Thank you all for joining Bank of America's 33rd Annual Financial Services Conference. This is Craig Siegenthaler, North American Head of Diversified Financials, and it's my pleasure to introduce Scott Kleinman of Apollo. Scott is Co-President and serves on Apollo's Executive Committee and also sits on the Board of Directors of both Apollo and Athora. He co-leads Apollo's day-to-day operations, including all of Apollo's revenue-generating businesses and enterprise solutions across its integrated alternative investment platform. Scott, thank you for joining us in Miami.
My pleasure.
Apollo was founded in 1990 by several partners from Drexel Burnham Lambert with a focus on private equity. Apollo also pioneered the alternative insurance model with the creation of Athene, and many of its large-cap peers have since replicated its strategy. The firm now manages more than $700 billion in assets under management and is one of the five largest alt managers in the world. And from 2018 to 2024, Apollo more than doubled its fee-earning AUM. So Scott, maybe we get started with the macro setup. We've entered year three of the bull market. IPOs are expected to take off. Credit spreads are quite thin. There's record money market AUM on the sidelines. What are your expectations for both transaction activity and fundraising this year?
Yeah, sure. So look, maybe just starting by, you know, as we look out into the market and the underlying fundamentals, things still seem pretty strong here in the U.S. across our 50-odd portfolio companies. We're not really seeing any signs of a drop-off or a slowdown yet. And so, you know, we feel reasonably good about the year, like we did, quite frankly, last year. In fact, but that's really only half the story. The flip side of that, of course, is that that means that inflation, which I think the Fed has wanted to declare, you know, victory over, we think is still bubbling underneath. You know, it's not cured yet. It's just suppressed, which then leads you to think about, well, then where are rates going to be? Rates probably are going to stay in this higher-for-longer, you know, zip code.
We've been pretty vocal about that for the last year, and we see that continuing, you know, whether it's housing prices, food prices. I'm sure every flight that every one of you came down on, you know, was packed. You know, the consumer is still spending, right? The consumer is still spending. So, but that was true last year too. And so I think this euphoria of, oh, there's going to be lots more IPOs, there's going to be lots more M&A is not a function of a shift in the markets or a shift in the economy, but simply, you know, more, you know, hopes and desires than actuality. I do think there'll be, you know, a modest pickup. I mean, the new administration certainly is more pro-growth, pro-business than the last administration. But the reason M&A wasn't busy last year wasn't because of the administration.
You know, it was because there's still a pretty wide gap between buyers and sellers for lots of assets. Same thing on the IPO side. You know, you can take companies public. You could take companies public last year. You just might not have gotten the valuation that you were hoping for. And I think that's more a function of the interest rate environment than it is the fundamentals, because the fundamentals have been robust last year and they continue to be robust this year. So I do think, you know, with the passage of time, you know, there's a little more positivity and you'll see a little bit more, but I don't think it's the step function expectation that people had coming into the year, and I just contrast the U.S., by the way, to the rest of the world.
So, you know, I've been to Europe a couple of times in the last few months, and it's pretty grim over there. You know, Germany is entering their third year of 0% growth. I mean, and that's the best part of Europe. You know, U.K. is worse. France is struggling. Like, it's a pretty tough environment. Asia, ex-India, is also, you know, having a tough time. So, you know, the other thing we're keeping an eye on is how long can the U.S. go in this direction and the rest of the world go in that direction? Either something's got to give. Either the rest of the world's got to start picking up or that's going to start dragging the U.S. down a little bit. So, look, we're cautiously optimistic on the year, but it's been 16 years since we've had a real recession.
I'm not one of these people who believe, like, this time it's different. We've cured recessions. And so, you know, we're watching, but, you know, cautiously optimistic, I would say.
So private credit has been the big outperformer in terms of investment performance and flows the last couple of years. But, you know, a few things have changed. Base rates have come down a little bit. Spreads have contracted. And last year on the retail side was the first time private equity outperformed private credit in a very long time. So what I'm getting at is flows. Do you expect to see a pivot start to occur from private credit to private equity, infrastructure equity, maybe not today, but down the road, real estate equity, or is this conversation still too early?
Yeah, I'd say it's not a zero-sum game like you're laying it out, right? The inflows from private credit, I don't think came from private equity. They came from traditional credit. The, you know, last year was really the first year in a decade where all of a sudden you started seeing attractive returns in credit again, right? And so investors, pension funds, sovereign funds, et cetera, were so underallocated to credit they had allowed their credit allocations, broadly defined, to drift down because in a world where they have liability growth, they had to find return somewhere else. So they had pushed into other asset classes. Now that you can actually earn high single-digit, low double-digit returns in credit, you're just seeing dollars flowing back to credit, broadly defined, of which private credit is a growing and important asset class.
