Q2 2020 Cohen & Steers Inc Earnings Call
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As a reminder, this conference is being recorded Thursday July 23rd 2020.
How would I like that or the conference over to Brian Heller Senior Vice President corporate counsel of Cowen and stairs. Please go ahead.
Thank you and welcome to the cone and Steers second quarter 2020, <unk> earnings Conference call.
Joining me are Chief Executive Officer, Bob Steers, our President, Joe Harvey and our Chief Financial Officer, not Stadler <unk>.
I want to remind you that some of our comments and answers to your questions may include forward looking statements.
We believe these statements are reasonable based on information currently available to us, but actual outcomes could differ materially due to a number of factors, including those described in our accompanying second quarter earnings release some presentation.
Most recent annual report on form 10-K.
Quarterly report on form 10-Q for the quarter ended March 30, Onest 2020.
And our other FCC filings.
We assume no duty to update any forward looking statement.
Further none of our statements constitute an offer to sell or the solicitation of an offer to buy the securities of any fund.
Our presentation also contains non-GAAP financial measures that we believe are meaningful and evaluating our performance.
These non-GAAP financial measures should be read in conjunction with our GAAP results.
A reconciliation of these non-GAAP financial measures is included in the earnings release, some presentation to the extent reasonably available.
The earnings release, some presentation as well as links to our FCC filings are available in the Investor Relations section of our website at Www Dot Cowen and steers Dot com.
Finally.
I'd like to note that each of our speakers are participating on today's call remote.
With that I'll turn the call over to Matt.
Thanks, Brian Good morning, everyone.
Before I discuss our second quarter results.
To provide a quick update on our operational capabilities.
The cold ignite gene pandemic.
Our operations continued to perform effectively in a remote work environment.
Using the business continuity measures that were implemented during the first quarter.
You have maintained an active and reliable network communications spoke employees and with clients as well as effective work and control Barton it's across the organization.
Our technology and infrastructure, including use of key third party service providers have continued to support operations without interruption.
And as always our executive team that means vigilant and prepared to respond to various contingencies scenarios that may arise.
My remarks. This morning, we'll focus on our as adjusted results.
Reconciliation of GAAP to adjusted results can be found on pages 19, and 20 of the earnings release or on Slide 16, and 17 of the earnings presentation.
Yesterday, we reported earnings of 54 cents per share compared with 62 cents in the prior years corner and 61 cents sequentially.
Revenue was 94 million for the quarter compared with one or 1.8 million in the prior years quarter and one of 5.8 million sequentially.
The decrease in revenue from the first quarter was primarily attributable to lower average assets under management.
Average assets under management for the quarter was 62.2 billion compared with 66.6 billion in the prior years quarter and 69 billion sequentially.
Our implied effective fee rate was 56 basis points in the second quarter compared with 56.7 basis points in the first quarter.
This reduction was less than the anticipated one basis point decrease mentioned on our last call primarily due to favorable shift in asset mix.
Operating income was 35.5 million in the second quarter.
Compared with 38.8 million in the prior years quarter and 40.4 million sequentially.
Our operating margin decreased to 37.7% from 38.2% last quarter.
Expenses decreased 10.4% on a sequential basis, primarily due to lower compensation and benefits distribution and service. These in Gionee.
The compensation to revenue ratio was 36.5% for the second quarter.
Consistent with the guidance, we provided on our last call.
The decrease in distribution and service fee expense was primarily due to lower average assets under management in U.S. open end funds.
And the decrease in DNA was primarily due to lower travel and entertainment expenses are result of reduced t. any activity amid the pandemic.
Our effective tax rate for the quarter was 26 and they have percent lower than the guidance provided on our last call.
This differential which included the cumulative adjustment to bring the year to date ratio to.
27% was primarily due to the diminished affect certain permanent differences on a higher than forecasted pre tax base.
Page 15 of the earnings presentation displays or cash corporate investments in U.S Treasury securities and sheet investments for the current and trailing four quarters.
