Q4 2021 Cohen & Steers Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the Cohen <unk> Steers fourth quarter and full year 2021 earnings conference call. During the presentation, all participants will be in that.
Speaker 1: for standing by. Welcome to the Cohen and Steers fourth quarter and full year 2021 earnings conference call. During the presentation all participants will be in a listen-only mode. Later we will conduct a question and answer session. At that time if you have a question please press the 1 followed by the 4 on your telephone. If at any time during the conference you need to reach the operator please press star 0.
Listen only mode. Later, we will conduct a question and answer session.
At that time, if you have a question. Please press the one followed by the four on your telephone.
But any time during the conference you need to reach the operator, Please press star zero.
Speaker 1: As a reminder, this conference is being recorded Thursday, January 27, 2022. I would now like to turn the conference over to Brian Heller, Senior Vice President and Corporate Counsel of Conan Steers. Please go ahead.
As a reminder, this conference is being recorded Thursday January 27th 2022, I would now like to turn the conference over to Brian Heller Senior Vice President and corporate Counsel of Cohen <unk> Steers. Please go ahead.
Speaker 2: Thank you and welcome to the Cohen and Steers fourth quarter and full year 2021 earnings conference call.
Thank you and welcome to the Cohen <unk> Steers fourth quarter and full year 2021 earnings conference call joining.
Joining me are our Chief Executive Officer, Bob Steers, our President, Joe Harvey and our Chief Financial Officer, Matt Stadler.
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 fourth quarter and full year earnings release and presentation. Our most recent annual report on Form 10-K , and our other SEC filings.
We assume no duty to update any forward looking statements.
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 referred to as as adjusted financial measures.
We believe are meaningful in 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 and presentation to the extent reasonably available.
The earnings release and presentation as well as links to our SEC filings are available in the Investor Relations section of our website.
At Www Dot Cohen, <unk> steers Dot com.
With that I'll turn the call over to Matt.
Thank you Brian Good morning, everyone. Thanks for joining today.
My remarks will focus on our as adjusted results I.
A reconciliation of GAAP to as adjusted results can be found on pages 18, and 19 of the earnings release and on slides 16 through 19.
Earnings presentation.
Yesterday, we reported record earnings of $1 24 per share compared with 76 in the prior year's quarter.
Six sequentially.
The fourth quarter of 2021 included cumulative adjustments to compensation and benefits and income taxes that lowered our compensation to revenue ratio and effective tax rates respectively.
Revenue was a record $159 7 million for the quarter.
Paired with $116 6 million in the prior year's quarter and $154 3 million sequentially.
The increase in revenue from the third quarter.
Primarily attributable to higher average assets under management in open end funds.
And higher performance fees from certain institutional accounts, when compared with the third quarter.
Our implied effective fee rate was 58, one basis points in the fourth quarter compared with 57 five basis points in the third quarter.
Excluding performance fees are fourth quarter implied effective fee rate would have been 57 basis points.
In our third quarter implied effective fee rate would have been 57 three basis points.
Operating income was a record $82 6 million in the quarter.
Paired with $49 4 million in the prior year's quarter and $74 million sequentially.
Our operating margin increased to a record 51, 7% from 45, 6% last quarter, primarily due to the cumulative adjustment mentioned a moment ago.
Which reduced compensation and benefits to reflect actual amounts to be paid.
Expenses decreased eight 1% when compared with the third quarter as lower compensation and benefits was partially offset by higher G&A.
The compensation to revenue ratio, which included the cumulative adjustment was 26, 6% for the quarter.
For the year the compensation to revenue ratio was 32, 2%.
The increase in G&A was primarily due to higher travel and entertainment increased hosted and sponsored conferences and higher recruiting fees.
And the increase in distribution and service fee expense was primarily due to higher average assets under management in U S. Open end funds.
Our effective tax rate, which was 20, 536% for the quarter included a cumulative adjustment to bring the rate to 20, 615% for the year.
The reduction in the effective tax rate was primarily due to a decrease in the non deductible portion of executive compensation on a higher than previously forecasted pre tax base.
Page 15 of the earnings presentation sets forth, our cash and cash equivalents.
Corporate investments in U S Treasury securities and liquid seed investments for the current and trailing four quarters.
Our firm liquidity totaled $248 2 million at quarter end compared with $241 million last quarter.
Term liquidity as of December 31 reflected the payment of a special cash dividend in December of $60 3 million.
Or $1 25 per share.
