Q2 2023 WisdomTree Inc Earnings Call
[music].
Yeah.
Greetings and welcome to the Wisdom tree second quarter 2023 earnings call. At this time, all participants are in a listen only mode.
A question and answer session will follow the formal presentation.
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As a reminder, this conference is being recorded.
At this time I would like to hand, the call over to Jessica <unk> head of corporate communications.
You may begin.
Good morning, before we begin I would like to reference our legal disclaimer available in todays presentation. This presentation may contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995, a number of factors could cause actual results to differ materially from the results discussed in forward look.
Statements, including but not limited to the risks set forth in this presentation and in the risk factors section of Wisdom tree annual report on Form 10-K for the year ended December 31st 2022.
With injury assumes no duty and does not undertake to update any forward looking statements.
Now it is my pleasure to turn the call over to your wisdom tree CFO , Bryan and Michigan.
Thank you Jessica and good morning, everyone let.
Let me begin by sharing our results for the second quarter, along with commentary on our expense guidance before turning the call over to Jarrett and Johnno for additional updates on our business.
We ended the quarter with $93 7 billion of AUM.
A new record and up 3% from the prior quarter due to another strong quarter of positive inflows and market appreciation.
Robust and sustainable inflows continue to grow our E U N having generated $2 3 billion in the quarter, which were gathered primarily in our fixed income and international equity products.
It has been 11 consecutive quarters of generating positive flows in our year to date closed through the end of June of $8 7 billion.
Translates into a 21% annualized organic slow growth rate.
Our AUM currently stands at 97 billion almost 4% higher from the end of June having benefited from further inflows and positive market movement.
Next slide.
Revenues were $85 7 million.
An increase of 4.5% from the first quarter due to a higher average a U N.
Partly offset by lower other income, which is impacted by the velocity of flows from our European listed products.
As a reminder, our other income may change quarter over quarter, depending upon European listed a U N changes due to market movement.
The velocity of flows arising from these products.
As previously disclosed during the quarter, we settled our contractual gold payment obligation with the World Gold Council and Etfs.
For about $137 million comprised of $50 million in cash and nonvoting preferred stock convertible into about $13 1 million shares of our common stock.
The settlement reduces operating expenses by about $18 million per year, and expands operating margins by 530 basis points.
The contractual adult payment expenses $1 6 million during the second quarter, representing our final payment for the month of April .
Which had about a one cent impact too.
Our earnings per share.
Adjusted net income was $14 9 million or nine cents a share.
Our non-GAAP results exclude a noncash after tax gain of 41.4 million related to the termination of our contractual gold payment obligation.
As well as $3 3 million in other net nonoperating losses.
Next slide.
Our adjusted operating expenses were down two 3% for the quarter.
This was primarily driven by lower contractual gold payments, partly offset by higher professional fees inclusive of expenses incurred to settle the gold payment obligation.
Next slide.
Now a few comments on our forecasted expense guidance.
We are updating our forecasted compensation guidance to range from $104 million to $110 million.
To account for variability in incentive compensation.
Our performance based plan considers the magnitude of our flows revenue operating income and operating margin performance.
As well as our relative share price performance in relation to our publicly listed U S. Traditional asset manager peers, whereby we currently ranked number one out of 13.
Given the potential volatility in our performance based metrics, we consider the midpoint of this range to be a reasonable estimate.
Which already seems to be reflected in consensus estimates.
Our discretionary spending guidance of 56 to 59 million remains unchanged, having recognized $28 3 million in discretionary spending year to date.
We reported a gross margin of about 79% year to date, and we're updating our gross margin guidance to 79% from 78%, which we believe should be sustainable at current AUM levels.
Our contractual go payment expense of 6 million year to date will be zero going forward. As this obligation was terminated in early may.
Our forecasted third party distribution expense of eight to 9 million remains unchanged given current run rate levels.
Our interest cost is anticipated to be $3 5 million per quarter going forward as we paid $60 million in cash and issued 1 million shares to settle the convertible notes that had matured in June .
