirement. More than 11,000 Americans retire, reach retirement age every day, and today, you can see on this chart, roughly 58 million Americans aged 65 and older, and by 2050, that becomes 82 million. Our average customer is in their late fifties to mid-sixties, and you see that this aging demographic is moving people into the sweet spot where we can help them. This tailwind to our business will exist for several decades. That aging population is woefully unprepared. 75% of retirees have income below $75,000.
Almost half of Americans don't participate in a retirement plan, and 33% of Americans, of pre-retirees, say they are concerned about running out of assets in retirement. We estimate that the savings gap is about $4 trillion in the U.S., and it's not just a U.S. problem. This is a global challenge, this retirement crisis, and we estimate the total target market globally is $45 trillion, and you think about where Athene sits as the industry leader in retirement services, we're less than 1% of the global opportunity. We are really just scratching the surface of what we think our business can be, so where are we going? You know, we presented at Investor Day in October of 2021, shared with you a five-year plan, and we met our SRE goal at the end of 2023.
We're here today to say again, we think we have a big opportunity in front of us, and we think that we can double the business in the next five years, earning 10% on average SRE, but do it in a capital lighter way by utilizing third-party capital and creating capital light and capital lighter products. Marc talked about widening the funnel and opening the aperture. By widening the funnel, we're thinking about continued distribution expansion, new products in our existing channels, and entering adjacent markets. When we talk about opening the aperture, we're thinking about new products in new markets. Overlaying all of this, we retain an inorganic option when we see attractive opportunities. Marc and Jim have both mentioned that we act like owner-operators. What does that mean?
It means that growth is a choice, and we don't have to do anything, and we only do things that meet our unlevered mid-teens return criteria. That said, we've consistently found opportunities to meet that hurdle, and in generating twenty-three times organic growth in the last decade, we are a market leader in each of the channels that we operate in. Now, nobody in our industry can show you a chart that looks like this, that has delivered consistent, growing, diversified, profitable growth. But even if we chose not to grow, if we flatlined our origination at $70 billion, our AUM and SRE would grow for years and throw off significant amounts of capital, and that capital could be used to retain more of the business that we're originating or used as an increased dividend to Apollo.
We've talked for years about our four channels, but these channels have really developed 13 sub-channels that are scaled and deliver a much broader array of products. A decade ago, 2014, two channels, a small handful of products. Today, 13 scaled sub-channels delivering more than 50 unique products. It gives us tremendous flexibility. A lifetime example: We gave guidance earlier this year that we thought we could originate $70 billion organically this calendar year. That was before any of the PRT lawsuits. We were anticipating that PRT would be $14 billion, if not $15 billion, of that $70 billion. It's a fraction of that, a small fraction of that, and yet we are going to meet that $70 billion goal. We're going to deliver on what we said.
That's the flexibility of our footprint that none of our competitors have, that allows us to pivot, either driven by market opportunity or necessity. When we say that in our plan, we're anticipating entering adjacent and new markets and developing new products, we have a successful track record of doing that, and here's a few examples. We launched PRT, what we call group annuities, the rest of the world calls pension risk transfer, in 2017, and in the last four years, we've had the number one market share and grown to $42 billion in reserves. We introduced Ascent Pro into our retail annuities channel in 2016, and it's now grown to over $18 billion in reserves, and this year alone, it's already sold more than $4 billion, and we started our international diversification in Asia back in 2020, and we've already originated $12 billion.
We have eight active flow treaties across Japan and Singapore, covering both annuity and life insurance products. There's many more examples. You cannot get 23 times growth without coming up with new products, entering new markets, and continually expanding your distribution footprint. Retail annuities is our largest channel, and it continues to be our largest opportunity. There's still room to grow in institutional distribution, activating agents within distribution, getting more shelf space at distributors, introducing new products. We have a differentiated footprint that no one can match, with strength across the independent channel, banks, independent broker-dealers, and wirehouses. And what that leads to is the results you see in the top right-hand side of this slide, where we sell more annuities than anyone. We certainly sell the most of the products that we're focused on in fixed and fixed-indexed annuities.
We are the largest distributor in banks, and banks is the biggest distribution channel now for annuities, and we maintain strength in the independent channel. The lower right-hand side shows that five of our six largest distributors, we've all added in the last five years. We are the largest seller, by far, on every one of those platforms. When we get an opportunity in a new channel, we shine and we dominate, and on the left-hand side, you see that from a startup in 2011 , startup in the retail annuity business, we've grown our market share to 12%. No reason to stop here. Why not fifteen? Why not eighteen? Why not more? Our expansion in retail annuities was a strategic plan that we developed in 2011 , and we're still executing on that plan. It takes consistent, sustained commitment year after year after year.
It takes capital, it takes ratings, it takes investment in technology, it takes new products, it takes scaling your sales force and your marketing along with your opportunities, and of course, delivering great service, and then on top of that, there's the moat that Jim and Marc have talked about in terms of our competitive advantages, and it gives two outcomes to our business. We can offer great consumer value proposition while still generating superior returns for our shareholders. What we've done is very difficult to replicate, and we're an incredibly tough competitor. We're also playing in the right space in the annuity market. When we set out in 2011 to enter this space, the market was about $225 billion, and we wanted to play in about a third of it.
So we said, "Hey, we're going to have a $70 billion target market, and if we're really good at executing, maybe we can get 7%-10% market share over a period of years." So we were thinking this was a $5-$7.5 billion market opportunity for us. We originated more than $35 billion last year, so obviously, a few things happened that you can see on this chart. First of all, the space that we chose to compete in, fixed-indexed annuities, it's a superior product to variable annuities, and that battle is largely won in the marketplace. And the market, which hadn't been growing for years when we entered it, has gone from being a $225 billion a year market to this year, it will be north of $400 billion.
We also entered the RILA space, so now we're competing in 85% of a much larger market versus competing in a third of a much smaller market. Very exciting development. Sometimes it's, it's good to be lucky as well as good. In thinking like owners, we pounce on opportunities, and in addition to what's on the slide here, I think what we did in the retail annuity last year, retail annuities last year is a great example. The market grew over 30% last year, and we had the capital, we had the products, we had the distribution footprint, and we had the asset yield to be able to jump on that opportunity. We sold more annuities last year than anyone has ever sold in a single calendar year.
Inorganically, we look at everything, and we transact when it makes sense, and there's very little about the current market that makes sense to us. Deals clear at returns that are well below what's available organically, and for liability types that are highly challenged and often have degraded, very degraded, surrender charges. So the market's paying a higher price for riskier liabilities, and that leads the winners to engage in capital arbitrage by reinsuring offshore. I think the only way that you can make sense of what we see currently in the inorganic space is that the people doing these deals don't have scaled organic options. We have a number of growth opportunities that offer upside potential. Internationally, I've already discussed that a bit. We see there's a lot more there available for us.