Over the past 12 years, we have paid a total of $15 25 per share in special dividends and we continue to be debt free.
Yes.
Assets under management totaled a record $106 6 billion at December 31, and.
An increase of $9 4 billion or 10% from September 30.
The increase was due to net inflows of $1 8 billion and market appreciation of $9 1 billion.
Actually offset by distributions of $1 6 billion.
This marks the 10th consecutive quarter that we have recorded net inflows.
Bob Steers will be providing an update on our flows and institutional pipeline of awarded unfunded mandates.
And now I'd like to briefly discuss a few items as we begin the new year.
First regarding or expected compensation to revenue ratio, we intend to balance anticipated revenue growth from year end assets under management that exceeded our full year.
Assets under management by about 13%.
With a disciplined approach towards adding human capital.
In addition to the full year impact from the new hires we made last year, we plan on making controlled investments in order to broaden our product offerings expand our public and private distribution efforts and most importantly to.
To maintain our industry leading investment performance.
As a result, we expect that our compensation to revenue ratio will increase to 33, 75% from the 32, 2% recorded in 2021.
Continuing with the theme of investing in our business, we expect G&A to increase 10% to 15% from the $47 2 million we recorded in 2021.
We intend to make incremental investments this year in technology, including the implementation of new systems that will add efficiencies and expand our capabilities cloud migration and upgrades to our infrastructure and security.
We will also make investments in global marketing focused on hosting virtual and in person conferences as well as expanding our digital footprint.
And we expect the travel and entertainment costs will increase as global conditions begin to return to normal.
We expect that our effective tax rate will remain at 26, 5% in 2022.
And finally, you will recall that a year ago. We noted that we were anticipating the redemption.
A 1 billion dollar global real estate institutional account in 2021.
I am pleased to inform you that not only do we continue to manage this account with the client has also added assets to it and therefore, we no longer consider this account can be at risk.
And now I'd like to turn it over to Joe Harvey, who will discuss our investment performance.
Thank you, Matt and good morning, everyone.
I will review, our investment performance and discuss the macro environment and its impact on our asset classes.
Four weeks into January the fourth quarter of last year seems far away, but it was very strong for equities.
'twenty, one closed with momentum and expectations for post pandemic economic recovery earnings growth stimulus and appetite for risk taking.
Our largest asset class U S rights was the best performing sector in the S&P returning over 16% in the quarter.
For the full year, our asset classes performed well.
With U S rates up 41% global real estate up 26%.
Listed infrastructure up 15%.
Resource equities up 24% and preferreds up nearly 3%.
With the new year. However, the market has finally focused on rising inflation, which as we shared our views with you last year will likely persist.
With the last reading at 7% CPI is currently at the largest gap to the federal funds rate in our professional lifetimes.
Reversion of that gap will come by way of both monetary tightening as well as from inflation normalizing at a lower rate.
We believe inflation could stabilize in the high 2% Zip code or 100 basis points higher than the pre pandemic trend line.
The interest rate an adjustment process will reshuffle, the deck of winning and losing asset classes and sectors, while exposing vulnerabilities from risks seeking borrowers.
We believe that the U S economy will continue to enjoy above trend growth.
Supported by a prologue and oscillating recovery as the pandemic ebbs and flows.
Earning sensitivity to inflation should be a key differentiator and performance to counteract the impending interest rate adjustment.
Looking at our performance scorecard in the fourth quarter eight of nine core strategies outperformed or equal their benchmarks for.
For the last 12 months nine of nine core strategies outperformed.
Measured by AUM.
99% of our portfolios are outperforming benchmarks on a one year basis, compared with 79% last quarter.
The improvement was attributable primarily to global real estate, which improved from 25% outperforming in the third quarter to 95% outperforming as of year end.
For both three and five years, 100% of AUM are outperforming.
<unk>, 86% of our open end fund AUM is rated four or five star by Morningstar, compared with 88% last quarter.
Credit goes to our investment leaders, John Shay, our CIO and Chris Parliament, Chief administrative officer, and guiding our teams to these outstanding results.
In light of the inflation situation I'll kick off our asset class review by highlighting our multi strategy real assets portfolio, the benchmark for which returned 21% in 2021.
This portfolio is designed to provide equity like returns inflation sensitivity and diversification.
We outperformed the benchmark by 340 basis points for the year, which included outperformance in all five asset class leaves as well as asset allocation alpha by our portfolio manager Vince Childers.
This portfolio is designed to perform best in an environment of rising or unexpected inflation.
