Manulife CQS’s Soraya Chabarek on Credit, Succession, M&A Pitfalls, and What Makes Investment Firms Last

In this episode, I talk with Soraya Shabarak, CEO of ManuLife's CQS Investment Management. Soraya and I got to know each other through Zoom calls, which of course will come as no surprise to anybody, but we actually developed a relationship because she gave me a lot of time, skipped the can messages, and was just herself. Still meeting her face-to-face to record this podcast was a real joy, and reminds me just how limiting those on-screen interactions can be. If you want to understand the story of the financial world over the last few decades, Soraya was there and can tell you. Our conversation about her career arc will give you a glimpse of what it was like to be working with investing legends and during the times that have shaped what the industry looks like now. Most recently, Soraya led the integration of CQS, one of the great credit hedge funds. After ManuLife announced the deal to acquire the firm. She has an insider's view of succession and what's needed to keep people and clients to stay through a change in ownership. The story of CQS in ManuLife is instructive as a manager scrambled to acquire alternative investment capabilities. Now that growth has plateaued in the traditional world of just managing stocks and bonds. Listen in, Soraya talks about what's next for CQS, the investing opportunities and alternative credit, and while she'll look deeply into the whites of your eyes, if you want to borrow money from her, no more spoilers when you get to the end, tell me what you think. So Soraya, you've been one of the few female CEOs in the hedge fund world, right? Let alone alternative credit. I want to hear your story really from your vantage point during your career. I don't get as many chances to talk to women as men and so I really want to talk to you about that. Okay. Well, thank you, Julie. Thanks for having me. I think I brought the weather with me from the UK to New York because it is actually cold. But let me start at the beginning. I mean, I think anybody that tells you that they came into this industry knowing that they were going to come into this industry and planned it, etc. in our generation wouldn't be completely telling you the truth. I graduated in economics and I went to the city to get a job and actually I started in a bank where I was on a graduate scheme and they sort of rotate you around different departments and give you a view of what finance sort of looks like. And then I worked, my last stint there, I worked on a desk that used to select funds, right? So basically, and I came across an organisation called Permal at the time, which was today called Entrust and really bumped into my very first boss, if you like, who plucks me out of at the time HSBC, has had a complete influence on the forward of my career, gentleman called Omar Qadmani, who was at the time CEO in Permal in London and hired me as a salesperson. I was like, I think 21, 22, 23 years old, I don't remember, but in that zip code. And really just very, very early on, honed in on the importance of relationships, clients, how you conduct yourself, how you look after people and how, if you look after them, they look after you and just basic concepts. I mean, what do you think he saw? I mean, right? It is so interesting, right? Mentorship and how important. Yes, that is. And I'm sure he, you know, you know, how lucky that is. When I look back, I think he probably saw the fact that, you know, I was quite a determined, I was very, very determined at a young age and, you know, had a fear as well as a respect for failure. Could fail quite easily, but failed in equal measures, if you like. So he, I think, was brilliant at really sort of mentoring me, nurturing, you know, sort of a young person who had, you know, great ambition. And I very quickly, not very quickly, I mean, I was there several years and I got approached to join an organisation at the time called GLG, which you probably know as now, man group, by a gentleman called Norm Gottsman, again, a fantastic individual who I basically think I owe my career to, you know, really sort of identified something in me again. And to cut a long story short, I'm Arabic by background, so I speak the language, but I was brought up and grew up all my life, you know, the majority of my life since the age of six in the UK. And Norm, at the time, said to me, we want to enter into the Middle East. This is some, you know, 20 years ago now, right? Where very few women, yeah, you know, travelled out to the, to the Middle East and people always used to ask me like, you know, what is it like traveling to the Middle East? This was 20 years ago. And I used to say to them, it's brilliant. They're very warm people that receive me really well, that look after me very well. And it is again, about basically spending the time to develop those relationships, taking the time to understand what matters to them, how you fit into their world, etc, etc. So some of the building blocks that I'd learnt very early on at Per Mal sort of translated now into culture and differences of culture and how you can, you can sort of win hearts and minds in different environments. And they're clearly valued, I mean, in many ways for obvious reasons, but they really valued your background, right? It might not have been clear at first. It definitely helped. Yeah. I think there's nothing like, it's a bit like when we were talking, you know, Julie, I mean, Zoom has helped accelerate a lot of efficiency in our industry and in our businesses. But I don't think there's any sort of, you cannot replace human touch and human interactions. And I think being able to speak the language, understand