In RILA and Athene Altitude, the tax advantage product that Stephanie mentioned, it's really about expanding distribution because our products are pretty great. In structured settlements and stable value, it's about entering adjacent markets and being a disruptor, as we think we can be. Defined contribution, you've heard a number of people mention that. It's a $15 trillion market. It's early days for people trying to crack the code of how to deliver both alternatives and guaranteed income into that space, but we want to participate both as a manufacturer and a part supplier. We're still working on ideas on how to create incremental and possibly stand-alone guaranteed income solutions. There's certainly strong interest in both the RIA channel, and we think it could be part of the solution in the DC space as well.
All of these things have relatively modest numbers in our five-year plan, so success here would be significant upside. Regardless, many of these have long lead times, and they will be significant contributors to Athene in the future, even if it's beyond the scope of the five-year plan. Just want to share a little bit about what we see as a potential future state for target date fund. We think Athene and Apollo are pretty uniquely positioned, working together with a target date fund manager to create a future state TDF adding alts will drive greater accumulation. Adding guaranteed income assumes you won't outlive your assets. We think the combination could produce 60% or more retirement income compared to a traditional target date fund with a 4% annual withdrawal rate. Zero chance that the retiree will outlive their assets.
And these products, as we're constructing them, will provide the flexibility and the liquidity that you need in a target date fund. And with that, I'll turn it back to Jim.
Look, our future growth will be guided by the same winning approach we've historically used. As Grant said, SRE growth is a choice. As owners of the business, we know there will be stairsteps as we move in and out of attractive cycles. We manage Athene's business for the long term, targeting consistent mid-teens returns over time. When we consider how this capital management philosophy manifests throughout the business, three concepts are at work. One, holding excess capital and liquidity allows us to capture upside, maintain a fortress balance sheet. Two, active portfolio management. We strategically reduced our net floating rate asset exposure by 50% and reallocated to Treasuries ahead of rate declines, which provides built-in gains to redeploy, as two examples. And three, we are very disciplined operators. We went six quarters recently without issuing public funding agreements when targeted returns weren't sufficient.
We've also de-emphasized MYGA sales when pricing became irrational. Athene does not seek to maximize profits or ROE in the short term. We've always operated this way and will continue to do so. Look, in summary, Grant told me this morning that, and I didn't know this, there are now 28 private equity-backed, so to speak, insurance companies trying to copy us. Based on what you've heard this morning in our presentation, we expect to widen our lead, not shrink it, against all the other copycats, because no one can replicate our business model. The combination of state-of-the-art, value-add asset origination, coupled with the biggest and best manufacturer and distributor of retirement savings products, nobody else has that. So you can see the takeaways. We're the leader, we're disciplined operators, and we have a substantial long-term upside that we expect to capitalize on. Really appreciate your attention. Thanks for coming.
Thank you.
Morning! So as you, as you've heard throughout the day, you've heard a lot about the power of our culture and our people, and Bill and I are excited to talk to you about how we build a great culture. As Marc says, we get to do this. We've seen this slide a few times throughout the day, and the point we're trying to emphasize is we are uniquely built for this market opportunity, and our culture and our judgment is what sets us apart. Our approach to human capital is a big part of the secret sauce of Apollo, and we take the art and science of culture as seriously as we do the art and science of investing. They are totally intertwined, and we never stop striving to get better and better. Our philosophy is to drive a modern, high-performance culture. We do this across three dimensions.
First, our purpose and values. These are the timeless principles that have been core to our success for thirty-five years, and they are our North Star. Second, our unique value proposition. So this is how we attract and retain the best talent in the industry. With the ultimate learning environment, a compelling comp design, and a deep sense of purpose and engagement, this is how we fuel great teams and where the best people want to spend their entire careers. It all comes together as a human capital flywheel that helps us achieve outperformance over and over again over the long term. In the heart of our culture is the apprenticeship model. And the magic of the apprenticeship model, as Marc talked about earlier, it's all about having incredible partners who are the best in the world at what they do.
We attract high-potential talent, we give them a clear path to the aspiration of becoming a partner, and we work hard to develop them on mastering the craft. The foundation of it all is striving to build the best partnership in financial services. The vast majority of our top leaders, they all grew up here. They're mentors to the next generation. Speaking of mentors, it's a real privilege to co-chair our Partner Committee with Bill Lewis, to benefit from his experience and from his wisdom. I'd love to turn it to Bill for his thoughts.
Thank you, Matt, and good morning, everyone. I've been on Wall Street for a long time, since the late 1970s . I spent 24 years at Morgan Stanley.
Among other things, I either led or co-led the global M&A department, the global corporate finance department, and the global real estate investment and merchant banking department. In addition, I was intimately involved in developing the best investment bankers in the world and in the creation of the managing director promotion process. I then spent 17 years at Lazard, a 175-year-old global firm, where I was chairman of investment banking and where I created and led the Global Managing Director Promotion Committee. For more than 40 years, I've been intimately involved in recruiting the very best talent on Wall Street, with a view toward developing the best possible leadership in financial services. I've also advised some of the most successful companies in accomplishing their strategic objectives.
These companies have been led by the most accomplished business executives in the world, so I have experienced talent from that dimension as well. In a nutshell, I've been a part of the best of the best for almost fifty years. I've seen it all, and let me tell you, Apollo is special. When I decided to leave investment banking, I was presented with a myriad of options. But after talking with senior leaders at Apollo for almost two years, I concluded that Apollo presented by far the most exciting opportunity in financial services. By the way, the stock price has doubled since I joined in 2021 . So my calculation was proven correct. My partner, Matt, just outlined the theory of how we are building a great culture at Apollo, but I can tell you based on my experience, that the theory is reality. Apollo's culture is truly special.
We've been able to create a systematic approach to cultural innovation. We have truly assembled at Apollo the best and the brightest, from the most junior to the most seasoned. What the research analyst community knows is that the lifeblood of long-term success is enterprise talent. We invest a lot of energy and resources in recruiting, developing, and ultimately promoting individuals to partners, individuals who don't think in silos, but who have the potential to add value across the entire enterprise, which you have seen this morning is extremely vast. Matt and I lead this effort to build a strong talent pipeline, and I can say based on my tenure in financial services, that we've created a system that will support and sustain the goals that you've heard from our leaders today. We are putting real muscle into building a strong talent system.
Let's talk about how we deliver on our best place to be a partner goal. We are constantly raising the bar for our colleagues to practice their craft. We're ensuring the right comp design, and we're keeping our small village entrepreneurial and vibrant as we grow the firm. So let's hear directly from some of our partners about their experiences at Apollo.
I've basically spent my entire career here at Apollo. You know, starting as an associate, then principal, then partner. I really can't imagine being anywhere else. We have a common goal. We rise and fall together, and we are tied to the performance of this company.
We have a culture of stewardship, and I think putting your own self-interest below the interest of the firm and the interest of your investors is such a core part of the culture here.
I love when we win together. To me, we maximize results and our outcome when we truly deliver one Apollo.
I have to lean on partners from all over the globe. I call them up, and they show up at a moment's notice. I couldn't ask for more.
The question I most commonly hear is: How can I help?
From my experiences, we don't have silos here.
