Q1 2020 Earnings Call
Good morning, My name is the call and I won't be your conference facilitator today.
Thank you for standing by and welcome to the Janus Henderson Group first quarter Twentytwenty <unk> earnings Conference call.
All lines have been placed on mute to prevent any background noise.
After the speaker's remarks, there will be a question and answer period.
Interest of time questions will be limited to want to initial and one follow up question.
Today's conference call certain matters discussed may constitute forward looking statements actual results could differ materially from those projected in the forward looking statements due to a couple of factors, including.
Not limited to those described in the forward looking statements and risk factors sections of the company's form 10-K for the year ended December 31st 2019.
Form 10-Q for the quarter ending March 31st Twentytwenty.
And in other filings made by the company with the FCC from time to time, Janus Henderson assumes no obligation to update any forward looking statements made during the call.
Thank you now it is my pleasure to introduce Dick Weil, Chief Executive Officer of Janus Henderson, Mr. While you may begin your conference.
Thank you operator.
Welcome everyone to the first quarter 2020 earnings call for the Jensen or some group.
Joined or Roger Thompson, our CFO today.
First and foremost I hope that everybody listening on this call along with your loved ones are all safe and healthy.
I want to acknowledge that Herwick work of many in our society supporting all of us and the continuation of our businesses and our lives it's their resilience and sense of duty, which keeps our society going during this cobot 19 crisis.
I also want to recognize the very hard work of our own employees, who put in tremendous hours and creativity to adapt to these extraordinary circumstances and its thanks to them that today. We can report that were working safely from our homes and that our company is operating successfully.
On today's call I'll provide an introduction of little update and then Roger will give his update on quarterly flows investment performance and financial results. After those remarks, we'll take your questions as usual.
For me the story of the first quarter is really two stories Roger will give you more specific specific information in the minute.
But we were having a very good start toward here in January and February investment performance was strong and we seem to be gathering positive momentum across our business. Then of course, the cobot 19 crisis hit in March and that change. Thanks.
Let me step down a lot of one focused on what we've actually done in the first quarter.
Immediately after the Whr declared a global health emergency we moved aggressively to implement our emergency scenarios and offices around the globe regarded by are simple principles ticking excellent care, where clients, while simultaneously protecting our employees and their families.
Very good news is that these efforts have worked powered by the hard work of our amazing employees currently we have greater than 95% of our employees working remotely.
Every single one of our 28 offices are operating under emergency business continuity plan.
Our infrastructure and planning have held up extremely well, we're able to do work daily business maintain our strong control environment.
We continue to take good care of our clients in remained in good contact with them I'm extremely proud of how where employees have successfully adapted to these challenges and this new way of doing things while remaining focused on keeping your clients at the heart of everything we do.
A little more on the clients agendas Henderson, we understand in times of crisis like today, we need to be closer than ever to our clients, we need to communicate with them about what we're seeing in the financial markets and hearing from the company's we cover and we need to listen to them.
I understand there fierce and concerns and answer their questions.
I'm proud to say our communication effort has never been stronger from the start of the pandemic.
Put out a vast amount of focused content. That's been created to answer two quick questions I'm hearing great feedback from clients that we are listening while responding effectively why no. One can accurately predict the future I think are experts are doing a very good job, helping clients make timely and better informed decisions.
From an investment perspective, Cobot 19 has obviously created unprecedented challenges.
We have been very focused on maintaining our client promises during the crisis, our portfolio managers and analysts have been working harder than ever doing their deep research, they're talking to company management teams revisiting their financial models and stress testing company balance sheets.
Ethernet aggressive way in fact, the company said, we've been talking to have been very responsive and in some ways corporate access has never been better.
Current valuations reflect a huge amount of liquidity management and perhaps also some panic selling.
Large gaps are opening up between market value in our own well researched opinions in the coming months, we will see great opportunities to invest for our clients in a way that should drive returns in the years ahead.
The global Health crisis is a since it's a significant challenge, but our investment teams are rising to it and they are actively seeking out opportunities created by the volatile markets.
