Q3 2020 Janus Henderson Group PLC Earnings Call
Good morning, My name is cool and I.
I will be your conference facilitator today.
Thank you for standing by.
Welcome to the Janet's Henderson Group third quarter 2020 earnings Conference call.
All lines have been placed on mute to prevent any background noise.
After the speakers remarks, there will be a question and answer period in the interest of time questions will be limited to one 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 number of factors, including but not limited to those described in the forward looking statements and the risk factors section.
Company. Its most recent form 10-K and other more recent filings made with the FCC.
And if I understand no obligation to update any forward looking statements made during the call.
Thank you.
And now it is my pleasure to introduce Dick Weil, Chief Executive Officer, Okay. That's understood.
That's a while you may begin your conference.
Welcome everyone to the third quarter 2020 earnings call for Janus Henderson.
As usual I'm joined by our CFO Roger Tony.
Let me start by saying that I hope all of you your friends your family continued to be safe and healthy.
Oh, I'm really pleased to be back physically in our London office or taking this call at a safe distance alongside Roger.
He said on previous calls we like to take a long term view of our business that's somewhat at odds with the quarterly reporting cycle. So to that extent, what we've done is to say on the first and third quarter call. We wrote your quarterly results and let me just a second and fourth quarter calls to do a bit of a deeper update on the business strategy.
In line with its in today's presentation I'll, just give a brief summary at the start of the quarter from my perspective.
And then I'll hand over to Roger come through the results in some more detail following our prepared remarks, we'll take your questions. So turning to slide one.
Our third quarter results were strong and UN increased 6% our long term investment performance was solid.
Adjusted EPS of 70 cents was better compared to prior quarter and two a year ago.
Our balance sheet and cash flow generation remained very strong as we continue to return capital to shareholders. During the quarter, both dividends and also Repurchasers Roger will take you through the financial details in more depth well what I'd like to do is just trying to tell you how I think about the quarter sitting in the context of our broader story.
Which really is about our strategy. If you turn to slide two its a reminder of our strategy, which is simple excellence.
We're making great progress on delivering our strategy of building a strong and resilient foundation, which is designed to deliver organic growth and to increase profitability.
To achieving simple excellence is founded on the five planks are referenced on page two and let me just quickly turn to each one of those five twice.
First producing dependable investment outcomes.
Our long term investment performance remained solid some of our strategies took a hit in the change in markets and covert related beginning part of this year, but a number of our other strategies have done extremely well and we've had the diversity and the resilience or two to continue to drive forward, an overall long term investment performance.
And so.
The second point is that we have to excel in distribution and client experience, we've seen a significant improvement in net flow in this quarter, we can definitely see those numbers moving around particularly with lumpy institutional flows over time and it's hard to draw.
Sort of an extrapolation line from quarter to quarter, but to me I'm seeing a good momentum in a number of areas in our business and I'm seeing improvement in the execution and so I think we're definitely getting closer to selling and distribution and client experience, which puts us on a path to achieve our objective of organic growth.
Just as an example, our fixed income retail flows were positive across the U.S. EMEA and APAC and have grown at double the industry rate in us retail during the quarter.
Another example is we're capitalizing on strong list of global focus products, which has been offered our global head of distribution Suzanne cane and her team. They put it in this global focus products programs and it's working well, we're focusing on products with high growth potential.
And are pleased with the year to date gross and those particular products.
The third plank is focusing on an increasing operational efficiency.
In the quarter Weve completed some major projects that simplify the way we operate our business and that also served to free up capacity. So that we can turn our attention not only to you to current you business improvements, but also generational steps forward in our infrastructure, we completed back office systems lift that we consolidate TPS we took another.
Her of other important steps during the quarter.
That moves forward. We told you last quarter also that we'd be taking a hard look at our business model and expenses were doing that taking a careful and thoughtful approach we need.
Need to balance cost savings against appropriate levels of continued investments that are required to effectively drive our growth strategy and get us to simple excellence.