the culture, I'd never actually travelled to those parts of the Middle East throughout my time growing up in London. But that affiliation definitely absolutely helps. But you asked me about, you know, being a woman and so far, I've described to you two stints within hedge funds, first a fund of funds and then, you know, at the time, one of the most popular and well-known hedge funds, you know, of its time was GLG. And I think at that stage of my career, because of the makeup of hedge funds and what they were, which were, you know, asset managers that were basically formed through lots of different people who came together because of merit. Right. So I never up to that point. I know every, you know, stopped to think about whether I was a woman or a man or, you know, because you didn't get hired that way at all into hedge funds. It was all about, you know, merit, what you were able to bring to the table, your difference of thought and how you could sort of move forward alongside the organisation. So just a brilliant start, I would say, a sliding-doll moment for me, where, you know, I was lucky enough to be brought into this industry. Yeah. You had those mentors. Just one quick question. It is very much a culture of merit, right? I mean, every day people can look at your scores, so to speak. Why do you think that there aren't more women in hedge funds? I mean, there's more now, of course, but what do you think it is in general? To your question directly, I think it goes back to, you know, education over time, right? Being able to really hire from the grassroots up, so I'm accelerating a bit now to where I am today, you know, when I first took over at CQS, you know, one of the first things I noticed was, you know, I was quite alone as a woman, you know, in our own organisation, right? And so one of the first things was really to try and change that through our graduate program, make sure that you are paying attention to that through your HR recruitment style, really being honest, and you can be when you're boutique and you're small, you know, with some of your portfolio managers, like actually pointing out something that they may not have actually even paid attention to, do you realise that you have very few women on your team? Right. Because now you're in control. Absolutely. And really not being afraid of those conversations, because sometimes, you know, it would come back to me and I'd be like, actually, maybe some of it has something to do with me as well. I, what I mean by that is I remember a conversation with one of my partners, actually, where I said, why is it that you don't have that? You're very good with me. We've worked with each other for a really long time, but it doesn't feel like you have, you know, you've just hired and you didn't, you know, of the three people you hired, all of them were men. Yeah. And he looked quite shocked at me and he went away and he came back and he said, actually, I looked into it and we didn't actually receive any CVs that were for women, right? So it tells you several things. Number one, as an industry, we need to continue to reeducate and to continue to talk about why it's a great industry to be in, why there's room for everybody, you know, who can add merit to the industry to be in, but secondly, it told me that I needed to take a few steps back and understand our hiring practices where we were dropping the ball, why hadn't we delivered the right CVs, etc. I mean, I'm, I'm, I'm describing in a very pithy way, but it is about having the honesty to recognise that you can, you know, make a difference. You can actually start talking to others about your journey and what you did in, in, in certain twists and turns. And I think where we started is actually the point, which is it is a lot better, you know, I think that it can continue to be better, right? But you, you have to have a balance as well. You have to think about it. Yes. Just thinking about it. Maybe not even measuring us as I've been thinking, yes, measurement, but thinking about it. I think that's the key. Yeah. I think measuring alone can sometimes be a bit misleading, because obviously large numbers are very different to small numbers of people that work together, but I think thinking about it and being quite pointed about it, I'm not being afraid of having conversations about it. Yeah. Yeah. I love it. So with CQS, so you've been there about, I mean, now you're on by many life, but it's been more than 13 years, talk about the beginning. I mean, the founder, Michael Henser, you know, recruited you to my understanding. Obviously you'll tell, you'll tell the whole story is to really think about succession. That is tough. I mean, big personality, the hedge fund world overall hasn't done a great job with succession. Talk a little bit about what he said that made you want to join and then the process. We've missed a small part, which actually is linked to what you're asking about, which is I left GLG with a gentleman at the time. It was quite public at the time called Greg Koffee, who, you know, in 2008 left GLG and I joined more capital with him. It's incredible when I sort of look back again at how fortunate I've been and I do say fortunate. I think you have to be very good, but you also have to be quite lucky in terms of the sliding door moments that you have, but you know, here I was, I'd met Omar Qadmani, then I, you know, worked with Norm Gotsman, and if you remember in those days, you had incredible personalities and incredible money makers and thinkers like Philip Jubber, you know, GLG, Pierre Lagrange. You know, I'm going to miss names out and feel bad later, but, you know, Manny Roman joined GLG again, you know, incredible opportunity to, I sat next to him on the