I'm proud to report our investment teams adapted well and it's working well despite the remoteness of not being in the office. Our teams are collaborating effectively an intensely and I remain very confident in their success.
Before I turn it over to Roger Let me also touch on financial condition.
Considering the strength of the of the market declines round the world I wanted I want to make sure I talk about our financial strength.
Despite the lower levels of anyway, we continue to deliver significant profits with a strong margin we're generating a substantial positive cash flow. We continue to have a strong balance sheet against this backdrop, our board remains committed to pay our regular dividends.
Our strategy of simple excellence remains our path forward.
We continue to deliver for our clients.
For owners and four employees, our financial strength is allowing us to continue to invest in becoming both more simple and more excellent.
Finally, let me turn to U.S.G., the cobot 19 crisis rightly deserves all of our focus and attention, but we have not reduced our commitment to developing our yes to your approach governance and policies Janus Henderson has a long history of active management initiatives that cover a diverse range of products sorry of topics such.
As corporate governance, sustainable investing and climate change.
We're committed to acting responsibly not only in the way that we invest but in the way that we engage our clients and support our employees and manage our impact on the environment and societies and communities around us.
Particularly during this pandemic I'm proud of our initiatives that we've undertaken to support the local communities and charity partners, our culture and values are even more important at times like these and I'm proud of what we're doing.
In conclusion, we are living an unprecedented times, our top priority remains to deliver excellent for our clients, while safeguarding the safety of our employees and their families.
Our so our long term track records remain solid.
Thats investment track Records, obviously, sorry, our client relationships are strong and we're on a very solid financial foundation, we continue to move our business forward.
I can't thank our employees enough you showed great resilience and professionalism. During this trying time, while also dealing with the obvious personal challenges created by this pandemic. Please stay safe and healthy with that let me turn it over to Roger.
Thanks, Dick I think you've everyone for joining us I sincerely hope that everyone on your friends and family and colleagues a second healthy.
Looking at the first quarter's results.
Okay volatility in the last five weeks for the quarter, coupled with the previously communicated redemptions results in $12 billion of net outflows.
Food and you when was down 21% compared to the fourth quarter.
That said you haven't you went for the quarter without any 3% from the prior quarter and as we sit here today as you win is up around 10% from the end of March.
In terms about got results there was one significant downturn in the quarter.
Declined in the U.S. as at the 31st at March.
On the economic uncertainty of type at 19 is affecting the value of our intangible assets and goodwill, which resulted in an impairment to $497 million.
I'll remind you that this is a noncash adjustment.
The adjusted financial results were actually stronger the same period, a year ago, but down a little compared to prior quarter with adjusted EPS of 60 cents.
Compared to 65 cents a quarter ago.
Finally, we returned $97 million a cash to shareholders during the quarter dividends share repurchases.
Moving to investment performance on slide five.
Long term investment performance remained strong with 65% and 66% to firm wide assets, reaching their respective benchmarks on a three and five year basis.
I think first in March.
Relative performance compared to peers is even stronger.
With 69%, 84% and 79%.
Represented in the top two Morningstar Cortiles on a one three and five year basis, respectively.
We take a long term view of investment performance understanding that very short term results will fluctuate period to period.
The last five weeks of the quarter rub precedented in volatility and liquidity terms.
Our investment team is focused on identifying opportunities that are being corrected by recent market defense to position full Saudi is for the long term.
Turning to total company flows on slide six.
For the quarter next outflows were $12.2 billion compared to 6.7 billion last quarter.
This reflects an increase in gross redemptions due to the 6 billion at man diagnosis that we previously told you about some affiliate writings coal along with elevated redemptions corrected by extreme volatility the loxa parts of the quarter.
The gross redemptions were partially offset by higher gross styles.
Gross sales were 37% higher than the same period a year ago.
On a 21.4 billion a gross sales is the best results since the merger continuing that I mentioned, we saw in the second half of 2019.
