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Masters in Business

Why Private Assets Are Essential: Masters in Business with Stephanie Drescher

56 min episode · 2 min read
·
Stephanie Drescher

Episode

56 min

Read time

2 min

Topics

Personal Finance, Investing, Fundraising & VC

AI-Generated Summary

Key Takeaways

  • Portfolio allocation shift: Institutions average 20% allocation to private markets while individuals hold only 3%, despite wealth and institutional markets each totaling $150 trillion globally. This gap represents massive growth opportunity as wealth clients seek institutional-level returns and diversification benefits.
  • Co-investment alignment: Apollo invests as much as two-thirds of certain strategy portfolios from its own balance sheet alongside clients, far exceeding the industry standard 2.5-5% commitment. This shared outcome model ensures investment decisions benefit both the firm and third-party capital equally.
  • Proprietary origination engines: Apollo built 16 proprietary origination platforms across fleet finance, aviation, trucking, consumer finance, and specialty lending. This in-house deal creation capability differentiates performance rather than relying solely on AUM scale, generating investment alpha through exclusive opportunities.
  • Liquidity spectrum strategy: Private market structures now range from daily liquid ETFs containing private assets to traditional seven-year lockups, matching investment duration to underlying asset life. Two-year credit notes offer monthly liquidity while maintaining illiquidity premium, enabling 50% portfolio allocations.

What It Covers

Stephanie Drescher, Apollo's Chief Client and Product Development Officer, explains how private markets evolved from niche investments to essential portfolio components, managing $840 billion across private equity, credit, and infrastructure for institutional and wealth clients.

Key Questions Answered

  • Portfolio allocation shift: Institutions average 20% allocation to private markets while individuals hold only 3%, despite wealth and institutional markets each totaling $150 trillion globally. This gap represents massive growth opportunity as wealth clients seek institutional-level returns and diversification benefits.
  • Co-investment alignment: Apollo invests as much as two-thirds of certain strategy portfolios from its own balance sheet alongside clients, far exceeding the industry standard 2.5-5% commitment. This shared outcome model ensures investment decisions benefit both the firm and third-party capital equally.
  • Proprietary origination engines: Apollo built 16 proprietary origination platforms across fleet finance, aviation, trucking, consumer finance, and specialty lending. This in-house deal creation capability differentiates performance rather than relying solely on AUM scale, generating investment alpha through exclusive opportunities.
  • Liquidity spectrum strategy: Private market structures now range from daily liquid ETFs containing private assets to traditional seven-year lockups, matching investment duration to underlying asset life. Two-year credit notes offer monthly liquidity while maintaining illiquidity premium, enabling 50% portfolio allocations.

Notable Moment

During Liberation Day market volatility, Apollo deployed $25 billion within 48 hours into mispriced household-name credits, demonstrating how scale and capital structure knowledge enable rapid deployment during brief dislocation windows that quickly self-correct.

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Episode Transcript

I'm Hannah Frey. And as we rely more and more on artificial intelligence in every facet of our lives and businesses, I'm on a mission to find out how we can build the Internet that AI needs. Learn more later in the podcast. These days, it seems like AI agents are just about everywhere you turn, every field and every function. But without identity, you can't trust they'll serve your business instead of jeopardizing it. Fortunately, Okta helps you get identity right by securing your AI agents identities, giving you a single layer of control, a single standard of trust. So whether an AI agent supports a single user or your entire enterprise, with Okta, you'll turn risk into opportunity. Secure every agent. Secure any agent. Okta secures AI. This podcast is brought to you by Wyze, the smarter way to manage your money internationally. If you're getting a headache from juggling different currencies and different bank accounts in different countries, there's a better way to receive money in the currency you need without the slow transfer times or hidden fees. Meet Wise, the savvy way to handle your money internationally. Hold balances in up to 40 currencies with the mid market exchange rate on every conversion. Whether you're receiving payments from tenants abroad, earning as a digital nomad, or converting dividends from your international investments, the Wise multicurrency account is for you. Be smart. Get wise. Download the Wise app today or visit wise.com. Terms and conditions apply. Bloomberg Audio Studios. Podcasts, radio, news. This is Masters in Business with Barry Ritholtz on Bloomberg Radio. This week on the podcast, I have an extra special guest. Stephanie Drescher is chief client and product development officer and private investment giant, Apollo. She's been there for over twenty years. She spent a decade before that doing alternatives at JPMorgan. What a fascinating person. Apollo runs $840,000,000,000 in client assets, and she has really not over overseen the wealth division, but also worked on a variety of geographies, new products. She's on everybody's best of list. She's been on the Barron's women in finance list since inception every year. I thought this conversation was fascinating. If you're remotely interested in private equity, private debt, private credit, private infrastructure, you'll find this conversation absolutely fascinating. With no further ado, Apollo's Stephanie Drescher. Stephanie Drescher, welcome to Bloomberg. Thank you, Barry. Happy to be here. Happy to have you. So we're gonna get into Apollo and your investment philosophy in a bit, but before we do, I I just have to start with your background. Bachelor's in Barnard at Columbia, MBA from Columbia Business School. What was the original career plan? I I did always have finance in my sights. Mhmm. So undergrad, it was econ and psych. I I joke that I use the psych in my day to day field way more than the econ these days. But there there was always a draw towards doing something in in the financial kind …

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