Q2 2022 AllianceBernstein Holding LP Earnings Call
Thank you for standing by and welcome to the Alliance Bernstein second quarter 2022.
Yep.
At this time all participants are in a listen only mode.
After their remarks, there will be a question and answer session and I will give you instructions on how to ask questions at that time.
As a reminder, this conference is being recorded and will be available for replay for two weeks.
I would now like to turn the conference over to you.
It's cool head of Investor Relations for AB Mr. Mark Griffin. Please go ahead.
Thank you Sarah good morning, everyone and welcome to our second quarter 2022 earnings review this.
This conference call is being webcast and accompanied by a slide presentation. That's posted in the Investor Relations section of our website Www Dot Alliance Bernstein Dot com.
With us today to discuss the company's results for the quarter are Seth Bernstein, our president and CEO , Keith Burke, CLO, and CFO and Matt bass had a private alternatives.
They'll seamers controller, and Chief Accounting officer will join us for questions. After our prepared remarks.
Some of the information we'll present today is forward looking and subject to certain SEC rules and regulations regarding disclosure so I'd like to point out the safe Harbor language on slide two of our presentation.
You can also find our safe Harbor language in the MD&A of our 10-Q Twitch filed earlier this morning.
Under regulation FD management may only address questions of material nature from the investment community in a public forum. So please ask all such questions. During this call.
Now I'll turn it over to Seth Good morning, and thank you for joining US today, our second quarter results reflected the adverse market conditions as negative market sentiment was amplified by a sharp decline in asset prices in the quarter.
Despite outflows from taxable fixed income, we generated continued organic growth and market share gains he municipals and active equities.
Through in alternatives multi asset highlighting the strength of our globally diversified and differentiated services.
Our fee rate improved by 2% year over year, driven by a mix as higher fee active equities and alternatives. Both grew organically by 7% on a trailing 12 month basis.
Our institutional business saw inflows in the quarter and our pipeline grew driven by alternatives. We closed on the Carbo acquisition on July one providing complementary private credit capability since specific strategy sought by our clients <unk> now has a $54 billion private markets platform, which we are growing in partnership with equitable.
Let's get into specifics starting with a firm wide overview on slide four.
Gross sales were $23 8 billion down 12 billion or 34% from a year ago, excluding the impact of a onetime $8 7 billion Venerable sale in the prior year quarter.
Firm wide active net outflows were $3 4 billion or $2 8 billion, excluding axa redemptions.
Quarter end assets under management of 647 billion declined 12% year over year and sequentially, an average AUM of 689 billion was down 5% year over year and 8% sequentially.
Slide five shows our quarterly flow trend by channel.
Firm wide second quarter, net outflows were $2 7 billion or $2 1 billion, excluding axa redemptions retail gross sales of 17 billion continued to moderate from a record 2021, resulting in net outflows of $2 2 billion.
Investors continued to shed risk assets and returns were negative the myths rapidly increasing inflation and interest rate expectations.
Organic growth in Muni alternatives multi asset enacted equities was more than offset by net outflows in taxable fixed income.
Our institutional channel grew organically for the eighth consecutive quarter, driven by alternatives multi asset and act with the equities.
Sales of $3 3 billion were down from prior comparison periods, both of which had large one time sales the venerable sale last year and the $9 6 billion target date sale. It in this year's first quarter.
In private wealth gross sales decreased 8% compared to the prior year periods with net outflows of $1 2 billion driven primarily by capital gains tax related withdrawals until 2021 business sales.
Investment performance as shown on slide six starting with fixed incomes in.
In the second quarter yields continued to move significantly higher reflecting a much more aggressive central bank tightening cycle.
Credit sector returns were challenged with developed market investment grade and high yield corporate bonds materially underperforming global treasuries within credit investment grade outperformed high yield.
While long term fixed income performance remained solid with 62% of assets outperforming over the five year period or one year performance dipped in municipals were an overweight to credit detracted as credit spreads widened dramatically, particularly in triple BS. Despite the municipal selloff Muni credit fundamentals remain strong with four.