Slide seven provides a little more color on the quarterly fly results.
Normally we don't focus on such short term flows so with the circumstances. It this quarter, we felt that as a one off it was importance. We thought this level of detail to help explain the results.
The 12.2 billion that outflows is almost entirely made up of the 6 billion previously notified undisclosed redemptions in the global emerging markets a core plus fixed income.
And outflows in the month of March caused by the market volatility.
Outside of these items January and February outflows were less than a billion dollars on included the continuation of the strong momentum intermediary business.
I'm pleased to site as we begin the second quarter the pace of retail outflows it slowed significantly.
I'm not sure we'll see in the public sites it seems to be published.
April intermediary outflows, so intermediary flows a currently around flat.
Moving to slide eight which shows the breakdown of flows in the quarter by capability.
Equity net outflows for the first quarter was 6.9 billion compared to 1.3 billion in the prior quarter.
Quarterly results was due to the previously that's part 1.1 billion redemption and am I not flows over the last five weeks of the quarter.
Floating to fixed income were negative in the quarter at 3.4 billion.
Excluding the previously notified 5 billion leafy protection in core plus the remaining fixed income business was positive for the quarter due to institutional mandate wins, primarily the seat in Australia.
In fact outflows of $2 billion.
Multi asset flows continue to be driven by strong flows into the balance strategy total inflows for this capability in the first quarter were $900 million.
Pleasingly the strategy continues to be in the first Morningstar portal over all time periods.
Alternative net outflows 900 million were primarily from the UK property Fountain, you pass through the Fed fund, which is actually performing very well.
Slide nine it's a standard presentation the U.S. got statement of income.
Excuse me.
Now turning to slide Ted.
Summary financial results.
Despite the difficult market environment, our adjusted financial results for the better across the both than they were a year ago.
This improvement resulted from better performance fees slightly higher average assets a good cost discipline.
First quarter, adjusted operating margin was 37.2% compared to 36.9% to the prior quarter and 34.4% year ago, reflecting reflecting that strong cost discipline.
Finally.
Adjusted diluted EPS was 60 cents for the quarter compared to 65 cents for the fourth quarter and up from 56 cents a year ago.
On slide 11, we've outlined the revenue drivers compared to prior quarter.
Lower average assets performance fees on one fewer calendar days, where the biggest drivers of the quarterly change in adjusted total revenue.
That management fee margin for the first quarter was 45.1 basis points, which was up slightly from the fourth quarter.
The quarterly increases due to mix shift.
The margin it's been resilience during the market downturn with the exit writes down only slightly compared to the first quarter average.
Performance fees were lower primarily from segregated mandates, which a seasonally higher in the fourth quarter.
Regarding U.S. mutual fund performance fees. The first quarter remained relatively flat to the fourth quarter, a negative 1.9 million, but have improved significantly from the negative 8.9 billion a year ago.
Moving to operating expenses on slide 12.
Adjusted operating expenses in the first quarter with $278 million, which is a 5% decline compared to the fourth quarter.
Adjusted employee compensation, which includes fixed variable self costs was down 2% compared to prior quarter.
<unk> costs were actually up 4% due to annual pay rises seasonality of payroll taxes resetting and for won't pay matches.
Given the elected to Q1, I mean items fixed costs will be lower in Q2.
Variable compensation with low by 8% due to lower profits.
Adjusted LCR was down 25% for the fourth quarter from the impacted mark to market adjustments.
In the appendix, we provided updated seats out on the expected future amortizations of existing crops.
The first quarter adjusted comp to revenue ratio was 42.4%.
So we're actually I was in line with guidance.
In a moment I'll talk about what we anticipate the remainder of Twentytwenty given lower asset levels.
Adjusted non comp operating expenses was actually flat to the prior quarter, which as a reminder included a one time 5.5 million credit.
Yes, and so this credits was offset by lower expenses, particularly in marketing and travel.
Finally, our carrying effective tax rate for the quarter was 27.4%.
