Apollo, Carlyle funds address ‘menu problem’ for retail investors, Titan Co-CEO says
Titan Co-CEO & Co-Founder Joe Percoco joins Yahoo Finance Live to discuss investment allocation, targeting retail investors, and the launch of Apollo and Carlyle funds. Apollo Global Management is Yahoo Finance’s parent company.
BRAD SMITH: Online brokerage firm Titan is doubling down on retail investors in a new offering with investment giants Apollo Global Management and the Carlyle Group allowing users to allocate into private funds. Joining us now to discuss is Titan co-founder and co-CEO Joe Percoco. And we've got Yahoo Finance's own Alexandra Semenova.
Joe, thanks for joining us here on set in studio today. It's been a big day for the markets. On a day like this, when you look across your platform, is there any data that you can extrapolate, even from how-- the traders that you've gone after and that you're introducing a new offering like this to-- what the mindset of those traders are.
JOE PERCOCO: Right. Yeah, it's been a really interesting time period over the last year. We're a platform of long-term investors, so we've built as a lot of direct-to-consumer engagement technology to explain what's going on in real time. So we see less of our clients trading in and out in days like today and more up the engagement on the content they're consuming, explaining why.
ALEXANDRA SEMENOVA: Joe, Titan clients are accustomed to having an actively managed portfolio of stocks and crypto. How are you going to go about explaining to them these private offerings that are more opaque in nature, that are more illiquid than what they are used to?
JOE PERCOCO: Yeah, it's a great question. The way we see it is, a lot of these investment products are really great, but they're wrapped around the technology equivalent of VHS tapes. They're really confusing. They come with a 90-page prospectus, and we all live in a digital age.
So our job is to take the best of consumer technology that you see on a lot of these platforms with billions of users and figure out the means to connect and build those-- the bridge to those old-school VHS-tape-like products. And when you do that, guess what-- consumers finally start to understand some of these great asset management products.
JULIE HYMAN: Well, it seems like it's not only sort of making them more modern but also making them more accessible, if I'm not mistaken. I mean, some of the stuff we're talking about, whether it's real estate or other types of alternative investments, in some cases, had only been available to accredited investors, to people with high net worth. Is that still-- are there still some barriers to entry here on the platform, or is it sort of like anybody who's on the platform can invest in this stuff?
JOE PERCOCO: That's a great point, Julie. The biggest thing in our opinion has been this menu problem. If you have a lot of wealth, here's a specific menu. And if you don't have enough wealth, we're just going to give you the McDonald's menu. So what we're really excited-- is that when you can aggregate a lot of consumers together, you can actually go get them into these products that historically have really high minimums and bring down those minimums dramatically.
So, on Titan, we're really proud to say the minimums are anywhere from $100 to a couple thousand dollars, relative to products that require you usually to have a million dollars, a wealth management professional, and you need to sort of have an in. So we're really excited to actually democratize the category.
ALEXANDRA SEMENOVA: Can you talk a little bit more about your relationship here with Apollo and Carlyle? These are two alternative investment giants that are used to working with institutional investors, high-net-worth individuals, as Julie said. What does this moment mean not only for Titan users who now have access to them but also for these firms?
JOE PERCOCO: Yeah. It's like, our whole day-one vision with Titan was how do we actually go get the Lakers and the Yankees of asset managers to service everyday clients? And so, with the managers, like you've mentioned, we're so excited to have them on the platform. And we're already starting to see a number of others reach out to us.
Because they get the drill. Historically, we've been managing a lot of institutional money. But there's about $10 trillion of millennial assets sitting between just vanilla stocks and bonds, and they're like, how do we get access to this? And so that's what our job is, just to be the bridge between these managers.
JULIE HYMAN: I do have a question about competition. Because you're not the only people who are trying to do this right now. And even just coincidentally, today, there's a story in the "Wall Street Journal" that KKR is partnering with Securitize to actually put some of its private equity on the blockchain. So just another sort of flavor of what you're talking about here.
How do you differentiate yourself in what's becoming a more and more crowded environment here?
JOE PERCOCO: Totally. There are many great asset managers in the world, as ones you've mentioned. And the really hard problem today is how do you actually build the means to get consumers not just in those products but understand it. And that's why, historically, a lot of everyday folks are actually quite reticent and they hold too much of their money in cash.
And so what we're really good at is actually building out that consumer technology layer in the means, and that's our core competency. Our team is all ex-Facebook, ex-Uber, and so on-- and Silicon Valley greats. That's like the one thing we're focused on, and it enables us to compete.
ALEXANDRA SEMENOVA: So the minimum investment here is $2,000 for these funds, right? For Apollo and Carlyle, that's nothing compared to the inflows that they get. But for the retail investor, that might still be a lot of money. Why should they make these investments?
JOE PERCOCO: For sure. And in particular, in a market like right now, when you look backwards, there was one note you needed to play over the last decade, and that was growth tech. And if you played that note well and you just kept hitting it on the keyboard, you made money. All of a sudden, the music stopped there, and you need to play multiple notes.
You needed to have a diversified portfolio. You not only need tech, but you need stability, you need income. And so our job is just to race and get these products out because consumers need us now, with more diversified portfolios than they've had.
BRAD SMITH: In terms of the key performance indicators, when you do launch a new product, what do you look towards to really prove whether or not it's a success on launch? And how long of a period of time would you be reviewing that reception in the market?
JOE PERCOCO: Totally. Two means. Ultimately, product quality-- so how is the fund or the strategy doing itself over the long-term time horizon. And then, secondly, how consumers vote. Consumers ultimately vote with their money. So if we're doing a good job to explain and enable retail investors to actually be confident, they'll vote with their wallet share.
JULIE HYMAN: Well, we'll see how they're voting on a day like this. Maybe they'll wait until tomorrow, when they feel a little bit better, even if they're looking three to five years out. Thank you so much, Joe--
JOE PERCOCO: Totally.
JULIE HYMAN: --for coming in. Appreciate it. Joe Percoco, Titan co-founder and co-CEO. And our Alex Semenova also with us here on set.