Commodities and resource equities provided.
The most inflation sensitivity wise.
Real estate is driven more by economic growth and infrastructure tends to be an all weather performer.
Valuations of these listed real assets are as cheap as they have been to equities in 20 years.
Meantime, the beta to equities as just <unk> six times.
We recently published a white paper on this strategy and its constituent asset classes and is available on our website.
Our three core real estate strategies U S global and international outperform in both the quarter and year.
As mentioned global real estate returned 26% with significant dispersion by region.
<unk> returned 41% Europe returned 9% and Asia returned 4%.
To address the inflation and interest rate question on prospective performance.
Earning sensitivity and replacement cost dynamics should help listed real estate.
Globally. These companies' cash flows should accelerate to an average of 12% over the next few years compared with our long term growth rate of 5%.
U S. REIT returns have averaged 10, 8% during periods of rising bond yields accompanied by rising growth while in periods of rising yields with declining growth returns have been flat.
Comparatively private real estate unleveraged returns have averaged 10, 7% and high inflation environments versus six 5% and low inflation environments.
Turning to infrastructure the asset class returned 15% of 2021, compared with 22% for global equities lagging for the second year.
We outperform our benchmark for the quarter and year.
Sector dispersion was wide with over 40 percentage points best to worst.
While certain pandemic challenge sectors, namely passenger rails toll roads and airports.
<unk> performance the ongoing economic recovery should provide tailwind for these sectors going forward.
Reflecting the income and stable cash flow growth profile and vintage infrastructure.
Characterize infrastructure generally as steady Eddie that is.
<unk> solid returns in most market regimes, while not at the top of the charts.
At the bottom.
In part due to president <unk> now passed infrastructure spending legislation, we are seeing broadening allocations in institutional portfolios and increased flows and wealth.
Preferred securities portfolios had modest negative returns in the fourth quarter, but performed well versus fixed income for the full year for.
For the quarter and the year, we outperformed benchmarks in both our core and low duration strategies.
This year likely will test fixed income performance generally based on our review for rising bond yields.
That said preferred credit fundamentals are very strong, reflecting the high representation and banks and other financials. While spreads are generally in line with long term averages.
Our portfolios are positioned defensively against increases in interest rates with duration of two four years and our low duration strategy and 4.0 years in our core preferred strategy.
After high yield preferreds offer the second highest yields in fixed income and offer meaningful tax advantages for the taxable investor due to the high percentage of qualified dividend income that they produce.
In terms of our private real estate initiative, we have commenced our investment process and have closed on several property acquisitions for both our income strategy and our opportunistic or capital appreciation strategy.
This year, we will look to add a real estate investment strategist as part of our expansion of multi strategy capabilities to help our teams and clients allocate between listed in private real estate and execute thematic in strategic research.
We look forward to sharing our progress on this initiative in the future.
In closing we are very positive about the allocation trends, we are seeing for our asset classes.
In the institutional channel, we see a greater need to allocate to real assets.
By example, in the private market dry powder in private equity funds is at 390 billion for real estate and 300 billion for infrastructure.
Investors are becoming more comfortable with listed allocations to complement private <unk>.
Despite greater measured volatility.
Some investors want real assets with liquidity, particularly in the Endowment foundation and healthcare segments, where some plans liquidity has been challenged.
In our early stage pipeline, we have some sovereign wealth opportunities where the plan sponsors are making initial allocations to listed real estate and infrastructure.
We would expect those initial small allocations to grow meaningfully to make it worthwhile for those planned sponsors to research the asset classes and oversee additional managers.
In the wealth channel, we are seeing earlier stage of adoption of private real asset allocations as.
As we've seen in other markets. This will help drive listed allocations overtime.
We believe the inflation environment will help provide additional support for these trends finally manager consolidations and conversions from passive to active or trends also in our favor.
As our performance continues to be excellent.
Thank you for listening I'll turn the call over to Bob Steers.
Thanks, Joe and Matt and good morning, everyone.
2021 was a record breaking year in myriad ways for Cohen <unk> steers.
It marked our 35th anniversary and 17 years as a public company.
For the quarter and year, we achieved a record number of records driven by improving fundamentals are rebounding economy, accompanied by the return of meaningful inflation.
For the first time in over a decade, the prospect of sustained fed tightening.
As Matt discussed assets under management increased to a record 106 billion at year end, driven by our 10th consecutive quarter of firm wide net inflows.
Both open and fund an advisory channels ended the quarter with record assets under management.
