Blue Owl Capital Inc. (OWL) Earnings Call Transcript & Summary

Good morning, and welcome to Blue Owl Capital's Second Quarter 2026 Earnings Call. [Operator Instructions] I'd like to advise all parties that this conference call is being recorded. I will now turn the call over to Anne Day, Head of Investor Relations for Blue Owl.

Thanks, operator, and good morning to everyone. Joining me today are Mark Lipschultz, our Co-Chief Executive Officer; and Alan Kirshenbaum, our Chief Financial Officer. I'd like to remind our listeners that remarks made during the call may contain forward-looking statements, which are not a guarantee of future performance or results and involve a number of risks and uncertainties that are outside the company's control. Actual results may differ materially from those in forward-looking statements as a result of a number of factors, including those described from time to time in Bell Capital's filings with the Securities and Exchange Commission. The company assumes no obligation to update any forward-looking statements. . We also like to remind everyone that we'll refer to non-GAAP measures on the call, which are reconciled to GAAP figures in our earnings presentation available on the Shareholders section of our website at blueowl.com. Please note that nothing on this call constitutes an offer to sell or a solicitation of an offer to purchase an interest in any blue all fund. This morning, we issued our financial results for the second quarter of 2026, reporting fee-related earnings, or FRE of $0.25 per share and distributable earnings or DE of $0.22 per share. We declared a dividend of $0.23 per share for the second quarter payable on August 27 to holders of record as of August 13. During the call today, we'll be referring to the earnings presentation, which we posted to our website this morning. So please have that on hand to follow along. With that, I'd like to turn the call over to Mark.

