Q2 2023 AllianceBernstein Holding LP Earnings Call

Thank you for standing by and welcome to the Alliance Bernstein second quarter 'twenty twenty-three earnings review at this time all participants are in a listen only mode. After the 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.

A replay on our website shortly after the conclusion of this call.

I'd now like to turn the conference over to the host for this call head of Investor Relations for a b Mr. Marc Griffin. Please go ahead.

Thank you operator, good morning, everyone and welcome to our second quarter 2023 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 and Bill Seamers interim CFO controller, and Chief Accounting Officer.

Carl Spools, Chief operating officer, and owners on head of global client group and private wealth 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, which we filed yesterday.

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.

In the second quarter equity markets continued to rebound with the bulk of the gains in June led by a small number of large U S technology companies.

Government bond yields rose amidst generally higher rates and a significant drop in market volatility.

We generated net inflows two of three months in the quarter led by U S retail and our global fixed income platform, both growing at 9% annualized organically.

Municipal SMA platform continued to gain market share growing for the 11th of the last 12 quarters.

Our institutional pipeline grew to $14 4 billion up 10% sequentially, reflecting several active equity wins and our private market AUM ended the quarter at 61 billion up 13% year over year apples to apples, assuming carve all had been owned last June 30th and up 5%.

Chile.

During the quarter Equitable holdings made a second 10 billion dollar commitment to grow this platform in coming years.

Let's get into the specifics starting with a firm wide overview on slide four.

Gross sales were $22 4 billion down 1.5 billion or 6% from the year ago period.

Firm wide active net outflows were 4 billion, reflecting 6 billion of pre announced low fee redemption early in the quarter.

Net flows were positive in both May and June .

Quarter end assets under management of 692 billion increased by 7% year over year and were up 2% sequentially.

And average assets under management of 678 billion was down 1% year over year and up 2% sequentially.

Slide five shows our quarterly flow trend by channel.

Firm wide second quarter net outflows were 4 billion or a positive 2.2 billion, excluding pre announced low fee redemptions of $6 2 billion.

Retail gross sales of $16 5 billion declined 5% year over year and slightly sequentially.

Net outflows for 700 million despite strong demand for taxable municipal fixed income.

9% and 13% annualized organically respectively.

Our institutional channel had gross sales of 1.5 billion declining from prior quarters.

Net outflows were $3 2 billion, reflecting the pre announced low fee redemptions.

In private wealth gross sales were resilient at 4.4 billion driven by money market funds and private alternatives net flows were flat in a seasonally slower quarter.

Investment performance as shown on slide six.

Starting with fixed income.

Developed market government bond yields rose in all major markets as most major central banks heightened interest rates given persistent core inflation.

Global developed market Treasury returns were essentially flat.

A b as fixed income performance showed meaningful improvement in the one year period, improving the 73% of assets outperforming as both American income and global high yield fund outperformed.

The three and five year periods remained strong at 76% and 75% respectively.

Investors are showing greater comfort with duration as the fed appears to near the end of the Drake hiking cycle.

American income net inflows in the quarter were positive $1 5 billion or 4 billion year to date.

We secured our first systematic U S investment grade fixed income client with 100 million dollar win a validation of the strategy, we discussed last quarter, which marries our fixed income technology with our quantitative research.

We are initiating a number of other active conversations where there's a preference for higher quality bonds.

Now turning to equities.

Global equities advanced in the second quarter led by a narrow group of stocks seen a big winners from the artificial intelligence Revolution.

During the first half of 2023 just 10 U S stocks accounted for 79% of the S&P five hundred's gain and 54% of the MSCI all country World indexes gain.

Over this time medium forward P/e ratio of the 10 largest capitalization stocks in the S&P 500 surged by nearly 50% to 28.2 times at the end of June compared to a median increase of just 7% for the rest of the market, while we own many of these companies we're wary of the <unk>.

Concentration risk of the high benchmark weightings and Mega cap Tech a risk highlighted earlier this week when a major benchmark provider carried out a special rebalance of its technology index to reduce the weightings of the seven largest constituents.