For the full year, we also achieved record gross and net inflows.
And fund an advisory gross sales increased 11% and 13% to 19, 5% and $4 9 billion respectively.
Most notably open end fund net inflows rose, 62% year over year to a record $8 8 billion.
While the advisory channel also registered a record $1 9 billion of net inflows.
Firm wide organic growth was 12% for the year.
The seemingly sudden rise of inflation and the expectation for multiple rounds of fed tightening have put into stark relief the importance and value of portfolio allocations to actively managed real asset strategies across client portfolios to enhance returns and provide diverse.
Suffocation.
The wealth channel was by far our strongest business segment and achieved multiple milestones in the quarter.
Net inflows in that channel were a record $2 5 billion for 22% organic growth rate and represented our <unk> consecutive quarter of positive net flows.
Importantly, net flows in the quarter were not strong, but also diverse with meaningful contributions from each of the wire house regional brokerage and <unk> segments.
In addition, <unk> open end fund net inflows were a record $476 million.
And marked the 14th consecutive quarter of net inflows.
The CIO assets in our open end funds ended the year at a record $6 billion.
Our non U S. Open end funds registered net inflows of $45 million in the quarter and a record $202 million for the full year.
We will continue to invest to support growth in this important channel.
And we expect that flows will continue on an upward trajectory.
For the year, the powerful combination of strong absolute and relative performance derived from our unique and diversifying asset classes resulted in 25% organic growth in well.
And industry, leading market share as well.
Our U S global real estate and preferred securities funds achieved market share record of 33%, 12% and 46% respectively against other comparable actively managed funds.
2021 was a record year for the institutional advisory channel as well with $1 9 billion of net inflows.
However, 2021 was also a year in which we reorganized our sales leadership and converted to a regional approach to our institutional sales coverage.
We enter 2022 fully staffed and prepared to go higher and deeper into the global institutional marketplace.
In the quarter the advisory channel had net outflows of $456 million. These.
These outflows were driven by a single an unexpected client termination of $400 million.
However, not included in the headline advisory flow results was $564 million of net new mandates from institutional clients, which were invested into our open end funds.
Other full year achievements for the advisory channel include positive net flows from each of the U S EMEA and Asian markets.
Additionally, all of our core strategies U S real estate global real estate global listed infrastructure and preferred securities registered net inflows.
The pipeline of awarded but unfunded mandates has increased dramatically.
$100 million in September to $2 1 billion another new record.
New awards in the quarter totaled $1 3 billion and included our first relationship in Africa, a $300 million global listed infrastructure mandate.
Sub advisory flows in the quarter were subdued net outflows in Japan were $242 million and distributions totaled $276 million.
Sub advisory net outflows ex Japan in the quarter were a modest $56 million.
At the risk of sounding overly optimistic we believe our current momentum and growth prospects have never been brighter driven as always by our industry leading investment results.
It bears repeating that virtually 100% of our Oems are.
Our outperforming their benchmarks for the 135 and 10 year time periods.
Truly remarkable accomplishment.
Looking ahead, the combination of industry, leading investment performance.
Rising demand for real asset strategies, and our plans for new product introductions designed to meet this demand has us poised for continued organic growth.
In addition to our open end fund organic growth next month next month, we plan to market. The first new listed real estate Securities closed end fund and over nine years supported by an exceptionally strong and deep syndicate.
And as I've discussed the institutional advisory channel entered this year with a record pipeline fully staffed and the reorganization behind them.
Also under new leadership, our EMEA wholesale business is also poised to deliver meaningful organic growth.
To capitalize on all of this momentum this year, we plan to launch multiple new initiatives, which will seek to position Cohen <unk> steers at the intersection of public and private real estate markets through the introduction of vehicles tailored to the unique requirements of both the institutional and wealth marketplace.
Laces.
These initiatives are designed to take us higher and deeper into real assets and position us for continued future growth.
With that I will turn the call back to the operator for questions.
Thank you.
I would like to register a question or comment. Please press. The one followed by the four on your telephone you.
Here are three tail prompt technology request I missed your question has been answered and you would like to withdraw your registration. Please press. The one followed by this three one moment please.
Our first question comes from John Dunn Evercore ISI. Please go ahead.
Sure.
Yes.
You've done a good job in the past about laying out.
Work, you've done to prepare for an inflationary environment.
Investment strategy side.
Talk a little bit about the stuff you've done on the distribution side, particularly in the wealth management channel to prepare for inflation.