Great. Thank you so much, Ann. This morning, we reported our financial results for the second quarter of 2026, highlighting 9% DE growth versus a year ago quarter. This growth was broad-based across products and geographies, demonstrating the continued diversification of Blue Owl's platform and reinforcing the strength and stability of our business across a wide variety of market environments. Over the past few quarters, we've looked to address questions about our business, and our ongoing goal is to continue to offer key facts that illuminate the diversification, resilient investment performance and core growth trends we see across our business. . On diversification, which we believe has been an overlook theme and a key evolution of the Blue Owl story. We start with our real assets platform, which now constitutes nearly 30% of our AUM. We have grown real assets AUM by 25% and revenues by 27% versus a year ago, with particular strength from our net lease and digital infrastructure strategies. In this platform, our central positioning and strong track record in these markets have continued to resonate with institutional and wealth investors alike, and this has not gone unnoticed by industry participants. Recently, we were named PRE's Global Net Lease Investor of the Year, Global Data Center Investor of the Year, Global Retail Investor of the Year -- and we've been ranked #2 on PRE's top 100 real estate fund raisers globally. This recognition highlights that our real assets platform launched 4.5 years ago with $12 billion of has raised more money over the past 5 years than nearly every other real estate manager globally. We're honored to be leading such an steam list of managers and believe our success reflects our singular focus on creating differentiated risk reward and strong yield-based outcomes for our investors. Since we first established our foothold in real assets in late 2021, we've expanded AUM sevenfold and continue to anticipate that it will be our fastest-growing area for the foreseeable future. In credit, the sources of growth have expanded as we invested bond strategies, such as alternative credit, investment-grade credit and GP-led secondaries. Today, direct lending is approximately 35% of our AUM compared to nearly half of our AUM just 2 years ago. In contrast, alternative credit, which is approaching 10% of our credit AUM has experienced 35% AUM growth over the past year. During the second quarter, we reached the 1-year anniversary of the inception of our alternative credit interval fund which has surpassed $2.7 billion in size and has outperformed the leveraged loan index by more than 600 basis points over that period. We've also meaningfully scaled drawdown funds and alternative credit -- our opportunistic fund, which held its final close last quarter, raised 1.6x more than the prior vintage against a market backdrop of private credit concerns and a challenging global fundraising environment. We continue to anticipate outsized growth from our alternative credit strategy. In GP's Strategic Capital, our market-leading position in the specialist strategy has continued to pay off. with approximately $5.5 billion raised over the last year across the comingled fund co-invest and innovative strip sales structures. Finally, we continue to introduce de novo strategies that draw upon our investment expertise in various asset classes and offer incremental product suite diversity. Over the last couple of years, we have highlighted GP-led secondaries and Net Lease Europe as some examples of these organic growth initiatives. Last quarter, we held the final close of our Bos product at a total of $3 billion and we have closed $1.5 billion for net lease Europe. Adding to this list, we're now in market with the first vintages of our data center credit and real estate credit strategies and have raised over $1 billion in aggregate towards a $1.5 billion goal. Summarizing our thoughts on diversification. As we look at the first half of 2026 across Blue Al, a period spanning the most acute headline noise and elevated redemptions for nontraded BDCs. We raised more than $16.5 billion of equity capital across the firm for more than 40% of our last 12-month total. Over the last 12 months, more than 75% of the equity capital we've raised has been into nondirect lending strategies and roughly 2/3 has been from institutional and insurance clients, underscoring the breadth and resilience of our business. Moving on to investment performance. We continue to experience strong outcomes across the board with no meaningful change in strategy level performance in direct lending. Performance of our funds and vehicles has continued to outpace their relevant benchmarks. Importantly, the underlying portfolio of companies we finance have continued to grow and mid- to high single-digit pace on average, providing incremental support to our position as the senior secured piece of these companies' capital structures. Across our direct lending strategy, credit health remains strong, we have seen no meaningful change in our watch list compared to a year ago. We remain vigilant on credit health and are prepared for some normalization off of very low loss rates -- but today, we are sitting at a 12 basis points average annual realized loss rate with a net gain in our technology lending book. Through June, our nontraded BDC OCIC Class I shares have returned over 9% since inception outperforming the leveraged loan and high-yield indices by more than 300 and 450 basis points since inception. Additionally, we have begun to see divergence across managers, we expect differentiation and outcomes to continue across market sizing with the upper middle market outperforming the lower middle market as it has over the past years and anticipate further dispersion among upper middle market managers highlighting quality of underwriting and credit selection. In real assets, our net lease strategy has generated 13.6% total return over the past 12 months, with the Class I shares of our nontraded REIT rent have returned 9% annualized since inception, and both O Rent and our nontraded digital infrastructure O REIT debt have increased their dividends this past year, and GP stakes, we continue to rate very favorably against private equity products of the same vintages, but top quartile rankings across fonts on DPI. While we're cognizant that sentiment can shift with market conditions and investor expectations, we believe our high-quality performance across strategies will allow Blue Owl to serve our investors well through a variety of market environments. With the diversification I highlighted earlier in my remarks, ensuring balance for our platform in the midst of the cross winds of fluctuate in semi. Bringing it back to where we started. We believe the results we reported this morning continue to demonstrate the resilience of our business in the midst of many market cross prints, which do not uniquely impact Blue Owl. As I consider the growth we've achieved over the past 2 years or even 5 years, -- we have done so through a wide range of risk-free rate environments, multiple geopolitical escalations and a broad spectrum of capital market backdrops. Our growth rate has fluctuated through these landscapes, but we have consistently demonstrated growth and durability and we maintained very strong investment performance throughout. We're very proud of the business we've built. We're exceptionally thankful for the tireless efforts of our Grateful Owl team and we are optimistic about the path forward for her. With that, let me turn it to Alan to discuss our financial results.