We're making really good progress in the project, it's been a focus and gotten attention from our board as well as the management team and we've had the help of some excellent third party consultants and so we are really making progress we've identified some very tangible areas of savings that we'll be pursuing and we also have a number of other ideas that network.
You need to work through I look forward to updating you on progress in this area as the work progresses and I expect to be able to give you more detail.
On how we're doing this in the fourth quarter when we give you our expense guidance for the upcoming year.
The fourth point in our strategy is proactive risk and control environment.
We further strengthened our team with some senior hires, especially our EMEA head of compliance, which is an important position for us and we're taking steps to further strengthen control environments and relationships with the regulators around the world. So I'm pleased at the progress in this area.
The fifth planks is to develop some new growth initiatives, we're focusing on areas of strength for us combined with where we see our clients moving here.
Here, we're committed to delivering growth in a profitable way.
Example, we continue to support growth in each yes, we've seen really good momentum in our M&A NRG MBS EPS in the US last week, we launched AAA CLL, we kept call Jay AAA in the US. It was the 11th largest ETF launch out of 1600 in the last 10 years outside of each.
Certainly this month, we also launched a UK asset backed Securities Fund I think we're doing good work and continuing to develop.
Targeted new growth initiatives before.
Before turning it to Roger let me reiterate <unk> commitment to delivering the benefits of our strategy to all of our key stakeholders, our clients our employees and our shareholders.
We are driving forward in this regard with as much urgency as possible. We know the time is expensive and that always our friend and we are really working as fast as we can to deliver on this strategy.
Let me say just a word about INTECH.
We've talked before about how we are facing some.
Real challenges in our in Tech business, driven primarily because of a couple of periods of underperformance in recent history in their investment strategies.
And also facing the challenge that a number of our clients are barbelling their portfolios, which can leave INTECH in the middle with a bit of a challenge to find space they've been fighting this battle for a while in this quarter represents improvement they had better investment results. They also had better.
Better flow results and so as we work to face the challenges and the INTECH part of our business. We know it's going to take time to fully deal and get back to help but this quarter does represent a step.
Step forward in our in tech business and Thats good.
But as we think about the lumpy nature of that business and the large institutional account size that they deal and it's hard to extrapolate from quarter to quarter and it's fair to say there is theres still some very significant.
Risk remaining in our in Tech business as we go forward and it's difficult to predict exactly the quarter to quarter Pat on the return to health of that part of the business looking away from INTECH. When I look at the rest of the business I think we can see a clear path to continuing to drive forward towards.
Organic growth, perhaps a bit more quickly I am optimistic that the rest of the organization can continue on that path and continue with the steps that we've made to this quarter and I really believe we are on the right path to achieving organic growth and driving greater profitability and building our business for the long term so with that let me turn it over to Roger.
To take you through the quarters results.
Thank you Dick and thanks, everyone for joining us.
Starting on slide four with investment performance.
Investment performance remains solid with 58%, 61% and 73% from what assets, beating their respective benchmarks on a one three and five year basis as effective for September.
The one year performance, resulting in our equity capability is primarily from segments of our us equity business, which we previously noted.
We're encouraged by in Piccs improvements is one year performance as Dick just mentioned however, the longer term performance will take longer to 10, and hence remains a consent.
Relative performance compared to peers, it's stronger.
With 68%, 74%, 78% of the web.
Essentially the top two Morningstar portals in the one three and five year basis.
Now turning to total company flows.
For the quarter net outflows were $2.9 billion compared to the 8.2 billion last quarter at 12 billion in the first quarter and the best thing to the time savings that we show here.
The quarterly flow number reflects lower redemptions, primarily from the institutional business, which were partially offset by lower gross sales in the intermediary channel as we typically see seasonally lower retail sales during the third quarter.
We remain encouraged by the institutional outlook, given our diverse pipeline across strategies and regions.
Additionally, we're optimistic that we're through the majority the redemptions that would likely as a result of the changes in the investment management teams that we made over the last 18 months.
The intermediary business, so positive flows fixed income and multi asset capabilities.
While outflows continued in our.
Mid and Smidcap capabilities.