We're one firm. We're in this together. We actually share rather than being siloed.
It's a team that doesn't rest on its laurels.
People are encouraged to ask questions, to work hard, to challenge each other.
We love intellectual insubordination.
We are encouraged to think big, and Apollo and Athene takes big steps, not incremental steps, and we're unconstrained.
Apollo doesn't seem to follow the herd, and I feel like as part of that, there's a real focus on empowerment of the individuals.
While it's a big firm, it's also a small firm.
While the place has grown quite a bit over the last few years, the partnership enables me to continue to feel like this is a small place.
It's game day every day. It's exciting to be part of a partnership that is bold, ambitious, and unafraid.
Raise the bar. Lead by example.
At Apollo, we're in all these different businesses, but at the end of the day, we're in the people business.
An environment where everyone can be their very best, authentic self. I think the focus on culture allows you to build a career while also weaving in those values that are so important to me of community involvement and culture and mentorship.
I feel as though I'm still new to Apollo, having only been here for five years, because there are so many people who have been here for fifteen and twenty years, and I think that is a real strength of the platform.
Frankly, most days, I can't believe I actually get to do this. There's nowhere better to build a career than at Apollo. I've been here sixteen years now, and I hope to be here for the next sixteen or more as we continue to build this firm into the greatest place there is to work.
Okay, so you've just heard from some of our partners, and as partners, we work hard to engage our people in the moments that matter to them, to bring out their best, and to build trust, camaraderie, and teamwork across the firm. This is all about having a flat culture, where our partners co-create the future of the firm with our people at all levels and our amazing HR team. So let me give you a few examples. Marc did talk about the magic of froyo recognition, which people absolutely love. I'll give you a few others. So as you can see here, earlier this year, we brought all two hundred of our partners together in Abu Dhabi to talk, as you would expect, about our business strategy. But we also spent a lot of time on our cultural priorities.
Every partner in the firm feels a deep responsibility to be part of this and to see that as part of their job. The Hackathon is about bringing the brainpower of everyone who works at Apollo in a competitive way to unleash the power of generative AI. Alt Finance, our innovative initiative to attract amazing talent from HBCUs into the alternatives industry. We are a very competitive people. You heard from David that we're investing in pickleball. Our employees are playing pickleball with the PE team. We are competing in the now legendary Credit Olympics. We are fostering a small village with a personal touch, where every voice matters, whether that's in West Des Moines, Iowa, volunteering with the United Way.
Whether that's in London at Take Your Kids to Work Day, or in Mumbai with one of our newest innovations, Take Your Parents to Work Day, which we're threatening to bring to New York. As partners, we roll up our sleeves to build the culture, including the guy on the right, our CEO, stepping in as guest chef at our Greenwich office barbecue a couple of weeks ago. This is a partner-led strategy, and it is resulting in higher and higher employee engagement. We have a 96% response rate on our annual survey, and our people trust that we will always be open to great new ideas. A big part of this story, and a big part of our culture, is the work we're doing on citizenship in our communities.
Our goal is simple: We want every one of our people, across every corner of Apollo, to participate in citizenship in their own authentic ways that matter to them, including through the Apollo Opportunity Foundation, where we are working with extraordinary nonprofits around the world, as you can see, to make a difference. And our model creates both social impact and employee development. We use a concept of foundation deal teams, which are modeled on how our investment deal teams work. We leverage our expertise, our creativity, and our leadership to create value for these incredible nonprofits over the long term. We're totally invested arm in arm with them over the long term. And the key is, our people are participating in these deal teams, and then they're bringing that learning back into their day jobs.
What's so special about our approach to culture is how we're prioritizing the importance of individual growth of everyone that works at Apollo, mastering the craft, driving business growth with all of our partners, arm in arm, working across the integrated platform, and that helps us deliver long-term outperformance for you. Our human capital flywheel is what keeps this moving forward. This is why we've been so successful for 35 years. We continue what got us here. We are always ready to challenge ourselves to evolve and reinvent, and we're always seeking feedback and ideas from our people. We know this is a winning formula for ensuring that we remain a magnet for attracting and retaining top talent for many years to come. It's our pleasure to turn it to our partners, Martin and Susan.
All right, home straight. Halfway up the home straight, actually. Good morning. I'm Martin Kelly. For those that I don't know, I'm the company CFO. I'm joined today by Susan Kendall, who runs Strategic Finance. So I think it's quite clear for those who follow us closely and for those who are newer to our story, you've heard a very consistent story today. We've been very clear about our targets. We're quite transparent. We track closely against that, and we want to make sure that progress in our business is clear and transparent to all of you. We are seeing increased momentum in our business, and I think that's clear from what you've heard today. Why is that? It's the opportunity set for us is just much clearer, and it's converting to financial results.
You can see that from all the presentations that you've listened to this morning. The foundations of each of our businesses are strong, and they're producing consistent results. The more recent priorities that we've been talking about now for several years, think Global Wealth, think Capital Solutions, think Bank Partnerships, including with respect to annuity distribution, are all creating the uplift in earnings that we're now seeing come through earnings. We expect the newer priorities, many of which we've touched on or scratched the surface on today, to create the earnings growth in the years that are ahead of us.
In terms of capital, we expect to create more than $20 billion of capital to invest or return to shareholders over the next five-year period, and that's the result of very strong earnings in each of our three main business lines. And when you combine the capital creation with the strong earnings growth, we expect a 20% return to shareholders at current multiples and current prices. So let me, for those who are newer to our story, some know this very well, but one quick slide just to lay out the earnings construction which we'll then step through. We have three earnings streams.
Two are growth businesses, fee-related earnings growing at 20% from our asset management business, spread-related earnings to grow at 10% from our retirement services business, and then principal investing income, which is net carry. And we think about that more as a cycle average business, very important to creating capital, very important to paying people, and highly value-creating over time, and we'll weave in some of the points that David and Matt made earlier. We laid this out at our prior Investor Day, three years ago. We've not made changes. I wouldn't anticipate that we do. This represents how we operate the firm.
So let me pivot back to a slide that Marc used very early, and there's no need for me to recap the update through 2026. I think you've heard that loud today, and you can connect that to what you've already heard. The one metric that we haven't touched on that's relevant is adjusted net income. That's our primary non-GAAP metric. We had put a target out of $9 per share for 2026, three years ago. We expect to exceed that. We'll report more than $7 this year, and so we're certainly on pace to exceed that metric. So looking ahead, on the right-hand side of the page, again, the top five components here on the page, the top five metrics, are all what I think of as consequences of our plan, each of the earnings metrics.
The next four, in the lighter blue, are the drivers of the plan, and you've heard from everyone this morning around the strategy behind each of these drivers. Marc made the point early on that origination is really important, probably the most important metric, and I'd make three observations on these metrics. Firstly, if you look at the trend line between where we expected to be in 2026 and where we now expect to be, either over the five-year period to 2029 or in 2029 , that demonstrates the momentum that's building up inside our business, and I think that does it quite clearly. Secondly, these are all connected. Origination fuels growth in Athene. Origination fuels growth in our Capital Solutions business, in our Global Wealth business.