Thank you, Mark. Good morning, everyone. As we highlighted in this morning's earnings presentation, Blue Owl grew earnings by 9% compared to the second quarter of 2025. Looking at the second quarter versus a year ago, management fees grew 8%, excluding the impact of management fee offsets, FRE grew 9% and DE grew 9%. Our FRE margin was 58.5% in line with our outlook for the year and modestly up from the first quarter and 2025 levels. AUM not yet paying fees increased to $31 billion, representing approximately $380 million of expected annual management fees once deployed. This is equivalent to approximately 15% embedded growth from our 2025 management fees. As this capital is drawn down and put to work, it converts into fee-paying AUM and will continue to support management fee growth across our platforms. To continue with Mark's themes, he covered in his remarks, our continued diversification and strong investment performance I'll cover the core growth trends we see across our business. First, given the number of drawdown funds we have in market this year, we expect institutional fundraising to remain strong in the second half of the year. On our net lease strategy, during 2Q, we exceeded the hard cap initially set for this vintage and have raised 1.5x more than the predecessor vintage. The investor interest and engagement here has been really impressive. So we wanted to share some stats, which include just a year after the first close, we have raised $7.7 billion and surpassed the original hard cap. Inclusive of Co-invest, we've raised $8.7 billion. Approximately 60% of these investor commitments are from first-time investors in the strategy. New consultant recommendation led to over $1.5 billion of this capital raised. And geographically, we added LPs from Australia, Korea, Scandinavia, Israel, Kuwait and the UAE, constituting roughly 40% of capital raised to date. In wealth, we believe we have seen a bottoming of Evergreen inflows in the May 1 close, supported by continued strong performance in these products and ongoing education across stakeholder groups. And for the July 1 close, we saw a greater than 50% increase in Evergreen inflows versus that May 1 close. While we are still below historical levels, we are encouraged by this data and continue to see increased engagement from home offices and financial advisers. And the recent redemption data is also supportive of better trends in the wealth channel. We saw a modest reduction in redemption requests in the second quarter for our nontraded BDC. While we are not calling for a V-shaped recovery and sentiment around private credit, we do think that the strong fundamental performance of our products has played a role in the decline of redemption requests to the nontraded BDCs and which we continue to view as more sentiment driven and led by individual clients as opposed to financial advisers or distribution partners. For the second quarter in a row, we continue to see 90% of our OCIC fund investors not request a single dollar of redemptions. The small shareholder base that did put in for redemption requests remain largely unchanged from last quarter with very limited new participation. And while we believe this has become very well understood by shareholders, as a reminder, the liquidity in our nontraded BDCs has remained very strong. As we highlight on Slide 25 of our earnings presentation, with repayments in the loan book meaningfully more than covering the net outflows during the second quarter. Outside of the non-traded BDCs, we saw no increase in redemption activity across our other Evergreen products over the past few quarters. We raised $7.8 billion of total capital during the quarter, bringing our last 12-month total capital raising to $50.5 billion, the equivalent of 18% of our total AUM at this time last year. All of this capital raising was organic, and nearly 40% of it was raised during the first half of 2026 during a period of elevated headlines about private credit and software and in the midst of meaningful geopolitical uncertainty. Fundraising was particularly strong in real assets this quarter, with about 60% of our equity capital raise originating from this platform across a number of strategies and products. Institutional and insurance investors comprised about 3/4 of equity capital raised in the second quarter and roughly 2/3 of last 12-month equity capital raised. And compared to the prior 12-month period, Institutional flows were more than 30% higher year-over-year, reflecting the expansion and diversification of our business that Mark highlighted in his remarks. Moving on to business performance across our platforms. In credit, we continue to generate strong absolute and relative performance across direct lending, alternative credit and other credit categories. Last 12-month total returns were 8.3% for direct lending and 11.4% for alternative credit comparing favorably to relevant public credit benchmarks over the same period. Deployment was robust across credit led by alternative credit and investment-grade credit. Similar to the trends we are seeing in fundraising, our platform expansion has benefited deployment with all credit deploying nearly $7 billion over the last 12 months, more than double the prior 12-month period, and we've seen meaningful deployment expansion for investment-grade credit as well. In direct lending, we continue to see deployment consistent with an industry backdrop of moderate sponsor-driven M&A activity and continue to see meaningful repayments at par and other metric demonstrating health and liquidity within the portfolio. In Real Assets, we continue to see elevated pipelines with very attractive risk return dynamics with nearly $160 billion of near-term opportunities across net lease and digital infrastructure. In net lease Fund VI, we have fully committed the funds and continue to have visibility with capital calls in 3Q and to be virtually fully called by the end of the year, which would be within 3 years of our final close. As I noted earlier, we are making excellent progress on the next vintage, which has already exceeded at $7.5 billion hard cap, and we plan to finish up capital raising this year. Our net lease strategy continues to focus on highly thematic investment opportunities, including industrials and reshoring, cold storage, data centers and health care as demonstrated by recent announcements such as the Sela and Spire transactions. In digital infrastructure, we continue to advance forward with a list of compelling development projects in progress and under discussion with exceptional partners. Today, our data center footprint spans more than 140 data centers owned or under construction globally with 15.3 gigawatts of leased and owned capacity. In GP strategic capital, we raised approximately $1.3 billion during the quarter, driven by our flagship large-cap strategy and an additional strip sale transaction. The total raised in our sixth vintage is $10.6 billion inclusive of coinvest. Across the past 2 years, we have engaged in 5 strip sale transactions that have an aggregate generated $4.6 billion of return of capital for our investors. We have seen strong interest from new investors for these structures, which can provide a broader set of attachment points across the return spectrum and allow LPs to invest in a highly visible and proven pool of assets. Looking out at the rest of the year, there are a few items I'd like to call out. On stock-based compensation, a quick reminder from our February earnings call, there are 3 categories running through our stock comp expense numbers, all shown on Slide 34 of our earnings presentation. First, our regular way year-end stock compensation, what we call equity-based compensation other. This is the number to focus on, and we continue to expect to run at approximately $365 million for 2026. Second, business combination grants goes to 0 starting in the fourth quarter of this year; and third, acquisition-related is GAAP amortization expense related to some of the acquisitions we've made over the last few years. As for an overall 2026 guidance update, on last quarter's call, we said we think we could beat visible alpha consensus estimates for 2026. We reaffirm that again today. And to be specific, at that time, FRE per share was $1.02 and DE per share was $0.89. We think we can beat those numbers this year. With that, why don't we jump into Q&A. Thank you very much for joining us this morning. Operator, can we please open the line for questions.