Due to short term underperformance, which we identified as a risk on last quarter's call.
We're pleased with the improving flow trends and the broader business momentum as we progress through Twentytwenty. So we know there's still much work to do ethics, just said, excluding insect which is lucky to be take longer to 10, we're optimistic about setting to positive organic flows in the near term.
Moving to slide six which shows the breakdown of flows in the quarter, but capability.
Equity net outflows for the third quarter were $5.1 billion compared to $4.2 billion in the prior quarter.
The quarterly outflows were primarily from elevated outflows in certain strategies due to short term underperformance.
Flows into fixed income positive 1.8 billion in the quarter compared to negative 700 million in the second quarter, primarily due to lower mandate protections built the growing positive flows in retail.
And retail were capturing market share and seeing positive flows across several strategies around the globe.
Basic outflows improved in Q3 to $100 million there.
The results include a 1 billion dollar funding as of a straight year, we're pleased with insects, improving short term performance and the fact the flow result, this quarter, but as we've said previously in fact, it's mostly institutional results will likely be lumpy and fluctuate from quarter to quarter.
Total inflows from multi asset was $600 million driven by inflows into the balanced strategy.
And alternative outflows of $100 million.
Slide seven is a standard presentation of the U.S. GAAP statements of income maybe.
Moving to slide eight which shows a strong SEC summary financial results. There's a lot of great on this page.
Adjusted third quarter operating results were up compared to the second quarter, primarily from a 10% increase in average AUM.
Total adjusted revenues in the quarter increased 9% compared to the prior quarter due to higher average our UN partially offset by seasonally lower performance fees.
Adjusted operating income in the third quarter of $162 million was up 17% over the prior quarter, driven principally by higher revenue, partially offset by higher expenses.
Third quarter, adjusted operating margin was 36% compared to 33.5% in the prior quarter and 37% a year ago.
Finishing up the financial results adjusted diluted EPS was 70 cents for the third quarter compared to 67 cents in the prior quarter and up from 64 cents a year ago.
On slide nine we've outlined the revenue drivers for the quarter.
Hi, Raj assets, where the biggest driver the quarterly change in adjusted total revenue.
Net management fee margin for the third quarter was 45.8 basis points up from 45.7 basis points in the second quarter.
Significantly from 44.4 basis points a year ago.
The margin remains resilient and the increase of 1.4 basis points over the past 12 months reflects the ongoing mix shift and our focus on quality flows.
Performance fees were $7 million in the quarter.
Thats, a 17.2 million in the prior quarter. When there are more accounts eligible for phase, but up from $1.4 million in the second quarter of last year we.
We currently expect Q4 performance phase to be ahead of Q4 last year. So that will obviously depend on final performance for the year.
For mutual fund performance fees, the third quarter was a negative $5 million.
Turning to operating expenses on slide 10.
Adjusted operating expenses in the third quarter with $298 million, which is a 5% increase compared to the prior quarter.
Adjusted employee compensation, which includes fixed and variable costs was up 6% compared to the prior quarter, but mainly from higher profit based incentive compensation.
Adjusted LCR was down 13% from the second quarter from the impact of the Mark to market adjustments in both quarters and sense of security taxes on Vestings in the UK that occurred in the prior quarter.
In the appendix, we provide the usual detail on the expected amortization of existing crops.
The third quarter adjusted comp to revenue ratio was 43.9% in line with our mid Fortys guidance.
Adjusted non comp operating expenses were up 12% compared to the prior quarter increase.
The increase is primarily related to marketing FX and professional fees.
For the year, we anticipate our non comp expenses to be down low single digits compared to 2019.
And finally, our carrying effective tax rate from third quarter was 21.3% below the statutory rate guidance of 23% to 25% the lower rates in the third quarter was impacted by the state to refund received during the quarter.
Lastly, slide 11, if you look at our capital management.
Cash and cash equivalents were $927 million as effective September of with Genesis since portion was $909 million.
As a reminder, you should think about the amounts of cash we have on the balance sheet as what the board and management is a comfortable operating the business with Jason regulatory requirements, a conservative working capital buffer on cash set aside to meet the 2020 five debt maturity.