Nine states reporting revenue collections above budget projections in fiscal 'twenty to 'twenty two.
Emerging markets exposure in our global high yield income funds also detracted from performance.
Our long term tax exempt performance remains stellar with all 10 of our strategies in the top quartile and half in the top decile across the five year period sustained.
Sustained demand for our tax exempt SMA vehicles continues to generate high teens organic growth in our tax where strategies grew by over 20% annualized.
Turning to equities global equities fell sharply in the second quarter as U S market split into bear market territory. The MSCI World Index fell by 14, 3% in local currency terms with U S large cap stocks tumbling by 16, 1%.
Regional returns varied meaningfully with relatively modest declines in the U K and Japan emerging markets losses were offset by gains in Chinese stocks, a strengthening U S dollar reduced losses for non U S investors in American equity portfolios.
The dramatic style she had seen in the first quarter continued in the second with the Russell 1000 growth index declining by 21% compared with a 11% decline in the Russell 1000 value index in the quarter.
Growth peers continued to struggle against the benchmark with just 18% of U S large cap growth managers and 35% of small mid cap growth managers, beating their benchmarks year to date.
Our equity returns over one in three years have also lagged benchmarks, we continue to outperform Morningstar peers.
And several of our larger equity strategies, including U S. Large cap growth select U S equity and global core outperforming their benchmarks in the second quarter as key factors, we emphasize including profitability and quality came back into favor as recessionary concerns steepened.
Our value strategy has continued through year to date outperformance against benchmarks and once again, we saw inflows into several international value strategies, including China value in Asia ex Japan value.
In total 49% of ARIA AUM outperformed for one year, 36% for three years and 82% for the five year periods respectively.
Versus Morningstar peers, 69%, 59% and 78% of our equity assets outperformed over the one three and five year periods.
I'm pleased to note that for the third time in the last four years, our equity buy side trading team was named best buy Sai Global equity desk by markets Choice Awards now I'll review, our client channels, beginning with retail on slide seven.
Sales of 17 billion, a retail channel declined by six and a half billion year over year, and $3 3 billion sequentially impacted by negative market sentiment across both fixed income and equities.
The overall redemption rate improved over both prior periods to 26, 6%, most notably in our high income products in Asia.
Net outflows were $2 2 billion driven by our Hot Global high income suite of.
Of note, while industry wide U S retail taxable bond outflows doubled sequentially ab's taxable fixed income outflows improved from the prior quarter.
While we have recently seen a small recovery, we believe global high yield valuations and forward returns are attractive. They will concern remains over at the entry point at quarter end gross of fees, our global high yield portfolio had a yield to worst of 11% versus nine 5% for the broader market.
Investors to wait more and more certainty around inflation and central bank reaction, particularly in emerging markets related strategies.
Municipals led by our SMA Muni tax where product that posted record sales in the quarter growing at a 10% annualized organic right now positive for eight consecutive quarters.
Despite softer sales active equity continues to grow now positive for the last 21 quarters.
Several flow rankings as shown in the bottom right.
Turning to institutional on slide eight second quarter gross sales of $3 3 billion declined from prior periods, both of which benefited from large one time sales.
<unk> continued to moderate to $2 6 billion or three 2% annualized rate.
Net inflows of 700 million or $1 3 billion ex Axa were positive for the eighth consecutive quarter and 12 of the last 13.
Diverse inflows included China values sustainable global thematic global core equity middle market lending in merger arbitrage.
Our pipeline stood at $10 2 billion at quarter end up 4% sequentially, 90% of the petitions for alternatives, which now comprise three quarters of the pipeline annualized fee base supporting an active pipeline three rate more than three times the channel average.
Additions in the quarter included $750 million from equitable for carve outs residential mortgage loan strategy $750 million from Axa into cred evidence that we continue to see private alternatives inflows from Axa and a 500 million win for merger arbitrage.
Post quarter end, we were informed that we've been awarded a large multibillion dollar custom target date account. This is another nice win for our defined contribution business, which continues to grow its long term customer base of nearly two dozen largest the most sophisticated D. C plans in the U S.