Our run rate interest income is expected to be about 500000 per quarter through 2023, taking into consideration the magnitude of our investments which has been reduced from the prior quarter. After having paid 110 million to settle our convertible notes and having bought out our gold royalty obligation.
Our adjusted tax rate was 23, 7% year to date through June and we are updating our tax rate guidance to 24% given the current distribution of profits amongst our U S and European businesses.
And our weighted average diluted shares outstanding were 170.7 million after having issued approximately 14 million shares in connection with our gold royalty buy out and the maturity of our convertible notes during the quarter.
The impact of the share issuance on our second quarter diluted shares was affected by the timing of when the shares were issued.
Going forward, we anticipate our diluted shares outstanding to be about 177 million per quarter.
That's all I have I'll now turn the call over to Jared.
Alright, Thanks, Brian and good morning, everyone.
Our story continues to be simple, we have deep and wide slow momentum driven by a broad product suite and a differentiated models business.
We have a scalable business with high incremental margins and we have a leadership position in token highest assets and blockchain enabled finance.
All of this was once again on display in the second quarter, we generated 2.3 billion as of second quarter net inflows, our 11th consecutive quarter of net inflows eight.
<unk> 8.7 billion of first half net inflows was the second best start to any year in bluestem Tree's history, while our 21% annualized pace of year to date organic growth is best in class among our peers wisdom trees total AUM is at all time highs in our slope.
Profile has never been healthier with inflows in all our eight major product categories. So far this year.
Our managed models suite continues to gain momentum now available to over 65000 advisors, including ongoing traction at Merrill and Morgan and the recent win at L. P. L. B.
High incremental margins on the back of higher AUM and revenues again drove organic margin expansion in the second quarter. Additionally, we added to our operating margins with the extinguishment of the gold royalty and may expanding annualized operating margins by over 500.
This points, while also eliminating balance sheet and income statement noise and on top of all of this we launched wisdom treat prime at the end of June .
Overall these are very exciting times at wisdom tree with nearly three years of positive results and momentum in our E. T F and models business and with three years of work coming to fruition with the launch of losing treat prime with that I will now turn it over to Jonathan to add greater D.
Dale.
Thank you Jarrett and Hello, everyone.
It really is an exciting time here at wisdom tree.
I've never been more bullish on our outlook, both short term and long term than I am today.
As Brian and Jared have covered.
We have truly strong momentum in our business today.
With record AUM also with her most diverse mix of a U M.
Best in class organic growth and ample runway for margin expansion.
Which also builds on the successful retirement of our gold royalty liability.
As stated.
He is a great first half.
And I expect the momentum will continue through the remainder of 2023 and beyond.
Also exciting.
The recent launch of our wisdom tree crime wallet and wisdom trees early mover status in token is Asian.
Starting with wisdom tree Prime as you may have seen it went live in both Android and Apple App stores in late June . This is just the beginning we view this as the starting line.
The Prime App is initially live in 21 states across the U S covering roughly half of the country's population.
As we've mentioned before expanding the footprint of our offering is a key initiative and we expect to have the platform available to substantially all of the U S population by the end of the year.
Also.
The platform will be iterative in nature, as we launch new products and features throughout the remainder of 2023.
The initial launch included nine blockchain enabled funds, a dollar and gold token as well as bitcoin and ethereum.
From here, you should expect us to add new products as well as expand the features and capabilities like adding peer to peer transfers and payments in coming quarters.
And we are focused on.
On the growth of prime ecosystem.
On the retail side. The next several months are about testing and learning who is attracted to the platform and how they are using it.
On the marketing front, we are laser focused on targeting users with a high ROI and a tight payback period.
We are not trying to solve solely with the number of users on the platform, but rather economically attractive users.
Organic retail growth is one way for wisdom tree to win but.
But not the only way to win.
Now that the prime platform is live we can showcase it to potential business development partners with either beat a b or b to B to C applications.
Financial services firms looking to leverage blockchain blockchain Tech tech firms looking to deepen relationships with customers, where institutional players looking for unchanged use cases with a more regulated product set we have lots of opportunity.