Well from liquidity totaled 191.9 million at quarter end.
Compared with 140.3 million last quarter.
You will recall that the first quarter included the paying the bonuses and the firm's customary funding of payroll tax obligations arising from the best thing and delivery of restricted stock units on behalf of participants in our equity incentive program.
Most importantly, we remain debt free.
Assets under management totaled 66.3 billion at June 30.
An increase of 9 billion or 16% from March 31st.
The increase was due to net inflows of 3.4 billion market appreciation of 6.6 billion, partially offset by distributions of 1 billion.
It's 3.4 billion represented our second highest quarter of net inflows pepper.
Advisory accounts I didn't close at 851 million during the quarter.
662 million of which were included in last quarter's pipeline.
We recorded 318 million of net inflows from seven new mandates.
And 754 million of inflows from existing accounts.
Partially offsetting these inflows were 222 million of outflows associated with it terminated account, resulting from manager consolidation and client Rebalancings.
Net inflows from advisory accounts were primarily to global and U.S. real estate portfolios.
Bob Steers will provide an update on our institutional pipeline of awarded unfunded mandates.
Japan sub advisory had net inflows of 318 million during the quarter.
Compared with net inflows of $280 million during the first quarter.
This marked the fourth consecutive quarter of net inflows from Japan sub advisory after eight straight quarters of net outflows.
Distributions from these portfolios totaled 334 million.
Paired with 316 million last quarter.
Sub advisory, excluding Japan had net inflows of 212 million.
Primarily from Rebalancings into global and U.S. real estate portfolios.
Open end funds had record net inflows of 2 billion 1.2 billion of which was from a strategic intermediary we added U.S. reach to their multi asset class model portfolio.
Distributions totaled 577 million.
437 million of which was reinvested.
Let me briefly discuss a few items to consider through the second half the year.
Notwithstanding the increase in our assets under management from the first quarter, our financial results continue to be affected by factors that we cannot control such as the market volatility and economic uncertainty, resulting from the cobot 19 pandemic.
But with respect to matters within our control such as investment performance in organic growth.
We continue to perform at a very high level.
As a result, we expect our compensation to revenue ratio to remain at 36%.
The majority of opening net inflows recorded during the quarter was into a legacy share class with a higher revenue share component.
As a result, we expect our distribution expenses for the second half of the year to increase by approximately one half to two basis points.
We project you need to be flat with the 46 million. We recorded in 2019 as decreases in travel and entertainment and sponsored and hosted conferences are being offset by targeted increases and recruitment and technology.
And finally, we expect our effective tax rate to be approximately 27% for the second half and full year 2020.
Now I'd like to turn it over to Joe Horobin, who will discuss our investment performance.
Thank you, Matt and good morning, everyone.
Today I will review our investment performance then provide some perspective on how our major asset classes, our position admits that pandemic.
Financial markets rallied strongly off the lows of late March and returns across all listed financial assets were significant in the second quarter.
Spurred by unprecedented fiscal and monetary stimulus.
And improvement and the virus curves in some parts of the world and parts of the U.S.
And wide ranging efforts to reopen geographies and businesses.
However, this crisis is far from over.
With the recent rise a virus cases in certain areas and the economic fallout, becoming better understood across the globe.
The good news is that capital markets, while volatile have been open and are providing capital to a wide range of businesses.
Turning to our best performance scorecard in the second quarter three of our nine core strategies outperformed their benchmarks for the last 12 months six of nine core strategies outperformed.
Measured by a U M, 75% of our portfolios are outperforming on a one year basis.
84% are outperforming over three years.
99% are outperforming over five years.
The one and three year figures improved from last quarter, while the five year figure remains near perfect.
The improvement in our batting average is from last quarter was primarily attributable to preferred and global listed infrastructure strategies.
98% of our open end fund you Wham is rated four or five star by Morningstar.
From 89% at the beginning of 2020.
On an absolute basis, our equity strategies and reads and infrastructure underperform the stock market, which was led by higher beta technology consumer discretionary and energy sectors.
