Q1 2021 Janus Henderson Group PLC Earnings Call
Good morning, and welcome to the Janus Henderson results briefing conference call all participants will be in listen only line did you need of sister. Please signal a conference specialist by pressing the falcate followed by the write.
After todays presentation and that'll be an opportunity to ask the question.
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I would now like to turn the conference over to Mr. <expletive> Weil, Let's see I. Please go ahead.
Welcome everyone to the first quarter 2021 earnings call for the Janus Henderson Group I'm, <expletive> Weil and as usual I'm joined by our CFO Roger Thompson.
As we've said on previous calls we take a long term view of our business versus the short term view that's inherent in our quarterly reporting to that extent, we used the first and third quarter calls to run through quarterly results and we use the second and fourth quarter calls to give you a deeper update on business and strategy in line with this thinking and today's.
Presentation I'll start by giving a brief summary of the quarter and then I'll hand, it over to Roger who will take you through the results in more detail.
And as always following our prepared remarks, we'll take your questions turning.
Turning to slide two.
Our investment performance remains solid with 62% of our assets, beating their respective benchmarks over three years. Our investment teams are first class they've.
And they've continued to perform well and volatile markets and through what was the very difficult quarter for bonds and fixed income we continue to have over 90% of our AUM outperforming benchmarks over one and three years and equities, we're seeing pockets of strength and European equity in particular, and we're also seeing improved performance in our U S.
Mid and smid cap growth strategies, which we've talked about on recent earnings calls.
With the benefit of markets, our AUM rose, 1% to $405 billion offsetting negative net flows of 3.3 billion.
Underneath the headline flow result.
We're seeing important underlying positive trends for example, and our intermediary business. We're seeing positive results with strong growth sales and we're seeing improved flows across a diverse range of strategies and capabilities.
And as I've told you in prior quarters, our path to organic growth starts with flows excluding our quant equity business, we're aiming for consistent growth and we achieved that growth and the last quarter, but this quarter. We ended up 1.2 billion negative and the first quarter, which is disappointing our path is not going to be linear not for this year.
But setting or in tech the quantitative business of side, we should be more consistently delivering positive flows and that's our aim.
Our financial.
Results for the quarter were very strong and up year on year, but down compared to the prior quarter because of the strong performance fees earned in the prior fourth quarter just passed our adjusted EPS decreased compared to that prior fourth quarter, but was up 52% year on year.
Finally, as we continue to evaluate opportunities to strategically grow our business, both organically and Inorganically, we remain committed to returning excess cash to shareholders in the quarter. We completed 230 million of share buybacks of Daiichi secondary market offering to.
At a given strong earnings and our progressive dividend policy, we're pleased to announce the 6% dividend increase to 38 cents a share.
Let me now turn it over to Roger to take you through the results in more detail.
Thank you <expletive> and thanks, everyone for joining us.
Turning to slide four for the people look at investment performance.
Investment performance remains solid with 67, 62, and 70% of firm wide assets, beating their respective benchmarks and a one three and five year basis as of the 31st of March.
Relative to performance compared to peers reflects 37 67, 68% of au and represented and the top to Morningstar courthouse on the one three and five year basis.
The decline and the one year performance compared to the fourth quarter was primarily from the balanced strategy, which is ahead of its benchmark I of all time periods, but as you can see all of the page the three and five year comparison of performance is very good and balanced continues to be one of our best play generating strategies.
And the total level the longer term morningstar metrics, which tends to be better indicators of flows of very strong and as you can see and the appendix and fact 40 for the 42% of the AUM is represented in the first quartile one of three and five year basis.
Yeah.
Now turning to total company flows.
For the quarter net outflows of $3 $3 billion compared to 1.1 billion last quarter and.
And thanks, just said, the smarts and significant strengths and improving trends.
Over the next couple of slides and I'll talk you through these as well as provide clarity of where we've seen outflows.
In summary, we saw strength and the intermediary channel, especially in EMEA.
And in our fixed income and multi asset capabilities as well as within equities European equities real estate Securities Life Sciences, and sustainable equities.
The fourth quarter result was impacted by quantity of equity outflows, along with outflows related to the short term under performance of all U S made of mid cap growth strategies, the reopening of the U K property fund and outflows at Perkins.