So I would expect private credit allocations to continue to grow, even, as you said, with tightening spreads and slightly lower base rates, because it's still a fundamentally good risk return, you know, certainly as compared to years ago where people were just dramatically underallocated to credit. Now, the second part of your question, I think you saw underallocations to private equity or new allocations to private equity in the last couple of years because people had gotten so long, you know, in the 2018, 2019, 2020, 2021 timeframe at the top of the market, you know, there was a readjustment of valuations. And so people had to let their books catch up. I think we're still not in, you know, back to that, you know, top of the market or even average of the market, you know, allocations.
But I do see allocations starting to pick up, you know, to more equity-oriented strategies, private equity, infrastructure, things like that. So I do think you will see improvement in those areas over the next year and the year beyond. But private credit, I think, is still getting a fairly healthy allocation.
Scott, what are your biggest focus areas this year?
Yeah, look, I mean, I think we've been pretty clear. You know, we were fortunate. We had a great investor day in the late fall where we laid out our objectives for kind of this year and beyond. And, you know, for us, you can't hear it enough. I know we sound like a broken record, but it's all about origination, right? At the end of the day, we think, you know, the next leg of alternatives growth, private asset growth is upon us as, you know, moving from institutional to retail. Retail really hits its middle innings. And as you start pushing into 401(k), as you start pushing into real mass affluent, right, the demand for alts is going to, you know, double, triple, quadruple over the next decade.
Having quality alts, right, being able to earn that excess return, that excess spread is what keeps us differentiated from traditional asset managers, right? You know, how can I charge 100 basis points for my product rather than five basis points for my product, right, by earning alpha, by delivering alpha? And so the way you're going to do that is by originating good, interesting new product. And so for us, being able to build that, continue to grow that front end, continue to find new ways to originate product from, you know, private equity to hybrid to private investment grade, private credit, you know, really finding that excess, you know, that excess alpha is the name of the game. And that's what's going to differentiate the winners from the losers over the next, you know, five or ten years.
And so we are spending massive amounts of time really making sure we're organized to optimize that origination capability and then continue to grow it.
If we look beyond 2025 and we think about your long-term growth targets, maybe just refresh us on what are the key targets and what are the key things you need to do to get to those targets?
Yeah, yeah, yeah, yeah. So we put out at that investor day, we put out some specific, you know, call it five-year type numbers, 20% FRE growth on average. That will be higher in some years, lower in others, depending on, you know, what products are coming to market that year and their flagship and other things in there. But, you know, averaging 20%, 10% SRE growth. So our Athene retirement service spread earnings growing around 10%. We have a five-year ANI target of $15. And, you know, I wouldn't call it a target, but the output of all of that is about a $1.5 trillion AUM in five years. And so those are the, I'd say, the high-level, you know, destinations. What we need to do that is really just execute on the plan we're talking about. There's no real inorganic in that.
There's no, you know, fundamentally new businesses that we're not in today. It really is executing against the pillars we're talking about, growing, you know, continuing to grow and scale our origination, continuing to scale our capital formation capabilities around the wealth market and, you know, presumably, you know, doing a good job investing. So that's what we have to do, yeah.
Scott, one follow-up there. If you would announce a large acquisition or something sort of unusual, would that impact your targets? Would you have to raise your targets because of that?
Can I say no? It really, obviously, if there's a step functional acquisition, we'd have to revisit. I don't anticipate we're going to do step functional transactions, but if we find some bolt-on tuck-ins, does that, you know, move things around the edges? I mean, maybe, you know, you sharpen the pencil a little bit, but for the most part, if we do bolt-ons, it's to fill in certain gaps or accelerate what we would otherwise just be building out over the next few years, you know, in sort of capabilities.
So your biggest flagship fundraise is starting to come into sight. You know, maybe not the first half of this year, but maybe sort of 12 months from now. The last one you raised, this is buyout Fund 10, I think around $20 billion. You raise it in a tough backdrop. I mean, there's a number of factors, including denominator effect and sort of not a lot of liquidity out there. What is your thought on this one? Could this one be a lot bigger than the last one? Especially given the long-term track record that you have, that's very good.