Our preferred strategies narrowly led credit performance compared with investment grade corporates bank loans and high yield.
In terms of our relative performance most of our portfolios have been balance between growth and cyclicality.
Reflecting the uncertainties in predicting the course of the pandemic and the recession.
And are lower on the beta scale, which partially explains why some of our strategies underperformed in the powerful second quarter rally.
Turning to our major strategies by a U M preferred securities rebounded strongly in the second quarter returning 10%.
Virtuous cycle and sued and credit as better markets enabled issuers to strengthen balance sheets via new equity issuance, thereby reducing credit risk and further pulling and spreads.
We outperformed in both our core and low duration preferred strategies in Q2.
Recapturing some alpha lost in Q1.
Well the strategies remain behind their benchmarks for the past year.
Performance versus peers has been strong.
Our flagship preferred fund Cohen, <unk> steers preferred securities and income fund as position number one or number two versus its closest competitors for the one three and five year time frames.
We believe preferred offer compelling income in value.
So spurt in part by Central Bank buying yields on quality income securities have plummeted.
The yield on investment grade corporates fell to 2.1% recently compared with 5% on investment grade preferreds.
290 basis point spread compares with a long term average of 190.
This could lead to strong relative price performance as spreads normalize adding appreciation to a substantial income advantage.
With banks insurance companies, representing the majority of the preferred universe, we intensively analyze their overall health.
While banks recently reported substantial provisions for potential loan losses.
We continue to report positive bottom lines and capital building.
They entered this downturn in a position of financial strength with very high capital ratios and substantial liquidity.
The recent fed stress test further underscored the health of balance sheets.
Some insurance companies have face claims related to covance, but so far these claims appeared to be an earnings issue not a credit one.
All considered we believe investor to our investors are well compensated for risks and preferred.
Global listed infrastructure returned 9.5% in the quarter compared with the global equity index at 19%.
We underperformed our benchmark in the quarter, yet our performance remained strong with 300 basis points 370 basis points of alpha over the past year.
Infrastructure Subsectors that led during the quarter with those best positioned to benefit from resumption of economic activity and relaxation of travel restrictions, specifically airports toll roads freight railways and midstream energy.
Traditionally defensive sub sectors, such as utilities lacked.
We believe in attractive relative valuation opportunity has emerged when comparing listed infrastructure to stocks.
Infrastructure trading in line with stocks on a cash for multiple basis, whereas they have historically traded at a premium.
This inflection exists despite the fact that 65% of the infrastructure universe is less affected or is benefiting from the coven related changes in the economy.
You asked rates returned 13% and global real estate return a 10% in the quarter.
We performed inline with our benchmarks.
In our core U.S. strategy and underperformed in our global strategy.
As an asset class real estate underperformed in the rally because number one reads are viewed as lower beta and less attractive than businesses, whose fundamentals are working in the pandemic and number two investors may rightly be discounting longer or permanent fundamental impairments for some sectors.
As a reminder, about 34% of the real estate universe is directly impacted.
With hotels gaming in retail being the most adversely affected.
On the other end of the spectrum about 53% of the universe is businesses that are less were positively affected including cell towers data centers and warehouses.
For the last 12 months all of our real estate strategies across geography, and by risk profile have outperformed and in many portfolios. The alpha has been substantial.
As a result, we are well positioned to gain market share.
This is one of the most challenging yet exciting times to be an investment manager.
The cyclical and secular changes are unprecedented.
We have mobilize the company to organize and communicate our research and work closely with our clients. Many of our clients portfolios are more liquid than they were in the financial crisis, and therefore able to capitalize on dislocations that arise.
I'm proud of how we have engaged with our clients.
And we continue to build our investment capabilities for where the world is going.
Looking at the Big picture for fixed income and a zero interest rate environment preferred securities provide some of the most attractive current income profiles in the capital markets.
Considering infrastructure as the presidential election approaches you will hear more and more about fiscal stimulus via infrastructure.