As we said previously we remain committed to returning excess from future cash flow generation to our shareholders.
During the third quarter, we paid approximately $66 million in dividends to shareholders and today declared a 36 cents per share dividend to be paid on the 23rd of November to shareholders of record as of November.
During the quarter, we purchased 2.4 million shares of our stock for a total of $50 million that's.
Since we started our buyback program in Q3 2018, the buyback program, that's being 9% accretive.
Now I'd like to turn it back over to pick for a few comments before we begin Q and a.
Thank you Roger before.
Before handing over to the operator for questions I'd like to briefly address the elephant in the room try its recent investment in our firm.
As you know China has made a significant investment holding approximately 9.9% of our shares.
We value input and good ideas from all of our shareholders. If triune has specific views or suggestions to share with us. We certainly will consider them as part of our broader thinking and take that seriously we are deeply committed to driving shareholder value creation.
Like most public companies, we can't really comment on market rumors or speculation.
Our board and management team will act responsibly and will act in the best interest of all our Janus Henderson shareholders, our plans and focus though remains centered on delivering simple excellence, which we believe is the right path forward.
We're making progress against the five planks of our strategy and we are moving towards fully unlocking the growth synergies from the Janus Henderson merger, achieving excellence takes time and that can be frustrating, but it's the right path that we're on and our priority remains to deliver simple excellence and growth.
As we turn to Q in a please keep your questions directed on the quarterly results is there really isn't that much more we can say about this trend situation. We appreciate your understanding with that let me turn it over to the operator for your questions.
Okay.
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.
If you 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.
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.
Star one to ask a question and we'll pause for just a moment hello, everyone and an opportunity to signal for questions.
Okay.
And we'll take our first question.
Ken Worthington with JP Morgan.
Hi, good morning, Thanks for taking my questions.
Thank you for your prepared remarks.
I think consolidation remains at school today or.
Three.
When Janet margins I understand you indicated that.
You had the size and scale at the time to compete but if you looked at over the next.
Few years that you might not be in a position.
Are your position would be dramatically enhanced by the merger with Henderson. So as we think about Janice is size and scale today.
Do you think you have the size to effectively compete in the global asset management business over the next decade at your current pace of growth or does the Janice benefits from pursuing acquisitions in order to better position. The company again for the next decade.
Hi, Ken deck here, thanks for the question.
Size by itself helps a few things right. It helps your ability to capture economies of scale.
It helps your ability to.
Invest in a breadth of ideas and it helps your ability to invest in your infrastructure. They probably also helps you build a broader.
Brant with with key clients southern.
There's some really good things that happen with us.
But.
There is some challenges with size it typically doesn't help alpha and it typically doesn't help excellence and getting through.
Consolidations or size accumulating inorganic transactions involves a huge amount of disruptions, which frankly clients penalize very heavily.
So I think our priorities are clear our first and highest priority is to deliver excellence for the existing clients that we have.
Our second priority is to drive.
Gross.
Organically.
And if we have the excellence and the platform well established through those two things there probably will be inorganic things that may well fit that could enhance the scale and add.
Qualitatively to our business.
In a way that that more than offsets the disruption, but the key is you've got to be delivering that excellence size without the excellence is just a bigger problem.
So were pursuing that appropriate level of excellence first is our highest priority, we'll get trying to drive to get to organic growth and I think that from that has established itself in that space.
Is frankly a better.
A better acquirer.
And is is more ready to take on the challenges of some future consolidation, but right now our focus really more as is.
Delivering on the excellent. So if you think about how pressured we are to consolidate in the near term future. We have a margin this quarter of 36% Thats pretty good.
So I don't think were desperately missing out on economies of scale.
At the moment.
And I think our our priorities are correct focus on delivering on the existing simple excellent strategy getting to organic growth and and with that said, we always have in the year open to opportunities, we're always listening and talking to people about potential ideas and if we find something very special that would more than.
Offset the disruption that it brings we'd certainly be interested in something like that but.
