It’s been our strongest inflow channel. The drivers behind that include going back a little ways, just the strength of the dollar, but also in the wealth channel, there can be at points in time a lot of faddish type investing and chasing of things like tech.So, the fact that tech went into a downturn has helped investors go back to more value and income oriented allocations. So that’s hard to predict. I’d say the other dynamic that as it relates to our subadvisory business, there is, as is the case in Japan, managements change every couple of years. And I would say the current management at Daiwa Asset Management is very interested in our strategies and very interesting and doing things to promote those vehicles.So, that makes me optimistic.
Institutionally because of the fact that the market has been closed due to COVID but now reopening, it’s been slow but we would expect that to get better as that country overall tends to get back to more to normal in terms of business activity.John Dunn Good to hear. So maybe just on closed end funds, what do you think the window looks like for the rest of the year? Will it open because there’s probably some good returns out there for new money?Joe Harvey I think the window is closed for the foreseeable future and one of the reasons is that with the cost of debt financing today, there are not many strategies for which you can create a positive spread on the cost of your financing. So you can’t enhance the yield of the closed end fund using leverage.
At the same time, there are discounts in the market to asset value that are very attractive. So those things are going to make it hard for the window to reopen.I will say though that once the interest rate cycle turns, those things can change pretty quickly, meaning discounts can narrow if yields settle out at certain levels. There are a couple of strategies you could do a close down fund for, but right now I mean our outlook is that yields will be more normal. And so, if that’s the case, it’s going to be tougher to use leverage and close down funds.John Dunn One more real estate one, how do you guys think about real estate debt lending in addition to your private vehicles?Joe Harvey Well, we don’t currently have a capability in that. We invest in certain types of real estate company, debt and preferred stock, as well as REIT debt.
It’s a capability that would be a natural one for us. And based on our view of the fact that some regional banks will pull back as lenders and there’s going to be an opportunity, and some asset managers are talking about it already. But it’s something that we’re going to spend time on and see if we could find a capability that would complement everything that we built in real estate.John Dunn Got you. And then maybe just a thumbnail for people in January 24, what do you think, we’ll look back and say these were the areas that drove positive flows in ’23?Joe Harvey Well think that if the interest rate cycle does in fact peak as Jon articulated, and the markets respond to that, it will create flows in REITs. It will create flows in preferred securities.
I’d say that both, one precondition would be that the banking system has to continue to show that it’s stabilized. But to answer your precise question like that, that to me would be if the environment starts to normalize, then we have a lot of interest that’s kind of waiting on the sidelines for those conditions to get better.John Dunn Thanks very much, guys.Joe Harvey Thanks, John.Operator There are no further questions at this time. I will now turn the call back over to the CEO, Mr. Joe Harvey.Joe Harvey Great. Well, thank you for your time this morning and we look forward to speaking to you in July as we report our second quarter earnings. Have a great day.Operator Ladies and gentlemen, thank you for participating. This concludes today’s conference call.
You may now disconnect.