So you want to answer that.
Well, it's a matter of.
Believe.
Making sure that we're educating our client base in wealth management.
And presenting the strategies that we think are best suited for the environment and an example would be our preferred strategies to educate and focus on our low duration strategy.
And we've been seeing increased flows in to answer that strategy.
The other.
<unk>.
Vehicle and strategy that we think makes most sense for the for the wealth channel as our multi strategy real assets portfolio.
I highlighted in my.
Discussion and.
That's a good.
All round.
Portfolio enhancer that doesn't give clients risk too.
Any one asset class like commodities, which.
It could be volatile lower.
Over the long term.
Not perform as well as.
A blended.
Approach to real asset investing so.
I believe that the wealth channel generally wasn't prepared for.
Inflation, because it hasnt been.
On the on the radar for a long time, and so we've got a great opportunity to educate.
And we've been doing that and highlight the strategies that we have.
Such as the low duration preferred and multi strategy real assets portfolio to.
To put portfolios in a better place I will say to that.
While.
REIT strategies.
Historically have not been as.
Sure.
Inflation sensitive in the short term.
This cycle.
<unk> been very sensitive to the changes in the inflation environment, and we have seen and as demonstrated by our flows into our open end funds.
Strong interest and rights as a way to.
Protect against inflation.
Got it and then maybe could you give us an update on the private real estate team the progress they've been making them.
Over the last several months and then maybe the growth outlook for that team.
Sure.
The team is formed and as I mentioned in my comments, we've made our first couple of acquisitions and we're <unk>.
Focus on two different strategies, one is an income strategy and that is designed for our income related vehicles.
That debt that we have today and we're in the lab constructing.
Constructing for the future and those will be primarily designed for the wealth channel.
And.
Yeah.
There are things like closed end funds and non traded Reits.
Then on the institutional side, we've got a vehicle that is in the <unk>.
Early in our cornerstone capital raising phase.
And.
That's a capital appreciation strategy. We've also made a commitment there. So are we're often running in.
We will.
Be able to report our progress on capital raising.
Over the next year.
But.
Yes very much.
Let me finish on that on that point as both Bob mentioned and I mentioned, our vision here is.
Is pretty broad and we see opportunities to work with a wide variety of clients.
Better allocate their real estate allocation between the listed in the private market and Thats why.
We'll be hiring a real estate investment strategist this year to work as part of our.
Listed in private real estate.
Our capability in a broader broader multi strategy capability.
But.
<unk>.
The backdrop is that investors are just.
As I think.
Outlined in my comments much more comfortable allocating their capital either to illicit market private market no matter where.
And then but driven by where the best opportunities are and so.
We want to work with our clients to help them optimize portfolios and it can be done.
Advice basis, which were always in the room on with our clients, but it can also be done through <unk>.
Vehicles so.
This broader vision and.
We see an opportunity to to.
As Bob mentioned kind of sit at the intersection of listed in private.
And.
Help investors optimize portfolios.
Thank you.
Thank you.
Our next question comes from Robert Lee K B W. Please go ahead.
Hey, Good morning, this is Alex for Rob.
I know you guys gave a little bit of color on expenses, maybe increase in tech next year in.
G&A can you add a little bit more color around comp or what the expectation is pressures heading forward.
Matt you want to speak to that.
Sure.
So as I mentioned in my prepared remarks, we are.
Continuing to build out.
Areas, where we have momentum as highlighted in both Bob and Joe's remarks, which include broadening our product offerings, Joe just mentioned.
And investment strategy just to help.
Explore.
Continued products in public and private blending.
So we continue.
Continuing of course.
To invest in the investment department more broadly to maintain our industry leading.
Performance in addition to that as the <unk>.
Firm grows there is some.
Infrastructure.
In legal and it.
And fund admin that is required to meet the needs of the growing business. So.
I think 2021.
Year was pretty anomalous in that.
Yes.
Joe.
A huge increase in compensation relative to that.
Huge increase in revenue year.
Year over year, I think as we as we get into 2022.
No.
Not expecting to have a reoccurrence of that but yet we have to continue to invest.
In our business.
Keep growing our business so I think the.
150 basis point increase is.
Reasonable given all of that backdrop.
Great. Thank you.
I would just add in terms of being competitive on compensation.
When you look at our business and I think it's pretty evident based on our comments today that we've got a lot of things going for us starting with strong investment performance, which is in strategies that are in demand, which leads to organic growth and so while a lot of the industry has been helped helped by <unk>.
