Core Insights - The shift towards evergreen funds is expected to lead to allocations reaching up to 90% of total private asset investments in the next three to five years, driven by the removal of barriers such as high minimum commitments and long lock-up periods [1][3] - The introduction of new investment vehicles has made private market investments more flexible, transparent, and administratively efficient for wealth managers [2] Industry Trends - There is a significant increase in individual investors' appetite for private markets in Europe, particularly with the emergence of semi-liquid structures like ELTIF 2.0 [3] - Regulatory evolution, product innovation, and rising investor demand are converging to create new pathways for accessing private markets [3][4] Company Overview - StepStone Group manages $723 billion in total capital and is one of the largest private market investors globally, providing tailored portfolios across various asset classes to meet individual investor goals [4][5] - StepStone Private Wealth Solutions aims to address the generational shift in investment access, focusing on performance and practicality [5] Investment Strategies - The growing popularity of private credit, especially in direct lending, is highlighted as a compelling opportunity due to traditional banks retreating from the market [10] - StepStone emphasizes the importance of liquidity in product design, offering funds like SPRIM Lux with 5% quarterly liquidity to meet wealth investors' needs [7][8] Diversification and Risk Management - StepStone's approach to diversification includes access to over 100 general partners (GPs) and opportunities across various strategies, which helps mitigate risk [11][12] - The firm employs rigorous evaluation processes for investments, ensuring high-quality deal flow and reducing concentration risk [13][14] Technology and Future Outlook - Technology plays a crucial role in bridging gaps in alternative investments, with StepStone's SPI platform providing wealth managers access to critical data and investment opportunities [14] - The private markets sector is expected to continue evolving, with StepStone positioned to redefine how wealth clients engage with these markets, leveraging its institutional-grade platform [15]

Financial Data and Key Metrics Changes - Total asset footprint increased to $958 billion, representing a 4% year-over-year growth [4] - Assets Under Management (AUM) grew to $138 billion, an increase of $14 billion or 11% compared to the prior year [5] - Total management and advisory fees reached $514 million, growing 14% year-over-year [6] - Fee-related earnings were $276 million, a 34% increase from the previous year, translating into GAAP EPS of $5.41 and non-GAAP EPS of $5.40 [6] Business Line Data and Key Metrics Changes - Fee-earning AUM stood at $72 billion, growing $6 billion or 10% year-over-year [14] - Specialized fund fee-earning AUM increased to $33 billion, representing a 16% growth [16] - Revenue from customized separate accounts increased by $6 million or 4% due to new accounts and re-ups [38] Market Data and Key Metrics Changes - Overall exit activity remains muted, but deal activity in various sectors showed recovery in 2024 compared to 2023 [12] - Contributions and distributions from Limited Partners (LPs) remained below historical averages, although distribution activity saw a slight pickup in 2024 [12] Company Strategy and Development Direction - The company is focusing on long-term results for clients, capitalizing on market volatility to find opportunities [13] - Continued growth in specialized funds, particularly semi-liquid evergreen funds, is a key strategy [14] - The company is actively expanding its product lines and enhancing its technology solutions [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating market volatility and uncertainty, indicating a stable margin outlook despite reporting changes [46][47] - The current market environment is seen as different from past crises, driven by political factors rather than economic shocks [79] Other Important Information - The Board approved a 10% increase in the annual fiscal dividend to $2.16 per share, marking the eighth consecutive annual double-digit percentage increase since 2017 [6] - The company is investing in technology solutions to enhance operational efficiency and scalability [28] Q&A Session Summary Question: Margin outlook under new reporting regime - Management expects margins to remain stable despite changes in reporting [46][47] Question: Changes in distribution fees for new products - Distribution fees remain predominantly upfront, with no significant changes noted [49][50] Question: Future management fees within separate accounts - The separate account business is impacted by macro market conditions, but there is optimism for future growth as markets normalize [59][61] Question: May gross inflows and outflows - May showed strong inflows, with no significant changes in redemption patterns [65][66] Question: Institutional interest in evergreen funds - The trend towards evergreen funds is still in its early stages, with institutions beginning to recognize their benefits [70][72] Question: Capitalizing on market volatility - The company is focusing on deal flow, talent acquisition, and technology investments to capitalize on current market conditions [76][78]