Near term equities performance was challenged with just 23% of the equity assets outperforming over the one year period or two year performance improved 48%, while five year declined 52% of assets outperforming.

Importantly, we continued to outperform our peer group with 65% and 71% up our equity assets outperforming the Morningstar peer groups over three and five year periods respectively.

At quarter end, 62% and 65% of our equity assets under management in U S and Lux funds, respectively were in funds ranked four and five stars.

Now I'll review, our client channels, beginning with retail on slide seven.

Gross sales of 16, and a half billion in our retail channel declined 4% from a year ago and were down 2% sequentially.

The redemption rate was slightly higher at 27% versus 25% last quarter, resulting in net outflows of $700 million.

We continue to see strong growth in U S retail, which posted 9% annualized organic growth driven by taxable fixed income equities and munis.

Last quarter, we highlighted our belief that we're in the initial innings of a fixed income reallocation.

Our Asia business continued to grow bolstered by American income, which grew sales at five times year over year, driving taxable fixed income net inflows of $1.3 billion or 9% annualized organic growth.

Muni sales and flows also continued to be robust with net inflows of $1 billion or 13% annualized organic growth positive for 11 of the last 12 quarters.

Active equity sales were 8 billion the highest level in four quarters, reflecting strong momentum in U S retail for Mark key strategies.

Increased global redemptions resulted in net equity outflows.

As shown on the bottom right. We ranked in the top 2% for cross border flows for fixed income substantiated by Broadridge, which ranked first in Asia for year to date fixed income sales and net inflows.

We're experiencing a strong start for our ETF launches for which assets under management reached 800 million, having raised approximately 500 million year to date.

<unk> between retail and private wealth channels with sales from well over 100 distributors.

Turning to institutional on slide eight.

Second quarter. Its gross sales were $1 5 billion down from both comparable prior periods net outflows were 3.2 billion, reflecting previously announced low fee redemption split between our custom target date and fixed income businesses driven by rebalancing.

Our pipeline grew to $14 4 billion at quarter end up 10% sequentially.

Additions included a $1 3 billion dollar U S large cap growth mandate, which funded earlier in July and for which annualized fees exceed those of the pre announced redemptions.

We saw over $300 million of carb al additions and a number of additional active equity wins, we're pleased that the imminent close of its latest clean energy fund a b carve out will have raised approximately $1 5 billion, which is triple the size of its first clean energy fun.

Notably equitable announced and it's May Investor day, a second $10 billion multiyear commitment to Ab's private markets platform. The initial 10 billion program announced in mid 2021 is now 75% deployed.

Moving to private wealth on slide nine second quarter gross sales were resilient at $4 4 billion up 35% year over year, while down 23% from a seasonally strong first quarter.

We continue to experience strong sales in money market funds and private alts.

While second quarter net flows were essentially flat on a year to date basis. They have grown at a three 4% annualized organically double the rate of the prior year period.

Our AUM growth from business sales, well outpaced the industry as measured by M&A volumes and the pre transaction planning pipeline remains solid.

We continued to see sustained growth in the ultra high net worth $20 million in over a category you.

Year to date alternative raises of $1.3 billion were well diversified across strategies, including secondaries, private credit and real estate equity and clean energy.

And our proprietary direct indexing strategy grew to 3 billion posting strong annualized organic growth of 35%.

I'll finish our business overview with the sell side on slide 10.

Second quarter Bernstein research revenues of a $92 million decreased by 14% year over year and 8% sequentially.

Industry wide global institutional equity trading volumes remain constrained with investors reluctant to turnover portfolios in the face of continuing market and economic uncertainty.

Research checks were up at autonomous for the quarter.

We launched coverage on four global sectors. This past quarter three in the EU and one in Japan.

Our 39th annual strategic decisions conference was a resounding success with over 1200 clients and nearly 150 companies attending.

Our joint venture with Societe Generale announced last November is proceeding.