[Operator Instructions] Your first question today comes from the line of Glenn Schorr from Evercore ISI.

Your last comment made me change my question. Alan, could you maybe address of the where you can -- where you think you -- the geography of where you might be able to beat that visible alpha $1.32 just which line items do you think are the source?

Yes, of course. You're definitely allowed to change your question, Glenn. Yes, look, we have some visibility into growth for the next couple of quarters, right? So for direct lending, we're going to look to net deployment numbers as an indicator to management fee growth for the next few quarters, but let's assume that's a push for now. We're wrapping up the latest GP stakes vintage, so we're going to add a little growth there. And for net lease, let's break down the pieces there for Fund VI that was 65% drawn at quarter end. We're out with a capital call now that will bring us to 77% drawn next month. And I mentioned earlier, we have line of sight to effectively fully called with that -- with Fund VI by the end of the year. Our current vintage is about 10% called and about 40% committed already. So good early progress there. And that capital call that 10% came in on June 25. So full quarter in 3Q there. And our next digital infrastructure flagship, I mentioned also, I think, in our prepared remarks that we're expecting our first close later this year. So you'll see more growth from that. And there's a difference here. If you recall, fundraising for net lease generally doesn't immediately link to management fee growth, it's deployment, right, as we know. That links to the pace of management fee growth. For digital infrastructure, we charge on committed capital, so more immediate management fee growth impact there. So look, there can always be fluctuations on a quarterly basis. Capital calls are lumpy. They're not straight lines. but we are seeing long-term management fee growth. And remember, we have the $31 billion of AUM not yet paying fees, that will get deployed over time. And that's $380 million over time. But we have visibility into the next quarter or 2, where we do see management fee growth building each of the next 2 quarters.

Your next question comes from the line of Craig Siegenthaler from Bank of America. .

So we have a 2 parter on the data center book. I'm curious how are cap rates trending in light of an increase in competition across the peers and also, can you update us on the underlying tenant credit quality watch list? I know most are IG tenants, but debt levels are rising and not all are IG. So I'm curious if you saw any changes quarter-over-quarter. .