Yeah, look, I mean, talking about Fund 11, just we are, you know, approaching, I don't know, 60% probably deployment in our current fund, Fund 10. So yeah, by the fourth quarter of this year, we'll probably launch, which basically means the bulk of the fundraise comes in 2026. The performance has been quite good in Fund 9, quite good in Fund 10. You're right. When we were raising Fund 10, it was right at the tail. You know, the denominator effect was going into play, but people were still sort of looking back on their paper profits that they had seen from growth managers and otherwise and felt pretty good about that. They didn't sort of like our, you know, Cassandra cries of like, you know, you guys are enjoying, you know, false profits here.
I think a few years on, it's become pretty clear that we had the right, you know, or certainly the right strategy at the right time, and there was more truth to what we were saying. So our performance has been quite good. And I do think there's interest. Like I said, you also have just the private equity allocations coming out from the forest, you know, into the sort of open air, and you're seeing that pick back up. So we're cautiously optimistic on fundraise, you know, expect at least as good as our Fund 10 and potentially a little bit better, you know. But I think too early to put a pin in what our specific forecast is, but, you know, we feel good about it. We feel good about it.
So this year, your FRE growth target's 15%-20%, a little bit below average because no flagship in there. Next year, you do have a flagship. I mean, that fund is a stepwise step up in your sort of FRE at that moment. So I think 2026 looks pretty good. Besides Fund 11, are there any other kind of sizable fundraisings that we should be thinking about the next couple of years, whether it be AAA or ADS or a drawdown like Hybrid Value?
Yeah, look, I think in this year we have, you know, in 2025, you have Hybrid Value getting raised. That'll be a nice step up from our last fund, I would expect. Beyond that, you know, a lot of our credit products have moved to Evergreen-type products, whether they be on the institutional or the wealth side. So you'll continue to just see dollars flowing in. We are leaning heavily into the fixed income replacement component of that. And so things like our Total Return Investment Grade product, our ABF product, I think you'll see some pretty big, I mean, it's not $20-$25 billion in a year type things, but you'll start to see those scale up in, you know, dollars raised this year and next year.
So, you know, in total, you know, we do expect when you add it all up, this year's fundraise to actually be north of last year's fundraise. And then next year with our flagship in it, it'll be even a step function, you know, above that.
So let's move into retirement. You know, Mark Rowan had this amazing idea more than 15 years ago, and he used the old AmerUs business out of Aviva to sort of create this, put a good matching team together with Belardi Wheeler, and, you know, that's done tremendously well for you guys. Now, since then, some of your peers have replicated your model. You know, arguably maybe only one has origination capabilities that are close to yours. But what's important now, I think, what are your competitive advantages in that model to sort of fend off competition?
Yeah, yeah. Look, I've explained this to some folks just this morning. You do have a lot of entrances into that space, but here's the thing. We have scaled Athene in such a way that it's really playing a different game than just about everybody else. Whereas, you know, we started life 15 years ago really as an acquirer of runoff. And that was because that was just a quick, easy way to buy a bunch of liabilities. Now, to be fair, even 15 years ago, Mark is visionary as he was. I don't think he anticipated what we would have been able to scale to today. What started to make that clear is once we bought some of these runoff books, we realized, hey, we're actually really good at this.
You know, this is, if you're buying the right type of liabilities, you know, and keeping them clean, not getting, you know, sucked into a whole variety of exotic things, then at the end of the day, you can hedge out much of the or all of the insurance-y type stuff, you know, the mortality and morbidity. And really, this is just a spread lending business. And we happen to be really good generators of excess alpha. And so if we run a really tight ship, we can do this job really well. And so we did that for a while. We grew. We grew by acquisition. But ultimately, we scaled our business to the, you know, $300-plus billion that it is today, making us a huge force. We entered, you know, a bunch of years ago the retail market.
So the ability to sell new annuities into the market, we became an attractive counterparty on the flow side. We, you know, we pushed into the PRT market. So we entered these markets that we're not dependent upon just buying more runoff liabilities. And in fact, most of our peers are still in that phase of their life. And we haven't done an inorganic at Athene in, you know, several years because, quite frankly, that's where the competition is. They've pushed relative pricing on that to a point where the returns haven't been that attractive from our perspective. And we can get much better ROEs from the retail market or the FABN market, you know, generating liabilities in other ways. We're now the largest writer of, you know, fixed index and fixed annuities, you know, in the U.S. It's been a phenomenal business for us.