Now, let's move to slide six which shows the breakdown of flows in the quarter by client type net.
The inflows to the intermediary channel, but $1.1 billion.
Intermediary gross sales of 16, and the half billions of dollars represent the best quarter ever and reflects our global distribution footprint and the strong range of products.
By region intermediary flows were positive and EMEA, Latam and Asia Pacific across equity fixed income and multi asset capabilities.
These inflows were partially offset by equity outflows in the U S.
Okay.
Institutional net outflows for the first quarter with three and a half billion dollars, resulting from lower growth sales compared to the fourth quarter.
We're confident the steps, we've taken and continue to take to strengthen and globalize, our institutional team will lead to growth.
After a strong fourth quarter, the pipeline has a broad and diverse range of opportunities across the regions, but the results will be lumpy quarter to quarter.
Finally, net outflows for the self direct to channel, which includes direct and seek market investors were $900 million for the quarter.
Okay.
Slide seven shows the breakdown of the flows in the quarter by capability.
Equity net outflows for the first quarter well one of the half billion dollars.
The quarterly outflows were driven primarily by U S mid and smid cap growth as well as the restructuring of value strategies managed by the Perkins team and Chicago.
These outflows were partially offset by non U S. Retail flows led by several European strategies to about dedicated ESG strategies, and UK responsible income and global sustainable equity and finally life Sciences.
Regarding Perkins during the first quarter, we made the strategic decision to rightsize, our product portfolio and better align with the changing needs of our clients there.
And therefore, we announced that we were liquidating the global value international value value plus income and U S large cap value strategies as at the end of April the.
The AUM and these strategies totaled approximately $440 million as at the 31st of Mt.
Floating to fixed income were positive $400 million in the quarter.
Fixed income continues to see positive flows and retail of course, a wide range of strategies, including global high yield multi sector income by and maintain credit and tactical fixed income and Australia.
Total inflows for the multi asset where $800 million driven by continued strong inflows into the balanced strategy.
Constitute of equity outflows to the first quarter with $2 $1 billion.
And finally alternative outflows were 900 million and the quarter of which $840 million came from the U K property fund, which reopens joined the first quarter.
80% of the property outflow was realized within the first week of reopening and the run rate outflow of has slowed significantly since then.
Elsewhere and alternatives, we're pleased that our absolute return products of performed well and of turned back to positive flows.
We're seeing flows into the multi strategy product, which we've talked about previously is a promising opportunity.
Yeah.
Slide eight is our standard presentation of the U S GAAP statement of income.
Yeah.
Moving to slide nine and four look at the summary financial results.
Our financial results of strong and up significantly year on year.
The comparison to the prior quarter is influenced by the very strong seasonal performance fees and the fourth quarter.
Average day U M and the first quarter increased 7% compared to the prior quarter primarily from market gains.
Total adjusted revenues decreased 2% compared to the prior quarter as higher average assets and higher net management fee rate was more than offset by the prior quarters seasonally strong performance fees.
Adjusted operating income for the first quarter was $202 million down 13% from the prior quarter, but up 22% from the same period a year ago.
First quarter adjusted operating margin was 39% compared to 43, 8% to the prior quarter and up to 37.2% of year ago.
Finishing up the financial results adjusted diluted EPS was <unk> 91 cents for the quarter compared to a dollar and four for the prior quarter and 60 cents a year ago, representing a 52% increase year on year.
On slide 10, we've outlined the revenue drivers for the quarter.
The biggest drivers of the quarterly change and adjusted revenue with higher average assets and strong management fee margins, which drove up our management fees by 7% over Q4, and strong, but lower performance fees and the seasonally strong Q4.
Net management fee margin for the first quarter was 46.8 basis points, which was up from 45.9 basis points and the fourth quarter and 45.1 basis points a year ago.
This marks the sixth straight quarter of high net management fee margins during a period of compression the fees and the industry.
I must state of the first quarter rate does include approximately 0.3 basis points of positive impact related to the mean counting adjustments made during the quarter, which will not repeat.
Performance fees of $17 million, and the quarter versus $59 million and the prior quarter and $15 million a year ago.
The first quarter result was primarily driven by the absolute return strategy.