trading floor for many years. You don't really see these things at the time, but when you think back at them, you understand sort of a bit of how you've shaped your own journey and what's, you know, shaped you. And then I arrived at more capital, you know, again, much more of a sort of institutionalized, you know, hedge fund, I would say, run by an incredible man, you know, Lewis Bacon, such a legend. Like a complete, you know, and a real gentleman actually, you know, is how I describe him. One by a lady called Elaine Crocker, who's really the backbone of a lot of what happens there, left a huge impression on me as well, you know, to see how she worked alongside such, you know, as you call it a legend. And I was there to really build out Grecoffey's business. And if you think about it, this is 2008 now, where nobody knew 2008 was going to come at us, right? Right. If you think about how high we were all flying in 2007, we'd actually gone public through a spack at GLG at the time. And then, you know, April 2008, you're in a completely different paradigm. So rebuilding Grecoffey's business within the platform at more capital was really the job. And we did that for the next four or five years, quite successfully. And then I think as public Greg decided to retire for a short while, you've seen that retirement up close. That's right. And, you know, and, and sort of, that was the first sort of impressions of, like, succession and what does that look like, you know, when portfolio star, portfolio managers stop or take a break or so on. And candidly, I met Michael, you know, he's now a Lord Michael Hincey. Yes. And good correction. Yes. And you're right. He's went through being a Sir and now a Lord. And he was somebody that just, you know, as as as brilliant as some of the other individuals that I've described with a real polymath type of mind. So very fascinating, a very big character, as you say, and going back to your question, when I joined Michael, to be fair, this was 2012. And his whole mission was, Siraya, I'm spoken to by, you know, consultants and institutions about how can I institutionalize, you know, how can I basically create succession planning? How can I solve for ownership planning? Because if I don't do that, then I'm not going to be able to, you know, sort of get onto institutional platforms and really change the makeup of my organisation. So that in itself is a is a is a pretty good recognition, right? Yeah. And to begin with, I sort of trotted off thinking, oh, what a great sort of mandate that Michael has given me. And within about, I think, three days, I came back and I said, Michael, I mean, I was very excited. But actually, I have to say to you, I am a massive believer that you cannot succession plan a man or a woman, right? Because if I could find somebody who's as great as you, who trades like you, thinks like you, who can sometimes be wonderful, like you aggressive, like you, etc. And I convinced that person to come and actually, I found that holy grail, first of all. And then I convinced them to come and sit next to you. You probably wouldn't get on for very long, right? And that's basically being the peril of hedge funds, right? And succession in a nutshell, right? In a nutshell, right? I'm a massive believer in it is to do with that journey that I described to you in, you know, staying away from that star culture, right? In building through people, rather than one person, platform, right? You know, the strength of a platform and what it actually brings to a culture that delivers that return and product, a diversity of product. Right. So when I arrived at CQS, you know, 13 years ago, so what it's a, now you missed a step. Yes. So what did my God, Lord, my God, say back to you? Well, I mean, to be fair to Michael, and I'm not sure if I'm remembering correctly, but, you know, he is a phenomenal trader, right? And traders like options, right? So he was very much like, well, why don't you go ahead and do that? And I can still continue to manage my hedge fund, right? And, you know, he was very supportive, but it's a good option to try and build, right? Right. And describing it to you like it's a straight line, Julie, it's never a straight line. Never worth it. I'm telling you the story because it ends well, but I think what we were trying to solve for is I think if you and I had bumped into each other 13 years ago and you were leaving CQS, you might have said to somebody in an elevator, well, you know, great hedge fund, you know, specializing credit and great founder, but they live and die by his performance sort, which was not particular to CQS, by the way. That was what basically hedge funds were, you know, back then. And the key was, how do you diversify? I don't want to say it away, but diversify alongside your founder. And so for us again, it was a real sliding door moment. I don't think anyone does anything alone or has a vision alone. You do have to have those sliding door moments. We bumped into them, we were incredibly fortunate to do this. A very large global consultant, Mercer, who supported us very early on. And they basically came to us with the idea, which by the way, some of the most of the best ideas and most of the best products we've ever worked on have always come from the client for obvious reasons because, you know, they are. That's right. So basically, they said, look, we've got a theme and the theme is that pension funds, and this was particular to the UK at the time as well as, you know, globally. But, you know, if you remember, we were in a QE environment where rates were at zero and pension funds are hungry for yield, right? So in a world of zero rates, you know, we think that by combining different credit strategies, now called