But the magic, what we do and how we do it is, you know, a few simple rules: clean liabilities, efficient operations, and amazing asset origination. And that the last one being the large, you know, the first two are we think table stakes. The last one is what differentiates us from the rest of the industry. And we just feel like we've built such a broad footprint that it, you know, not to say that no one else can ever do it, but I mean, we are years and years, decades ahead of, you know, most of our competitors. And it will just take a long time. Plus, we're continuing to innovate, continuing to grow, continuing to find new places to originate. That's the secret sauce. That's what's allowing us to continue to write attractive, profitable business, you know, year in, year out.
So, you know, another competitive question, but some of your peers are out there with very high growth targets. And when they say grow, they're really focused on similar businesses of Athene, fixed annuities, fixed index annuities. Now, sales have grown a lot for this industry in the last couple of years because interest rates are higher. It's more attractive. We don't know where the 10 years go in the future. But as all your peers try to grow, how do you think about the risk of competition intensifying from here? And could that put pressure on ROEs or your spreads down the road?
Yeah, look, break that down. It took us a long time to build the retail position that we have today. Right? When we started life, we were a triple B, you know, player. We were on some small RIAs, but the likes of B of A would not, you would not sell us, you know, on your wealth platform. You know, today we are A plus rated. We carry AA plus, you know, capital. We are the largest, you know, the largest annuity writer now on most platforms like, you know, B of A, Wells, JP Morgan. So it's just, you don't just get to show up. You know, you bought some, you know, pool of liabilities. You know, you hire a couple of guys to start writing policies. You knock on B of A or JP Morgan's door.
Like, they're not just letting you in saying, "Great, we're happy to go." You know, that is a long, long journey. So on the liability side, sure, you always have to pay attention to what your competition is doing. And we're, you know, in addition to just being there, being big, being well capitalized, we also have amazing products, you know, that I think, you know, hands down are just better than, you know, competitors. And so on the liability generation side, we think we're, you know, pretty far ahead from others. And again, I'm sure a few will be creeping in, but most of our competitors are not pushing in that direction yet.
On the asset side, this is, you know, we're in an asset world that's not like, yeah, the insurance competitors are a small part of that, but this is, you know, a huge, you know, multi-trillion-dollar, you know, asset origination, you know, space that we're just, you know, continuing to innovate, continuing to grow. And like I said, the real value comes from being able to generate that excess alpha on safe assets. And that's what, you know, we do day in and day out.
So I wanted to pivot into the international markets. You have Athora in Europe. You have some other partnerships, including Challenger, FWD. Now, at this moment, I think excluding Japan, where I think things are going very, very well, the rest of those markets are a little more uncertain. And I know you've moved those stakes also to a different location. I'm just wondering, what's the state of the union in Europe and Asia? Can you really replicate this model and grow successfully there? Because there's different characteristics in each of those markets.
For sure. For sure. I mean, so in Europe, you have a different regulatory regime, which in some ways is almost opposite the U.S. one, which means you need different assets and different ways of creating excess alpha. We've done a good job sort of building that and building the capabilities to drive that. The difference also there is, you know, Europe is not Europe. Europe is, you know, 25 smallish markets, you know, small to medium markets. And so unlike the U.S., where you develop a killer app and then sell it, you have to develop 25 killer apps or, you know, five killer apps, you know. And so it just, the scale of the retail opportunity is going to be smaller. We're spending a lot of time now trying to really develop those products.
In fact, in Athora, last year was the first year where new, you know, new policies exceeded runoff for the first time in Athora's history. So we are moving, you know, the needle that way, but we're a long way from, you know, the juggernaut that Athene is on the retail side. That is still very much more a, you know, acquisition market. And there's still a lot of acquisitions to do. And so we're still pretty optimistic about what we can do over in Europe. And I think you will see some interesting acquisitions that Athora does. Asia, you know, is just even sort of years behind that market. And we're still in the learning and figuring out where we can play. You know, we've made, as you mentioned, a couple of footholds and getting to know the players in that market. We're doing a lot of interesting things.
Some of it may involve actually buying an insurance platform in a particular country. Others may be partnering with the local insurers to bring not only assets, but also liability construction and how do you create new interesting products that we can reinsure or we can do other things to help them grow their markets. And so it's, you know, this is a journey. Asia is probably a decade journey, which we're just on the front end of, but obviously an enormous market and one which, you know, we're going to find the right ways for us to bring our skill sets and be relevant there.
Scott, I have to hit on retirement because I think Mark Rowan is probably one of the earliest to talk about the opportunities for privates going into the retirement channel. So post the election, I wanted your thoughts on this. What do we need to see on the regulatory front first, and what could that open the doors to? And if we don't see that, you're still working on some things now, like in interval and trust vehicles. What could we see absent rulemaking from the Department of Labor to the SEC?