We continue to see advocacy from global and regional consulting firms, which has led to new business across both their advisory and Ot I O deli delegated clients.
In the quarter, our China, a emerging markets value in use sustainable dramatic received upgrades.
Taking a step back one year after announcing the equitable private market commitment of 10 billion. We're pleased with the progress we're making against our multi year objective to deploying our partners' capital in variety of strategies.
Moving to private wealth on slide nine.
<unk> quarter gross sales declined by 8% year over year and were up 4% on a year to date basis.
Net outflows were $1 2 billion driven by large capital gains related tax withdrawals due to 2021 business sales from our growing entrepreneur client base.
We've discussed this SaaS, we've had in our strategy of cultivating our growing pre transaction planning pipeline as we ramp from a lower base lumpy flows from large business sales, including subsequent year tax related withdrawals may continue to have an outsized impact.
We continue to see our mix shift toward our ultra high net worth 20 million and over clients with net client relationship growth well outpacing the channel average influenced by our pre liquidity event planning efforts.
Private alternative commitments more than doubled in the quarter versus the prior year driven by real estate equity private equity fund of funds and commercial real estate private debt.
Our proprietary direct indexing strategy grew to $1 7 billion up 70% year over year and ESG portfolios continued to be an important differentiator for our clients.
I'll finish our business overview with the sell side on slide 10.
Second quarter Bernstein research revenues increased by 1% year over year and were down 10% sequentially.
Despite a much more volatile 2022 U S. Institutional trading volumes remained relatively constrained amidst an uncertain environment revenues increased in the U S and declined in Asia and Europe .
<unk> revenues from research sector continued to post healthy covers up 8%, reflecting the strength of our brand and the value provided to clients.
Our 38 strategic decisions conference held in person for the first time since 2019 was a resounding success with a strong and spirit declined participation and a higher corporate to turn out than pre pandemic and.
And we launched coverage on four global sectors. This past quarter U S emerging internet European autos in the industrials and infrastructure and China's software.
I'll conclude by updating you on our strategic initiatives on slide 11.
While long term performance across both equities and fixed income remained strong near term performance reflects challenging markets performance improved this quarter against equity benchmarks, while credit exposures impacted fixed income results.
Global product diversification and our engaged client teams drove both organic growth in institutional for the eighth consecutive quarter as well as multiple asset classes within retail offset by net outflows from taxable fixed income.
Our ESG portfolios with purpose now stand at 24 billion in AUM.
We recently announced our commitment to achieve net zero emissions working to align our business operations in a range of investment strategies with a pathway to limit global temperature increase to one five degrees Celsius by 2050. This advances our longstanding effort to both act and invest responsibly.
In alternatives, we closed a carve out acquisition and continued to see growth in our middle market lending and commercial real estate debt businesses, as well as liquid strategies, including merger arbitrage and risk overlay.
Financially second quarter adjusted operating income declined by 19% adjusted operating margin was 27, 7% and adjusted earnings and unit holder distributions of 71 cents per unit declined 22% versus the prior year.
Early in July we announced.
New leadership changes.
I'm pleased to keep Burke has assumed the role of Chief Financial Officer. In addition to her role as Chief operating Officer.
Those seem Richard's capable service as interim CFO Bill remains our controller and Chief Accounting Officer.
Owners on a beach head of client group has been appointed head of Bernstein private wealth in conjunction with this client group role.
The alignment, resulting from these appointments will support our strategic growth plans going forward now I'll turn it over to Keith to review the financials Kate.
Thanks, Chad, it's a pleasure to be with you. This morning, let's start with the GAAP income statement on slide 13.
Second quarter, GAAP net revenue and a $971 million decreased 10% from the prior period operating income of 192 million decreased 32% and operating margin of 22.6% decreased by 340 basis point.
GAAP EPS of <unk> 69 cents in the quarter decreased by 24% year over year.
I'll focus my remarks from here on our adjusted results, which remove the effect of certain items that are not considered part of our core operating business.
We base, our distribution to unit holders and our adjusted results, which we provide in addition to and not as a substitute for our GAAP results.