Ranging from creating jobs, while fixing roads and bridges to building renewable energy infrastructure.
Meanwhile, we are seeing the benefits to our way of life and economy from investments in digital infrastructure.
While some of these things are tangential to our infrastructure business taken together they paid a broader picture of a great investment and therefore business opportunity.
Ultimately as we've seen in other countries, we need to use the private sector to invest in hard infrastructure assets and we believe that dedicated vehicles potentially tax advantaged could foster capital formation.
For real estate, the recession and pandemic are resetting the cycle, thereby creating the next set of opportunities.
Devaluation markdown already occurred in the public market, creating the first opportunity.
Fundamentals will reset and equal fashion for both the pipe private and public market as tenant demand shifts in response to cyclical and secular forces.
Slowly price discovery will work its way into the private market and provide acquisition opportunities for those with available capital.
As we have throughout every turning point going back to the early 19 nineties, we expect to provide capital to real estate companies that are well positioned to create value.
We see opportunities to provide capital to healthy companies to take advantage of acquisition opportunities.
To help strong businesses shore up their balance sheets.
And to help cyclical distressed businesses fix their balance sheets.
Finally, we may find a few opportunities to invest in private companies on behalf of clients.
In closing, we expect that the resetting of a cycle will create myriad alpha opportunities.
With that I'll turn the call over to Bob Steers.
Great, Thanks, Matt and Joe and good morning.
As you're aware operating in the current social economic and market environment remains a challenge.
Seemingly unpredictable path forward regarding the spread of the krona virus.
Lets into question all aspects of the shape and timing of any return to normalcy.
School businesses and state and federal government are all plotting courses based on what we know now.
But fully expect to adapt on the fly to conditions as they evolve for the balance of the year.
We're no different.
Conan stairs continues to operate remotely in the U.S. and though that we are targeting a potential phase one return in October we are prepared to delay that until next year if necessary.
Notwithstanding this unprecedented uncertainty we plan to stay the course by investing in people and product development to capitalize on existing and prospective growth opportunities that we've identified for real assets and alternative income strategies, while continuing to manage aggressively.
<unk> those variable costs that are in our control.
Given this difficult backdrop, we're really pleased to report a near record 3.4 billion of inflows in the quarter.
In many respects I believe this was actually our strongest quarter ever.
Only one other quarter produce superior results, but that was dominated by one source of inflows, Japan sub advisory.
By contrast, and consistent with our long term strategic plan. This quarter, we generated positive net flows in every channel and region.
Many years of planning on investing have substantially diversified and broadened our distribution capabilities and platform.
There were multiple factors that drove our 24% organic growth rate in the quarter.
The market decline in March, especially for reads actually motivated many existing and new relationships to add to or initiate positions.
Also the significant arbitrage that has developed between public and private valuations.
Continues to favor investing into listed securities versus private equity.
In addition, overall demand from institutional investors for real assets remained strong.
Especially with the prospect of government sponsored investments and infrastructure after the coming elections.
Turning to flows the wealth channel achieved another strong quarter, putting up record gross and net inflows of 5.2 billion and 2.0 billion respectively.
Organic growth in the quarter was 33%.
Breaking down the net inflows.
That's right fund flows were a record 1.3 billion, which was primarily attributable to the inclusion of our cone and steers Realty shares fund.
Large financial intermediaries model based product platform.
We do anticipate additional inflows from this relationship and the second half of the year.
As an aside I want to recognize that the sizable new relationship was the result of years of collaborative work between our investment and national accounts team. So thank you.
Flows into our preferred securities funds rebounded from net outflows in the first quarter and produced net inflows of 701 million in this quarter.
And as a reminder, we remain on schedule for an October marketing launch of our tax advantage preferred securities closed end fund.
Highlighting the growing diversity of the wealth channel sources of flows the all Rhiag segment produced the most impressive growth with net inflows of 1.6 billion for 32% organic growth rate.