Higher effective tax rates compared to the statutory rate guidance of 23% to 25% is primarily a result of books book to tax differences on stock based compensation.
Considering the lower asset levels entering the second quarter I wanted to spend a few minutes revisiting our expense guidance twentytwenty.
As a reminder, we have a keen focus on sound financial discipline within awareness of margin pressure, but with an emphasis on the long term as opposed to short term results.
That said in this environment to so many unknowns, particularly around the depth and duration of the crisis, we all being prudent in managing expenses.
This includes the hiring freeze canceling out deferring the hiring to fill vacancies reviewing contract to use.
You have all non compensation related expenses.
Looking at compensation.
Our assets will drive lower revenues, putting pressure on the adjusted comp ratio, which we now estimate to be in the mid fortys.
Our guidance for Noncompensation expenses was low to mid single digit growth compared to 2019.
We now anticipate known cost to be flat to slightly down on 2019.
And finally.
Statutory tax rates is expected to remain at 23% to 25%, but as we saw in the first quarter. The effective rights will be impacted by various differences, which are rise quarter to quarter.
The updated guidance assumes roughly flat that you win for the remainder of Twentytwenty I continued low activity from travel.
Timothy on travel from kind of had not seen through the summer.
We'll update guidance accordingly of future earnings calls should these assumptions, which are there any change.
Turning to slide 13, I don't look at our balance sheet.
The balance sheet that can withstand volatile markets such as the current development has always been a proxy for spend management.
We're on a net cash position has no debt maturing until 2025 and the minimal debt, we do have equates to less than one times EBITDA.
On slide 14, we provided additional detail on the first quarter cash activity.
Cash flow from operations is positive despite including annual compensation payments in the first quarter.
For the remainder of the yet we don't anticipate any large operational cash needs. So full cost generating significant cash flows that can be used further investments in the business ultra return to shareholders.
Second we returned $98 million to shelves as far as dividends buybacks.
The dividend remains well supported by the business results today, we declared a.
I think 36 cents per share quarterly dividends.
During the first quarter, we purchased 2.1 million shares of stock for $31 million at an average price of $15 11.
Also throughout the buyback in terms of returning true excess cash to shareholders have not changed and we believe it is a good use of cash at the current stock prices.
So whilst we're constantly review you should expect to see us in the market in Q2.
During the quarter, we finalize inside the Geneva capital management, which resulted in net cash proceeds of 38.6 million. In addition to announce over the next five years.
Finally, we had $98 million in net seed redemptions in the quarter in the prior quarter, we've made $100 million short term investments in our seat book, which we redeemed in Q1.
The net result of its activity, it's a slight quarterly increase in cash and cash equivalent balance to just over $800 million.
It's cash balance coupled with the expected cash flow generation for the remainder of the yet provides a solid foundation to weather the storm and to come out when is.
I'd like to turn it back I went to the operates acuity.
Thank you.
Ladies and gentlemen.
At this time, we will conduct a question and answer session in the interest of time questions will be limited to one initial and one follow up question.
I would like to ask a question. Please press star one on your phone now and you will be placed in the queue in the order received.
If you are using a speakerphone. Please make sure your mute function is turned off to allow your signal to reach our equipment. Once again. Please press star one ask a question and we'll pause for just a moment to allow everyone an opportunity to signal for questions.
Well take our first question.
Ken Worthington with JP Morgan.
Hi, Good morning. Thank you for taking my questions on I think first can you talk about the difference as you saw between the reaction of your European investors, you heard us investors and your age investors.
The Kobe 19 crisis in the downturn in the various markets and as the World recovers. We do you expect to see or how would you expect to see customers Reengage by region. Given your mix is based on your relative performance.
Kevin Let me, let me start mountain Pepsico coming as well.
Looking at Slide is it was interesting we saw outflows in March in the U.S. and in Europe.
Actually interestingly in Asia outside the one big fixed income outflow that we talked about on the practical outflows in Asia were actually positive we had our best quarter in Asia for quite some time.
And that is continues.
So you has been difference.