It brings in third-party capital that's attractive institutionally, and it works in reverse as well. ACS opportunities can create origination, and so we don't think in silos. I think this is really important to the culture point that we've been emphasizing. This wouldn't work if we had distinct strategies and distinct teams. This only works because we are a flat model, and we're open architecture, which we've been talking about today. So, the other point clearly is there's an earnings multiplier on these activities. If we originate a dollar of asset, it has multiple homes around the system. It can create spread earnings for Athene. It can create multiple forms of fee earnings for the asset manager, including management fees or Capital Solutions fees or spread promote on our Global Wealth businesses.
It's a really powerful accelerant of earnings growth throughout the firm. A couple of other points on this page. This assumes no org- no inorganic growth, so this is an organic plan. This does assume that we get the share count to 600 million shares by 2029 in terms of the EPS metric that's noted, and I'll dig into that more a bit later. Moving on to our growth trajectory. You've heard today, 20% growth in FRE, $1.9 billion becomes $5 billion over time. In our spread earnings business, spread in Athene, 10% growth, so $3.1 billion becomes the same $5 billion over time. So two $5 billion businesses.
When you combine that with principal investing income, tax affected, and deduct financing costs and so on, you get to our primary earnings metric, which is $15 per share by 2029 . And I think you should assume... I'm not going to touch on it, so just assume no other changes to the construction of that. Assume no changes in the tax rate or the cost structure relative to the pace that we're on today. So with that, I'll pass over to Susan to touch on the asset manager. Susan?
Taking a look at the asset manager in more detail, with FRE growing at twice the pace of SRE, we do expect our income to shift from a majority in spread-related earnings today to over 50% coming from asset management in FRE and PII. And within FRE, growth is expected to be driven by third-party management fees, from less than 60% three years ago to a target of more than 70% in five years, as we serve a growing set of clients across the risk-reward spectrum. As shown today, we are growing from a strong foundation with a large and growing franchise in Athene, leading origination capabilities, a strong Capital Solutions business, and an established track record in flagship PE and other core institutional products.
In total, these scaled businesses represent about three-quarters of our revenue today and are expected to grow by one and a half to two times over the next five years. They also provide the core capabilities and reinvestment capacity to lean into growth drivers for the next five years, continuing to grow third-party credit, diversifying our equity franchise, as you heard earlier, into climate, infrastructure, AAA, and hybrid solutions. Scaling our Global Wealth business as we serve the large and under-penetrated market for individual investors, and further penetrating fixed income as we redefine the market for public versus private credit. These businesses are only about a quarter of our revenue today, but growing quickly, and should well more than double over the next five years.
Finally, we expect equity replacement in new retirement markets to begin to contribute to revenue over the next five years, although they're in much earlier stages today. As we invest in the business, we expect revenue growth to move into the high teens range on average, including outsized growth in those years where we have a flagship PE capital raise. As we execute on this growth plan, we are focused on a few key metrics, as you've heard earlier. Increasing our total originations to $275 billion or more, stemming from our proprietary origination platforms, credit and High Grade Capital, Equity Origination .
Scaling our annual inflows from $125 billion today to over $150 billion on average, with growth across Global Wealth, institutional capital, and Athene inflows, and growing ACS fees to roughly $1 billion, driven by diverse activity and increasing flows across our franchise. But the primary metric we'll use to measure success is our ability to accelerate FRE growth to roughly 20% on average for a $5 billion FRE business in five years. Similarly, revenues or fee-related earnings will vary year by year, with stronger growth in years where we have a flagship capital raise. But on average, we expect earnings growth to accelerate as our initiatives mature. We also expect a significant contribution from principal investing income over the next five years as the realization environment improves and we continue to grow our carry-eligible assets.
As a reminder, principal investing is comprised of realized performance fees or gross carry, and realized investment income, which we expect to be modest, offset by performance-related comp, financing costs, and other corporate expenses. Realized performance fees are an important driver of employee compensation, and principal investing income is a significant source of capital generation for the firm. In aggregate, we expect to earn roughly $4.5 billion of PII in total over the next five years, with variability year by year, depending on the environment. This PII outlook is supported by strong fund performance, which not only generates carry-on existing funds, but also helps to attract new capital. We expect to generate $10 billion or more of gross realized performance fees over the next five years, with the majority coming from our established flagship PE funds.
Fund IX is our 2018 vintage flagship fund and is fully invested. As you heard from Matt earlier, Fund IX continues to outperform the industry, with gross and net IRRs of 29% and 20%, respectively, and among the strongest DPI metric versus our peers. Fund X is our recent 2023 vintage fund. Fund X is already roughly 50% committed, with performance off to a strong start as well. At this investment pace, as you heard earlier, we would expect to be in the market with Fund XI by late next year. And with that, I'll turn it back to Martin to cover SRE.
Great, thank you. So let me pick up on SRE and touch on four areas of focus. And you saw some of the metrics on earlier slides from Jim and Grant. The Athene ecosystem today is about a $300 billion balance sheet. The retained business is about a $240 billion balance sheet. The retained business creates spread-related earnings. We've raised, as you saw, close to $10 billion of capital in via the ADIP franchise, which today supports about $60 billion, the differential in assets, and will ultimately be about $100 billion when fully invested. We expect ADIP to continue to be strategic to Athene and capital efficient for the group. It has clear capital benefits, efficiency benefits to Athene, which I'll talk about in a moment.
It also allows us to create equivalent FRE of the assets that are managed within ADIP, but that's a choice we can make, and we'll make that choice as the business continues to grow and scale. Secondly, we've seen two pretty significant interest rate transitions. We lived one on the up, post-COVID, we're living one now on the down, post-inflation coming back down, with the equivalent of two cuts behind us and more ahead, and the earnings profile of the business does look different when we go through periods of rate transition. The alternatives portfolio has performed well over time. Grant talked about this. We're very happy with the performance. It's had one negative quarter in forty.
That said, we've seen some recent underperformance, and so we're taking actions to align it more closely with the AAA portfolio, which I'll talk about. Then lastly, in view of all of this, particularly the interest rate transition and the actions that we took over the last year to manage our interest rate position, we're providing a current outlook for SRE in 2025. I think it's useful to look at the forward growth expectations, and you've heard this from Jim and Grant, 15% and 10% assets and earnings respectively, in the context of the last decade. If you look at the pre- what we call the pre-ADIP period, that was after the benefit, the full year, the full run rate benefit of the big Aviva portfolio acquisition, but before any capital was raised in ADIP.
Over that time period, the growth rate on assets and earnings was pretty similar, mid-teens at 16 and 14, respectively. But during that time, we owned 100% of the business, and we operated with significant excess capital to fund inorganic growth, which was relevant then, which we didn't know when and how and in what size it would materialize. We also maintained excess capital to qualify for ratings upgrades, which we've since achieved. So as a result of that, our growth was more limited. Over the last 5 years, since we raised ADIP I, we've seen 20%+ growth in each. ADIP has allowed us to be more capital efficient. Top-line growth over this period increased from $28 billion in 2020 to expected to be $70 billion this year.
