KEY DEBATE: WILL CREDIT OR EQUITY DOMINATE THE MODERN PORTFOLIO?

The debate centers on whether credit or equity should dominate the modern portfolio, given a rapidly changing world. Kathy Wood emphasizes the technological revolution driven by robotics, AI, and blockchain, predicting substantial GDP growth and favoring equities. She views AI as the biggest catalyst, disrupting traditional sectors. Katie Koch highlights credit's role in providing ballast, matching assets for institutions, and offering diverse financing options. Koch acknowledges deflationary pressures but sees credit as a solution for funding innovation, especially in AI infrastructure. Wood raises concerns about stranded assets and disrupted cash flows due to technology. Both speakers agree on the importance of active management. Koch points out risks in optimistic lending and software companies within the private credit space. Ultimately, Koch suggests a balanced approach, incorporating both credit and equity for different investment horizons.