Who mutual fund performance fees. The first quarter results was negative $4 million compared to a negative to millions of the prior quarter.
Before moving on I want to provide and update on second quarter performance fees.
Many of our European and see Caf funds, particularly and the horizon range by annual performance fees and June and performance, which is publicly available and some of these strategies has been very good.
Whilst the measurement period is ongoing and second quarter performance fees of therefore unknown as we sit here today with the good investment performance that we've seen over the prior few years, there was the potential to earn fees and the upcoming quarter, which is significantly higher than the prior three years.
Turning to operating expenses on slide 11.
Adjusted operating expenses, and the first quarter with $315 million, which was up 6% from the prior quarter.
Adjusted employee compensation, which includes fixed and variable costs was up 8% compared to the prior quarter, primarily the result of the seasonal payroll taxes and retirement contributions coupled with the higher variable compensation.
Adjusted LTI was up 20% from the fourth quarter largely to you to payroll taxes triggered by annual vesting and the quarter.
The first quarter of adjusted comp to revenue ratio was 44, 2%.
That higher ratio compared to guidance and results from some seasonally higher expenses, primarily from those payroll taxes on wages and the LTI vesting for the full year, we still anticipate to range of 40% to 42% in line with our prior guidance.
Adjusted non comp operating expenses of 3% lower compared to the prior quarter, primarily from lower G&A, which is partially offset by higher marketing expenses.
For 2020, one the expectation of non comp operating expense growth of mid single digits remains unchanged.
Finally, our recurring effective tax rate for the first quarter was 22, 5%.
Turning to slide 12, which is to look at our liquidity.
Cash and cash equivalents were $824 million as at the 31st of March a decrease of $273 million, resulting primarily from the payment of annual variable compensation and our participation and the secondary offering by Daiichi.
The first quarter cash position is typically our lowest given seasonal cash needs.
Please note the following feedback from several of you we've begun excluding cash and investments related to B R. E V or ease from the slides as we agree that it is more accurately represents our true liquidity and it also aligns with how we discussed the liquidity and capital resources and the M D and a section of our 10-Q and 10-K filings.
Finally, given the strong profitability and liquidity position of the firm I'm very pleased to the board has approved a 38 cents per share quarterly dividend and increase of 6% from our prior payout level.
This increase the lines without capital philosophy of returning cash to investors and paying the progressive dividend that grows with profits.
And lastly, slide 13 is look at our capital management.
As we've said previously we remain committed to returning excess cash to our shareholders and on this slide you can see those results over the last eight quarters.
During the first quarter, we paid approximately $62 million and dividends to shareholders and as I've. Just mentioned the board has declared a 6% increase and the quarterly dividend.
We also purchased $8 1 million shares of our stock for $230 million to the Daiichi secondary offering.
Over the last 12 months, we've distributed $588 million of cash via buybacks and dividends.
10% return based on the average dividend yield over that period, plus the reduction of shares outstanding.
Since starting the accretive buyback program and Q3 18.
We've reduced our shares outstanding by 14%.
Regarding additional buybacks for the remainder of 2021, and we'll provide updates on future earnings calls as we evaluate our cash position and cash flow generation.
Now I'd like to turn it back over to the operator for Q&A.
Thank you I would like to remind you.
Thank you.
And they constitute forward looking statements.
Actual results could differ materially from the project.
In the forward.
Yes.
Just to remember.
And then to true.
And the forward looking statements and the risks.
And the company.
And so that low rates and filings.
Okay.
We will now begin the question and answer session to ask.
Good question and he May press and.
And your telephone keypad.
And finally pick up.
Okay.
Sure.
To withdraw your question please.
All of them too.
Your first question comes from Ken Worthington from JP Morgan.
Go ahead.
Hi, Good morning, Thank you for taking my question and maybe.
And maybe first on your comments on performance fees, and they've ramped and while investors tend not to ascribe a lot of value to them.
Cash flow is cash flow. So how do you think about leveraging this increase increasing performance fees and driving the greatest shareholder greatest value for shareholders.
From this rising revenue stream.
Okay. Thanks, Roger and thanks for the question.
I think the.
The important thing is the diversity of performance fees that we've got.
We saw very strong performance fees in Q4.
In Q2, it's largely to seek hubs to come through.