multi asset credit, right, as a sector, we can deliver those, you know, repeatable returns. And that was definitely an ecosystem that existed at CQS. It was really the ability to take how a hedge fund works. And what I mean by that is like thinking outside the box, being highly, highly, highly selective in the credits that you pick into your portfolio, not really worrying too much about benchmark hugging, being very, very disciplined in being in the right asset classes, the right sectors, the right geographies, right? Right, right. And to do that and to achieve multi asset credit, I mean, the name says it. It means that you're working with more than one person, you're working with a head PM that delivers global loans, both US, Europe, a head PM that delivers high yield, convertible bonds, ABS, today we're in regulatory capital, CLOs, et cetera, and combining that into a multi asset credit fund that delivers that risk free rate plus a spread. Got it. So it's like, yeah, by default, you had a team that also met like this, this incredible need at the time. We already had, if you like, the ingredients that were there through the history of 20 years plus of underwriting credit, right? And so it was a question of how do you deliver that to the client and how do you deliver that to the client need? If I fast forward to the question of succession, it cannot be one or two people's idea, it has to be a village has to come together, I think, and I was hugely lucky in the two partners that I have today. To be fair to them, Jason Walker, who looks after what I would call semi-liquid alternative credit platform, so ABS, CLOs, red cap, et cetera, has been managing structured credit through himself and his teams now at CQS for 17 years, right? He's worked with Craig Skordellis, who really looks after the liquid side of our business, which is the credit multi-asset, and so on, that I just described. He's been there some 16 years, and I'm not just the youngest by age and beauty, but I've been there 13 years, so you've got three of the leadership team having worked together for a really long time, having made mistakes together, survived those, got stronger, and really, really just have got like a massive belief in sticking to our knitting, like we're credit investors, let's do that really well in the credits that we understand and we know how to navigate in markets that we understand and we know how to navigate. And that history and that know-how matters, I think. Oh, that tenure, working with someone for a long time, working with people just informs you in a way that you can't really expect, right? Agreed, yep. Yeah. So after all this, you're obviously a boutique, you're independent, there's challenges, but probably a lot of advantages. I mean, talk about what led then to the deal with manual life, and kind of how you thought about it. I spent probably 17 months of my life with bankers, lawyers, trying to look for the, quote, but perfect, you know, parent, right? And they're, you know, very quickly through that process, you learn several things. Number one, you learn what you don't want, which I'll have to talk about, which is important, right? If we fast forward to where we are today, I think we made a very, very good marriage with manual life. And the reason is to do very much with how much time we spent together through that 17 and 18 month period, right, really getting to know each other, getting to understand each other's cultures, getting to appreciate each other's cultures, and appreciate the differences between each other's cultures. And I think the reason it worked well with manual life was very much to do with the fact that they loved what we brought to the table, which is differentiated product. If you think about who manual life are, they're an insurance, one of the largest insurance companies in Canada, with a very serious investment management arm called manual life investment management, which is what owns, you know, CQS. And they are very much, you know, in the public market, so fixed income, public equities, you know, have got a longevity of history there and great performance. And then on the other side, what I would call private real asset markets. Right, like timber, like agriculture, etc., real estate, so on. Both are very synergistic to what we do, but we fit right in the middle of those two, you know, wedges, if you like, so you were competing with other strategies on the platform. So that was, you know, number one, number two, I think, and just as important, was the fact that they appreciated our DNA, our history, our culture, and how we work together. And so they've allowed for, you know, that senior leadership team to stay, you know, in intact for our investment autonomy to stay intact. Basically, put in layman's terms, what's brought us here over the last 20 years in terms of how we deliver performance to clients, how we construct, you know, portfolios for clients is kept intact. So I think that's basically at the heart of our successful marriage. I think some of these deals sometimes don't work when, you know, it's a bit like two people getting married and then deciding that, you know, the difference is a too far apart. Right. Right. This is about a marriage of, you know, I think a lot of shared values, which are, you know, clients, we actually are very similar in culture in terms of how we come about building our businesses and so on. But the best way I can describe it to you is we've remained a boutique credit specialist, but within this large, stable, deep asset manager. So you try to worry about distribution, necessarily, you get seeding, you get all these other things. So by virtue of the deal, you know, they unlocked what is historically, you know, the conundrum