The odds of something like that coming along that's that's such a great fit that doesn't happen very often.
Okay and then your comments were really helpful. Thank you very much.
We'll take our next question from Nigel.
Hi, Ken.
Great. Thank you very much just just first of all that.
Obviously with the flows that you are trying to sort of get organic pricing I mean, what do you think it's going to be the biggest driver is it going to be sort of equity outflows diminishing is it going to be stronger grades in fixed income where do you have the sort of guidance.
The improvement will come to push you into a great situation.
Hi, Thank you good thanks for that question.
I think it's with us where a complicated story when it when it comes to something like that we have so many products operating in so many parts of the world and they're moving in different directions against.
Different market backdrops, it's hard to give you were really simple pithy answer to your question.
We've seen our traditionally extremely strong Denver equity franchise phase.
Faced some challenges through this.
Market environment, this year, particularly small and mid cap investing which has been right at the heart of the very best of our investing has taken a challenge on the other hand fixed income European investing some of our absolute return strategies have all taken.
The opposite tack and have demonstrated really substantial outperformance during the period and so I think we're going to be a bit of a complex story in all periods with some products moving.
Better than others in different market environments, and its the balance but reps. If you wrap those things with excellent client service with excellent client experience with a really strong.
Infrastructure that delivers the right information at the right time to the right people internally and externally.
Then I think you have the opportunity to be resilient through those different parts of the market cycle and if everything you're doing is excellent I think you'll win across time with that hand, and that's what we're trying to accomplish and so there'll be parts of our business that will go through challenges in every market environment.
But hopefully we can we can consistently more than offset that with all the good stuff, we're doing and I think we're on the right path to delivering that we're just not quite there yet.
Hi, Alex its Roger I thought if I had a couple specifics in tactics mix and fixed income.
Yes.
Fixed income performance you can say is in a totally different place than it was.
Yes, a few years ago, it's very strong across the board on an in market where fixed income is growing we're taking market share.
That's that's yes, that's around the world, we're seeing we're seeing outsized market growth outside flows against the market in the in the in the U.S. and elsewhere around the world.
In in in equity.
The pipeline for growth in institutional equity business.
Number of interesting things that nothing funded in Q3.
But there are things there are things that we would hope and expect to covenants in the future.
Yes, I mean, new products now.
RMCF franchise is growing growing really well and really fast continued growth in Vienna ally.
Jbs as Dick mentioned earlier.
And we've shown that we can be a real player in that space the.
Jack AAA that we lost a couple of weeks ago.
The 11th largest 11th largest funds.
ETF launched over the last decade, so we're pretty excited about what we can do in that space as well. So there are there are plenty of areas where.
Throughout that we think we're seeing growth there are a couple of fix that that will be in a business is diversified with us.
Which which have challenges short term with a fantastic investment teams.
Okay. Thank you for that and then maybe just as the follow up obviously you seem to be said sort of set the detail on the sort of cost efficiency programs by quarter.
You, obviously mentioned the need to balance investment with with actual savings I mean, how are you feeling about stockpiling currently yes.
Do you think the most of the savings that you're going to generate all gonna be reinvested or or will there be some sort of relatively meaningful impact.
The impact on the overall cost base.
So I don't see anything nothings nothing's chunks that nodule is with with three four years through the merger and as we said on the last call. It was time to the types of Europe is the right time to be looking at our business, how we do it.
And obviously connectivity. This type has given us an opportunity to look at things in a different way.
So we've done yes.
We're working through it a detail please welcome to fix that.
This business is it's really important to do this right.
Not to disturb the momentum that we've got.
Because we are on the right track.
So.
We're working through that.
Yeah, we'll give you updated guidance as we normally do around around Q4, we are investing yes, we've been investing in our business, we will continue to invest in our business.
But there are efficiencies that will drop to the bottom line yes.
Okay. Thank you.
And we'll take our next question.
From.
Karen from Macquarie.
Hi, just a first question for me just Dick just a clarification on the comments you made.