Sure, sure. And let's be clear, right? Like our whole industry has served the retirement market for 40 years, you know, whether it's on the insurance side, whether it's on the, you know, the traditional asset management, the fat part of our client base, right, was the DB plans, you know, the public and private, you know, pension plans. And so this, what you're referring to is, hey, does the DC market ultimately open up to alts, the 401(k) market, the DC market? That's a $13 trillion market in the U.S., probably $20 plus trillion globally. But just focusing on the U.S., interestingly, there's nothing law-wise that prevents alts to be in the defined contribution market. It's really market convention and, you know, the sort of principal-agent problem, right?
You have a 401(k) market that is basically you have beneficiaries of better outcomes, i.e., individuals, retirees, but they're not the ones who actually get to pick what their 401(k) looks like, right? You have companies and you have administrators that have been really driven by, you know, things like ease of use, complexity, risk of getting sued, education. You know, there are all these market conventions that have prevented, you know, and but if you think about it, you have $13 trillion of long-term money that's put away for 30 years being forced to invest in daily liquid products, right? Like it's kind of a messed up system. Like it's the wrong model. If you can earn an extra couple hundred basis points on that over 30 years, I mean, think about the trajectory of the retirement pools of capital.
So I think we're getting close to seeing that flip. We actually don't need a whole lot of like legal change. What you need is a tone at the top and some guidance from the DOL to basically indicate what they think is sort of should be in the norms of what these plan administrators could and should be looking at. And I do think you'll get some of that guidance out of this current administration. And that's really the crux of what we're pushing on and what I think the industry needs to see happen. But it is a huge unlock and one which I think, you know, sky's the limit, right? You have basically zero alts in a $13 trillion retirement portfolio. I don't think, you know, the answer is, oh, like Mrs. Johnson puts 100% of her 401(k) into, you know, XYZ private equity fund.
And I don't think that's going to happen anytime soon. But I do think you will see, you know, 5%, 10% allocations to a basket of safer alts, you know, more yieldy, maybe less volatile alts. Those are huge numbers that, you know, could come into play over the next, you know, few to 10 years, you know, that is just one massive unlock, you know, for our industry. In addition to that, right? And by the way, you're starting to see that even without any regulatory guidance, you're starting to see early adopters start to put little programs in place, see how it goes. But we'll see.
I mean, it's one of these things where it's the snowball effect where once a few of the administrators start offering alts, you're going to ultimately have, I think you're going to see everybody have to have alts in their mix in order to be competitive and win business. And so that's pretty exciting. But you're right. There are other things, you know, other new product innovations, you know, our insurance wrapped product that we've been talking about for the last 18 months is finally starting to show legs. I think this will be, I think you'll see a nice bit of growth in that product this year. You know, these are educational products. Like you have to educate markets, you know, because you're selling something completely new. But, you know, we're pretty excited about, you know, all of these new channels that are opening up.
I have one more question that we're going to open it up to the audience. But I wanted to talk about the potential for deregulation in the financial services sector. You know, for 15 years or so since the financial crisis, banks have had to give away a lot of businesses. They lost some people. And my entire coverage has kind of been a beneficiary of that. Do you expect some migration of that back? I know it's hard to put the genie back in the bottle in a lot of these. And I think Marc on the earnings call said something interesting. I think consensus was that if anything, you know, comes back, it might be more on the ABF side. I think Marc's view was corporate direct lending actually might be an area where the banks would compete more aggressively.
Yeah, look, I don't know completely. Look, at the end of the day, banks, most banks have figured out that with the advent of private lending, you know, direct lending, it's a change just the way when high yield came into the market, you know, 35-40 years ago, that was a change. It's not better, it's not worse. It just is. I think, you know, we've gone from a, for sub-investment grade, we've gone from a two-product market, bank loans and high yield to a three-product market, bank, high yield, and direct lending. I think there's generally speaking a right answer and a wrong answer for every situation. Sometimes it'll use a little bit of each. The difference with direct lending is you really need a balance sheet to be able to participate in it.
Banks, most banks have figured out that actually at the end of the day, folks like Apollo, we don't actually want the same things they want, right? A bank wants the corporate services, the treasury services, the M&A, the IPO advice. They don't necessarily want the underlying asset. That's what we want, the asset. We don't want all those other things. And so there's actually a symbiotic way to work together. And we've started to develop a number of banking relationships with banks to be the direct lender, you know, of choice so that they can go out and offer a bank deal, a bond deal, or a direct lending solution. And quite frankly, on the direct lending solution, they love it because they put no capital up, sharing some of the fees.