Timeframe for closing has been extended into the first half of 2024, and we remain highly confident that we will obtain necessary regulatory approvals.

The economics are essentially unchanged and we anticipate disclosing further financial details closer to that time.

I'll conclude by reviewing the status of our strategic initiatives on slide 11.

Performance in fixed income improved while equities near term performance lagged versus capitalization weighted benchmarks.

The second quarter was led by 9% annualized organic growth in fixed income and we gained market share across retail taxable municipal categories, including Muni SMA.

We had several active equity wins, which grew the institutional pipeline.

In private markets, we progressed towards the imminent close of a b car valves latest clean energy fund at $1.5 billion three times its predecessor fund.

We were pleased to participate in Equitable's may Investor day at which <unk> announced its second 10 billion dollar permitting capital commitment to growth of our private markets platform. Additionally, we outlined at that meeting that at current market levels, we have visibility to 350 to 500 basis points of margin expansion.

<unk> to the 2027 horizon period.

This reflects the margin benefit of the Bernstein research deconsolidation about 200 to 250 basis points. The completion of the Nashville relocation about 100 to 150 basis points. In addition to savings already realized and the growth in private markets and other investments about 50 to 100 base.

At this point.

Second quarter financial comparisons reflected lower assets under management versus the prior year period.

Adjusted operating income declined by 3% adjusted operating margin was 27% and adjusted earnings and unit holder distributions were 61 cents per unit down 14% versus the prior year.

Now I'll turn the call over to Bill Seamers to discuss the financials Bill.

Thanks, Seth let's start with the GAAP income statement on slide 13.

Second quarter GAAP net revenues of 1 billion increased 4% from the prior year period.

Operating income of 189 million decreased 2% and operating margin of 18.4% decreased by 420 basis points.

Cathy P. You have 53 cents in the quarter decreased by 23% 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. Our adjusted results now reflect interest expense below the operating income line, whereas previously interest expense was above the operating income line. This was done to improve the comparator <unk>.

Of our adjusted operating margins with our peer group.

We base our distribution to unit holders on our adjusted results, which we provide in addition to and not as a substitute for our GAAP results.

Our standard GAAP reporting and 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 we talked through the P&L shown on slide 15.

On slide 15, beginning with revenues net revenues of $823 million increased 1% versus the prior year period and were down 1% sequentially.

Base fees were flat versus the prior year period, as 2% lower average AUM was offset by a higher fee rate.

The second quarter fee rate of 40.0 basis points increased 2% year over year drew.

Driven primarily by the addition of higher fee rate carve out base fees.

Sequentially the fee rate was down less than 1%.

As we experienced unfavorable mix shift in a risk off environment.

With net inflows and lower fee rate fixed income AUM, including money markets.

Looking forward, we expect the fee rate to improve sequentially based on asset mix, reflecting improved markets.

Second quarter performance fees of $15 million declined by $3 million from the prior year period, due to lower real estate equity and strategic equity fees, partially offset by higher fees on private credit services.

Given current market conditions, we continue to see full year 2023 performance fees roughly in line with the prior year level.

Second quarter revenues for Bernstein Research services decreased 14% from the prior year period, driven by a decline in customer trading activity in the U S Europe and Asia as investors remain cautious given the macroeconomic backdrop.

This quarter, we are breaking out dividend and interest revenue.

Which at $46 million increased by $34 million year over year, reflecting the higher interest rate environment and higher average balances.

Netting against this is broker dealer related interest expense associated with our private wealth brokerage clients.

Interest expense of 26 million increased by 17 million year over year due to higher interest rates and was down $2 million sequentially.

Moving to adjusted expenses all in our total second quarter operating expenses of 601 million increased by 2% year over year and were up 1% sequentially.

Total comp and benefit expense increased by 4% from the prior year period, reflecting a higher compensation ratio of 49.5% of adjusted net revenues as compared with 48.0% in the prior year period.

And a 1% increase in revenues.