Our standard GAAP reporting and a reconciliation of GAAP to adjusted results are in our presentation Appendix press release and 10-Q.
Our adjusted financial highlights are shown on slide 14, which I'll touch on as they walk through the P&L shown on slide 15.
On slide 15, beginning with revenues net revenues of $816 million decreased 7% versus the prior year period and were down 10% sequentially.
Base fees decreased 3% versus the prior year period is 5% lower average Avon well, we're across all three distribution channels was driven by market decline.
Offset by trailing 12 month net inflows.
Channel.
The second quarter fee rate of 39.4 basis points, it was about 2% year over year.
Up 1% sequentially.
We continue to believe that although our feed rate may be volatile from time to time, given the potential for large low C. D. D C mandates.
The new target date mandate, one until I referenced in our earlier remarks over a long term it should continue to grind higher.
Second quarter performance fees of $18 million declined by $36 million from the prior year period, reflecting lower fees in our U S select equity long short and private credit services.
Given current markets, we continue to see full year 2022 performance fees or 2021 outside snabel somewhere between 2019 and 2020 levels. This.
This includes the addition of carve outs performance fees in the second half of the year.
Second quarter revenues for Bernstein Research services increased 1% from the prior year period as higher revenues in the U S driven by market volatility were offset by lower trading volumes in Asia and Europe .
This continues the trend that began late last year with a shift in the Asian investor sentiment away from risk.
We incurred related investment losses of 6 million in the second quarter as compared to a slight gain in the prior year period of less than a million dollars.
Moving to adjusted expenses all in our total second quarter operating expenses of $590 million decreased 2% you know every year and were down 5% sequentially.
Total compensation and benefits expense decreased 7% in the second quarter versus the prior year period, reflecting lower AUR, Kevin revenue and performance fees as well as a lower compensation ratio of 48% of adjusted net revenues as compared with 48, 5%.
In the prior year period.
The decrease in compensation expense was driven by lower incentive compensation, reflecting the lower compensation ratio offset by higher base compensation driven by a 6% increase in average head count.
In the second quarter global equity and fixed income markets declined sharply with the S&P 500 down 16%, reducing our base.
And revenue levels.
Given market conditions, we plan to accrue compensation at 51.0% ratio in the third quarter of 2022 and May adjust further if market conditions change.
This should be viewed within the full context of our full year comp to revenue ratio.
We paid 48% in the first two quarters of the year.
We plan to pay competitively based on performance given our people are our most important asset.
As a reminder, the compensation ratio is sensitive to variability in the asset mix and the mix due to year end performance of performance fee eligible funds.
Our nation and servicing costs increased 33% in the second quarter as teeny and sales and client related meetings increased compared with depressed levels in the prior year period due to the pandemic.
We are managing commission and servicing spend levels to decline slightly sequentially in the back half of the year to a more normalized pace lower than the second quarter that was above last year's depressed levels.
G&A expenses increased 7% in the second quarter versus the prior year period and were up 2% sequentially.
Of the 7% year over year increase about 4% was due to strategic investments in growth and efficiency technology projects.
Scenario pressure comprised 2% for last year's second quarter. When these pressures have begun to emerge and core G&A. It was about 1%.
For the full year, we are targeting G&A at the low end of our prior guidance of mid to high single digit percentage growth.
Subject to market conditions, we will continue.
Jack technology investments, including the use of outside consultants, where appropriate and we expect inflation to persist.
Second quarter operating income of 226 million decreased by 19% versus the prior year period.
Second quarter operating margins of 27, 7% was down 400 basis points year on year.
Given the market conditions, we continue to expect 2022 margins to be impacted year over year.
<unk> continued higher inflation and selected growth related investments combined with rebounding teeny expenses from prior year coping and these flows and lower performance fees.
As outlined in the appendix of our presentation.
Quarter earnings exclude certain items that are not part of our core business operations in the second quarter. Adjusted operating earnings were 6 million or two cents per unit above GAAP operating earnings due primarily to acquisition related expenses.