Thank trusted insurance sector is also delivered a strong 312 million of net inflows for 19% organic growth.
We also saw de CIO net inflows for the eighth consecutive quarter.
Again, we are as pleased with the growing diversity of the sources of our flows as we are with the absolute magnitude.
Advisory net inflows in the quarter were 851 million and included seven new mandates totaling 318 million along with 754 million of contributions from existing clients.
Reinforcing the diversity same flows were truly global with 529 million from the U.S.
And a 198 million and 126 million originating from Asia, Pac ex Japan, and EMEA, respectively.
The vast majority of these net inflows were directed towards U.S. and global real estate strategies, a portion of which was tactical.
We ended the quarter within awarded but unfunded pipeline of 1.2 billion.
Of the 1.6 billion beginning pipeline 652 was funded in the quarter and we were awarded 540 million of new mandates 215 million of which was also funded in the quarter.
We did experience a 162 million global listed infrastructure termination in the quarter, which was not performance related.
And we were also notified of a large approximately 500 million dollar additional global listed infrastructure termination, which is expected to occur later in this quarter.
In conjunction with our previously this goes plan to improve organic growth domestically, Jeff Sharon joined US last month to lead our North American institutional sales efforts.
Jeff who will report directly to Dan Charles head of Global business development brings extensive experience in advisory sales, having previously served in comparable role with Gramercy funds management, and Oh by global asset management.
Sub advisory ex Japan had one of its best quarters in recent memory generating 212 million of net inflows.
Four of our strategic partners two of which are non U.S. institutions generated the majority of the flows.
And we arent hearing to our strategic plan and focusing only on those intermediaries that we consider to be strategic partners.
Japan sub advisory experienced net inflows of 318 million before distributions and net outflows of 16 million after.
I was sales of the U.S. reap product remains strong even in the face of limited marketing due to covert related conditions.
Similarly, our new relationship with M., you can SMB team, which launched the next Gen read portfolio in February produced 128 million in net new sales in the quarter and 235 million cumulatively since inception.
I'm very pleased to recognize the progress that our teams have made to maintain industry, leading performance, while simultaneously expanding and improving our business development efforts.
Delivering positive organic growth in every channel and region simultaneously.
It's been our goal and can only be achieved through a strong team effort.
At the present time most of our employees continue to work remotely, which is going as well as can be expected.
I will return to office Task Force has recommended that we continue in this mode until at least October 1st to ensure the safety of all of our employees.
In the meantime, we are actively working on new product initiatives, including additional real asset strategies active ETF products and customized solutions that integrate liquid and illiquid securities to help sustain our current growth trajectory.
With that I'm going to stop and asked Dimitri to open the floor to questions.
Thank you.
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One moment please for the first question.
Our first question comes from the line of John Dunn with Evercore ISI. Please go ahead.
[noise] guys and thanks, So why the advisor channel, it's gotten up to almost a quarter. The knicks from kind of mid teens, a few years ago. Yeah can you give us sort of a flavor of the composition of the Knicks and strategies and where the clients are coming from at this point.
Sure John Yeah.
There is a diverse mix it is mainly <unk> at least in the quarter. It was mainly global real estate, but we did have.
Multi strat, we had European real estate, we had global listed infrastructure.
You know in terms of their mandates that were awarded an unfunded in the quarter.
We had a as I mentioned, you know mandates from both Oh Asia and the EMEA region with.
The bulk of it coming from the U.S.
I would emphasize that you know the bulk of the assets did come from existing accounts.
Which is.
A strong positive in the sense that we have a lot of.
A large long and deep relationships, so when a there oh well when the air pocket when the downdraft developed had complete confidence in picking up the phone and calling us and adding or or launching new strategies.
At the same time as I mentioned, you know we brought on additional talent to bulk up and improve our results in generating new.
Mandates from new clients in the U.S., and we do hope and expect to do better there.
Gotcha and then just how are you finding the reception for your retail strategies over in Europe, now that you're going with more of a direct a fund approach and what do you think that looks like when you guys had some of those meaningful size threshold over there.