Sure, happy to. We continue to experience very strong cap rates. So to be direct, we are not seeing compression in cap rates competition. Again, remember, we do something very, very distinct. There's a few people in the world that can do it, but only a few and do it, and that is to build in partnership where we have the actual ability to design, build, operate. We have 1,000 people in our STACK deal and adjacent businesses, and that has made us the partner often of choice for all of the hyperscalers. And that partner and ability to deliver on time, on budget and do it in a reliable fashion at scale 140 x. I think we're now at 15 gigawatts of -- out of center capacity that we have either built or are building, including the biggest project currently underway in the world down in Louisiana or at least best of our [indiscernible] in the world, I guess we don't know what's happening in China. So that leads to a value of mutual value for us and Viperscaler. So no, we are continuing to see and are developing a very attractive rates and in fact with rising interest rates, perhaps that even helps escalate those cap rates. In terms of -- what was the part was credit quality. Look, our business, if you look at our funds, the single-digit percentage is done with people that are noninvestment grade. So you could take your own view of the current AA borrowers and whether they're AA credits are strengthening and weakening or neutral. But our business is an IG business, non-IG is essentially inconsequential to what we do .

Your next question comes from the line of Steven Chubak from Wolfe Research. .

So I wanted to ask on the retail fundraising strategy. Just given year-to-date BDC redemption trends have been much more concentrated across a subset of international investors. Just wanted to better understand whether the recent turmoil within the non-traded BDC space, whether it's reshaped your approach to expanding the retail distribution abroad, and is there a way to isolate what might be considered hot money versus a stickier core U.S. retail base across your platform?

Thanks, Stephen. I'll take that. I appreciate the question. Yes. Look, overall, we feel good about what we're seeing right now, just pulling the lens back with wealth overall. We think we've troughed by way of inflows, and we commented on that. Redemptions are down in our nontraded BDCs. And I commented earlier, we haven't seen increases in redemptions across our other wealth dedicated products over the past few quarters. So we're cautiously optimistic that nontraded BDC redemptions will keep coming down, and it appears others are seeing that, too. . We're seeing strong flows into our Oren product. And both ORAN and Odet have raised their dividend this year. And to that point, performance is strong across our wealth dedicated products. There's been so much focus on the nontraded BDC space. Looking outside of that, we're running at 10% to 12% annualized return so far this year for Owl CX, for ORE and for ODT. And so let's take a product like Oren just to double-click on that. Since its launch in September 2022, Irwin has been the top-performing nontraded REIT, putting up a consistent 9% annualized return, been a category leader in private evergreen real estate fundraising on both a net and gross basis in just 4 years to become the largest -- second largest sorry, private REIT in the market with $16 billion of AUM. And look, more broadly in wealth, what we're seeing is financial advisers and home offices have been very supportive of us in our products because they see us continuing to post these strong performance returns. And we've been very transparent with them through the challenging period that we just went through. And we're now seeing a broadening in adviser participation across our distribution partners. So just to share what we're seeing in hearing. We've already launched on 13 new platforms this year. So talking about where are we seeing the opportunities in wealth and in growth. We're also slated to launch on 21 more platforms this year. We continue to see a very steady growth of new advisers allocating to our funds for the first time and for financial advisers that invested in our products in 2Q, 74% or more than 1 Owl product versus 52% in 2025. So what we're seeing is, once advisers allocate capital, we're seeing significant cross-selling opportunity, which is really a testament to continued strong performance. You continue to see that. You continue to hear that theme from us and having built a really diversified product offering for the financial adviser community. So all of this shows us we're really seeing a strong level of financial adviser and investor confidence in Blue Owl. And so internationally, we continue to -- I don't want to say minimize, but we continue to grow our wealth platform across the board. We have very minimal exposure across our wealth products to Asia.