And we gave up part of the SRE earnings as a result of the ADIP co-share. So looking ahead, we have both ADIP capital at our disposal, and we have likely excess capital within the Athene system. And so we have more flexibility today looking forward. And you've heard this from Jim and Grant, we expect around 15% asset growth from here. Today's $70 billion of top-line growth will average around $85 billion over the next five years, and then we'll have 10% SRE dollar growth, with ADIP contributing to the difference between the two. But the future use of ADIP, including raising ADIP III, is a choice, and it's a choice we're fortunate to be able to make, given the strong track record that we've had in each of ADIP I and II .
So SRE, what drives SRE? It's two things. It's asset growth and it's net spread. Asset growth is quite straightforward. You heard, you heard on the inflows and the expectations around inflows and diversification from Grant. Runoff, as we've lived through, is highly predictable, both on the up and on the down, and then ADIP partly funds net asset growth, which is a choice we can make periodically. Of the four components of spread on the right, it's really the first one, which is credit spread on growth, which is the most important driver of SRE growth over time. The other three items can introduce temporary transitory impacts up and down, but they tend to mean revert over time. So looking at that a little bit more closely, spreads will be wider at certain times. It's the credit market.
They'll be narrower at certain times. At times, they're both in different asset classes, which is what we're seeing right now. Spreads are tight today in CLOs and REITs. Spreads are wider than the average on commercial real estate debt. But over time, and like the other three components, spreads tend to mean revert over long periods of time. Liability costs are quite stable outside shorter-term, competitive, transitory impacts. And on rates, I'd make two points. Rates, the absolute level of rates has little impact on the business over time, because both assets and liabilities reprice to wherever the term rates are at that point. And then the deviation in rates over time is also quite predictable, but for transitory periods, which we've lived through and we're about to live through again. And then lastly, alternatives. I'll come back.
There's a slide to follow on alternatives, which lays out our actions we're taking to modify that portfolio. So if we move ahead to the next slide here, it's interesting that over time, you can see the stability of net spreads in the business. This is a decade... On the right-hand side here, this is a decade in the making, and you can see, again, points in time where spreads are narrower or wider, but spreads may revert over time, and it's a hundred and thirty-one basis points over this period of time. Also interesting that the business we're writing today, which is the left-hand side of this chart, first half of the year, we wrote business at a hundred and forty basis points. So that's approximately what we need to do.
That's what we plan for, as part of running the business and as developing our longer-term plan. I think it's also interesting to look at spreads right now, and where we're writing business right now in the context of what's changed inside the last twelve months, so today, the market sees, as we all know, four to five more rate cuts than expected last November. CLO spreads have tightened meaningfully, and as a consequence of that, refi and prepayment rates have increased. We're still writing business at a hundred and forty basis points. It's less than periods of time within 2023, but it's still consistent with our long-term expectations, and that's really connects back to the whole origination thesis and the plan around ability to source interesting, appropriate investment-grade fixed income assets that are appropriate for Athene's balance sheet.
You saw this chart earlier from Marc, and just to put this in more context in terms of the transition, we did experience significant increases in interest rates in the period of time post-COVID. We lived through that. We had a significant spike in earnings 2022 and 2023, and we outearned in that period of time. We also carried more floating rate assets, as Marc mentioned. And then when rates were high, we entered into hedges to bring down that floating rate exposure. And so today, pro forma for that, we're in actual terms, we're 7% floating or $15 billion of net exposure. We also, when rates were high, bought what we call countercyclical assets.
Think defensive assets like Treasuries that we can sell when rates decline, and reinvest at wider spreads when the opportunity is available to us. And so both those actions are part of the earnings transition story as we look from 2023 to 2024 to 2025. On alternatives, we're very happy with the performance of the portfolio. It's been a long-term, well-performing portfolio. What we have experienced up until now is that the alternatives portfolio is represented approximately 70% by AAA and 30% by other. And the other included some strategic retirement services platforms, of which we are in the process of selling or repositioning to pro forma, to a position where we own just Athora and Venerable.
And so once that some of that is done, some of that is in the period just ahead of us. Once we are done with that, the alternatives portfolio will be about 80% AAA, and you can see the impacts on returns over both the last 12 months and the trailing 3 years had we done that, and the portfolio construction was what it is pro forma for those actions. About 200 basis points higher, and very close to the long-term 11% expectation. One more important note.
Because of the focus on this and the importance of understanding performance of the alts, we do plan to publish each quarter going forward around quarter end, the expected returns of AAA in that quarter, and that'll just allow a shorter-term modeling, in view of that particular quarter. So how does this all connect? Similar slide to what you saw earlier, from Marc. In 2023, we outearned for the reason that rates increased significantly, and we rode the ups on the floating rate portfolio. The outearning was about $300 million. So we believe an appropriate level of base earnings for 2023 is around $2.8 billion. In 2024, we created close to 10% earnings growth from new business.
We further created earnings from optimizing the existing asset portfolio, and we actually benefited, as Marc said, by about $100 million due to the run -rate benefit of higher rates, notwithstanding the fact that short rates are now just starting to come down. We expect to end 2024 right on top of what we previously said, with reported SRE around $3.2 billion, which would be 14% growth off the rebase 2023, with a further $300 million if we assumed alts performance at 11%. And so on a comparable, like-for-like basis, that represents approximately 4% earnings growth for the year, in line with our prior comments. For 2025, we expect the base business to grow at the same, approximately 10% growth rate.
We expect interest rate headwinds of about $300 million, and we expect some benefit from both asset portfolio positioning and alternatives returns. So assuming alts returns at 11% for next year, assuming everything else stays the same, we would report SRE for 2025 of $3.5 billion or approximately 10% growth off 2024 . I think it's just stepping back for a minute. I think it's important, and this sort of threads back to some of the earlier comments. We operate the business as a principal. We make decisions that are appropriate for the long-term benefit of the business. We don't reach for risk. We don't play capital arbitrage. We run lower leverage than the industry average.
We want long-term profitability, and we're performing well in an environment when many peers are experiencing flat to declining earnings. So with all these comments in context, particularly the interest rate transition from 2024 to 2025, we expect the longer term growth of the business from 2024 to 2029 to approximate 10%, with SRE dollars targeted to be around $5 billion in that last year. And from a capital perspective, this assumes consistent use of ADIP. It assumes... We expect that Athene will be capital sufficient or generative through this timeframe, and we assume a constant annual dividend to the HoldCo of $750 million each year. So let me move on. Last topic on HoldCo capital.
We're very pleased with the progress we've made on capital in the last three years since our last Investor Day. We targeted an upgrade in our ratings, which we achieved. We've built a strong liquidity position to be offensive. We've migrated all of our debt issuances to be SEC registered out of the HoldCo . That's attracted a whole new buyer base of debt investors into our capital structure. We issued capital in the form of a mandatory convertible when it was attractive to do so to fund Athene's outsize growth. And we've been active in immunizing shares issued to employees. And I think also importantly, we will buy back stock opportunistically when we can.
