Bloomberg Podcasts Sep 20, 2026
With Yie-Hsin Hung, CEO of State Street Investment Management
State Street Investment Management's own portfolio is at benchmark in both equities and fixed income, and its target date funds now carry a permanent 10% allocation to private markets.
The portfolio that paid for the last decade was the concentrated, optimized one. Yie-Hsin Hung says that period has ended, and that the test now is whether a portfolio still works if inflation stays high and rates stay where they are.
"I think that there's been so much focus on the markets on what is the Fed's next set of moves, and maybe a little less focus on what if inflation is more persistent and we're in a higher for longer rate environment."
Yie-Hsin Hung, CEO of State Street Investment Management, on Bloomberg Podcasts, runs the firm behind SPY, the S&P 500 fund that is now a default investment option inside the federal government's new Trump accounts, and she has spent the past year building private credit into products a retail saver can actually buy.
The full segment is covered here so you can skip it.
Here are the 6 calls that matter.
Key Takeaways
Investors were rewarded for efficient, concentrated, optimized portfolios, and she says that era has ended in favor of resilient ones
Higher yields raise the bar for every other asset class, which is why she wants durable earnings and balance sheets that can carry higher financing costs
Large institutional clients are adding buffers rather than returns: liquidity, gold, uncorrelated hedge funds, floating rate products
The heaviest ETF demand she sees is in short and ultra short duration fixed income
Her retirement products now run a barbell: a 10% permanent private-markets sleeve against a liquid index core
Markets are pricing the Fed's next move and underpricing persistent inflation, which is the risk her resilience argument is built on
The two rules she gives savers are invest early and stay invested — and with the Trump accounts, early means from birth
1. A New Era for Portfolios
The segment was taped ahead of a day of proceedings where global uncertainty was the overarching theme, and the first question was the broad one: how does she feel about markets and the economy. Hung answered with a claim about what kind of portfolio gets paid now.
The optimized portfolio is giving way to the resilient one
I think we have moved decidedly into a different era for investors where they were rewarded for efficient portfolios, concentrated, optimized — the ones that are much more resilient.
Yie-Hsin Hung
Growth itself is holding up, on her account. What has changed is the number of things that can go wrong at once.
Growth is fine; the risks around it are now permanent features
And we've seen growth be fairly resilient, broadly speaking, but, of course, capital costs are increased, geopolitical tensions, technological change — these are much more pervasive today.
Yie-Hsin Hung
Her instruction to investors is not to get out. It is to widen the set of outcomes the portfolio is built to survive.
Stay invested, and price a wider range of outcomes
And so what investors really need to be thinking about is a broader set of potential outcomes. Stay invested, but yet at the same time, think about what these macro risks could do to their overall portfolios.
Yie-Hsin Hung
2. Higher Yields Raise the Bar
Asked where the bright spots are, geographically and by industry, Hung gave the firm's own positioning first. It is not a tilt.
At benchmark in both equities and fixed income, with the hurdle rate up everywhere
If you look at our own portfolio, we remain at benchmark for equities and fixed income. But I think the fact that yields are higher today, it just raises the bar for all other asset classes.
Yie-Hsin Hung
That hurdle is what sets her equity screen: companies whose earnings hold up and whose balance sheets can carry more expensive debt.
The equity test is durable earnings and the ability to pay higher financing costs
So when you think about equities, it's important to think about companies that have really durable earnings, strong balance sheets, ability to withstand these higher financing costs.
Yie-Hsin Hung
The more specific piece of information in the answer was what her largest clients are buying. It is a list of buffers rather than a list of return-seeking positions, and it ends with the part she says is moving fastest in the ETF market.
Institutions are buying liquidity, gold and floating rate, and crowding into short-dated bond ETFs
And then at the same time, we're seeing some of our large institutional clients add other elements to their portfolios that are more buffers, increased liquidity, maybe metals like gold allocations, uncorrelated hedge funds, floating rate type of products, and then increasingly, particularly in the ETF market, huge interest in short duration and ultra short duration fixed income.
Yie-Hsin Hung
3. A 10% Private Sleeve
The interviewer turned to the products State Street has built to give retail investors a route into private markets, and asked how much demand there has been. Hung said three products launched over the past year, pairing public index exposure with private credit, and that the credit inside them is investment grade. She said the firm worked to make sure the liquidity was there, that performance has compared well against others in the category, and that across the range the assets are probably nearing about $1 billion already.
The private-markets exposure inside the new products is investment grade, and liquidity was designed in
So we launched three separate products over the course of last year, really with a focus, as you mentioned, both public index exposure as well as private markets exposure on the credit side. Most importantly, it's investment grade.
Yie-Hsin Hung
Asked whether smaller retail and individual retirement investors should have more access to private credit, Hung did not answer yes or no. She answered with the time horizon, and then with where she has actually put the exposure.