And and the other thing is we're adding we've got and yet.
Some of the business, we're winning we're adding with performance fees on it so the opportunity to performance fees is broad and I think I agree with you it doesn't it.
It doesn't merit of the site multiple probably of the management fees, but with the diversity I think kind of strength.
Yeah. It is it has to be to be valued and we do expect to have performance fees on a regular basis.
The level of Q2.
We would expect to see some stronger performance fees from <unk>.
The performance as I said, obviously, we haven't got final numbers for Q2 yet.
But we look.
And today, we would expect to see some quite significantly improved performance fees over the over the prior to a yes.
So from looking back and that's sort of where we were in the and the year before that the to being some some of some strong numbers for the jumpstart instrument.
And.
Okay. Okay. Thank you and then just shelf directed has been a stable source of maybe outflows for some time and you guys have taken the step of opening the distribution channel to do investors.
And what are the next steps that you think you could take here chip and you know it.
The results from this channel.
And maybe slow the pace of outflows further and possibly even turn that channel back to inflows.
Yeah, we opened we reopened the early early in the summer of last year, and and I think primarily it is exactly as you say it is to it is to see ebbs and flow.
And therefore to stem that athletics its the size.
The book of business and it's a very strong business and something that we've got to we've got of Bradshaw.
So we have good ideas around that are we have started from advertising for example, and for that channel.
But I think it's still very early days, Ken and the the bigger drivers of growth of going to come through intermediary and institutional.
Okay, great. Thank you so much.
Thank you. Your next question comes from Dan Fannon from Jefferies.
The head.
Hey, Good morning. This is actually James Steele on for Dan and Thanks for taking our question Joe just firstly following on the divestment of Daiichi I was just curious if there's any impact this quarter on flows or anywhere else I know the day by day some seed for you.
Hi, James Thanks for the question.
I guess the first thing is yes, the the divestiture with I think we got it is the success and we were pleased to welcome to the new shareholders onto the onto the register.
As we said on the coal and I don't.
And she is an important other.
Well I should say Daiichi is an important client for us and exactly that and we don't we don't divulge any individual clients holdings.
And our Japanese business.
It is about $19 billion slightly.
Slightly up from the quarter.
Okay. Thanks, and then just kind of wanted to dig in to your goal of getting to net flow positive ex corn.
And I know that you've done a few things to the investment performance has improved you've hired ahead of the ESG doing some stuff with technology. So just curious what is what.
What is the which initiative do you think is most likely to to bring you back to the net positive or what are you most excited.
Okay.
Yeah, I think it's the combination this the stickier the thanks for that question.
I think it's the combination of those things it isn't just one sort of magic trick that will deliver the answer to that question. We need to have really strong investment performance really good risk management and the investment performance and excellent client experience, we've been investing as you say and the technology that underpins the system.
Suzanne Ken and the team have been working hard on improving.
How they are facing off to clients and the client experience of the investment team continues to work through these volatile markets to deliver the right sort of risk adjusted investment returns and it's not one thing the.
The difficult part of this business is you have to deliver that suite of things and and that's what really makes the difference.
And that's our mission and why.
Just to go.
And so some of the some of the sort of facts and where.
Pleased with another positive quarter of intermediary and we've had some really strong flyers and intermediary and Europe.
And the growth rates and our fee cap business and all.
And the Dublin Fund range.
And is fairly steady off of a set of 21% annualized for the Q1 such of real strength there of cost across a range of capabilities.
And we've got close to flows and in Australia and Asia.
We've got some positives in the U S.
We are seeing some outflows as we've talked about and in certain areas of U S equity.
So intermediary.
And Ah.
The the acceleration there and I can see.
And of what we're saying there is is it is hopefully already that to be seen and.
And institutional we had a good we had a good Q4.
As you can see our institutional flows and in Q1.
We're much more minimal and that's true.
And the lumpy nature of that business. So we know we need all of those things to fix that it's a little bit of everything as opposed to one thing all the time.
Understood. Thank you.
Your next question comes from Alex that's nearly all of it from Jan Please.
Go ahead.
And good morning, and thank you for taking my questions and put a couple of specific ones on non day, firstly the tax rate was much lower in the quarter and.