for a boutique manager, I've got a great idea, but I don't have the seed to actually make it happen. And you know, Manu Life can do that and they have done that. So, you know, you touched on a point of distribution for a boutique manager again when you're left alone, you're very good at managing money, but you're not necessarily very good at distributing, you're not very good at reaching the right client base. So retail and wealth management is a big, you know, a theme now for alternative credit. Manu Life owns on Hancock, you know, they're very large in Canadian, wealth and retail. They have a wealth of history. They've been in Asia for a hundred years. Those are all barriers to entry when you're left, you know, as a boutique manager alone. So having that is very, very important. The other bit that I think people miss, which we've really begun to understand about each other, which I think is a great thing that Manu Life has brought to us, is actually in how we access paper and how we access credit. So we'll probably talk a bit later about red cap, right? Right. Where it's done on a sort of a bilateral club deal basis, etc. So you want to be, you know, that asset manager that gets the first call that's able to actually join into these deals, etc. And we have historically been there. We've been in the trade for the best part of 11 years. It was born in champion banks in Europe, etc. But it's now expanded into areas like the US, where regulators have signed off the red cap sector network, right? And in Canada, right? So if you're a boutique asset manager, no matter how great you are as an investor in the asset class, your access is not as powerful as when you actually turn up to a champion bank in the US as part of a very large insurance company, where there are large relationships, historic relationships, and dealings, etc. So really we're beginning to see a lot of value from that. So I've over labored the point, but I'm talking about a situation where we've been able to continue being true to ourselves, which is deliver income, income, income to clients. I haven't really described what our platform looks like today, which I hope we'll get. But we're able to do that now with a lot more tools and sort of patient capital that gives us the ability to continue to deliver those returns for clients, but it's just the beginning. So it's only been 18 months now, I know. I know. We're sitting in this chair as an 18 months in the future and talking more, which is great. So talk a little bit about the distribution, and I want to talk about SRTs and regulatory capital. Talk about private wealth, right? The opportunity there. I mean, obviously, the industry, you know, that's a huge, huge topic for alternatives firms, you know, industry-wide. Talk about the opportunities and what you've done. So it sort of takes me back to where we started, which is sometimes when you're left alone boutique firm, you don't necessarily know how to enter the private wealth or retail market, right? And even when you do enter, you don't really have the know how or the boots on the ground or the cultural affiliation with that sector to educate and to onboard your product and so on. So for us, you know, we feel really privileged being part of Manu Life, you know, they, as I said, they own John Hancock in the US and have been, you know, deep in the roots of that for a very long time. So that's one thing. The solution is one thing, but a lot of the things that people miss sometimes is also product and how you put product together. And like I said to you, boutique managers can be brilliant, brilliant portfolio managers and deliver brilliant returns, but are not always at the forefront of how you structure the right type of product to deliver to that particular client base. Right. Right. So it really is. And, you know, in some of these larger organisations that Manu Life is just second nature. They have an entire product team that, you know, do these things. So we're really fortunate, as I said, you know, our multi-acet credit fund is now available in interval format for retail distribution on different platforms. And what is the interval format? So, it's, it's, it's, onshore, it's an onshore vehicle for the US market. And if you'd asked me the same question over two years ago, I, I hadn't even heard of an interval fact, right? Right. It's, it's, it's a way to deliver alternative credit into the US domestic market, retail market. And it's, you know, it's really how we're positioned on the John Hancock platform and, and other platforms that we're in that market for. So we're doing that for our Mac fund and we're also doing that for our ABS fund. And to be fair, like the liquidity of the interval funds that tend to be quarterly or, you know, monthly, et cetera, match what they are for our institutional format. Right. Right. Now is true. Right. That's not always true, which is why I mentioned it. Yeah. So it was an easy step forward for us, you know, our multi-acet credit fund that's got a 13 year track record is monthly 30 days, right? Yeah. So actually the interval fund gives you even more room, you know, in terms of it being monthly, but, you know, with, with, with quarterly liquidity. It's the same for our ABS fund. So I think that the space that we're in at CQS, which, you know, as I described is that liquid alternative credit and semi-liquid alternative credit, marries quite well with interval structures. So talk a little bit about regulatory capital. I think that's also available to private wealth or maybe, maybe not yet. But talk about your capabilities there because obviously it is a very niche area. Yeah. Or a complex area, I think competition is increasing, but talk about what it is. Let me first of