A: I don’t think we are in an analogous situation to just before the 2008 crisis. It’s not that bad.
But on the other hand, the demand for our services has been strong. Most people think that they can’t get the returns they want from the stock market or the bond market, so they are getting into the alternative investment managers like us.
We’ve done very well in raising money, and we’ve created some new strategies. They have contributed to our asset growth.
Q: Of the newer investment strategies that you have been raising money for, emerging market equities and distressed debt are an important part. What is Oaktree’s strategy in expanding into emerging markets?
A: The main engine of growth for our activities in emerging markets has been listed equities, which is a new area for us.
We have been in the “absolute return” segment in emerging markets for the last 15 or 16 years. A few years ago, we started to be involved in open-end, non-hedged equity strategies, where we have seen substantial growth.
I’m a believer in emerging markets. I feel good about getting bigger in that area. I also think fundamentally, emerging markets equities are relatively attractive in the long-term.
Q: Oaktree and China Cinda Asset Management Co. signed a memorandum of understanding last November to set up a joint venture to invest in distressed assets in China. How has that been going?
A: It’s going according to expectations. We are learning, working together and gaining positive experience. I hope we are laying a base for a very successful long-term relationship.
Q: Chinese banks’ non-performing loans (NPL) are projected to balloon in the next few years. Is NPL an area that Oaktree will get involved?
A: I can’t tell you what our future strategic decisions will be. But I will say that our partnership with Cinda positions us to potentially be involved.
About Howard Marks:
Howard Marks is the co-founder and chairman of Oaktree Capital Management, a Los Angeles-based investment firm with US$93 billion assets under management. He is the author of “The Most Important Thing”, a collection of investment principles accumulated during his 44-year investing career. Marks previously worked at The TCW Group and Citicorp Investment Management before co-founding Oaktree in 1995.