Chapter 1: What is the main topic discussed in this episode?
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Subject to credit approval, Apple Card issued by Goldman Sachs Bank USA, Salt Lake City branch. Terms and more at applecard.com. Bloomberg Audio Studios. Podcasts. Radio. News. I want to get right to our first guest. Conor Teske is Chief Executive Officer of Brookfield Asset Management.
They've got over a trillion dollars in assets under management, touching into many different parts of the investment universe. And he joins us here at Bloomberg Invest. Nice to have you here with us. Thanks for having me. It's been a while. And you now officially are CEO of Brookfield Asset Management. What's changed in your life? Very little.
At Brookfield, we run a lot of businesses around the world. We like to run those businesses well. We like to run our own business quite well. And full credit to Bruce and the other senior leadership team. This was a very thoughtful, methodical, incremental transition. Well telegraphed. Nice to get the announcement out of the way and just back to business as usual. All right.
So that went as expected. But the world is kind of crazy, to say the least. And I think about the volatility we see as a result. We see it playing out to some extent in the markets today. But we do have an environment macro where things can change pretty dramatically, as we saw this past weekend with U.S. and Israel, the attacks on Iran.
So I'm just curious for you, is it too soon to rethink kind of strategies at this point? Like what will it take to maybe say we've got to start rethinking differently about the macro? We're very long term investors.
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Chapter 2: What insights does Connor Teskey share about his role as CEO of Brookfield Asset Management?
We focus on long duration assets that are essential and critical in the communities and businesses that they operate in around the world. And these are assets that produce cash across a cycle. They're downside protected. They're inflation linked assets. So we will take a very, very long-term view.
And despite the headlines over the last weekend, our focus is on our people who are safe and our assets that are operating. So we continue to look forward. And the fundamentals for the key themes we're investing in continue to be positive. Does the geography change at all? And I bring that up because data centers, energy, infrastructure, big investment play for you guys.
You teamed up with Qatar Investment Authority on a $20 billion venture to invest in AI infrastructure. How does the war with Iran, the instability in the region, does it change that specific investment at all? It does not. And again, when something like the past weekend happens, the focus is on our people who are safe, both at Brookfield and our portfolio companies.
And then our focuses are on the assets. And those are all performing. When you think longer term about our focus on the region, it's an incredible region. It's got very significant growth. It's got an increasing presence on the world scene. Those are the types of asset classes and geographies that we want to be investing in long term. Could this make the region even more attractive?
Is there an idea? I mean, look, the president spoke from the Oval Office today. It's obvious that there's not a clear person who is going to take over for the supreme leader or with regard to Iran's leadership at all. Nobody knows what's going to happen. But is there a chance that Iran becomes a more stable force in the world and that opens up opportunities for you in the region?
I would say when we think at Brookfield in the types of things we invest in, they tend to have durations far beyond single administrations, political parties, individual leaders. And therefore, we focus on the fundamentals. And when you think about things like data centers, like energy, the two you just mentioned ā the fundamentals today are better than ever before.
And that's what's going to drive our investment decisions. Connor, one of the things that we love talking with you guys specifically is, I mean, I think about Brookfield Asset Management. You've got $273 billion in assets under management when it comes to real estate. Infrastructure, $247 billion. Renewable power transition.
This is something that you have been overseeing for a while at the company. $143 billion in assets under management. Credit, $363 billion. Where are you seeing, though, any signs of stress? Are you going to tell me the whole portfolio is fine? So I think the topical one today is credit. And the first thing we would say is everyone needs to take a step back.
Credit, private credit, and direct lending are almost used synonymously in today's market, and they represent very different things. Our view is credit markets are actually in very good shape.
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Chapter 3: How is Brookfield Asset Management navigating the current economic volatility?
Corporate balance sheets are strong. Banks are great. Capital markets are incredibly liquid today. Then you can move to private credit. Our private credit focus is on three things. Asset-backed lending, real asset lending, and opportunistic credit. All of those are seeing very strong fundamentals. And then there are some concerns in direct lending today.