One, I think, important point of color coming out of this very tumultuous period or at least narratively tumultuous which is there's a lot actually to take away about the durability of the wealth channel and its rationality. Recognize the performance numbers speak, I think, for themselves at this point. We continue to deliver and expect we'll continue to deliver very strong performance. That was true before the superstorm of the narrative. It was true Durian and it's true after. And I think actually, the channel, there's a lot to take away that's favorable, even though none of us would have wish this experience, which is, first of all, it stayed very concentrated in the products where the narrative and the conversations perhaps got most carried away. The acteConcentric circles away from that, even 1 circle away, go to something like asset-backed, and we continue to see both inflows and very minimal outflows go to things like O rent. Again, the 1 of the most successful products in the marketplace, raising dividend. Investors are delineating between asset categories. And even those who were the narrative, perhaps drove behavior, it actually stayed very concentrated. We made this comment before, but the redemption in our core income product, 90% of the investors didn't ask and we're appreciative of it for a single share back because they know the product is working. So the redemption behavior was narrowed to about 10% of the investors in a very specific product. So actually look out 5 years and say, what do we now know about the wealth channel. I actually think what we know is the structures work and we know that actually the market is very much able to discern indeed, when there are narrative moments. We all appreciate it's going to have a slightly different feel in that market, where people are going to quickly pull back on inflows and you're going to have to deal with out pools for a period of time, but it's much, much more durable and much more narrow than I think anybody probably thought and even again, the way I think the narrative is today, there's a lot to like about the wealth channel over the medium and long term.

Your next question comes from the line of Bill Katz from TD Cowen.

So I appreciate the updated confidence in beating guidance, great to hear. I think it removes a lot of risks on the story. And just thinking about that and looking at your margin profile, FRE margin, I did the math correct, it looks like you had about 80% incremental margin year-on-year. So as you think about the trajectory made for the second half of the year and then again into 2027, how are you thinking about maybe the opportunity here to drive a little bit better profitability?

Thanks, Bill. I appreciate that. Look, we do continue to feel good and very good about where we are and where we're going with FRE margin. 58.5% was the guide for the year. We've already achieved that in the second quarter of the year. You should continue to expect modest increases as we go out over the next few years, but we feel good about where we are and where we're going there.

Okay. So just to clarify then the opportunity for the media being expectation is more of a top line story at this point? Just I understand the modeling. .

Sure. Yes.

Your next question comes from the line of Brennan Hawken from BMO Capital.

So we'd love to ask about GPV. So you mentioned that you're at $10.6 billion to date. I believe that's what you mentioned. What's your updated expectations for size and timing for final close? And then really more importantly, given sort of the expectations for consolidation among mid-market what are there more long term, what are the limitations to growth on this strategy? And what are you hearing from LPs around some of those concerns?

Sure. I'll take the first part of that, Brennan. Since the beginning of fundraise for this vintage in total, we've actually raised about $15 billion when you include this vintage co-invest and the strip sales that we've done. So $10.6 billion in the flagship in co-invest, specifically 9.7% in the vintage and then about $4.5 billion that we've raised over the past 2 years across the strip sales. We're in the final stretch of the fund raise. We'll see where we wrap up this year, but we will wrap up this year, and we continue to make steady progress towards where we want to be there.