In the quarter that just ended yesterday, we bought back four million shares in the market since our prior earnings call. So moving ahead to the next five years, we're targeting, as you heard this morning, $21 billion of capital to invest in the business and return to shareholders. And that's driven by each of our earnings components, with the heavier emphasis on FRE, as you'd expect. This is after tax, after the cost of immunizing regular way employee stock issuance. And then we look at the uses of that. We are indicating three lots of $7 billion.
The first to pay the base dividend, which incorporates into it a 10% annual growth, up from the current 7.5% annual growth, and that reflects about half the growth rate of what we expect to be the FRE earnings growth. Secondly, an amount of shares to bring us down to 600 million shares, which is the base math we used in the EPS calculations throughout today, plus clearly some excess for further repurchase. And then, $7 billion to grow either our asset management business or our retirement services business. Currently unidentified, may happen, may not happen. If it doesn't, we can use it to buy back stock. In either case, accretive to our base earnings growth with approximately similar returns on capital. So in closing, four simple messages.
We are tracking at or ahead. We're very pleased with our progress. I think we have a high conviction of continuing to meet our targets in view of the momentum in the business that you've heard about today. We are expecting 15%+ earnings growth in ANI per share over this time period. We expect to generate significant amounts of capital. Some is earmarked, some is not. We'd expect around a 20% return on that capital when it's put to work. Then we're very focused on shareholder value. We are all stock owners as you are. And if you look back, we've returned seven X on the stock price since IPO, Noah's opening chart.
And we expect this plan at current multiples, at current prices, to return 20% to shareholders through 15% earnings growth and then other forms of capital return. So, with that, we'll close out. Please welcome back Marc Rowan.
Mostly on time. Thank you all for the attention and for sticking through this. This has been a tremendous amount of work, and as I started the day, this is literally the best time to be CEO of this business. We are getting to make years' worth of changes over a very short period of time. I'll bring back the message that I started with. In the asset management business, we have nothing but opportunity. This has been about focus. There are lots of things in the asset manager that we've elected not to do. We just have to do a couple of things well. They're all up on the screen or have been talked about today. We have lots of other choices. In the retirement services business, the team has been relentlessly focused on execution.
It's now time to broaden what they do and think about retirement in a whole new context. But when I think about how daunting it is to go from where we are to the projection, I come back to this relatively simple slide. We are a small asset manager in the context of the world. We don't have to do all that much. I said to one of you in the hallway that if you look at our fixed income business, our credit business, it's roughly $550 billion today. Not all of that is alpha. There's mostly alpha, but there's a chunk of beta in there. For us to double that business, it's finding $300 billion of assets or $350 billion of assets over the next five years.
I like our odds against this TAM and against what we've invested in. Any one of these four big planets here could double our business. We're lucky we have all four. We have spent the better part of a decade, fifteen years, for some of the businesses, positioning ourselves for this moment. I wish I could say with clarity that we, we saw this coming. We did not. Changes in capital markets, changes in regulation, changes in competitive dynamics, changes in markets, have afforded us this opportunity, and we find ourselves not just as a small asset manager surrounded by massive TAMs, but truly uniquely built to achieve what we need to achieve, and for us, we just have to make sure the culture is right. The goal is not to be the fastest growing. The goal is not to be the largest.
The goal is simply to execute the plan, and as I often say, to like ourselves at the end of the five-year period. We are really fortunate to get to do this. We have a tremendous amount of fun doing what we do, what we do. It is a small village. People know each other. We care about each other in the moments that matter. If you're gonna be my partner, our partners, for your entire career, the number of good things and bad things that are gonna happen to you over that period of time, gonna be quite substantial. How we deal with you in those moments as an individual, massively important to maintaining the best partnership. So we're very modest. We understand the work that we have in front of us. We understand that many companies who have been successful are content playing not to lose.
We're here to play to win, and winning for us is achieving the plan, but also liking who we are at the end of the five years. So thank you very much.
Great. So we're going to move into some Q&A. We have Marc and Martin on stage, and we have mics also for the other presenters as they may participate. If you could just please state your name and your firm, that would be great, and the mic runners will come around. First question to Craig, right here.
Craig Siegenthaler. Craig Siegenthaler, Bank of America. Thank you for hosting a great event, and actually, thank you for being on time, too. That's not always the case.
Of course.
But my question was on the,
non-US retirement business. I know you've had some success in the Japanese reinsurance market. I also saw you sold down Challenger, and maybe Europe is a little tougher these days, but I wanted an update on that business because you have several businesses there. And will we see growth from inside of Athene or from the other retirement businesses that you own?
So, the question is on international retirement services. So I'll take a shot at that, and feel free to add, and Jim, obviously feel free to add. Athene's mandate includes some international markets, in particular, Asia. As Grant mentioned, there are now numerous treaties, and the large, well-capitalized, well-rated Asian companies like to deal with the mothership. That is their preference. They like to deal with the ratings. They like to deal with the continuity of the management team. So I would expect most of the growth, and what is in our five-year plan, is pretty much focused on Athene and international markets. Challenger was, as I said, on the earnings call, this was our chance to think about how to enter the Australian superannuation market. Australia has done an awesome job accumulating assets. They have done a less awesome job on decumulation.
We actually think we can be really helpful in the decumulation business. We've developed really good partnerships with Challenger. It was not and is not our intention to own Challenger, and it turns out we don't actually need to own the stake. And the stake was. We made money on the stake, and we've since disposed of it. At least from Athene's point of view, Apollo retains a residual stake in Challenger. Same is true, by the way, for FWD. FWD is very aligned with Apollo from an asset management point of view. We are doing reinsurance. We're looking at portfolios together. But from Athene's point of view, that stake is now gone or will be gone.
Yep.
-and is now where it should be, which is with Apollo. In terms of the European business, the European business is quite a large business today. But I would say, and Europe is just a much more difficult place to grow a business. We've basically pivoted the management team at Athora to focus on reigniting organic growth because there's a series of opportunities. Inorganic transactions have proved to be politically very difficult in Europe, not just for us, but for everyone. Organic, there is a massive falloff in the availability of guaranteed income and retirement savings in the European market, and right now, the primary place we're growing organically is in the Netherlands, with a little bit in Italy. We actually need to return the entire business to organic growth.
We find ourselves in an interesting situation of a large, profitable business with massive amounts of excess capital, because we did a very large capital raise, which is still not deployed. And Europe itself is wrestling with interesting issues. The U.S., just to start, the U.S. is the envy of the world. We raise 50% of the world's capital. Everywhere in the world, as I suggested, regulators have two choices as to where debt capital comes from: the banking system or the investor marketplace. Everywhere, they've told the banks to do less. It's just in Europe, they forgot to tell investors to do more. They're just starting to do that. The conversations around liberalization of securitization, liberalization of other private assets are just starting. And that, to Jim Belardi's point, we only want to grow where we can earn excess spread.