Just around the slows to INTECH is it fair to assume that duration is sort of alluding to the potential troubles in those business isn't necessarily that as a pipeline as of outflows or redemptions that have been requested but it's more that it's.
Probably more likely that you do get a normalization.
Backing to outflows over the quarter, just given the performance track record.
Yes, I think Thats, a fair thing to say.
Okay and the second question I had just on the buybacks.
Obviously, there is a fair bit of capacity left stop possums lots of capacity left to get done in the quarter.
Is it possible to get through the entire amount in the quarter or could we expect that there might be some some yes. Some capacity that was less as the year ends of that $200 million.
Yes, but it's what the where I think were 103 million through the $200 million Board authorized through April. So April next year will will will.
I'd like to continue with the same structured buyback program, we've that we've had before.
Looking at looking at market volumes and the like so I Wouldnt expect us to do it in one quarter.
But I will.
Yes, you can you can see at least in Australia, you can see what we're doing on a daily basis.
Okay. Thank you.
The powerful engine.
Forever.
You know the fact, it's improved 1.4 basis points over the last year I think sets us apart from from a significant amount of the competition.
But over time you'd get you should you should see that flatten out and probably.
Yeah over time, we would expect to see that three margin come down a little bit and that's why we need to run an efficient effective excellent business.
Look at some of those efficiencies to me.
Maintain.
And possibly further improve the margin but.
Yeah.
If we if we win.
Significant mandates in some of our enhance stick with see some of a bind hold fixed income taught products are obviously at lower fee.
Yep, Okay. Thanks [laughter].
Next question from Andre.
Stanley.
Mm mm mm [noise]. Good morning, I've opened up then and just just wanted a chance to question <unk> on the ultimate and margin and improve to 36%.
In the quarter is that some of the early wins on the coast transformation coming through a is that yeah yep mm.
Amongst conditions, helping out as well [laughter].
[noise] yeah.
You know what you've got this quarter, you've got a market that's improved.
We've got less performance face and we had in queue too.
Q3 is a really liked performance fee quarter, we're still relatively light in in some areas you know from from low Covid type spending I guess, you would just fine Ass T. N E. R. Marketing is up some cute too, but still below where it was a year ago. So it's a real mix of things, but no.
Sorry, and yeah. It's you know, it's it's us running inefficient business. We're not this isn't I I guess, what I wanted to differentiate Tony's, we're not doing something.
We yeah.
That we weren't doing anyway, you know, where we are constantly looking running inefficient business.
So you know there is a how do we fundamentally look at doing things differently. That's that's right, but we all so they're all things that have come through this cool. So yes, I guess, but there will always be things were were looking and drive inefficiency.
But yeah 36 is.
Is the right margin for the quarter.
Thank you and the second question one of those bad progress in in Japan, and you know bold bold bold over to take to accelerate the progress you know do you think there needs to be more proactive that's pay.
Pay a little more puzzled the Japanese market or do you think you know your partner in Japan, you know I.
Would need to push hard on sales and distribution cause.
Cause it seems like there Tiffany progress.
At something some mandates slowed recently.
[noise], Yeah, hi.
This is dick thanks for that Uhm, Yeah, I agree with you I think we had more momentum in Japan, and it's it's slow there's still some good things happening there but.
But I think it's a fair observation to say, we need to take re energize and dig deeper on how we're pursuing that business. Because you know we had more growth earlier on in and it slowed a bit so.
I don't have a simple magic answer for you on that one we're aware of it we're focused on it and we're asking herself the questions about what do we need to do to re energize and and reinvigorate some of the stuff going on in that space.
It's not an easy business and it's very competitive in Japan, they are very well informed and sophisticated client base, but.
But we need to keep pushing to do better and we are I dunno Roger.
There's a couple of things I think which are relevant what we haven't had as a soda blockbuster launch.
1 billion dollar you know at a single Guy that's a couple of things we've talked about it over the last few courses that I think that I'm more flow product and.
And I was I was describe it those things they will sort of let's say if I was pregnant because that's money that just comes in.