all sort of describe the platform that I talked to you about first, right? Because it will feed into why I think we've got a right to win in regulatory capital. So the multi-acet credit platform that I described to you globally were 120 people. So we're, you know, as a unit, we're not massively large, we're not massively small. Yeah. So what I describe that is because I think that's part of our magic, if you like, you know, the ability to be nimble in our communication, the ability to understand cross-correlation between different asset classes that we manage. But ultimately, it's also a mantra that runs throughout the whole of CQS, which is we're just there to do something quite simple, which is deliver income, income, income, right? You know, let's just not forget that. Like credit is lending. Right. A lot of people use acronyms, reg, app, SRT, ABS, loans, you know, you can go into like the sub-sectors as well. But effectively, it's all lending, right? And when you lend, what do you look out for, right? You're lending so that you get an income, which is interest that you're being paid by the companies that you're lending to. And if I were to lend you money, Julie, I would be looking into the whites of your eyes to find out if you were going to give me my money back. You're going to stay solvent, you know, what are your practices like, what's your management like? And do you have enough cash flow to continue paying me my income, right? And that's effectively as simple as it is. I mean, the portfolio manager is listening to this, we'll say it's not that simple. Yeah, that's right. Yeah, that's right. But our job is to deliver income repeatedly in a stable way, because income itself creates a real fantastic buffer, right, for volatile times. And if you can compound that income and stay rich, if you like, with that income, you do that by avoiding defaults, right? And how do you avoid defaults? You avoid defaults by doing what I just described in a very layman term, which is that fundamental that's right. Yeah. To do the fundamental bottom up work, like, am I lending to the right companies? Am I in the right sectors? Am I in the right geographies? And for us at CQS, we tend to stay in developed markets. And that goes back to, you know, our mantra of like stick to your knitting. Yeah. Do stuff you understand. Do it really well and continue to get stronger and stronger at it, right? Yeah, yeah. And so for us, it's really all of our portfolios are global. But we tend, we have tended to have a bias towards Europe, and we can unpack that a bit later. Yeah. It brings me to the red cap story as well. And why? Because we're constantly trying to identify the relative value between being in the US versus European names, in different sectors, in different tranches, et cetera, et cetera. So why do I describe that platform to you? Because that platform, you know, is made up of 50 front office investment, you know, people. And their job every day is how do I find companies to lend to that will pay me good levels of income? Right? Right. And I mitigate the risk of, you know, defaults. I'm going to use a quote that one of my partners uses Craig's cordiality always says when you invest in credit, you're less of a PM and more of a risk manager, because when you're investing in equities, you're sort of looking for those top five performing equities to outperform, right? Right, very tough one. But when you're investing in credit, you're trying to look out for those bottom five, you know, defaults or bad companies that can erode your income. So our job is to really, basically, consistently make sure that we're delivering income and avoiding defaults. Right. Credit people are not always the life of the party, right? No, exactly. It's a very quiet office. Right. Right. Yeah. I also really, I do get to get to appear into the way your mind works too, right? And perhaps mine. But I love when you take me back, like what I'd first like to point out, you know, is this as I race ahead. But I do, I do really see that. So racing ahead to red cap, let me just touch before we do on the idea of where we are, you know, in terms of like, I talked about relative value between the US and Europe. If we stick to, I'm still talking about the public market side of our business, two-thirds of what we do in multi-acet credit across those asset classes I described is in floating rate assets. Right. So those are credits that pick up the local interest rate of their market, you know. Right. Right against inflation. That's exactly right. Short duration, you know, and the reality is is that I always joke again with our CIOs and I say, look, you're in floating rate assets, right? I mean, I don't think we need to pay you this year because you get out of bed and before you even brush your teeth, you know, you're being paid through the risk-free rate, right? Which today, you know, is four, five percent depending on where you are in the market. Right. Right. And so actually your job is to deliver that extra five to six percent from selecting being very, very highly selective with the credits that you put in your in your in your in your portfolios. Right. So it's a really long way of saying, you know, you're being paid very, very well over the risk-free rate from credit today, from public credit. And then you can do other things like identify relative value that I talked about. So I've said that we're global in nature and we've lent towards the US versus Europe over time and so on. But if you look back at European credit in all the asset classes that I described on a one, three, five, ten year basis and our multi asset credit goes back some 13 years so you can even go back 13 years and you pick an asset class. And this is true of