Regarding head count excluding the 284 previously outsourced, India staff, whom we on boarded in the first quarter and the carve out acquisition head count declined year over year, reflecting the previously announced 4% reduction in February 2023.

Taking a step back.

Global equity markets continue to rally throughout the second quarter, which is encouraging that said there is a lag effect as average AUM and revenues catch up, particularly when comparing on a year over year basis.

As well, we continue to manage the business with a balanced perspective, recognizing uncertainty remains in the current environment.

We continue to believe that our full year 2023 compensation to revenue ratio will be towards the higher end of the historical 47% to 50% range.

We plan to accrue at a 49.5% compensation ratio in the third quarter and as we typically do we'll true up the full year ratio in the fourth quarter as full year revenues crystallize.

We plan to pay competitively based on performance, giving our people are the most important asset.

Promotion and servicing costs decreased by 10% from the prior year period, due to lower trade execution marketing advertising and transfer fees.

Promotion and servicing costs increased 11% sequentially driven by higher teenie seasonal firm meetings, including the Bernstein strategic decisions conference in early June .

For the full year, we continue to target promotion servicing spend to be up lower single digits.

G&A expenses increased 3% in the second quarter versus the prior year period due to higher office related expenses and professional fees, which were partially offset by a favorable foreign exchange impact.

Sequentially G&A expenses increased 5% due to an unfavorable foreign exchange impact higher portfolio services related expenses office related expenses technology related expenses and professional fees.

For the full year, we continue to target G&A growth below inflation levels up low single digits.

Second quarter, adjusted operating income of $222 million decreased by 3% versus the prior year period and was down 7% sequentially.

Second quarter operating margin of 27.0% was down 100 basis points year on year.

As shown in footnote two on this slide interest expense, which is now below the adjusted operating margin line.

Increased by $12 million from the prior year period, reflecting higher interest rates and higher average debt balance and an increased 1 million sequentially, reflecting higher interest rates.

As outlined in the appendix of our presentation second quarter earnings exclude certain items, which are not part of our core business operations.

In the second quarter adjusted operating earnings were $33 million above GAAP operating earnings due to acquisition related expenses, including carve out intangible amortization.

And due to interest expense non-GAAP <unk> was eight cents above GAAP, EPS, primarily reflecting acquisition related expenses.

The second quarter effective tax rate for a b L. P was five 3% our guidance for effective tax rate in 2023 remains approximately five 5% to 6%.

We continue to expect Nashville relocation will be accretive for the full year 2023 with compensation related savings more than offsetting increased occupancy costs.

With that update we are pleased to answer your questions operator.

At this time, if you would like to ask a question simply press star followed by the number one on your telephone keypad. We ask that you. Please limit your initial questions to queue in order to provide all callers an opportunity to ask questions. You are welcome to return to the queue to ask follow up questions.

Our first question comes from the line of Daniel Fannon with Jefferies. Please go ahead.

Hi, Thanks, good morning.

Wanted to follow up on the longer term margin outlook as you highlighted at the Investor day.

And maybe if you could bifurcate the segments that are going to contribute to that as I think about the timeframe given.

Quarter Pushout of Bernstein, as well as I believe most of the Nashville savings should be done by next year shouldn't we really see this kind of transition closer to $24 25, as we just think about the natural evolution of those things flowing through your income statement.

Hey, Dan It's bill.

Yes.

There's definitely a timing difference there and that's what when we said that in the Investor day.

These are and targets by 2027, but yes the Bernstein.

Pick up 200 to 250 basis points.

Now that's not going to be fully realized next year.

So the only be a piece of that next year. According to when we close.

But then going forward in 2025 and beyond that that would take effect.

As to the relocation of 100 to 150 basis points.

Most of the Nashville is done.

We're still fitting that out but primarily the big pickup there is all predicated on the New York more when we get out of 13, 45 and going up Hudson yard.

And so that's going to happen in the fourth quarter of 2024. So again same thing it's going to be 2025 forward.

And then the private often growth investments.

I mean should start slowly taking effect.

