At this year’s Milken Institute Global Conference, Principal Asset Management’s CEO, Kamal Bhatia, joined a panel of global leaders to explore where markets are headed—and what investors should watch most closely. In a candid and forward-looking conversation, Bhatia addressed rising macro uncertainty, the growing relevance of private markets in retirement portfolios, and why credit conditions abroad may offer a glimpse into tomorrow’s investment realities.
Q: You were asked to rate the health of the U.S. economy on a scale of 1 to 5. You gave it a 2. Why?
There’s a growing disconnect right now between what investors hope for and what decision-makers are actually doing. I speak with CEOs around the world, and I’m seeing more caution than conviction. That caution doesn’t always show up in market sentiment, but it’s there in capital spending decisions, hiring, and risk-taking.
So while investors are holding onto hope—whether that’s for a soft landing, rate cuts, or continued asset price support—decision-makers are still signaling anxiety. And to me, that’s the real tell for where the economy stands today. It’s not a collapse by any means, but it is a period of hesitation. That’s why I gave it a 2.
Q: Much of your panel discussion focused on private markets and retirement. What’s the paradox you’re seeing there?
Private markets have become a dominant force in investing—but the average retirement investor is stuck watching from the sidelines. We’re here at Milken, where private equity, private credit, and alternatives are front and center. Yet across defined contribution plans globally, private market exposure still averages below 50 basis points.
That’s an enormous gap considering retirement is the largest investable universe in the world—bigger than banking, bigger than insurance. This is about the idea of opening up the benefits of private investment capabilities to DC plans – More than 60% of Americans in defined contribution (DC) plans are invested in target date funds, yet only a handful of these funds include private assets. As this gap widens, so does the wealth and opportunity divide between institutional and retail investors. If we’re serious about unlocking long-term value, we can’t keep private markets walled off from the place where most wealth is being accumulated: 401(k)s and similar plans.
In contrast, institutional DB pension plans have been big users of private market capabilities, including private credit, private real estate, etc. for quite some time. And we have been partnering with them for a long time to implement private solutions into their portfolios.
What gives me optimism is that investors are starting to care more about valuation and less about the label—public or private. They’re asking, “What’s the relative value here?” not “What exchange is it listed on?” That shift in mindset will be crucial. And I believe the most practical path forward is through managed solutions—like target date funds—that can provide structured access to private markets while maintaining fiduciary integrity.
Q: What about opportunities outside the U.S.? Where are you seeing divergence?
Credit markets globally are telling very different stories. In Brazil, for example, government bond yields are over 14%. For investors there, the incentive to look beyond domestic credit is limited—it’s already richly compensated. Contrast that with China, where interest rates have fallen below Japan’s, which almost no one predicted. And yet, China now has an urgent need for credit to rebalance sectors like real estate and drive economic regeneration.
So what we’re seeing is not just divergence in rates—but divergence in credit demand, monetary posture, and economic urgency. For investors, that means you can’t export a U.S. view of credit globally. You have to localize your thinking, even as you apply consistent risk frameworks. It’s one of the reasons we remain focused on regional insight. That’s where opportunity often hides.
Q: If you could ask U.S. policymakers to do just one thing to support the economy, what would it be?
One word: clarity. The U.S. remains one of the most entrepreneurial nations in the world. Small businesses, founders, innovators—they are the real growth engine. But risk-taking only thrives in an environment where the policy rules are understandable and stable.
We’re not asking for certainty—just bounded conditions. Whether it’s tax, regulation, or capital treatment, clarity gives decision-makers and retirement investors the confidence to act, thus channeling capital into markets. And in a world where risk is everywhere, clarity is a multiplier. It enables the natural strength of the U.S. economy to express itself more fully.