If there's no excessive spread in public markets, you have to go to private markets. If the regimes are hostile to private markets, very hard to earn excess spread. And that's why the European guarantee market has virtually shut down, not for us, for everyone.
Okay, Patrick.
My goodness!
Patrick Davitt, Autonomous Research. Another question on retirement, particularly U.S. retail annuity demand through the lens of lower rates. There are early signs that demand is shifting to RILA, from FIA, and Athene has pretty low market share in that product. How should we think about your right to win in RILA versus some already very established players? And in that vein, do you think you can replicate the share gains you've made, in FIAs with that product?
Grant, why don't you take a shot at that? Just grab the mic from Jim.
Grant.
First of all, I disagree that, RILA sales are coming at the expense of FIAs. They're coming at the expense of variable annuities, and both fixed indexed annuities and RILAs continue to grow. There were a few questions in there. Our right to win in RILAs, I think we have to prove it. RILA is the first registered product that Athene has engaged in, and so it goes through registered distribution, which we're still in the process of building out. As I said, I think we have a great product. Our RILA sales are growing more than 25% this year, but our market share is still modest. As you pointed out, it's 2%. On the platforms that we're on, we have 10%-15% market share.
So I think in RILA, it's about getting more at bats, getting more exposure for the product, and we're busily working on that. I think the last piece was around interest rates. I've been asked this a couple times before. We don't know. I mean, we haven't lived through an environment, rates have shot up this month, this much, and now we're trending down. But I do believe there's reason to believe that annuity sales will stay elevated. We talked about the tailwinds of an aging population. No one is forecasting rates going back down where they were. I think the consensus is 3% floor on Fed funds. I think our internal forecast is higher than that. And you also have the phenomenon of this money has come in to the insurance ecosystem. They are now experiencing the benefit of tax deferral.
And when the products mature, they will be offered a new opportunity to continue that deferral. So the short answer was, I don't know, but I have optimism that the sales will continue to be elevated. Maybe MYGAs will come down. FIAs and RILAs have grown regardless of the interest rate environment. So I'm far more sanguine about the opportunity for retail annuities than some who've sort of implied that falling rates mean our market's gonna shrink a great deal. I don't think so.
Glenn?
Thank you. Glenn Schorr, Evercore. So I'm fascinated with the thought process of origination is your lifeblood, origination is what fuels your ability to win in all these huge TAMs. Yet at the same time, if you look historically, large originators trade at low multiples. They were either cyclical because of rates and the economic cycle, or they were really bad underwriters. So as you build out, and especially as you build these partnerships, A, can you avoid any of the cyclicality by diversification? And B, how do you avoid adverse selection with all these partnerships in terms of what you do take on?
Let's start with the asset management business, because I don't think origination is our lifeblood. I think it's everyone's lifeblood. I think if I'm right, and we're right, that public and private are gonna converge to some extent, illiquidity premium, structuring premium, they're gonna disappear. Where you're gonna get excess return is from originating product. Most people who have gotten into if you originate bad product, you will have a bad business. If you are an asset manager who picks bad stocks and picks bad bonds, you will have a bad business. So it presupposes we can do what we do well. Why do people like doing business with us? Because we have skin in the game. We are 25% of everything and 100% of nothing. Everyone is making a journey.
Yes, endowments and institutional investors have been invested in alternatives for a really long time, and they've developed a comfort level. But when you talk to family offices, to individuals, to insurance companies, when you start talking to the fixed income market, like in the room here, we just take this for granted. But everyone is on a journey of education. The fact that we own the product and that we are not a promoter of product, a salesperson of product, a bank who has no skin in the game, an asset manager who just gets a fee, is a massive part of our selling point. We go to market, purchase price matters, excess return per unit of risk, and the most aligned investor out there. I think that's to our betterment. And the final point really gets to quality control.
When you consume the asset yourself, you are very concerned about what happens. Each of the platforms that we run, they are not captive only to Apollo. Every one of the 16 platforms that Chris Edson gets up to care for each day, now with a massive team reporting to him, we want to retain third-party market access because it's a good discipline for ratings. We don't want to own 100%, even of the platforms. We have invited seeming competitors of ours, MassMutual, others, MetLife, into ownership of these platforms. We never want a platform to be so big that we have to do business. Just like Jim and Grant talked about running Athene as a principal, we run these origination platforms as a principal. If we don't like the flow, we want to shrink it. If we think spreads are wide, we'll accelerate it.
We compensate people not for what they produce, but for ROE net of losses over a really long period of time. There is no perfect outcome. There is no perfect alignment. But relative to a banking institution, relative to a pure asset manager, relative to a specialty finance company whose only business is specialty finance, and therefore has to love their asset class every single day, we are the best we can be in the context of nothing is perfect.
Alex.
Thanks. Alex Blostein, Goldman Sachs. I was hoping you could spend a minute on your capital return framework and just double-clicking into the $21 billion you highlighted a number of times today. I think at a high level, it feels like there's a lot of discussion around growth of third-party capital, which obviously comes with higher ROE and more capital generation. So as you think about the buyback and the toggle between some of the M&A opportunity versus doing more buyback over the next several years, what does that look like? What are the key considerations? What are some, like, inorganic things you still might need to add to? And just a clarification point, I think I heard you say you're using about 600 million shares throughout kind of your targets for 2029 as well.
I think previously, you kind of talked about 600 by 2026. So is that the case, and therefore, 2029 will be, you know, lower than 600?
Yeah. So a couple of questions. It's interesting. What we have actually spent on strategic growth in the last three years is less than $1 billion. So, we look at what in front of us today, it's all organic growth. I think if we do something M&A-wise, it's likely to be niche-y tuck-ins that give us a new capability, but it's sort of easy to justify the math on the initial sum of the parts accretion. You then have to integrate the business, operate the business, and grow the business. And so we just don't, like, where we sit right now, we don't see a lot of opportunity to be active in spending money, capital on M&A growth. So you know, that's unlikely to change, I think. So, so the share count is like, there's plenty of capital.
You can see, like with the reason we laid it out so clearly was to connect all the components between FRE, SRE and PII, and then there's some borrowing capacity in there. So, you know, we brought the share count down to 613 today from 617 a month ago and six weeks ago. So, you know, I think you should expect that we'll continue to take it down, and then we'll make decisions on where we go from there. But it's attractive. Like, we run the math, it has to. M&A has to pass a bar of 20%-ish return. Buying back stock, we think at our growth rate, does the same thing.
That's, you know, you get to the same place. We'll do whatever's more attractive.
I'll add just the overview of this. Look, we're forecasting a plan that's out in the future, where a portion of the capital generation comes from the good work of Matt and David, and realizations in the portfolio, which have been delayed for an industry over a long period of time, and we're more mature than most and doing a better job than most, but still is uncertain. What we've done in constructing the plan is we've constructed. We've left what I'll call two levers in the plan. One is Athene's growth is up, but on a percentage basis, it's not up as much in terms of new business. Think of how fast Athene has grown from a new business point of view, and we're talking about going from seventy-ish billion to eighty-five billion on average.