As soon as we can.

This year into next year, and all of that but we can't really say when exactly thats going to be fully realized.

Understood. Okay. That's helpful and then.

Following up on your comments on the fee rate outlook.

I think you said near term some improvement and clearly beta is going to help with the flow through of end of period versus average, but as you look at the backlog you look at you know kind of investor trends with fixed income potentially being a bigger source of flows with higher rates, even as youre kind of private markets business picks up to Houston is there.

As those trends change in investor So that mix shift do you still see kind of a longer term fee rate.

Dropping constructive if we see more of that fixed income demand pick up.

I mean currently where we're saying we think will modestly improve throughout the year.

Based on on the on the pipeline.

Split between higher fee active equities and alternatives.

You know right now that pipelines at 59 bps, which is about three times higher than the normal.

The rate in the institutional channel.

I mean, but at the same time you have to worry about.

It's all on timing of the fundings there could be a funding in there.

Low fee custom target date mandate, which definitely has lower fees.

So there is.

Risk in there that is that it's not all perfect.

Active equities and alternatives.

Anybody want to add anything further that yeah. Thanks, Phil it's owner I'll add two minor points number one in fixed income obviously, we have a strong <unk>.

Asia taxable fixed income franchise retail that tends to be.

Pretty high fees.

About 50 basis points level for American income and definitely even higher for global high yield so within fixed income we participate in high fee categories, particularly in Asia.

That should be a factor then number one.

Number two.

As you might have followed our U S retail.

Continues to grow at a very high organic rates, so even though we might be.

Adding.

At times lower fee assets like Muni Sma's.

On overall basis it lifts the overall revenue. So we are very pleased with that.

Net revenue additions in U S retail, which comes through very high organic growth rate. So that's the other overlay out with that.

Great. Thank you.

Your next question comes from the line of Alex Blaustein with Goldman Sachs. Please go ahead.

Alex Your line may be on mute.

Your next question will come from the line of Craig Siegenthaler with Bank of America. Please go ahead.

Good morning, Seth and the team are doing well.

Thank you Craig.

I got a bond question.

That is still raising rates.

And it looks like it's partially Delaney, Eric how green bond close at all year it had been improving.

If the fed needs to keep raising rates. How do you then think about the bond reallocation trend in the second half.

Any commentary across channel or product, including taxable munis and vehicle would be helpful.

Okay. Thank you Craig for the question.

In my view, we're much closer to the end than to the beginning of course, stating the obvious in the feds.

Cycle.

And so I do think.

People are increasingly confident we're seeing interest not just from Asian.

Investors Asian retail investors to begin to reallocate back and it's been pretty consistent for us for a while now but we're also seeing.

Interestingly public institutional demand as well.

And we're seeing it.

And in the insurance space, where we see opportunities for them to extend duration.

And credit, but that being said Craig to your point.

If we should have a nasty surprise with subsequent inflation readings in the fed needs to continue raising that will put off that bonds are back by one or more quarters, but actually just given the trends in and the economic reporting with that we've seen of late it seems less likely that that's.

The risks, we're facing I guess, one final point I'd raise.

I may turn it over to own or to add.

If you had some comments.

We continue to see Muni interest by U S retail much stronger now.

Not as strong as it was in the first quarter, but continues positive they've been strong for us and performance is quite good there and remember we really haven't seen that as an industry strong muni.

Demand for a long time and I do think that continues because the third spring com is really unquenchable.

Thanks Ted.

Its owner again, I will just add obviously market share gains matter as Seth pointed out we continue to gain market share in segments of fixed income parts of credit tax exempt in U S retail.

And our expansion of vehicles should only help that bolt on.

Current flavors of SMA spot ticker to customize Sma's and tax exempt debt has strong distribution followership as well as the growing range of Etfs, which are off to a very good start as Seth mentioned in his remarks. So for instance.

Fixed income, we expect to and.

The year with a larger number of fixed income Etfs, even greater than the three fixed income Etfs, we have today, so that will help with the vehicle expansion as well.

