In this episode of CIO Perspectives, host Sid Ahl speaks with Kif Hancock, International CIO, and Campbell Donley, CIO Investment Analyst, about the sharp market reaction to AI, the so‑called AI Death Star and the recent pressure in private credit — and how today’s volatility is creating opportunity. The conversation covers why quality has trailed, where dislocation is creating opportunity and how the most concentrated U.S. market in decades affects portfolio construction. The team also examines a K-shaped consumer, rising youth unemployment, the case for international diversification and why private credit requires manager-by-manager scrutiny in a software-heavy cycle.
Highlights:
- AI-driven selling: How AI fears have triggered broad selling across software, data, payments, and cybersecurity, and why strong distribution, regulatory positioning and proprietary data still matter.
- Quality lagging, value emerging: Why quality underperformed in 2025, the early signs of a reversal in 2026, and where leaders like Microsoft, Amazon and major software platforms may be mispriced relative to fundamentals.
- Market concentration risk: What multi‑decade‑high market concentration means for investors and why we believe active management plays an increasingly important role in this environment.
- A K-shaped consumer: How spending remains concentrated among higher earners and what that means for the broader economic outlook.
- Opportunities beyond the U.S.: Key takeaways across Europe and Asia, including infrastructure demand, private markets activity, AI and biotech industries and why falling correlations strengthen the diversification case.
- Private credit pressure: What’s behind recent stress in private credit, and the gap between disciplined cash-pay lending and structures reliant on enterprise-value underwriting or payment-in-kind income.
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Private investments are characterized by a high degree of risk, volatility, and illiquidity due, among other things, to the nature of the investments. A prospective investor should thoroughly review the Offering Materials pertaining to any investment and carefully consider whether such an investment is suitable to the investor’s financial situation and goals. Investors should have the financial ability and willingness to accept the risks and lack of liquidity that are characteristic of these types of investments. There can be no assurance that any investment objectives will be achieved, or that investors will receive a return of their capital. Accordingly, investors should only invest in private credit investments if such investors are able to withstand a total loss of their investment.
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The MSCI All Country World Index (ACWI) is a global equity benchmark covering developed and emerging markets.
The MSCI World Index is a developed-markets equity benchmark that excludes emerging markets.
Agentic AI is artificial intelligence that can plan, take multi step actions and perform tasks autonomously within workflows.
Broadly syndicated loans (BSLs) are corporate loans arranged by banks and sold to multiple institutional investors.
Direct lending is private lending directly to companies, often those backed by private equity sponsors.
Enterprise value (EV) is a company’s total value, including equity and net debt.
Free cash flow (FCF) is the cash a company generates after capital expenditures that is available for dividends, buybacks, or reinvestment.
Initial public offering (IPO) is the first sale of a company’s shares to the public on a stock exchange.
K-shaped recovery is an economic pattern where higher earners experience stronger growth while lower earners face weaker outcomes.
Market capitalization is the total value of a company’s outstanding shares, calculated as share price multiplied by shares outstanding.
Net profit margin is a measure of profitability calculated by dividing net income by revenue.
Payment-in-kind (PIK) interest is interest paid using additional debt rather than cash.
Quality investing is an investment approach focused on companies with durable earnings, strong balance sheets, high returns on invested capital, and stable free cash flow.
Return on invested capital (ROIC) is a measure of how efficiently a company generates profits from the capital it uses.
Stablecoins are crypto assets designed to maintain a stable value relative to a reference such as the U.S. dollar.