Well that's another great question Oh, we are I hope we are near the end of a search process for a new head of our.
Well fund effort.
In Europe.
The flows into our use its funds they are have lagged our expectations and we've essentially been on hold the last six months, but we're hoping starting this fall to really crank up our efforts I think.
You'll find that they the talent that we're going to bring in is substantial and we're absolutely committed to growing these funds and yeah. We are not at the threshold that we'd like to be in order to really start seeing some scalability there but.
Hoping again, starting this fall to re initiate a strong effort there.
Thank you.
Thanks, John.
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Our next quarter.
Mike carrier with Bank of America. Please go ahead.
Hi, good morning, executing the questions.
Great flow quarter in probably a couple quarter to ask.
Question, but you guys have been you're making a quite a few investments in distribution. Obviously just wanted to get an update you on the institutional side.
When you expect you maybe further.
Traction or further penetration and some of the areas that you guys. You mentioned that you are going and scares was kinda under you're penetrating versus where you expect to be just giving you. The products that you had the performance that you guys are putting up.
And realize that yeah. When you put it this organic growth rate probably not the other a quarter to basket, but just curious on the on the update.
Sure. It's a great question and as we mentioned in our prior call.
You know led by Dan trials, we read organized our U.S. institutional effort a away from channels and having more of a regional focus and we reorganize the teens you know that cover those regions.
And so we're six months into it we're seeing some very encouraging activity.
And as we mentioned in our remarks.
Institutional interest in real assets remained a strong so you know that activity will continue.
To be honest I would say that and I'd like to give the this new approach or you know 12 months before we expect to see you know a significant uptick in institutional sales.
Again, I think we're going to do well between now and year end, but we expect to do better than well.
And we expect to gained significant market share.
Those are the quality of our product. So we're six months into the reorganization, Jeff Sharon just joined US and so again I would expect activity levels to improve productivity to improve and asset raising to improve but.
I wouldn't expect to see a a stair function improvement probably until first quarter next starting next year.
Okay. Thanks, and then just a follow up I think you mentioned.
In the third quarter, just on the infrastructure side, maybe a lumpy outflow and then I think some of the money that came in during the quarter.
Are you said something either some tactical or strategic assets I think in the past that men are you, sometimes we saw that money you're kind of come in and then in an exit you over shorter timeframe.
Just curious if I heard that rate or you know what that means from a from a close standpoint.
Yeah, you heard that right. So the overwhelming majority of the flows in or I believe our long term asset allocations.
A portion of the money.
That came in from existing clients was from you know some very very large relationships that.
From time to time will tactically add and subtract from their account.
There's there's no way of knowing whether.
This money will is tactical or strategic from one or two of them, but yeah. We view it as as long term money and but on the other hand, if retail perform they might take some back as Joe mentioned, you know rates are still.
All down double digits for the year, there's still great value.
So I don't anticipate this being.
Truly short term money.
And then of course, we had a real boosting our wealth side from the addition or two.
Financial intermediaries.
[music].
Model based platform.
And Oh, we had a nice bump there they'll be additional flows.
Probably in the second in the third quarter.
And but will also be participating in the growth of that overall program going forward.
So long term it will continue to be additive to organic growth.
Good Thanks a lot.
Sure Mike.
Our next question comes from a line of Robert Lee with KBW. Please go ahead.
Great.
Thank you and good morning.
It doesn't mean, you had mentioned earlier.
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Yes.
Maybe update us.
And some advisory.
Certainly its.
Stabilizes.
Years.
And maybe update us.
It's about.
And.
Central but from that business.
Sure so it means.
He said.
Yes.
The little hard to hear that question as it basically what's the outlook for the sub advisory sector.
Yes, mainly in Japan.
Oh, okay.
You know it's the outlook there is the same.
As it always then with our existing partner Die why you know a the the the.
The flows over their dominated by a U.S. read a portfolios.
And you know at the present time.