And then what you've indicated previously how should we think about it from the rest of the year and ease of any sort of said the seasonality of that might come in to that and then secondly on the noncontrolling interest I E. The jumped in and this quarter instead of a country.
And to what you previously had and so I think you're investing out a lot.
Could you give us a bit of color on that and because of it does seem to the numbers around the little thank you.
Yes, the tax rate no change to our guidance from 2023% to 25%.
At wealth tax rates on where they are so and.
We know we've got our U K and attack.
The increasing.
And a couple of Years' time.
And once that comes into it and to.
And to the statute books.
We're going to we'll get to a change and that in all of the fed rate, but not all of our other line right.
And obviously and I think everyone's expecting an increase and the U S tax rate as well, so but given the current given the current tax rates.
All guidance of.
The tax rate for the year of 23 to 25 to said state of the site.
Funding out of this quarter with.
The best thing for the life, which switched to which could move that rabbit and the quarter, but like I say just to stick with the safeguards.
Oh and NCI.
You're right what normally happens to see she got a and.
Hence the audience largely.
Clients are investing in and funds that we've got feet, and which we have to consolidate and and back out so you'd normally see.
And something going to the same way of our investment guidance you can see a reversal of coming out and NCI to go the same way this cost quarter.
Largely because of one fund, which has got a pretty significant.
Our clients are investing in and which has performed incredibly well over the last 12 months, but this quarter was slightly negative and investment performance.
Oh its overall performance.
And there's a reversal of NCI, but across our entire book of all of us from positive, but we can we can take you to that in more detail if you'd like to use with but.
That's why it moves that's why they are moving in the same direction this quarter.
Okay. Thank you very much.
Thank you your next question.
Comes from Andrei Stadnik from and that please.
Go ahead.
Okay.
Well good morning, or good afternoon, and I wanted to ask two questions and my first question is around ESG and sustainable investing.
It seems from DHT doesn't quite the jumps head of Sandoz and it doesn't quite have as many of them.
Strategies and sustainable space with some of the competitors.
Is that something that's worth accelerating instead of doing additional buybacks given it's such an area.
And the areas of potential opportunity.
Andre <expletive> here Yeah.
And we are going more cautiously down the ESG road and some of our competitors to be sure. We're concerned that some of the methodology used to take sort of the.
Large existing parts of People's asset management business and convert them into qualified sort of ESG assets is.
Some of that exclusion and and methodology looks to us like it's.
And maybe very likely to be challenged and and may not be in in the fullness of time proved to be the exact right wrote to take so we are we've hired to ahead of ESG investing we're building out teams to support.
The better.
ESG research and infrastructure and data collection.
We are moving.
Some of our product line.
In accordance with European rules.
And to their proper categories, and Youll see that trend accelerating on a go forward basis.
We're not off to quite as quick of start as some.
That's a little bit uncomfortable, but we think it's the right path because we think we want to do it at the highest possible quality level and and.
And so we're moving as aggressively as we can down that past subject to that sort of quality limiter.
And again.
To that Andre.
And yes, we already and we've got one.
Article NOG and one asked the right pumps to get fit.
We are very confident with you will see of adding to that during the course of the year.
But again as Dave said and of course why.
We're interested in.
And how some others at the Claris and things ESG as you would expect probably from Jeff Henderson were bank.
<unk> had a little bit more cautious we are investing.
Across our business as well.
And it takes the pool of course, the guys joined we're building out the team and.
Of the pool, and also adding adding ESG resourcing to our client space, where we're working on technology and data, which is critical to round. This.
So there are investments there are investments there and you'll see some some products and product extensions over the over the course of the year.
Yeah.
Thank you and the second question I wanted to ask around the country.
Yeah Yeah.
And I'll, just say one of our spacing and we do have and after the exceptional.
And the sustainable product, which has been in existence for fair to yes, we're not view of this.
Just going to three $4 billion.
That was true.
That was.
And she has got three or $4 billion that was $1 billion of couple of years ago. So we are we are growing and some specific areas as well sorry Brito.
I think of the that's important.
I wanted to ask.
Around fixed and fixed income flows.
And it was still positive and the quarter, but they were substantially lower than the net inflows you had in the and.
And the December and September quarters, and was there anything specific kill or was it just.