Going forward as a result of us acquiring significant intangible asset and the carve out transaction are amortization of intangible assets, which are included in acquisition related expenses in our GAAP to adjusted earnings reconciliation will increase commensurately.
The second quarter effective tax rate for Alliance Bernstein L. P was 5.5%.
We continue to expect an effective tax rate for 2022 approximately 5% to 5.5%.
Regarding the Nashville corporate headquarters relocation at quarter end, we had 1082 Nashville based employees at <unk>.
25% from a year ago, and more than 85% and the way to our target of 1215.
We continue to expect the relocation will be accretive for the full year 2022 with compensation related savings more than offsetting increased occupancy costs.
And as Seth mentioned, we were pleased to close the carve out acquisition on July 1st we purchased 100% of carve out for an upfront purchase price of 750 million at a low teens EBITDA multiple.
The multi year contingent earn out ranging from zero to 650 million if certain performance targets are reached.
This adds approximately $11 7 billion of fee, earning AUM and $3 7 billion of fee eligible AUM, we expect the deal to be slightly accretive to EPS in 2022, and 'twenty 'twenty three and improving thereafter.
The fee rate is approximately 1% and margins are consistent with our existing mature alternative business, but the upside as we scale.
Now I'm pleased to turn it over to Matt boss head of private alternatives for some additional comments on carve out Matt.
Thanks, Kate and good morning, everyone just to reemphasize, what Seth and Kate mentioned, we're thrilled to officially welcome the car valve team to ebay.
We've been able to partner with a terrific firm that has an excellent cultural and strategic product and financial fit for both clients and unit holders.
As previously mentioned the addition of E D carve out brings our private markets platform to nearly 54 billion in AUM heading capabilities and opportunistic in distress credit renewable energy, especially finance and transportation investments, while complementing our existing scaled capabilities in corporate direct lending commercial real estate lending.
In private placements.
Since the acquisition announcement in March client activity in fundraising momentum has been strong with approximately $2 $1 billion raised by a carve out across our diversified product lineup, including our clean energy strategy.
At the same time, we're continues regarding new product development opportunities for a b carve out across client channels, including high net worth retail and institutional as well as insurance with our partner equitable.
Some current areas of focus include a residential mortgage whole loan strategy clean energy hard assets transportation and opportunistic credit strategies.
Speaking of equitable one year post the announcement of our $10 billion private markets partnership we continue to make progress working together across both organizations to expand <unk> existing strategies and launch new strategies towards meeting Equitable's general account needs and deployment goals.
Looking forward equitable remains supportive of <unk> strategy to grow our private markets offerings, including additional commitments in the future for existing and new services may develop subject to equitable risk and return objectives with that operator, we're ready for questions.
Sarah we're now ready to take questions. Please.
Yeah.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys.
If your question has been addressed and you'd like to withdraw. Your question. Please press Star then two at this time, we will pause momentarily to assemble our RASK.
And our first question will come from Alexandra <unk> with Goldman Sachs. Please go ahead.
Good morning, Thanks, everybody I'm myself and congrats Keith on the on the new role our expanded role.
I wanted to start maybe with a question around just south of your kind of pulse on fixed income market allocations, given kind of the rapidly changing backdrop.
I guess given sort of stabilizing interest rate dynamic are you starting to see any green shoots in terms of people sniffing around on adding back to the asset class or a wider credit spreads risks still kind of weighing on the appetite there and I guess within fixed income broadly any particular area that you're starting to kind of.
See some green shoots and kind of how's the lines bursting positioned to benefit from that potential improvement.
Thanks, Alex for the question.
Hum.
Kind of nervous to be.
Pointing out green shoots, but the last I have to say the last couple of weeks we have in fact.
Some more stability in interest rates, and frankly, theres been a bit of a rally.
Risk assets and we have seen better flows.
And in the and the strategies that we really saw outflows from so.
I don't want to suggest to you that that is a something.
Something that we're going to count on because I think there is still going to be volatility ahead for rates.
But there seems to be.
A little more consensus around the fed's direction.
And the rate of change in inflation. So you know that given the dollar strength as well.