And the classic River nickels over time, and he's probably possible quite possibly more valuable. So we launched you know a year or so ago, but in the summer of 19, we don't start adaptive allocation strategy in Japan for Daiichi life.
At the end of last year, we launched.
A product for Daiichi frontier life, which we talked about and those those two have been raising money yeah, a little bit every day every month, they're not around $1 billion between the two of those.
So things like that I'll.
Great to see coming through on that on that regular basis, but I know that.
Stand out so it's like there's some posters.
And I think the other piece, which which reminds very positive from from from <unk>, obviously, the growth of the business in Australia with Tao.
Which is which has happened over the last over the last 18 months. So so say some real some real gross down there.
Thank you.
And we'll take our next question from Patrick.
One of his research.
Alright, good morning, Thanks for taking my questions.
I appreciate your candor I'm kind of the risks at in Tech could you remind us of the concentrations. There I think a few quarters ago. You mentioned, you know a handful making up a plurality of the assets and and also remind us kind of a seasonality of that.
Decisions more of a four Q event are kind of spread throughout the year.
[noise] on the.
The decisions.
Necessarily.
Yeah.
Yeah cause I'm looking at plants looking at mandates over the course of the year.
So there's anything any real seasonality that but you're right. They're all in tech is it isn't institutional business.
With some substantial mandates and should any of those should we yeah. This quarter, we want a billion dollar mandate, but we have several multibillion dollar mandates in the existing book.
And the five largest strategies of insect make up almost 60% of their business. So yeah. There is a.
There is a concentration there.
Great. Thank you and then does that help I'll Patrick Yeah. That's very helpful. Thank you and then B U K real estate strategy has been getting some press I don't know if you can give us an idea of what the pipeline of redemption is there or or any kind of you to win that might reopen.
No we set that that we've set that that is unlikely to reopen until the first quarter of next year. We're still building liquidity the material uncertainty closest that were across the industry have been raised the fund.
Is is top quartile in what it does and how it's already it's performance Ah and the and the asked it makes in there I think is is pretty strong.
But we all we all cautious about about opening that fun, I'm, seeing and seeing outflows and and therefore, we want to make sure that need to make sure. That's we built the right amount of liquidity and at what there is at the moment. Despite the the material uncertainty closest being released it is.
Withdrawn is that there is there was very little trends, but very few transactions going on in the market.
So so setting selling properties.
Is taking time, so that's that's what's going on there so that's yeah.
Yeah, So there will be some outflows when that reopens.
<unk> well next year.
Would likely queue will the next year cause at the moment it is still soft closed.
Okay. Thanks, very Hans is about two and a half the fun is about two and a half billion dollars yeah.
Thank you very much.
[noise] to John done from Evercore.
Alright, and thank you Uhm can you talk a little bit about some definite you, making you need the media every channel potentially looking at noon vehicles and also have those relationships are allowed <unk>.
[noise] alright.
The the.
For a lot she's.
That we've made that we've made over the last over the last few years and continue to make particularly around getting the rights the right instruments in the right in the right vehicles around the around the world.
And we're seeing we're seeing success I interestingly looking at.
Looking at.
Taking on when we were at the Board yesterday, we were looking at where flows have come from and they've actually the lowest flows from products that didn't exist a few years ago. So the product suite launched over the last few years, whether they be vehicles of existing products. So it takes something like strategic.
Strategic income is a great product that's being sold in Europe. We launched it is in the U S a year or so ago as well bummed that is now the third largest selling in the U funding. The U S. We've talked about our ETF franchise.
Which is growing.
From a low base, but I think we can have it around three and a half billion dollars in etf's.
And J AAA, we're pretty excited about being I that that being another star.
Substantial product.
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Getting off.
Local sustainable product launched in the U S C, where there was a lot of interest that Ah Ah multi strep throat. So there. There is there is plenty plenty of work going on both in terms of new product, but also making sure that we've got the right vehicles in the right places.
[laughter].
Yeah, and then kind of a corollary cat you mentioned customer experience and she's spending more and more important could you give us a flavor of kind of what differentiates you guys in a different distribution channels in that day.
