Patrick O'Shaughnessy: evaluation

Transcript context

…To help us put some shape to the Canvas business—you don't have to talk in numbers at all—how do you price it, and how does that compare to the pricing of a traditional asset manager? What's the scaling factor on that? It's incredibly simple pricing, which I think people like. It's dynamic. It depends on the settings you choose, and all we're doing is we establish a minimum fee, which is very competitive with whatever and low. We will go below that minimum fee, if the settings are the most vanilla, will still charge that number. Above that, it's simply a pro-rated version of our normal fee for our services. If you're allocating more away from the very basic public market index portfolio, we do some of that too, a lot of that. If you're allocating away from that, the more different you get the higher fee you pay. It's a sliding scale up to a max where even the max is lower than what a lot of long-only asset managers would charge. It's dependent on the settings you choose. We don't charge for extras. Everything is included in one asset base price. Clients have really liked that because it puts them in the driver's seat if the fee is a really important variable to them, that it's under their control, and we're a platform that fulfills that we don't dictate the terms. They can decide themselves and that's worked really nicely. In terms of scale—again, we talked about this earlier—the reason there's no performance fee in this is if you told me we had to invest $100 billion (to use an absurd number) into this platform, we could do it over the next year. In many cases, it would be a crap ton of work, but in many cases, we would still end up owning a modest amount of these huge public companies, and hopefully not affecting their prices. It scales extremely well to very large numbers, and that's how we think about it. Cool. All right. In the future, what's the A+ scenario for OSAM and you over the next five years? What's keeping you up at night? What's the nightmare F scenario?…

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