The move and the movement of rates.
And that slow down and the momentum there.
Okay.
Yeah, and nothing nothing specific were still taking market share and the U S. We've taken market share for the for the.
And the last year of Starwood, and Dmitry and fixed income.
And to take market share, but obviously it wasn't it wasn't quite of changed quarter for bonds and the overall market growth and the U S, particularly of everyone was slower.
And we didn't have any substantial.
Channel wins and fix this quarter other so.
Nothing nothing nothing particular to the right about where as you can see our performance to fixed income.
Is exceptional and.
And we look forward to continuing to grow that business.
Thank you.
Yeah next question comes from Mike Carrier from Bank of America.
Go ahead.
Good morning, and next day and the question.
And the performance fees heat by ice and context of out of the Europeans.
And with performance fees, and Kathleen just to get a sense of the magnitude or the opportunity.
Sure.
Hey, Mike.
And they're all they're all listed public cloud and so you can see there's a mixture of of.
Quarterly filings and annual farm to performance fees and some of those performance fees of got high water with the carry on the.
And I can say it is the it is it is it.
And it could come through over multiple years because of that of Hollywood Hollywood and Mark carries but it's a mixture of the value of.
Of quarterly fees and annual fees and annual fee.
Faced with carries from the from the past again and we can we can we can talk you through where to look for those things to help if you want to model it but.
That's the the short answer.
Okay, and then just to.
The board given some of the weaker shorter term performance, mostly on the <unk>.
And yet it sounds like you guys are noticing some rebound in the smid cap area just wanted to get your sense on and how that's likely to impact maybe the trajectory of the timing.
Those exports.
Given that youre still seeing the strength and fixed income multi asset and intermediary.
And you just curious how much of an impact and maybe that's happening and how much performance you need to kind of read to you know to get back to where you want to be.
Okay.
Well in terms of the timing youre seeing the that our flows we've definitely seen some pressure and mid and smid and small cap growth out of the U S.
You know after the significant underperformance and those strategies during last year, and particularly around the month around the the.
And the COVID-19 crisis and March April of last year.
And where the the question is can we build.
In other places more than enough to offset that outflow and and have done on the intermediary side, but.
But.
The they are the mid cap growth strategy and particular run by Brian domain has been Super strong for a long time went through this very difficult period and now has has made some significant ground back but.
And obviously, we're sensitive to where the past goes from here.
And it's a little hard to predict but right now what we're seeing on the intermediary side is the rest of the intermediary business has been strong enough and more than strong enough and with the exciting to come back.
Of a lot of the European assets, which have historically been strong, but frankly have not been over the last couple of years.
Since the Janus Henderson merger Theyre coming back now quite well and so that's given us the intermediary channel strength to.
And to more than outweigh the challenge and and that U S mid and smid cap growth space, So far but it is sensitive to the performance right now of month by month.
But that is mitigated by the fact that these are strategies that had been really superb for 20 years plus and.
And and have a strong sort of educated successful.
[noise] base that that is pretty loyal.
But there are limits to that and we'll just have to see it. It's it's sensitive to the future performance.
But overall the intermediary channel is quite strong.
Great. Thanks, a lot.
Thank you. Your next question comes from Ed Henning from CLSA. Please go ahead.
Thanks for taking my questions.
Firstly do you believe continued growth and the intermediary channel can hold off or even continue to improve your margin going forward is my first question and place.
Is that on the.
The management fee margin of Oh, yes.
Net management fee margin I guess the throat.
The answer is the size of the boat is yes, if we continue to grow the intermediary business our management fee margin will increase.
And if we grow that business, yeah, we should see that flow to the bottom line as well so.
Yes.
And are you confident you can continue to grow to one of your vision and thought of it.
Sorry, I thought of.
Yes part of that is part of that is what we're selling as well I mean, we're selling we're selling good product at good prices.
And we're setting.
The market neutral, we set of absolute return, Michelle and strategic bond with selling high yield.
And these are.
And we're selling a lot of European equity and fixed you said all of our European equity growth of the quarter was 22% on the law.
Yes.
So yes, we can grow and yeah. We can we can sustain or it will continue to increase that fee rates, which again I think it's the differentiator.
That is something you are seeing across this business flows and not where we want them to be yet.