But yeah March was at March was a pretty consistent outflow in both Europe and the U.S.
Congrats and let me now but carcinoma.
And then on the aggregate Reengagement side any any things you would expect here as the market recovers.
Oh I guess the biggest thing in areas. We are very active in the marketplace, we're seeing considerable.
Clients interactions.
Our pipeline in institutional is actually stronger than it has been since the merger.
I'll pull through of of information is very high.
So yes, yes, it's obviously difficult to site.
Given where markets are where they may end up but.
Activity is pretty high everywhere.
Our next question comes from Dan Fannon from Jefferies.
Hi, Thanks, I guess is following up on that last commentary a Roger with regards to.
Big pipeline since the close the deal can you talk about.
The drop in mobile products.
Hi details.
Yes, and this has decades of its abroad listed products is not just in one thing. It includes some absolute return and fixed income in equity it's.
And it's geographically diverse as well.
And so.
Roger Smith CFO he never believes pipeline what he believes this cash in the front door.
And so we'll see how well we can convert opportunity into into flows and long term relationships, but.
I think all of US would have had a question going into this crisis, how well can you reach out and connect with clients and even prospects through this remote.
Working environment.
It turns out better than I think any of US would have anticipated I think we're seeing some clients turned to.
Zhu more remote finals presentations in a way that seems to be working for them and and working for us. So.
Our business continues to move forward and and we're optimistic about what we can accomplish asterisks none of us have a crystal ball as to whether the market is going to continue in a relatively stable way or weather.
There will be more very significant upsets on the horizon. So.
You know.
We will live in the broader environment as that moves, but but assuming a relatively stable platform from which to work we're pretty optimistic about what we can accomplish.
Great well begin to see follow up maybe non comp guidance and flat to slightly down.
No just you mentioned getting a couple of continues in terms of what you're evaluating I assume you had just gone through a lot of those evaluations through the merger.
Curious how much is actually.
Business decisions that are being made versus the main travel kind of from Boeing kind of natural.
Reduction somebody extension, so you get a little more color, let me, let that what you actually doing versus kind of words, which is within output in the clinic environment.
Yeah, you're right you're quite right that that there was some things and sort of naturally look after themselves.
We normally spend about 3 million at $2 billion amongst thing into any obviously adult.
Our marketing and conferences and things like that.
Todd events is obviously very significantly diminished.
And we're expecting that to continue for a period of time.
There are yeah, we've talked about both from a couple of things, but the other thing I think it's very important Tonight is we continue to invest in the business.
We put a number of projects that we plan to do this yet the vast majority of those were still doing these things that we're still doing them. This yet again Dick talked about how the organization is working.
We had to deliver those things in this market I think is also in this environment were not to talk to set of people to look at a high.
I think is pretty remarkable.
Pretty confident of of progressing with some of them, we'll take a little bit longer. So again, we yes. Some of that is that some of those things, but we hope to finishing twentytwenty will probably drug after 2021.
But the cost that will drive into next year.
But we are continuing to invest in the business.
And that's baked into that guidance, a flat to slightly that.
We'll take our next question from Simon Fitzgerald from Evans <unk> partners.
Good morning. Thank you for taking my question only had one question. How does this morning, just in regards to the payment.
And just sort of highlights intensive the.
What the test was they all the measurement that results in the payment and certain contracts as opposed to others like just wanted a bit more day Tyler in that impairment charge of understanding this noncash debt.
Yes. Thanks.
You've got yeah, I think all firms would it with that we'll be looking like this and if you've got a triggering event visit there's no doubt you've got a triggering event with with the are you went to climb and the uncertainty in the markets.
Then just need to look at where you where youre.
Where you'll period end the asset so and and then and I look at that we sit with a pretty significant.
Impairment of goodwill balance where an intangible business.
And at times, when you look at that and you and you come up with some reasonably prudence assumptions.
Thank you all the way you might be on the upside and downside from from the end of March you model something on that you've got some.
Contracts and some goodwill.