Thanks Donna.

For my follow up I, just wanted to go a little deeper in the media side, because you are gaining lots of share there.

Flows are still a little negative, but you are putting up really impressive organic growth. So what factors are really driving that delta and how sustainable do you think the share gains are into 2024.

Absolutely. So we believe we have a structural strengths and advantages.

This is supported by a number of factors number one we invested significantly in our.

Fixed income technology, all the way from trading on onto the backend portfolio construction. So as a result, we believe we have a differentiated set of technologies that makes that SMA platform very competitive on back of those technical capabilities and strength that is.

By the markets, we have been expanding our distribution relationships not only in our traditional distribution partners international wires as well as regional broker dealers, but there is definitely growing uptake from <unk>, which is definitely a high growth channel for us and as I mentioned.

Adding more vehicles like Etfs will only accelerate that opening new doors.

In channels like RIS, so feeling quite good about our structural strengths and expanding capabilities to continue to drive market share again, it's hard to be very precise in terms of a quarter of two I'm very bullish on the long term prospects I don't have any reason to believe that.

Next two quarters will be weaker but hard to be very precise on the exact quarter dynamics.

I think I would also add Craig that maybe turning weakness into a strength.

While our investment performance at me and he is a superb nearly all of it as four or five star rated.

The fact is we were quite underpenetrated in the Muni.

In the Muni mutual funds space, and it's there where you're seeing structurally much less interest with the advent of Etfs and I think frankly more importantly.

As wealthier people tend to be the buyers.

The advent and growth widespread growth of separately managed accounts, which we manage and predominantly automated fashion and I think it's really provided that competitive edge for us.

Thank you Scott.

As a reminder to ask a question simply press star one on your telephone keypad. Our next question will come from the line of John Dunn with Evercore ISI. Please go ahead.

Thanks, Good morning can you talk.

About.

In the retail channel U S equities doing well can you kind of frame.

Frame maybe.

If there is any difference between overseas redemption.

Is that going to continue going forward or.

What was that kind of one one times.

I got to take on that high on our again.

In terms of the retail equity shrank.

It goes back to some of the investments we are making across different vehicles.

Don already SMA and Etfs, but another structural strength category for US has been cities, where we increasingly deploy commingled investment trust kind of structures with our retail partners, which is a very.

Yes.

For assistance business typically low redemption rates given the high duration of defined contribution assets in retail so that is definitely contributing to some of the momentum in retail.

Overseas again, very broad it's hard to generalize.

I think Ed.

The one geography that.

Las delivered of momentum.

In the first quarter was Japan.

Fixed up more.

Sales momentum in the second quarter. So it will depend on a lot of different factors what happens with the currency, obviously, it matters as well as some of the broader.

Equity market outlook.

Definitely structural.

Strength in U S retail with the vehicles and if you look at the institutional pipeline as we've talked about institutional pipeline has a healthy equity.

Composition, and then three pipeline, we are definitely having a lot of good dialogue on the institutional side with a wide range of <unk> equity strategies as well. So that's I think how I would summarize Dow.

Outlook.

Got you and then just thinking about the second half for our private wealth you talked to that need.

Can you kind of frame what other products do you think theyre going to.

Essentially die sizes.

Okay.

Sure.

We had a very good first half in terms of alternatives in our private wealth channel as you know we have been using alternatives, particularly.

Private credit private equity secondaries real estate and our client portfolios for a long time.

So we will have new.

The strategies that we launch in our private wealth channel for instance, our new interval funds that we will launch out of the carve out platform will be available in the second quarter. So that will be one example, and we will continue to see flows into our evergreen vehicles as well, whether it's our <unk>.

Real estate III product or <unk>.

Private credit BDC does not.

A few examples.

So continued interest in our direct indexing platform, we call it Pat.

We exceeded $3 billion in assets in that platform and private wealth, so that does that.

A good tax management capability, given the increase in the equity markets that will continue to be a handy and useful strategy. So I'm bullish about that in the second half of the year and then we are continuously adding our etfs into our platform.