And there are concerns about tightening credit spreads, corporate credit quality deterioration, maybe some concerns about liquidity. It's important to recognize that direct lending is a very small component of the broader credit markets. So, but are there any situations that your guys are concerned about or no? I understand it's a small in proportion, but.
We've positioned the business really well over the last few years. And we've been very cautious and incremental about our exposure to the headlines, the themes that are dominating headlines today, whether it be software or retail funds. Well, we have some, it's de minimis. What's more important is we've positioned our entire business to be a net beneficiary from AI penetration.
And then the other exciting thing for us is we've recently announced our full partnership with Oak Tree, a very contrarian credit investor that's extremely well-placed to go to work in this environment. We'll get to Oak Tree in just a second. One more on credit though, outside of your portfolio and when you look across the credit landscape, what gives you pause?
Not Brookfield's assets, but out there in the environment. In the environment today, I think the thing that we look at is sometimes there is issues with underlying credit quality and sometimes there is issues about liquidity in which these credit investments are held. And those two things are very different. And in today's environment, they're sometimes being conflated.
There's a lot of talk about perpetual credit vehicles. We think these vehicles long-term are great. They offer a unique private market exposure to a wider spectrum of investors that can offer diversification, that can offer growth. But those vehicles are perpetual in nature.
They need to be managed, they need to be invested appropriately, and they need to be executed in a way that is thoughtful given the liquidity requirements they will have over time.
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Chapter 4: What long-term strategies does Brookfield employ in response to global events?
Your understanding and Brookfield's understanding of the financial markets, this push to kind of spread those things like private credit to a wider investment pool, if you will. Do you think that still makes sense? Absolutely. Absolutely. Private markets offer an incredible opportunity for investors of all type. It gives them diversification versus what they can get in the public markets.
It can give them exposure to some of the most exciting growth themes that are sometimes difficult to get in public stocks and bonds. And historically, private markets have offered a premium return.
It comes down to a very simple fact that when they are offered to the individual investor, it needs to be through a structure that is well understood on both sides and is managed appropriately from both an investment and a liquidity standpoint. So understand it's not liquid. So understand what you're investing in.
Understand, and there is an onus on the manager to appropriately manage those vehicles. I'll tell you from the Brookfield standpoint, we've been very incremental and thoughtful of our growth in this space, at times restricting capital to avoid any situations that there could be a liquidity crunch. Can we squeeze in one real quick one, about 45 seconds or 60 seconds?
On AI in terms of the data center build, what do you continue to see and has anything changed versus what we've seen in the last six to 12 months? You're starting to smile, so I'm assuming no. It's exciting. And the reality here is the demand is being driven by the largest, highest quality credit counterparties, the best corporates in the world. So nothing's slowing down. Nothing's slowing down.
That's pretty amazing. Connor, thank you so much. I really appreciate you taking some time for us. You'll have to come back. We didn't have time to touch too much on Howard Marks and Oak Tree, but we can do that another time. So, Connor, thanks a lot. Always good to see you. Thank you for having us. All right.
Connor Teske, of course, Chief Executive Officer of Brookfield Asset Management here at Bloomberg Investor. I'm Barry Ritholtz, inviting you to join me for the Masters in Business podcast. Every week, we bring you fascinating conversations with the people who shape markets, investing, and business.
CEOs, fund managers, billionaires, Nobel laureates, traders, analysts, economists, everybody that affects what's going on in the market, whether you own stocks, bonds, real estate, commodities, crypto, You really need to hear these conversations. Sometimes it's behaviorists like Dick Thaler or Bob Schiller. Sometimes it's fund managers like Peter Lynch, Bill Miller, Ray Dalio.
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Chapter 5: How does Brookfield's investment strategy adapt to changing geopolitical landscapes?
Sometimes it's authors, Michael Lewis, author of The Big Short and Moneyball. Regardless of the conversation, these are the folks that move markets each week. That's the Masters in Business podcast with me, Barry Ritholtz. Listen on Apple, Spotify, or wherever you get your podcasts.