Appreciation.
Our business is drawn is been driven by a combination of things.
Both organic growth and appreciation in so with with our business model.
Strong performance I think we're well positioned to.
Be competitive on compensation.
No matter what.
The markets bring us in.
Foreseeable future.
I would also add again the.
Underlying our expectation for the comp ratio.
I'll just highlight.
Leverage of all our business model is because it includes.
Building from scratch building organically the entire private real estate team, which.
We're not assuming any meaningful revenues this year, along with bringing bringing building the team that will sit at the intersection between public and private we don't expect meaningful payoffs from from those new initiatives.
<unk>.
2023 and beyond.
And that's all contemplated in the guidance that we're giving.
And so it just again it shows that our business model our structure competes very well.
Economically versus other asset managers.
Great. Thank you for taking my question.
Thank you.
As a reminder, via the phone lines you May press. The one followed by the four if you would like to register a question or comment once again, the one followed by the four.
Our next question is from Marla backer of Sidoti. Please go ahead.
Thank you so.
Just continuing on with P&L.
Investments, but you are looking at for 2022, particularly in human capital as you said you mentioned the real estate investment strategist.
Can you give us some more color around the potential timeline as to when some of these.
Investments in.
Might take place and what Youre seeing in your pipeline.
Joe would you take that.
Sure when you when you look at.
R R.
Plans for head count additions.
They are.
I'd say they are broad throughout the functionality of the firm and Thats.
Driven by the fact that.
Sure.
We're having success on a lot of a lot of fronts. So I think as you can think about loading that into.
Our model, it's going to be spread over the first half of this year.
In terms of.
Thinking about those head count additions.
Okay, and then switching topics.
And given your traditional.
Strength and real estate investing there has been a lot of.
A lot of discussion about just a change in the paradigm of how companies do business.
Whether people will continue working.
At offices to the same extent as they did pre COVID-19 do you see any potential opportunities for you.
Terms of.
Investing in.
Any restructuring of existing office property.
Well first of all I think.
It's an exciting topic right.
We live for us change and in the case of the pandemic and how it impacts the commercial real estate industry.
There is some structural.
And secular change that's taking place there was a.
Article in the Wall Street Journal yesterday that said that.
The way we.
Work live and play is changing and that's something we believe in strongly is going to change or which regions of the country are getting stronger and which are getting weaker and it's going to change a fourth fortunes of property segments and sub segments segments within those property types. So.
As active investors that changes what creates opportunity.
That's what energizes us so.
Specifically to the topic of the office sector.
It's one that we've targeted as.
An area of opportunity, particularly on the private side and.
So.
But it's driven by.
The change taking place of.
Migration to southern states, such as Florida or Texas.
Which is driven by a lot of things, including the tax regime.
<unk>.
So it's.
It's creating opportunities and Thats where were we.
That's what we're all about as a as an active investor.
Thank you.
Thank you that was our final question I'd like to turn the call back over to Joe Harvey President for any closing remarks.
Thank you.
Since I will have the honor of succeeding Bob Steers as CEO on March one.
This will be his last earnings call.
Next quarter, we will continue with the same format with Matt reviewing financials, John Shay, providing an investment review and May handling the overall business review.
No doubt I have large shoes to step into considering that Bob Cofounded Kona series, along with Marty Cohen over 35 years ago.
Since our IPO in 2004.
Our AUM has grown from $15 billion to $106 billion and our annualized return to shareholders has been 17, 3% compared with 11, 2% for the S&P 500.
With that backdrop, our executive Committee and senior leadership are as strong as ever.
And we remain intensely focused on continuing our long record of innovation and excellence.
We will continue to have the council of Bob and Marty as largest shareholders and board members alongside our other active value added board members.
For a period of time, Bob will continue as executive chair to work on our private real estate initiative.
On behalf of <unk> employees, our board shareholders and clients I would like to thank Bob for creating along with Marty.
Great Company.
And for being a great leader. In addition, I would like to congratulate Bob on preparing us for a smooth transition into the future.
We look forward to talking with you in April .
Thank you operator.
Thank you. This does conclude the conference call for today, we thank you for your participation and ask that you. Please disconnect. Your lines. Thank you and have a good day.
Tom.
Sure.
Okay.
Okay.
Sure.
Sure.
Yes.
Yes.
Yes.
Yes.
Okay.
Okay.
Okay.
Okay.
Thanks.
Yes.
So.
Okay.
Sure.
Okay.
Got it.