Access depends on the holding period, which is why the money went into retirement accounts
I think that it really depends on people's time horizons. Where we have focused is in their retirement assets because if you look at their overall — where they're putting their money — that is obviously, like, the longest time horizon.
Yie-Hsin Hung
The structure is a barbell: a permanent 10% private sleeve against a liquid index core
So we've launched target date fund series with a 10% persistent allocation to private markets broadly, so equity, credit, real estate. But the rest of it is very liquid, index oriented. So it's almost a barbell approach that we think sort of delivers the best of both worlds.
Yie-Hsin Hung
4. If Inflation Is Persistent
The interviewer made the case that ordinary investors used to be able to ignore energy and commodity prices and no longer can, calling the moment an oil super shock and a global super shock, and asked how much weight Hung puts on crude and refined products hitting the economy from here.
Hung did not take the oil question directly. She reframed it as a question about what markets are watching.
The market is trading the Fed's next move and underweighting the chance inflation sticks
I think that there's been so much focus on the markets on what is the Fed's next set of moves, and maybe a little less focus on what if inflation is more persistent and we're in a higher for longer rate environment.
Yie-Hsin Hung
That is the argument underneath everything else she said in the segment. If the rate and inflation regime is uncertain, the portfolio has to hold pieces that earn their place in more than one of them.
Different parts of the portfolio have to work in different regimes
So it's all about this notion of resiliency and ensuring that whether it's a high inflation, low inflation, a high interest rate, low interest rate environment, they have parts of their portfolio really working for them.
Yie-Hsin Hung
5. Income for Life
The interviewer described the advice he was given starting his first job: take the 401k, max it out every month, and you will be fine. With people retiring earlier and living longer, he said, that no longer covers the problem. Hung agreed, and pointed to the product the firm built for it.
IncomeWise pays a managed payout after the working years, guaranteed for life
And one of the most popular products that we have today, called Income Wise — it has guaranteed income. And so you participate in markets through your working years, and then there's a managed payout, and you can ensure that you have enough income for life.
Yie-Hsin Hung
The demand behind it, she said, is demographic rather than cyclical.
Longevity is what is driving the demand for income products
And we also see tremendous demand for income oriented products, generally speaking — just because as populations get older, and hopefully we all live longer, right, we wanna make sure that we don't outlive our savings.
Yie-Hsin Hung
6. Investing From Birth
The last question went to the other end of the age range. The interviewer noted that State Street's SPY is integral to the Trump accounts introduced a few months earlier, said the inflows have been large, and asked what the program says about how families think about their children's futures.
Her two rules are invest early and stay invested, and she says the accounts enforce both
One of the key factors of creating wealth over time is investing early. And there's a second one — staying invested. And I think that's what these Trump accounts do.
Yie-Hsin Hung
The product's claim on the slot is price. It is being used as a default option, and she made the cost argument rather than a performance one.
The pitch is the lowest-cost S&P 500 exposure, bought from day one
It's the lowest cost S&P 500 exposure. And we're really excited. I mean, you can't start much earlier than birth.
Yie-Hsin Hung
What she wants out of it is not the contribution itself but the habit it starts: broad market exposure held early, so that people arrive at retirement already invested.
Bonus Insights
The interviewer's own framing did a lot of work in this segment
Three of the six questions arrived with a claim already attached: that global uncertainty was the overarching theme of the day's proceedings, that the world is in an oil super shock, and that the standard 401k advice no longer covers a longer retirement. Hung accepted the third, declined to engage with the oil call, and answered the first with her own reframing about portfolio construction.
She put private credit where the money cannot run
The reason the private-markets exposure went into retirement products rather than a general retail wrapper is the time horizon, on her account, not the wrapper. Retirement assets are the longest-dated money households have, which is what makes an illiquid sleeve tolerable inside them.
The segment ended on a joke
Asked nothing further, the interviewer closed by saying he might ask for some advice off camera once they were finished.
Hung's bottom line is that the next decade will not pay for the same portfolio the last one did: with yields higher and inflation possibly stickier than the market is pricing, she wants durable earners, a liquid index core, a small permanent private sleeve, and buffers that do their job in more than one regime.
Products, Companies & Tools Mentioned
State Street Investment Management (Her firm, at benchmark in equities and fixed income; its own read is that higher yields raise the hurdle for every other asset class)
SPY, the SPDR S&P 500 ETF Trust (Used as a default investment option in the Trump accounts; she sells it on cost, calling it the lowest cost S&P 500 exposure)
Trump accounts (The federal program for children introduced a few months earlier, which the interviewer said has drawn large inflows into her firm's fund)
IncomeWise (The target date strategy she named as one of the firm's most popular products: market exposure through the working years, then a managed payout guaranteed for life)
State Street's target date funds (Now run with a permanent 10% allocation to private equity, private credit and real estate against a liquid, index-oriented remainder)
Gold, uncorrelated hedge funds and floating rate products (The buffers she says large institutional clients are adding alongside more liquidity)
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