It looks a little bit.
It looks a little bit topic at those prices. So we've we've written that off but as you sites, it's a noncash item.
Thank you.
And our next question comes from my carrier from Bank of America.
Good morning, and thanks for taking the questions.
Yes, I guess.
No question on flows in any if I look at the sales in the quarter, you had pretty strong given the environment.
Redemptions, obviously yeah.
When you look at the trend line there.
Any granularity on where you're seeing you're paying that relatively straight.
Just on the calling on April I think you said you relatively flat I just want to make sure I I don't know if you just intermediary or overall, but just any clarity here. Thanks.
Let me take the second pass that first Mike Yeah, intermediaries flat institutional is lumpy, but we felt we talked about the Python Ah we talked about the pipeline that so and there's nothing big to tell you about I think is yeah. That's how we normally describing CF institutional is we'll tell you.
There is something as we did at the end of last year.
There is nothing big out there that you need to be aware I would institutional and intermediaries. It's flat. So I can just remind me the first off the question again right.
Yes. The first part was just you know when I look at the strength in sales you guys saw during the quarter. Just anything you do that kind of stay outstanding redemptions that you, obviously know what happened in the quarter and where we thought lead the industry outflows from the sale sides anymore.
So it's pretty broad brush you see you can say in that in the deck a that yeah. We saw we saw increased gross gross flows a number of capabilities. Yeah. Some of Oh longstanding strong products like balance continues to be positive absolute return income first.
Only positive.
Hey, some other fixed income areas.
Or small cap.
Global value. So what is it is fairly broad.
But it has always it's different by geography.
In our business, but but fairly fairly broad.
And we'll take our next question from Andre Stadnik with Morgan Stanley.
No no. Good morning to just wanted a couple of questions. Firstly, just following up on that slows a an intermediary floods game plan in April and you just kind of little bit of what's changed the emphasis at some geographies doing better than others and he's a better gross sales days with lower gross redemptions.
Changed in April.
Primarily of affection story Andre.
Yeah I.
I think it wasn't yeah.
It was obviously was a reaction in March.
But that seems to have.
As a pause at least now in terms of in terms of redemptions were still seeing good activity in in gross so they decrease to get to flattish for for intermediary Israeli around less redemption, but it's the same everywhere.
Yes.
Lux Dublin.
The UK.
ER and Asia, a role I roll around flat. So it's not that one region has changed completely on others haven't.
It's pretty in again for us.
Having us assigned everywhere, though for us.
We're seeing flattish flows in intermediary.
Yeah the results of yeah.
Gross things in gross out stayed about flat in all markets, which is which is a dramatic change from April but again.
Our dramatic change from sorry dramatic change from March, but as Dick said, we caveat that with with that just happens to be where we are now I think the important messages, yes equal looks different than March.
But obviously, we can't tell you what Michael.
Yes, Thank you and my second question just.
Thinking through with the operating margin.
And we'll just thinking about mid cities.
It's what 21.
Right. So how do we think we previously said mid I think we previously said mid to high Fiftys stuff that you know that that remains all long term aspiration, but.
But we'd love to record levels, Yeah, you're probably looking into love affair.
Thank you.
We'll take our next question from Ed with CL essay.
Thank you taking my questions can we just got off on intact.
The outflows have been getting better they bought performance seems to be getting a little bit was can you just touch on conversation with clients and how and what the outlook is it fair for INTECH.
Yeah, I'd say in the first quarter the performance was a little bit better overall, but they have so many different products living in different directions that any such.
Can't comment is.
You know has to be taken as a pretty blurry outline.
Underneath the covers save a lot of different products.
Moving in different directions, but generally speaking the in tech products in the first quarter performed sort of as described on the 10.
So.
You know thats not.
Strong enough outperformance to really drive them.
Back to a very healthy front foot then you did they need to put up good performance over and over a long period of time to to get to the level of success that we are that we aspire to for them so they're not.