The result will be significant capital accumulation at Athene, because we've only assumed that there's a $750 million annual dividend, which is becoming a lower and lower percentage of Athene's earnings. The reason I, I mention this is we have a choice. The ecosystem is growing faster. Anytime we decide to retain more business, we don't have to actually do more business. We just keep more of the business we're already doing and deploy some of that capital. We've left that as a buffer because we will get a rainy day, we will get a cycle, we will get spread tightening, we will get things we don't like, and we want the flexibility to meet our commitments to you as we have over the four planning periods. The other is we have not assumed a return on roughly $7 billion of capital.
We have a pretty, you know, rough framework. Given how much stock employees own, like, we're very focused on stock and share count and on other things, and so we will, I assure you, get a return on $7 billion of capital, and that return can come from just buying back the stock with all or some of that. But I agree with everything that Martin said. I don't see significant game-changing M&A for us. That does not mean we will not do M&A. I could think about distribution. I could think about additional skills that we don't have, particularly as they relate to the high net worth marketplace. I can think of niche tuck-in acquisitions, but I don't see significant M&A on the horizon.
Mike?
Great, thank you. Mike Cyprys of Morgan Stanley. Just a question on guaranteed income solutions that came up throughout today's presentation. Just curious how you see that developing, particularly in the DC channel. What might be successful, do you think, in terms of products, what that might look like? And what do you see as perhaps the winning strategies and approach from a distribution standpoint? I think there was some reference to target date earlier. Maybe you can update us on how you're thinking about that as well. Thank you.
It's good because you'll actually get debate among the team, so why don't you start, and I'll, I'll voice over.
For the second time in Q&A, let me start by saying, I don't know. I think it's pretty early days, and we and others are trying to figure out solutions. It was SECURE Act 2.0 that actually allowed annuities to go into DC plans. It is a very difficult ecosystem to navigate between plan sponsors, record keepers, product providers, target date fund managers, the legal requirements for liquidity and all the rest, very difficult to navigate. All I can tell you is we're spending real time thinking about it, coming up with different ideas, thinking about pieces of the puzzle. A product like a SPIA, Single Premium Immediate Annuity, that we just introduced, could be a piece of the puzzle. The future target date fund that I outlined could be a piece of the puzzle.
We're in the market now as a parts provider to a solution being offered by ARS, which has a target date fund that qualifies as a QDIA, and where the target date fund, rather than migrating from equities to fixed income, migrates from equities to a fixed indexed annuity, and where that guaranteed income can be taken by the participant when they leave the plan. We think that's a superior solution. The market hasn't decided yet. Other plans that you've seen announced provide for income, but the individual has to select, and I think as most of us in this room know, most people don't select. They set it and forget it. Over 70% of people in DC plans never make a decision to change anything after setting it up.
So I think there's a lot of elements of it that are yet to be played out in the marketplace. All we're saying is we're throwing our hat in the ring, and we're devoting serious assets, people, to try to figure it out.
So in the plan is just what Grant said, Athene's assets and people to get to guaranteed income. It is one of the things in the future. If you think about the public policy issue here, we have $12-13 trillion in 401(k)s, and we're forcing these really long-term investors to own daily liquid index funds for a period of time, 50 years. Why? I can't tell you, but it relates to a vague notion that public is safe and private is risky. It's my belief that if we have a change in administration, we will have, in a very short period of time, illiquidity introduced into 401(k)s. That will not just benefit Apollo, that will be another source of demand for the industry of a magnitude that will be quite substantial.
The other is we have to reimagine what a guaranteed income solution is. One of the questions I ask, and I think the team is responding to, why is an annuity more than one page? Why shouldn't it just say that, "Mike, you get guaranteed income for life, and it has a CUSIP, so when you tire of it, you can sell it." It's not clear to me that that product should not exist. It's just not what exists. The second point I would make. So one point I'll make is product evolution. We cannot think of the existing product in the existing form, solving the problem you're talking about. It's gonna be a new product, that it will be much simpler to administer.
The other is, right now, annuities are so complicated that they are sold through advisor channels or third-party channels, and distribution costs can be substantial. When you deal directly with a fiduciary, like a target date fund, you are able to either increase. You're not paying a distribution cost. You can either increase the economics and make it more attractive, or you can retain a portion of that to hedge the longevity risk. And so I think, to Grant's point, the outcome that we can offer with access to private markets and guaranteed income is not 5% better or 10% better, it's 60% better. We're gonna get there. We just can't tell you exactly how, but baked into the plan is very little of it.
Brennan.
Brennan Hawken from UBS. Two questions on retirement services. So you spoke to ADIP growing, but is it gonna grow proportionally as a percentage of the capital supporting Athene? And then you made some changes to the alts portfolio that you spoke to, Martin. Is it now that it's just Athora and Venerable in there, and so, like, Catalina and the other investments were gone? And maybe could you speak to the lessons learned from that change?
Do you want the first one? I'll do-
I'll do it. In lessons learned, in international markets, particularly in Hong Kong and Australia, we started with the premise that these were really attractive markets. We didn't know if they were attractive as principal or as agent. We actually figured out that they were more attractive as agent than as principal, and yet we left the stake in there. We had early appreciation, and then we kinda left it there. As I said on the last call, the asset and the investment should follow where it benefits, and since it is an agency relationship, it left Athene and moved to Apollo, and in some cases was downsized and sold. I don't think there's any overall lesson learned, because you think of other relationships like Venerable. Venerable's been massively successful.
On average, all the insurance stakes have been really successful. It's just a lot of that success played out, and in the quarter that we had, we had negative mark on Catalina, and we had no appreciation on Challenger and FWD, and that created a challenging situation and forced us to just get after it. We did. In terms of the mark, when we started 15 years ago, we had a choice. Recall that Athene's portfolio is roughly 95% fixed income, of which 95% is investment grade and 5% of it is equity. Most people, including our regulators, assume that as a firm that had its heritage in private equity, we would have put private equity into that 5% bucket. That, in fact, is what most of the competitors have done, and in addition to real estate equity.
We decided that we wanted to have less volatility and more stability of return, and so we started doing hybrid transactions, as David and Matt described, and over the years, we're now circa two hundred different hybrid transactions, fully diversified by vintage and by type, and AA A has performed really well. We like it because it also works well with interest rates and the interest rate risk we carry. Typically, we've seen tighter spreads when rates are declining. Typically, we've seen equity markups when rates are declining. It's not a perfect hedge, but it is a hedge, but without the volatility. So I think we're happy with it. I think you're gonna see us continue to allocate five-ish % to equity. I think if you have a complete repricing and debacle, we'll actually go up in percentage because it will be more attractive.
I know there's more questions in the room, but in the spirit of keeping on time, I think that's a good place to end. We'll finish where we started, which is we very much appreciate all the time that you've taken with us this morning to hear our story. If you have any questions that went unanswered, please feel free to follow up with us directly. Thanks again.
All right, we can bring in the next-