It's actually from an ROE standpoint as good as it gets, you know, from a bank, you know, lending situation. So I actually think the direction to travel is more in that than banks figuring out how to use a bunch of balance sheet capital to, you know, play in the direct lending market. That's not really where I'm. So at the end of the day, I don't think our part of the world is. I know a lot has been made in the press and otherwise. I mean, banks have lost a lot more profit from the Jane Street and the Citadel, you know, who have taken that part of the market, that market making, that trading operation and have, you know, lifted whole teams, brought sort of the best people.
And that's where you've, I mean, look at the profits of those platforms, you know, literally tens of billions of dollars, you know, that have siphoned away from the banking system and now live, you know, on those balance sheets. That to me is where I would suspect banks may try to start clawing, you know, some back to the extent there's any regulatory relief.
Great. At this moment, let's see if there's any questions in the audience. Please raise your hand and we can get you a mic.
You don't have to be shy.
Hi, thanks. I'm curious, for any of us that have lived through crises and been doing this for decades, and you go into the retail market, retail to a whole other investor base, you tend to have a whole higher standard to work, and when you have this much money and you think about, even if you can get into the defined, you know, kind of the plans, contribution, when there's that much money chasing, at some point somebody makes an error, so and then it takes everybody down, and what are the things, like, what do you worry about, right? As you go down the path and to retail and to growth and a lot of money chasing similar assets, origination, how are you thinking about that?
Yeah, look, that's a really valid point, and you know, certainly as we enter more retail markets, we're being really, we're trying to be really thoughtful, really cautious, and you know, bringing products that we think will give a good customer experience, a good client experience to that, but look, inherently investment products have volatility. I think we are trying to skew, and that's why you've seen, quite frankly, the more yieldy products take off first in this space because they're just inherently more stable, inherently. I think though, at the end of the day, we are still in the earliest days of this retail evolution, right, so I mean, I won't name names, right, but right, we had a competitor that got really massive, really early in a particular product, right? Right before rates moved.
So was deploying multiple $ billions per month in a market that literally was the most affected by rates and saw a 500 basis points rate move in a relatively short period of time. I think they ultimately gated their product for what, eight or nine quarters, something like that. But guess what? $ Billions per month are now flowing back into that product, right? So that's because of where we are on the curve, right?
We are so early days that even if you had a group of investors who had a horrible experience and said, "I'm never putting money in alts again," that's sort of a drop of water in the ocean of where fast forward 10 years when the retail universe has gone from like 0.5%-10% allocation to alts, then you might say, "Okay, enough people say, 'I'm never putting money with that manager again.'" But for a long time, I just think you have so much dollars that need exposure that even will accept a little bit of volatility to get exposure to this broadly defined asset class. Now, that's not to say somebody does something extremely stupid and really, you know, the one bad apple spoils a lot. Look, that's a risk.
You don't want to see such massive deregulation that it allows every, you know, Tom, Dick, and Harry to come in and do crazy stuff. That's why when I was alluding to the 401(k), I said, "I think you're going to see easing in. If you start seeing like literally you can put your whole 401(k) into, you know, a single private equity fund, that's a bad outcome." Like we shouldn't allow that type of extreme, you know, volatility into the system. But if you can, you know, allocate five, 10% to a blend of alts products, like that's a good thing. We absolutely should be, you know, should be going in that direction. And I do think that's the direction. We're going to crawl, walk, run as an industry, you know, into some of these markets before we get to just some of the extreme, you know, possibilities.
Any last questions?
Talk about Athene's financial growth in Japan. It's got a retirement system seem to be allowing.
Sure, so Athene is actually quite active in Japan. We have a number of flow reinsurance relationships in Japan. We have a lot of asset management relationships in Japan. I mean, Japan, you're right, is a massive insurance market. You know, we continue to invest, put more people on the ground over there. You know, I think we'll continue to grow there, whether or not we set up shop, you know, as an insurer in Japan, TBD. But certainly it is an area that's slated for more investment, more growth, more focus, you know, from us. We're already, you know, a multi-billion dollar per year, you know, flow, you know, relationship from that region.
I think with that, we are out of time. So Scott, on behalf of all of us at Bank of America, thank you very much for joining us.
My pleasure. Thank you.