You know, they're not back to sort of green lights, and full health, but ER, but you know, they're continuing to do their job and work hard they do an excellent job of explaining things and communicating clients as they continue to evolve their business. They have a significant number of strategies that have been excellent in this environment.
Again and have delivered outperformance and obviously, a those will probably be the things that you know a lot of clients will be more interested in but they continue to have opportunities to sell business and move ahead and they're focused on you know healing some of continuing to heal some of the damage of some of the past.
And we've talked about based they've added some risk control practices into how they manage money.
As lessons learned from the past so they are there any improved business.
And there continue into sort of try and built forward no special guidance that we have around.
Their future at this point.
Okay. Thank you.
Just want to one other question.
If you look at the World now and you've obviously got very strong balance sheet would you call ought to.
Do you have given all the market moves does that change your appetite at all to look at any inorganic opportunities.
We've sort of always answered that question the same way, which is never say never but we really are focused on first things first we want to.
Delivers a simple excellence that we can deliver in the current.
Configuration of our company.
See lots of opportunity to improve how we're doing what we're already doing and our priorities are more focused on that then they are on big M&A or changing things in a inorganic and significant way.
Never say never you know we continue to look at things we continue to educate ourselves we continue to listen to to folks so we'd like to chat and and mostly that's a learning exercise but.
But you know you can't you can't ever foresee the future perfectly something could potentially happen, but it's not the highest thing on our priority list.
All right. Thank you.
Our next question comes from Nigel put away from Citi.
Oh.
Oh, Hi, Hi, guys.
That's a little just it seems like on slide 30, fives as reasonable evidence of that sort of else. It's like yeah, you were talking about.
Yes, just checking I mean, if the assumption behind that pretty much the same as what you were saying on the other tough place to be let's say you end for payroll.
Or.
Is there anything else you can tell us about what's been a student behind.
That's like that.
Hey, Matt.
That's that's based on flat markets from the end of March Roger.
Yeah.
Okay and then just a second question just on the full let's see some and obviously I think it surprised nice people up how good the performance fees were in the third quarter can you give us sort of any kind of guidance as to how we should think about those for the remainder of the army, presumably we've got to look at sort of relative.
Well now and is there any color you can provide.
On that since Uh huh.
Potentially moving forward.
Yes, if we take in in in the regular pieces. If you like you Rick.
You had spoken phase.
Due to 27, saying that rolls off was actually quite a good good quarter.
So after we had a bit in order to two to stay at that sort of 2 million negative level, where we were but then we then we brought into the that's sort of bad year, a performance dropping off.
So you can model that if you model flat if you mobile flat performance.
For the year.
When you get to sort of $5 million was negative phase for the year.
Compared to $15 million last year upside account for the future performance, Okay, but assuming no no no alpha it's modest fight for the year.
I'll mutual funds and whoever soon we have these the European fun stuff that that kinda period is.
At June 30.
There are often something nice that all out again, you can track this stuff public they're off their awesome farms in there that are currently.
Above high Watermarks says that this as we stand here today, there's a little bit on crystallize, but again that can change.
Or that you capture the Cat fund is slightly ahead now so again more around the opportunity for the future rather than something that's in the back today.
But if the team that can continue to add its more positive than the this and performing space it could could occur there.
Let's face it segregated accounts in the first quarter, we had a couple of physically active accounts at where they were quite large.
One of those things what else.
So the cap we got have anymore.
But there are optimistic accounts that we would expect outperformance phase all.
For the remainder of the year, including in Q2.
Okay, great. Thank you very much.
And we'll move onto Ryan Bailey from Goldman Sachs.
Good morning, Thanks for taking my questions.
My first question is on the UK property fund the cadence I was just wondering if you can give us an update about the timing if you think that that might change and although implications and true you think platform.
Yeah, we got that that's going to this as as the entire industry is in that sector because the because the.
The value is that people because ultimately we love Fest and see close on valuations sorry, if you call value of fund.
Yeah, there's no real choice of them to spend it. So are we suspended or I don't think everyone else suspended the day after us just about.