But what we all selling is very good product.
And so.
We do expect that to continue the risk fee pressure and the industry don't get me wrong, and we expect to see that continue but.
But we are building and selling good fee product and clients are very happy with.
And with the performance.
And the price to go back.
Thank you and and then just the sick and one you talked about the progressive dividend policy. You know you have and increase dividends since the first quarter of <unk> can you just remind us do you have a target payout ratio of it obviously varies a little bit from quarter to quarter, how should we think about that.
Yeah.
We don't have to tell them, we don't have a payout ratio.
And that's a result of as opposed to it as opposed to of target.
As you say, we've got a progressive dividend you.
And you should expect to see that rise because of adding horizon and earnings have risen and last year and we're expecting earnings to rise again this year and good markets, where they are obviously at the moment.
Yeah, we view it very much as part of our capital return.
And the.
Effectively you've got an accordion.
Buyback on top of that which as we said we've talked consistently about three years.
I'll yield.
And it's pretty.
In comparison to the stocks.
And all in all of our competitive set of all yield is pretty healthy.
So I think the both to the decision that to.
To set increase this.
And this quarter with the right with the right to increase.
And that is very well covered again, we run of very.
Our conservative balance sheet, very deliberately there was enough leverage and enough pizza and the stock without without.
Without a lot of that we've talked about that and the power.
And the dividend is the dividend is very well covered obviously at market levels, where they are but would also be covenant at lower market levels and to get one of the intentions of a progressive dividend is the is that you could not you would not have to cut it.
And I expect and extremists so.
Board of comfortable with that to sell to increase.
And.
And we'll talk we'll talk further about capital return and and hopefully further increases and progressive dividend and the has to come.
Okay. Thank you I appreciate it Tom.
Thank you. Your next question comes from Alex <unk> from.
From Goldman Sachs. Please go ahead.
Good morning. This is actually Ryan Bailey and BOP, Alex I was just wondering if we can come back to your institutional Roger I think you mentioned there was a pretty healthy pipeline and I was just wondering if you could speak to one of the products and the pipeline and sort of the fee rates associated with it and then I guess just more broadly within institutional water and some of the sources of the outflows the recent.
Excluding kwan.
The the Python.
Sure.
And just let me start my morning started this morning without with I E.
Home for all four of them.
For our institutional treat the Bud.
And the economy rebounds, our institutional business globally.
And I came out of it was actually it was supposed to be the 20 minutes and a certain amount of the half because of.
It was just great to hear what's going on.
And and the learnings from the from the past couple of years. So the the pipeline is.
Growing it's diverse.
And both by geography and by products to your question around Phoenix is it's a pretty broad church.
There are some higher fee opportunities as well as some as soon as well as some of them.
From low fee product, we talked about in Q4.
We want to bake it helps the index mandate here and the U K.
Which is obviously the lower fee and.
We've been having some some other areas.
As well so that that's the.
He is looking to build and.
And we talked a little bit about some of the areas where.
We were bridesmaid and in.
And over the last 12 months and what we've learned from that and how.
We can we can win of the last that last phase coming second.
And isn't something you want to do.
And so yeah.
Really positive field, but we've got work to do.
And Richard Greg joined US as global Hawk and consultant relations had a few months ago and Ah. We're building we're building up those relationships with consultants.
And so there's but there's still work to do but we've done an awful lot of an institution and we still got work to do.
In terms of in terms of outflows.
And this is anything really.
The specific.
And the comes to mind.
Sorry.
In Tech is.
A couple of billions of dollars of outsize this quarter.
Which is probably the biggest driver.
Outside of that it's fairly well spread.
Got it okay. Thank you.
And then maybe just so I understand correctly coming back to the parking right sizing.
A that sounds like it's a true few of of that I kind of just wanted to come from that and then the of the $440 million.
Were you able to recapture any of that and through other tuck ins products.
I guess the answer to the first of all is it both quarters, we had about 700 million out from Perkins and Q1.
And this for 40 and the strategies with where we're closing.
As we rightsize those areas and focus on the real strength that we've got.
And that in the in the U S value businesses.
So this is the.
For the full 40 day, you should expect and Q2, but included in those outflows in Q1 is about $700 million.
From from Perkins.