The opportunity to add on that side is really more about the evolving marketplace. You have a lot of very important franchise businesses that are of substantial scale and people need to find the proper way to monetize. And fortunately, our GP Stakes business is the singular market leader. If you look at the large end of the market, which is very much where we like to operate. And by the way, I think this environment is reinforcing why you very much want to be in the large end of the market and not in the middle market. The middle market as a general matter with some exceptions, we see them in our growth fund is an area where there's a question of like what is the franchise over the long term. . The big firms are not -- thankfully, are going to actually consolidate their role as we're all seeing. The bigger are getting bigger. And those owners, you need to find capital solutions over time to support that growth and support generational transition. So that really makes us the destination for those opportunities. So we definitely see a very strong addressable growing market over time. to be able to deploy and deploy very successfully in a way that works for those firms and clearly works for our doctors. Again, I think hear this a few times, the results speak for themselves. If you look across the board, and I don't want to down this road deep on this question, but performance really matters. And if you look, we are delivering extremely strong performance in all of our platforms and all of our products. There's an example where we're rated amongst the very best performers in the land of PE. And as you know, we talked about this Dow Jones ranking before, #1 in the world by that measure. So I think we feel very good that this is a very, very attractive way to participate in the PE landscape. And as a note, if you think about what we've been able to do at Blue Owl, listen, there are some wonderful PE firms in the world, the boy, they go to what they do, and we're lunky to new business with a lot of them and lucky enough to own stakes in a lot of them. We've also created our own approach to this asset class. So we have the GP stakes business, so you can be an owner on the ALT side as opposed to the LTP payer. And we have our Blue Owl's product, which is now a $3 billion product in a rapidly growing market. where we are buying the self-selected best-of-breed assets, and it is really working. Our portfolio has come together in excellent form, we're deployed at a really attractive rate. And that product, I think, has a lot of promise in the future. So we've developed Agana you would I think, hopefully expect of us our own way that's very consistent with our DNA to participate in this -- frankly, the biggest asset class in ALTS without going to head to head, which it was a very different proposition with the many, many good providers in a place where there's already a lot of capital sort of trapped. So I think we've got a couple of very, very good ways to skin that...

Our next question comes from the line of Patrick Davitt from Autonomous Research.

The market still obviously hyper-focused on your exposure to retail direct lending, but you have a great track record, clearly, have institutional relationships where it looks like demand might actually be leaning in. So what has your hesitancy been to do a big traditional drawdown fund like some of your competitors have? And would you consider launching 1 to help fill in the capital loss on the retail side?

Sure, happy to start on that one. So I appreciate the predicate of the question. Performance in our retail direct lending product continues to be, and we expect will continue to be extremely strong. Low loss rates, great strong returns, good diversification. So we feel very good about the product. Again, we do understand both 2 things. We understand that there are legitimate questions that have been raised, although I will tell you that time and deep study have led us to ever-increasing comfort about the manageability of the software transition question. So we appreciate that, that was a valid and remains a valid conversation. But at the same time, these are very diversified portfolios, and they are performing extremely well. And we're built to handle -- very well built to handle when there are all the periodic issues that there undoubtedly are will be. We think that channel will recover very nicely. That doesn't mean V-shaped or rapidly, but we can already see it. The tone has changed meaningfully. And we even acknowledge at high levels, we already saw our redemption requests come down in Q2. And we see a tone continuing to settle and people realize and these products really work. And in fact, in a rising rate environment, which apparently now is the new norm from 6 months ago, direct lending is exactly the place to be, and I think investors appreciate that. Institutions do, we absolutely have seen a meaningful uptick in institutional engagement. Timing is always a little trickier with things like big SMAs, but we expect to post some really attractive results on fundraising in total in Q3, but including the credit side, on the institutional side. As for drawdown, not draw down, we do have a product called ODL, which actually is a drawdown structure, but have some nuances to make it slightly different from a traditional one. We have no hesitation to launch a drawdown product and in fact, I expect we will effect where people want to put the capital. We're never trying to force-feed people structure for our purposes. We want to meet them where they want to be. So it seems quite logical that we would actually launch the right drawdown -- traditional draw-down structure. And it's less about kind of offsetting retail I think retail will indeed already show signs of recovery. Again, not rapidly. We're not trying to get anybody ahead of themselves in this market. It takes time for after hurricane blows through to clean back up again. But we feel good about retail. We also do feel good about institutional and we'll absolutely -- we're absolutely open-minded to creating a drawdown project at certainly talked about it actively. And imagine we will, if that's where our investors want to be. And you'll finally, let's again, just go back to the rate environment we're in is exactly what you want to be in direct web, individual or institutional or like I mean how many years in a row has it been now that everyone is sure rates are about to come down and everyone is wrong every time. And so I am sure it will be true eventually. But the point being our product that insulates and provides for that is a really good place for any type of investor, insurance, institutional or retail line.