Speaker 0:
At the start of the year, we talked about the the Concentric circle framework and the idea that uh we'd likely see a bit more volatility on, on things like the outer rings, essentially higher risk assets. Uh How is our thinking evolved? Given everything that's transpired over the, the last couple of months?

Speaker 1:
Yeah, it's a great question, Ken. Um you know, first of all, you know, in these sort of uncertain times or radic or even radically uncertain times, having a proven framework is definitely a benefit with regard to the concentric circles. As we look back to 2022

Speaker 1:
the middle of the circles overnight rates repo central bank official policy rates. That was the capital, the source of, of volatility for markets. We think as the central bank tightening cycle continues to mature, eventually slows pauses or in fact ends that volatility is

Speaker 1:
subside and that is gonna create opportunity at the center of that, that universe, the center of the concentric circles. We're still very cautious about the outer rings. We're we're entering a really dangerous part of the economic cycle and those outer ring assets are very economically dependent.

Speaker 0:
A question that we get a lot is uh when you look at front end yields, why not just send in cash at this point in time?

Speaker 0:
Uh If you think about, you know, maybe a solutions perspective, uh how should investors be evaluating the fixed income opportunity set and really the benefits of bonds at this time? The

Speaker 1:
simple answer is you're getting pretty attractive all in yields on 2345 year duration, intermediate high quality bond portfolios. And so if you're getting those attractive yields as a starting point in a more uncertain environment,

Speaker 1:
why wouldn't you want to lock them in for some period of time? Cash is a zero duration asset, which is great when interest rates are rising because you get to reinvest. But the problem is when the cycle turns and interest rates begin to fall, it can go away real quickly, that yield, that level of income can

Speaker 1:
go away very quickly. Versus again, that intermediate opportunity set where you can lock in pretty attractive yields at these levels. Question 2022 was well, what is there a diversification benefit or are correlations permanently impaired? In other words, bonds go down, risky assets go down and there's no where, where to hide.

Speaker 1:
I think the events of March have reinforced once again that there is a diversification benefit for owning high quality fixed income. And and again, my sense and I think our sense is that those correlations remain intact and that owning um uh again, intermediate or long duration bonds will once again provide that diversification benefit. So the simple answer is avoid reinvestment risk, lock in good levels of income yield. Um get yourself set up for the potential for capital appreciation.

Speaker 1:
And of course, the benefit of diversification, the opportunities are coming to us. I think it's a call for action. Uh I think we're getting to the point where there is a call for action that, that both on the public side now that yields have reset. Uh And we have that benefit of diversification again. Um Combined with the growing private side opportunity, there is a call for action to deploy capital and that would be my advice to investors over over the cyclical time horizon.