The fun dispositions very well has a strong cash balance.
It's mix has less retired in the most people.
It's actually go some things like logistics warehouses into I would've thought doing rather whatever that might.
Oh, sorry, Yeah, we call I'll tell you when it will reopen it'll be when the survive. This all I can take off that material uncertainty killed like that that will really happened until there's some until the some transactions in the marketplace.
But again with were communicating well with clients.
And I think we've been viewed quite strongly in terms of how we have communicated. So you can never lots to guide products.
Ah Ah.
Ah, yes, it's a little bit easier when when an entire sector is a is positioned to saying one.
Understood. Thank you and just maybe another question on on buyback activity and thank you for the incremental color on the balance sheet strength and cash flows.
Just wondering how we should we thinking about media that as a target payout Ah, yes, so cash or you do you think in the current environment.
It's better to be prudent made.
Sure.
I flew on getting the stock price you think you have the opportunity to be a bit more aggressive.
This is dick.
Thanks for that question Yep I guess.
Our commitment to the dividend is is the first way that we returned capital and the strongest commitment the buyback is that an incremental piece. When are we don't have to invest that money in the core of the business and it's how our investors have told us they like to get that incremental return of capital.
So you know at these levels.
We're generating you know good free cash flows Roger Roger said, and we're going to continue to be in the market as Roger said earlier buying back if the levels of the market change significantly will have a conversation with the board and reflect on.
On whether that remains true, but but that's the piece that is I would say you know more.
It's on top of the dividend in that would be the first thing where we'd look to adjust its the market levels changed significantly.
Understood. Thank you.
And we'll take our.
Question for John Dunn with Evercore ISI.
Yes, you talked about a <unk> want to be a winner having a dislocation and you talked about what on the gross sales side is working but there are areas that maybe haven't been doing great. There maybe.
Teed up or close to maybe slipping to be contributors.
You know we have a list of focused products that we think have good client demand and good performance, we have a tracking process, where we take a look at things that are in the wings that we think are.
Maybe because of length of time that we've been running the strategy or maybe it's just a U.M. into strategy or it could be a performance bubbles moving through.
You know that we think will be a more appealing on a go forward basis, and we track all those things, but theres nothing that we'd want to publicly call your attention to along those lines that said sort of an internal process and frankly most of those pieces are ours are smaller you know our results tend to be the aggregation of a lot of.
Of individual pieces, and we hesitate to call any one individual piece out too often because it's the nature of our company is diverse geographically and diverse product was diverse across asset classes and so the things that really drive our results tend to be.
Aggregations, rather than individual specific things.
Gotcha, and then on the investment.
The quarter were there any investment strategies that stood out as I'm quoting kinda <unk>, you know the deterioration investment performance and and the ones that I know Super early days, but maybe that position to inflect back if you back to where you were in that they're kind of course, we're both form.
Yeah, I mean, I don't think I want to participate in a naming and shaming exercise on this call, but yeah, we had a few products that.
That dramatically or suffered in the three weeks the battery weeks in March we had some very good products that lost.
That last years of outperformance that they carried into March and gave significant parts of that back and we had some other pieces absolute return and other things that that's delivered well through the you know through the period of volatility, but honestly were less concerned about what's just happened in the last three months and more concerned about what happen.
Ins from here.
I don't think success or failure is driven by how you wrote through these last three weeks I think success or failure is driven by how well we find value in this disrupted market from here going forward in so we're not going to overreact to short term performance changes in the last month or two what we're gonna do.
It's try and keep everybody very focused on the idea that there's a huge range at mispriced opportunity out there and this is where we do our jobs well and succeed over the next three and five years.
Thank you very much.
With that maybe.
Let me just thank everybody for your time and attention today I hope we've done a good job answering your questions feel free freight to follow up with us a afterwards, if there's more we can do.
But we appreciate your time and attention today, and we look forward to speaking with you next quarter.
Okay.
Then once again, ladies and gentlemen that does conclude today's conference I appreciate your participation today.
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