So I think that getting movement out of the short end to further along the curve is still back to when there’s conviction that we are at peak Fed funds. I guess in terms of private credit, you know, there’s — a few years ago, you know, we spent a lot of time educating wealth about the tax efficiency of preferreds and their yields. And, you know, some of the movement that Joe talked about on certain investors looking more towards private credit, of course, number one, those were investors that can handle illiquidity, so those were institutional investors. Number two, preferreds are much more tax efficient than private credit. Those were institutions that I imagine didn’t have the same after tax view of comparing, say 9% in private credit versus a 7% in preferred.
So as you know, the vast majority of our AUM within preferreds is in our wealth-facing channel, where, frankly, the tax-efficient yield has been a very powerful argument. So I suspect we will still have some comparison versus private credit and preferreds over time but it’ll depend as I said on is one having pre-tax view and after tax view, that kind of thing. I hope that helps.
Adam Beatty: Yes, absolutely, excellent, appreciate that. And then a little bit more maybe strategically, your commentary around target date funds and the 60-40 allocation and being broadly under allocated to real assets was pretty compelling. So just wanted to get a sense of how you’re thinking about long-term, you know, how Cohen & Steers can play into rectifying that, whether it’s, getting on retirement platforms, getting sleeves in target day funds, or other elements of your strategy. Thanks.
Jon Cheigh: Well, obviously, we try to spend a lot of time educating, whether it’s the record keepers, the target date managers, or the end investor on the importance of real assets. To be honest, for the end investor, I’m not sure they’re always looking at their underlying exposure in their target date. So I think, we need to educate on all three of those levels. Again, the end investor, the 401(k) committee of a given company, the record keepers, and the managers. So, you know, we’re going through that education process And we’re going to keep doing that. You know the way this goes that I said that five years from now or 10 years from now, one of those groups will say, why didn’t we do a better job? I talked about how over the last three years, if you just had real assets, you would have done 50 basis points better with lower drawdowns and volatility.
It may not seem like a lot, but again, target dates, when you’re talking about 10, 20, 30, 40 years and you’re compounding that, you know, you’re talking about, [4.2] (ph) versus [4.7] (ph), you’re basically, it’s like saying, you’re improving your return 12% and you’re compounding that. And so that’s an education process that we continue to have. You know — and we think over time there will be more success, but frankly, there needs to be some –. There probably needs to be some — I don’t want to say pain. What I would say is some remorse before there’s more action taken on this. I would say at the end of 2022, when the 60-40 did very poorly, a lot of people said, well, talk to me about real assets. At the end of 2023, when the 60-40 had a much better year, people thought, you know what, maybe that inflation was just a blip.
It was a moment in time. I think that towards the end of this year, there’s going to be more people saying, you know what, inflation goes in cycles, as it goes higher. It goes lower. It goes higher. That’s the lesson of the [70s] (ph) and its others. It needs to be part of my strategic allocation as opposed to I wish I had in 2022. So anyway, I think that’s the acknowledgement process that we’ll go through over the next 12 months.
Joseph Harvey : But I think broadly, just to add to that, it’s education of asset consultants, plan sponsors at this point in time, and ultimately to a lesser extent that the end users but it’s also having the right vehicles and having an ability to customize — customized strategies at some point. So with our mutual fund and with our – we have a collective investment trust or CIT, those are vehicles that are designed for that — the end user. And over time we could end up with some vehicles that will help us customize for different plan sponsor needs.
Adam Beatty: Yeah, that all makes total sense. No, I appreciate it. That’s all for me today. Thanks.
Operator: And that concludes our Q&A session. I will now turn the conference back over to Mr. Joe Harvey for closing remarks.
Joseph Harvey: Well, thank you, Abby, and thanks everyone for listening, and we look forward to talking to you next quarter.
Operator: And ladies and gentlemen, this concludes today’s conference call. You may now disconnect.