And definitely that will be another.

Kind of expansion of the platform so all in all.

Starting with July .

See good in.

Interest from our clients. The big obviously are known is how fast we can convert some of the money market fund assets too.

Two higher yielding strategies, we have taken action on the money market pricing as well so that's good news.

But obviously.

Whatever you do outside money market funds is even higher yielding from a revenue perspective, so thats the other backdrop here.

Thanks, very much I appreciate it.

Your next question comes from the line of Alex Blaustein with Goldman Sachs. Please go ahead.

Oh, Hey, guys. Good morning, sorry for a phone issues earlier.

The institutional pipeline continues to build pretty strongly and obviously the fee rate has been very robust as we've seen for the last couple of quarters with the market getting a little bit on stronger footing than kind of the rally broadening out a little bit how are you thinking about the timing of institutions funding. This pipeline should we expect that to accelerate a little bit over the.

Next 12 months.

And maybe some color in terms of which strategies are likely to hit first would be helpful. Thanks.

Why don't I start, but owner I think is probably better positioned to give specific color on it.

It was up the pipeline was up about 1 billion three.

In the quarter and we funded about 1 billion too.

Alex which I think is important because we continued to see realizations, there which have been helpful.

And it very much is comprised well it's across the firm, but really all to predominate with.

Certainly with respect to the fee rate if not the the actual AUM involved in it.

We continue to see fundings moving forward there.

While it had slowed earlier in the year, we're beginning to see people funding.

On a pretty consistent basis.

You know carb al is just about to complete its clean energy, but its eminent it's I think it's tripled the size of their original funding.

This is their second and we're launching.

Their flagship fund.

Credit fund.

Now and Thats about a year.

So those will be coming on slowly.

As they find opportunities to invest that money, but perhaps you could give some additional color.

No absolutely.

Number one again to be factual.

In July we funded that one large kind of mandate that we had talked about so definitely that was deployed very quickly over $1 billion mandate in equities. So if that is a good sign.

To your point Alex.

In terms of the broader pipeline.

In General I think it's going to move ahead with like normal speed I would say I don't see anything that is particularly accelerated or or slowing down a good chunk of the pipeline is also.

Alternatives with equitable again Thats moving ahead.

With the commitments, we have which also equitable made public in their Investor day as you are well aware. So all in all I think we are making good progress with the pipeline. So if there are no.

Speed bumps that I can see in July I think had couple of good data points that suggest that institutional investors are moving ahead with their equity commitments and funding them.

Great. Thank you Andrew for the follow up you mentioned equitable XO is going to go there next so.

Super encouraging obviously to get that $10 billion commitment from them for sort of the next tranche of the partnership can.

Can you spend a couple of minutes on maybe how they are thinking about allocating the $10 billion and also although what timeframe you realistically think that could be deployed through the alliance Bernstein franchise. Thanks.

Yes, that'd be specific and my team will correct me, if I'm wrong, but I think the equitable and its investor day guided through 2027.

I believe.

It was their timeframe and that is predicated on them growing their general account as well we have been in active conversations about new structured credit strategies for example.

And new areas of investment that pick up R. R.

Both carve out as well as our our middle market lending group and others. They continued to be quite supportive and our commercial real estate debt area, where we see obviously a much more interesting buyer's market to play in.

And so you know.

They will be very methodical and they will rollout progressively over the next several years.

So it's hard for me to gauge.

Because it's not only the timing of getting it through their approval process and setting up the structure, but it's also the team finding opportunities.

To deploy it and finally of course Theres, a private placement debt element of that which is investment grade principally.

Which has always been a part of our mix and we will continue to be part of what equitable is interesting in doing given their very strong quality orientation for the G E.

Got it thanks, so much.

And there are no further questions at this time, Mr. Griffin I'll turn the call back over to you.

Perfect. Thank you everyone for joining us today. We appreciate your time, if you have any additional questions. Please reach out to Investor relations and have a great day.

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