Perhaps an opportunity to.
Recoup some some traction here.
But I guess.
You know from our own perspective, we always tend to underperform in risk off environment, because we tend to have.
Pretty significant credit positions in our portfolio, we tried to avoid idiosyncratic name and and and and sector bets. So when we really do see a strong divergence between like corporate and high yield you'll see our high yield portfolio is going to suffer.
In American income and global high yield and of course, we have emerging markets as well so.
That has been a headwind in this regard, but yes, we are seeing better both performance and better flows.
And I'd just add to that we continue to see.
Very strong flows in muni.
Which I find very.
Rising dividend.
Right.
Backup in interest rates.
But they've proven to be pretty attractive and I think we have a value proposition that <unk>.
Some clients are taking interest in but maybe you should follow suit as well if in fact, we are reaching some sort of plateau here on on rate, although I'm not calling that.
Got it alright fair enough.
And then gave question for you just around the overall pre tax operating margins in the business I. Appreciate the updated guidance on the comp rate and obviously nice to see G&A pull back maybe a little bit in light of a tougher revenue backdrop, but as you as you were to think about where the.
The margins could end up once we get through kind of in the near term volatility, but also taking into account, obviously higher inflation that that everybody else's seem as well if we anchor around kind of pre COVID-19 levels. I think you guys were kind of in the 27 or 28%.
Operating margin should we think there is kind of scale and operating leverage on top of that or is that likely to be the place where the firm as a whole can it can sort of lift for time being.
Thanks for the question look I think your.
Your description of the environment. We're in is accurate and that we are recognizing and as you've seen in the teens to our comp ratio guidance that.
We recognize that there is certainly wage inflation, particularly in the lower compensation bands that we are well aware of it and want to manage through as well as we are continuing trend that our head count is up largely due to strategic investments that we're continuing to make in that we want to continue to make through the cycles. So that we're well.
Positioned strategically and in a recovery to be able to optimize the strategies, but that being said we are also being vigilant around our expenses and that we are as I mentioned, we're targeting DNA growth to be at the lower end of our prior guidance of that of that mid to high single digit we are.
Looking at areas like travel Tenney to see where we can be focused in terms of bringing in some of those expenses here in the third quarter, we expect that to be down slightly versus our second quarter spend second quarter. I think was the real return of a lot of client related and travel.
<unk>.
As we've recovered from the pandemic, but we do anticipate that to come down in the third and fourth quarter and ultimately I think you can expect our margins to be in the high Twenty's as.
No as we round up the year subject of course to market conditions, and our ability to respond to them.
Super clear great. Thanks, very much again.
Our next question comes from Daniel Fannon with Jefferies. Please go ahead.
Thanks, Good morning.
Other question on flows but on equities.
A very long and consistent trend of inflows, but as we kind of think about the industry is still facing a lot of headwinds for active equities and you guys kind of bucking that trend do you think about performance and maybe the channels from what you've had success are there any changes or trying to think about the outlook for that that asset classes.
Think about the your complex products.
Yeah, let me take that.
Look it's been a pretty tough market as you rightly characterized it.
And we've seen.
Gross sales I think as a consequence of that but.
I would say we continue to have a suite of services that resonate with our clients.
And and we have continued to see strength. There now there are stories within that.
Large cap growth.
We need to see interest in it and as growth has begun to rally relative value.
That interest has been renewed and we have interest in Japan for that product.
That has.
That also has a dollar impact to it so I I think we benefited from that as well and that of course.
But we continue to see interest there we have seen a pickup of interest in some value strategies, particularly institutionally.
Which has been gratifying and we also are seeing interest in some of our or a more discrete strategies.
Some parts of the market. So all in all I think it's more selective.
I think if conditions continue to prove argue with I'm not sure we'll continue bucking the trend.
But.
Given where we are right now.
I'm comfortable with that.
We'll continue to find an audience.
Receptive to work towards services, but well work.
Ultimately I think there's a lot of uncertainty still in the marketplace. So I don't want to sit.
Sit here and Bang the table about it but we continue to see pretty good flows.