Yeah.
I think customers want.
They want investment excellent consistently second they want the right information at the right time Thursday want access to the real thought leadership of your firm that.
In a convenient and easy format that makes them better at their jobs that enriches.
How they engaged with their bosses and their clients and makes them.
Better.
And if they have a problem in a question or a complaint they want you to deal with them as is.
Ishant, Lee and friendly and effectively as is humanly possible. So at every stage of that we've been investing in improving the technology to enhance our ability to do that improving the way, we architect and Stuart data in order to be able to facilitate our ability to do that I think we haven't.
Awful lot of the right people in the right seats, but we haven't always.
Powered them with the absolute most effective tools.
To deliver the highest level of.
Each of those planks and so we're working hard at doing that we're investing in those things and and that really allows the personality of the firm to come through to the clients. When we do that we are hearing from our clients that they really they like us and they're very pleased with what we do typically.
Typically our grades with the folks we know well are really really good and the feedback from the clients is very high on a competitive basis against peers.
But we just don't know abroad enough group of the clients well enough.
And so using tools better to expand our reach in relationships is another thing that we've been investing in because if if you divide our clients up in markets into tier one tier two and tier three relationships.
We do much much better than the relationships, where we're spending the time and where are we now we just need to get out to a broader group of widened that audience and that set of relationships and that just takes takes better tools and it takes investment.
And we are hard at work on that.
Thanks for calling Tonight.
But I didn't hear that question.
Those.
Yeah.
I'm sorry, I think he just said thank you.
Okay. Thanks Barbara.
[laughter].
And ladies and gentlemen, if you would like to ask a question again, that's prompt is going to be star and then one on your Touchtone phone again that is star wonder if you'd like to enter in the queue to ask a question.
And we will move on to my carrier and think of America.
Hi, guys. This is actually Sean calamine on for Mike. So I know you mentioned earlier on the call you would give us more guidance around simplifying a business and potential efficiencies next quarter and can you tell us what are some of the areas that you're targeting and where you may be investing for future growth.
Yeah. This is Dick.
Think I've been I've already mentioned, the fact that we're trying to generationally move forward in some of our infrastructure and systems are data architecture and data stewardship those areas clearly, where we're making the biggest investments at this time, we're trying to better empower client facing people are investors.
And frankly every part of our infrastructure.
And so that's been ongoing work and work that will continue on the investment side in terms of where we are looking to be more efficient. We've met I've met with the heads of every significant part of the firm.
And we're talking through ideas and in every part of the firm so.
This is not a cookie cutter thing, where we have some leveling bar across all parts of the firm and where are we get everybody to to to follow the same path. We're trying to instead differentiate treat different parts of the firm differently and talk to the leaders in the real experts in each part of the firm and say.
What do we need to do to be both better and more efficient.
In your space, because we're not willing cutting costs is easy across or a choice anybody could cut costs, but what you have to do is increase the level of excellence increase the level of of client servicing client engagement at the same time that you are becoming more efficient and that's where it gets more complicated it requires some.
Additional investment and.
We're working through those issues in absolutely every part of the firm.
To make sure that we're we're getting progress without disrupting the building momentum that were feeling.
Got it and then the increase in DNA and professional services quarter over quarter did that has to do with the efficiency plan just because some of your peers, we'd seen been flat to lower than this covid environment. So I'm just wondering if we can get a little more detail on what drove that.
Not sure there's a couple of things in there partly that's effects so.
Sterling strengthened in the in the quarter against the total of that comes through the revenue lying on the coastline.
A part of that is that part of it is some one of one of consultancy that we've.
It's around there, but not really not really around the investment investments that they are talking about now we've been investing and we will continue to invest in the business. That's built into the guidance we've got.
Around to spend a lot lower than last year and again like I said, we will continue to update update update guidance.
And we'll give you that at the end of the year.
Great. Thank you.
Yeah.
And we have no further questions at this time.
Well, ladies and gentlemen that brings us to the end of our conference today.
Do I appreciate your participation today.
Okay.
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