Our or die was funds are selling well the top selling refunds in the category because of our performance.
But beyond that and so that'll that'll continue to chug along until it doesn't.
However, we have made very substantial strides developing new products with new just distributors, such as a IMMU Cam and SMB T.
Next Gen read a as I mentioned, you know weve raised over $200 million.
Exactly in the Cove it environment over there with limited marketing.
We also are seeing growth, it's not sub advisory, but in the institutional business over there so.
If we take a long term view to Japan sub advisory our relationship with Iowa has been and continues to be strong.
And we have made very significant strides in developing and to a into ER with new distributors with exciting new product strategies.
So we feel we feel very good about Japan sub advisory.
Great and maybe one follow up and they get I apologize.
As well.
But.
Parsing the some of the U.S. high network channels are a.
Wire house.
Firms.
Since Uh huh.
Where are you see the most.
Opportunity or where you feel like.
Well penetrated and very channels.
Maybe some initiatives or progress.
Yes.
Better penetrate some disruption.
Well, there's absolutely no doubt that they are a channel I think industry wide and for US is the fastest growing.
And we've we've identified that years ago and have migrated our sales teams become hybrid.
Relationship managers.
And you know candidly you know our investment strategies are anything, but generic they're not commodities and.
So the internal Buzz word that we rally around is we want everyone to go higher in deeper we want to focus on large.
Team, whether they're in the BD channel on the already a channel who really act more like endowments foundations are they take deep dives into asset allocation into manager research and as a result.
Fairly confident and saying you know by a wide margin, we deliver the highest quality white papers in research and support of all of that and so.
We don't want to compete in.
In Commoditized marketplace, and so in those marketplaces that are increasingly embracing passive or focusing on LOE costs.
More than Alpha generation, we're migrating away from that and we're putting our chips in those markets, whether it's well or institutional where we can go higher in deeper and the end market really appreciate.
The tremendous alpha we're generating the intellectual property that we're sharing with them. The support we're giving them the platform that we've developed so those large ri A's that that you know act independently and.
Do their own research, our our bread and butter, and that's where we're saying a lot of traction.
Great appreciate the color. Thank you.
As a reminder, please press one afford or register for a question.
We do have a follow up question from the line up with John Dunn with Evercore ISI. Please go ahead.
And then we could talk a little bit a bit more about rest of world sub advisory or you know because did have pets quarter in two years and.
You have been going through this process of shedding noncore chazen clients.
Well, where do you think that could go from here I mean is it.
Have you are you finished with the revamp where were at what you wanted to be and you think it can grow from here.
I do I think you know, we took a year or two to eliminate non strategic.
Relationships, which you know, we're just you know steadily bleeding assets.
Through lack of effort.
And where we didnt have a multi strategy strategic relationship.
We also believe our existing relationships you know our are a.
Very strong and our partners really believed in the real asset asset class and as such a they continue to embrace that and promote that.
We're also hopeful that as we.
Focus in on our own CIO initiative, and it's a big one.
And you know.
Not unlike the our eye a trends not unlike the D.C. I O trend.
And so on the owes CIO.
ER segment of our industry is growing rapidly and we expected to continue to.
And for Us.
That can generate significant separate account activity, but it can also generate.
Sub advisory assets and you know again, our motto is to go higher in deeper we want to identify.
The the half a dozen.
Oh CIO that we think are going to be the long term winners and so we're not trying to be all things to all people just as we're not trying to be all things all people in the wealth channel we want to focus our efforts on who we think are going to be the long term winters here and there'll be some I think attractive sub advisory opportunity.
These are in the O C O channel.
Thanks very much.
There are no further questions at this time I will now turn the call back over that Bob Steers, Chief Executive Officer. Please continue with her presentation or closing remarks.
Well, thanks to everyone for joining us. This morning, we look forward to keeping you informed as this quarter a progressive and please everyone stay safe. Thank you.
That does conclude the conference call for today, we thank you for your participation and ask that you. Please disconnect your lines.
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