Sorry, what was the second half of the question Alex sorry.
And sorry, Brian.
Just if you were able to recapture of any of the that incremental 440 million and to into other products on the platform.
Alright.
Not that we're aware of where well we made some strategic change to around skinny and that team and focusing them, where we felt like it would be really successful.
And that shift.
<unk>.
Yeah.
Changing some of the personnel and and caused some of the product closure and so that's the the effects that Roger is talking about which spread across.
Started and this past quarter and Youre seeing some of those results and then we'll carry on into the next quarter and she has described but we weren't able to move those to different Perkins products.
Got it perfect alright, thank you.
Okay.
Thank you your next.
Question comes from Nigel to pay the way from Citi. Please go ahead.
Yeah.
Oh, Hi, guys just to just first of all I was hoping to delve a little bit further into the.
Retention of the guidance of non comp cost despite the 4% drop and first quarter of that basically means it's going to be sort of on average, 8% hard and one key area and the remaining three quarters. So is that is that all going to come through G&A and can you be any more specific of that well that's being spent on.
And yeah, I think that is what we say a.
Part of that is obviously our expectations of.
Unlock from from COVID-19.
So we are seeing some particularly in the in the U S.
More clients more client visits, which we view as positive.
But we're starting to see some to the country.
Which again is good.
And we're not expecting to go back to 2019 levels.
But we would expect to see that accelerate over the course of the year.
We'd expect marketing to increase them.
Again, we have.
The volume better ways of communicating with clients, which again will be leveraging.
To to get us to that I supposed to flow.
We've been talking about so.
And I think that there.
They are the biggest drivers.
And that will drive drive that but yet the.
You're right and the mass for us to get to mid single digit would mean and I speak about 8% higher and the <unk>.
In Q2 to four.
Okay, Thanks to that and then.
The sort of obviously, you mentioned and the sort of dropped and portal and the balance fund.
That was obviously kind of as you're sort of changing Tms on that that fund so you're still pretty comfortable that that's going to be a smooth transition with the.
And nothing much to worry about in terms of that despite the sort of dropped out and the cool to all level.
At that time.
Yeah, I think we're confident and the team, we're confident and in the process, but and and I think we've executed the transition as well as can be done, but you know where to.
Still accountable for the performance and we're still subject to to that accountability and the marketplace right. Now that fund continues to run ahead of index, but it's less ahead of index than many of its peers at the moment.
It's probably a little more valuation sensitive in some ways and some of its peers and that Hasnt always served it well and recent recent history. So.
Yeah.
And we're confident that we've gotten through the portfolio manager transition as well as can be done and we think it's a model case for that and we're very grateful to Marc Pinto and his leadership and executing that transition, but now we own the performance and we're accountable and that will affect the future path.
Yeah.
But as Dave said.
And that fund is ahead of benchmark over all time periods.
Three five and the tiny of numbers, Oh, I think top of their solid growth across the board. So.
Yes.
And I think we're in a good space module.
Okay. Thank you.
And it continues to sell well.
Thank you all final question comes from day Cold you from credit Suisse.
Please go ahead.
Hi, guys just a quick one circling back to Japan can you just talk about that the new cooperation agreement with Daiichi and how's that.
Has impacted your distribution efforts and Japan right now.
And so much the Daiichi money, but you know way, you've worked with and distributing and to that region.
And I used to working on new products. There has anything changed do you still view that as the and opportunity.
Yeah, Hi, Yes, we do view of this as an opportunity.
We had a senior executive from Daiichi, Mr. Ozawa start.
As our new chairman of <unk>.
Our Japanese office and company.
Very recently.
Talk to our whole senior management and a review of the product lineup and.
And talk to us a lot about the ways, we can work together to you.
Deepened the partnership that we have with Daiichi, but also to expand it out to other possibilities and Japan. So I would say the relationship is very healthy.
And it's not so much based on the written words of the agreement it's based on the the trusted relationships built between the people and the addition to our our leadership team of Mr. Ozawa is very welcome and ease of very.
Honored and respected senior.
Senior member of the Daiichi team has come across and that's nothing but good news for us.
Alright, thank you.
Thank you. This concludes our conference call today.
Thank you for attending today's presentation you may now disconnect.
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