Great. That's helpful and then I did want to clarify.
And Seth around the private wealth channel, obviously, you had tax related outflows this quarter, but I think you mentioned kind of ongoing potential.
Potential I guess headwinds the assets, but I know you have a lot of initiatives that are also or are are enhancing productivity. So maybe just to kind of recap and enhance upon some of your comments around the outlook for that channel.
Yes, we continue to see pretty strong new client interest and that's pretty broad based.
As you know we have a client base that is.
<unk> has a fairly large component of entrepreneurs, who are really in the process or had been talking about transformation.
Transformational states were selling or bringing on.
Other investors into their into their businesses and so we are sensitive to capital markets and M&A activity. So our flow has been I think adversely impacted there as a consequence of that but we continue to see growth. There we continue to see interest, particularly in alternative.
And that client base and tax managed solutions.
So it's been pretty good I think.
Second quarter is always challenging.
Season, but 2022, obviously was particularly hard.
Just given the convergence of an incredible result in 2021 investment results and the fact that we you know we have touch them.
Widespread drawdown.
And markets so we.
We continue to see interest, but it's going to be it's going to be affected by the direction of overall condition. So.
Look we continue to invest in bringing new Fas onboard we tend to develop ours organically, we don't buy teams and so it's a longer build out and so progress is slow but methodical.
Thank you.
Okay, and if you'd like to ask a question. Please press Star then one at this time.
Our next question comes from John Dunn with Evercore ISI. Please go ahead.
Hi, How're you doing.
You are a little bit ago, you mentioned, Japan can you remind us.
You know what the more notable like flow trends going on in Asia or outside of American income and global high yield and maybe also a kind of a thumbnail sketch of what's going on in Europe .
Sure.
I mean, you highlighted two of the biggest ones and we have seen a better.
More interest coming for global high yield and at American income more recently as I mentioned a little earlier.
We also see interest.
In Asia.
For a.
A number of our multi asset strategies.
I'm all about that.
Those tend to be sponsored by distributors as new programs come and go but.
There has been interest there.
And when you look over to Europe we've.
We've seen instead.
Institutional interest in a number of strategies, particularly in alts.
So on the more traditional side I think.
More traditional side.
<unk> has seen similar risk conversion that we've seen here in the U S. So those are sort of the headlines I wouldn't give you from a regional perspective.
Yeah.
Got you and then.
Just given where we've been over the past.
A few quarters.
Changes to the discussions are.
Investor appetite for ESG.
You know both on the retail side and then maybe to just regionally.
Sure.
A number of ESG funds and we're not unique.
Hmm.
<unk> has been has been certainly less interest for sure just given the outperformance of commodities.
And in the context of the markets today.
That being said, we continue to have strong consultant support institutionally for those strategies, we see support for ESG and our private wealth business, where that can use to resonate and frankly.
I think that.
It's very healthy for foreign investors interested in ESG to recognize that the separate.
Growth in momentum factors from from companies that are really practicing.
And you know ESG values.
There was a very high correlation as you know historically between those that screened well and those factors that we're outperforming so I think.
Welcome to slow down in my view, because I think clients are becoming more discerning, particularly with regard to strategies were.
You may still be investing for example, and.
And carbon emitting industries, but investing in companies with green patents or who are on a course to significantly reduce their carbon footprint over time I think there's a lot of residents there and we're seeing interest with clients, but so I think its temporary and the <unk>.
<unk> will continue and it certainly continuing in Europe .
In U S. It's in a much earlier stage I just also would like to just go back and get a little more color.
That we are seeing low vol equities and Asia ex Japan also having some resonance.
And we see large cap growth continuing to grow in Japan, So I think.
I should have just added those when you put in your prior question.
Great. Thanks very much.
Yeah.
Yeah.
Again, if you'd like to ask a question. Please press Star then one at this time.
Showing no further questions at this time, Mr. Christian I turn the call back over to you.
Thank you Sarah and thank you everyone for participating in our conference call today feel free to reach out to Investor relations with any further questions and have a great day.
Yeah.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.