most of the ones that we invest in, like loans, even on an index level over the last 10 years, it's out, you know, in Europe, it's outperformed its US peer index to the tune of about one, one and a half percent per annum. Right. Which in our compounded basis is an outperformance of 20% over that period of time, right? So it's, you know, and that's true of, you know, ABS, it's true of high yield. So, you know, if you take that out performance and then you overlay it with being highly selective so really avoiding those areas of default and so on. And then you look at the default rates that occur Europe versus the US, you know, Europe over that period of time has had a historical default rate of about one to two percent. The US is reaching four to five percent, right? So it's a really long way of saying the reason why we lean more into Europe, a lot of people assume it's because we're English and we've, you know, we've got these accents and so on. It's more to do with the fact that you can get higher return and take less risk. Right. So what a great opportunity for, you know, for our clients. And those are the things that we try on history. Yes. And doing that as well. And thank you for saying history because history is sort of what brings us to Redcap. So, Redcap, some people call the asset class SRTs, sits under our structured credit umbrella. So we've been in structured credit for the best part of 18 years now under, you know, Jason Walker as I described in his team. And Redcap is a strategy that was born in the GFC era when regulators went to banks and said, look, we're going to make it quite punitive for you to lend. And Redcap is an asset class that basically allows the treasurers of banks to relief capital from their balance sheet so that they can lend more to businesses they have. Right. Right. Whilst still being, I mean, maybe it's something you can comment on, which is like, whilst still being prudent, right? Yes. And this is not a, you know, a way to kind of get around those things. No, no. Absolutely. It's what I would call regulatory arbitrage versus economic arbitrage. So it's actually driven by a regulation, an anomaly that's happened through regulation, where by risk sharing, the bank risk sharing with asset managers like CQS, they're able to create higher return on equity for their shareholders, right? Right. Right. And create that, that relief to be able to lend more to existing businesses of theirs. Right. Right. It's a risk sharing. It's sharing the alignment of interest as well, which I think is important. And the underlying collateral of, you know, the red cap tends to be an average investment grade. Well, one thing that I think is interesting is, I mean, obviously in Manu Life, you brought this up several times, right? As an insurance company. And I think of how, in many ways, the asset management industry was really born from the insurance world, because insurance companies needed, you know, firms to manage the assets on their balance sheet. Yeah. Now, I know, you know, there's been spin-offs and, you know, things recombine and split up again all the time. But it is really interesting, especially given how, you know, the big private equity firms and others really have done some, you know, complex and interesting deals to get into insurance, right? A lot of them have different strategies, buying an insurer, buying part of an insurer. But here you have, you know, your own buying insurance company. How do you think about that opportunity and how you could do it, perhaps differently, you know, or in a similar way? Because I do think that there's a huge opportunity in that. If I talk to alternative credit, it's effectively, you know, long-term patient investing. You're basically trying to, you know, as I said, identify the right companies to deliver that income return over a patient-long period of time. And that really goes hand in hand with how insurers think as well, I think, number one. Number two, I think it's insurance companies are bringing in alternative credit in different shades of gray because it's a differentiated asset class to what they already have. And, you know, the augmented, if you like, rate of return that you can get by entering, you know, alternative credit is definitely attractive for insurance companies. And it's very attractive to investment managers like ourselves where you can partner with your clients alongside patient capital that comes from, you know, an insurance company. Stickly, right? Yeah. Right. And so I think, you know, interests are aligned with clients. So I think that's a very, very positive, you know, thing. And you touched on it. You know, some of the largest asset managers have shown what you can do if you do it in the right way when you come together, when alternative, you know, asset managers come together with insurance. But it goes back to being, you know, sure about, you know, your cultures and your aligned interests and where you want to sort of get to together and, you know, we feel quite lucky with where we've landed. Well, that's great. I do think, you know, we'll have to book the studio for a couple of years in a while. Okay. Now, thank you so much for doing this really great conversation. Obviously. No, we've kind of gone longer. You have to come and do this in London next time. Oh, yeah. Yes. You're right. In your office. No, that's great. No, I love it. I love it. Thank you so much. And thank you for having us to talk to you in real life as they say. Thank you so much, Julie. It's really nice to talk to you as long. Thanks for listening. I'm your host, Julie Siegel. A conversation with Julie Siegel is produced by Deeanna Chapman and I'll always check out institutionalinvestor.com for more. [BLANK_AUDIO]