Alex Ambroz

But from an allocator's perspective, not just trusting what the fund is saying and trusting what the team is doing, but also their ability to continue to withstand that illiquidity.

That is a spicy question.

That's a great question.

I'll give you a simple answer to it, which accounts for a huge swath of them.

Number one, they're not allowed.

It might be written into their legal documentation, usually their investment policy statement.

that any type of borrowing at the institutional level.

So they recognize that there's a lot of leverage in a lot of the underlying investment strategies with which they're working, but borrowing for any purpose at the institutional level is almost not allowed.

This is usually also reflective of the fact that a lot of institutions, so think of healthcare foundations or university endowments, they may already be in the debt markets themselves.

And that debt market borrowing

They're usually so, for example, a health care foundation may put out a municipal bond and they're getting a decent credit rating because they, as a sophisticated business, have very good credit quality.

And so therefore, they're able to borrow at great rates.

But that's for the institution themselves.

The endowment or the foundation pool for our health care system may be a large part of the balance sheet, but.

the institution may be precluded legally from borrowing on that part of the balance sheet.

The other side of it, in all honesty, is, you know, a lack of exposure in borrowing from that part of the portfolio or thinking about borrowing from that perspective of the portfolio.

Because of an understanding that historically crises, when they happen, you know, bubbles, when they pop, almost always don't pop because of valuations.

Bubbles almost always pop because of leverage.

And if your underlying investment portfolio already has some baked in leverage, adding more may be detrimental, may be adding a little bit more risk for quasi incremental return.

It feels like we've moved to this new normal of large private companies with billions and billions of dollars in revenue, established companies with hundreds, if not thousands of employees.