With many ways to grow the wisdom tree prime platform.
Early engagement has been very promising and we are going to leave no stone unturned.
Also your.
You're starting to see our peers wake up to the opportunity in acid token is Asian.
Lack rock CEO called token as Asian quote the next generation of markets.
Franklin token is the money market fund KKR token Istent L. P and many others are starting to explore token is Asian and blockchain technology.
This is not only a validation of our token as Asian strategy, but also underscores the strong position that wisdom tree is in being an early mover and the first with any sort of robust product set.
We will look to leverage our multi year head start two additional products with the prime ecosystem, but also explore potential third party distribution opportunities as well.
Like I said earlier.
It is a very exciting time here at wisdom tree, we have incredible momentum in our ETF flows we had record high a U N. We have a significant margin expansion opportunity and we have a massive opportunity to capitalize on the secular shift towards blockchain enabled finance through our.
Asset took innovation in these initiatives and our wisdom tree Prime platform I think you now, let's turn the call over to questions.
All right. Good morning, everybody, it's Jeremy Campbell head of Investor Relations over here at wisdom tree as in prior quarters, we are going to start out with a couple of questions from our retail user base our retail shareholders.
We're opening it up to the sell side analysts here. So the first question from our Se platform is.
As to will Peck head of digital assets and it's a conglomeration of three different questions that came through well with the digital landscape evolving what are you. Most excited about related to wisdom tree Prime and what new products with features are you planning to rollout.
Hey, Jeremy. Thank you. Thanks for the question good morning, everyone.
Obviously some of this is just echoing exactly what John just said I mean, it's been interesting to see that tokens nation and very encouraging to see organization, becoming a major theme in financial services broadly and wisdom tree is clearly an early leader here, especially on the liquid asset side with wisdom tree Prime we've got a great use case for it whereas I think a lot of other people are figuring out their use.
Aces and we're actually going into the market with light product so with wisdom tree Prime just echoing what John has said this year is really about adding features and expanding to additional states to get more users onto the platform.
In terms of features that I'm. Most excited about I mean, we've got an ambitious product roadmap, but connecting spending and investing is something that is just absolutely critical to what we're doing is going to be a great use case for the platform by this I mean things like U S. Floating rate notes are gold feeling more like currency being more transact the ball on both debit card.
And on the ECH and Bill pay rails. So that's a feature that I think is going to be most exciting with what we're doing a lot of additional features as well and we're looking forward to rolling that out over the rest of this year and then really ramping up marketing spend from there. So people should go to wisdom tree, Brian Dot com sign up for more details and they can download the app and therefore in the right state.
Great. Thanks, well our second question is going to go to Jeremy Schwartz, our global Chief investment Officer.
Jeremy. The question is are there unique trends to the European business and market that differ from the U S market and how do you think about product development globally.
Thanks, Jeremy and in Great question or.
Questions.
I guess, a number of key differences between Europe and U S that stem from how we each started the business and historical strength for both U S and in Europe , but increasingly we have a unified product road map that we're executing globally and I'll go through a few examples here are you.
What we've seen in Europe . This year is a robust leadership position commodities, playing through and when you look through the flow data year to date, what you see is our legacy gold products and a bit of outflows, but it's being offset by.
You know, even even more inflows to copper and oil are roughly more inflows, the copper and oil and I look at that.
<unk> franchise in one of the key risk for equities and even traditional bond markets as rising oil rising food prices that feed higher inflation. It keeps them more hawkish central bank that tightens rates and so having these strong commodities franchise to me is a great diversify or for our overall business and the key risk to risk assets and.
We have a number of secular tailwind to commodities things like the move to electric vehicles that you hear a lot about thematic Lee we see that with those copper inflows year to date, but also even a 100 million of inflows to our energy transition metals basket. This year. So we've got both.
Nice cyclical and secular forces in the commodity franchise, but our net flows to Europe are now largely coming from UCITS and our usage suite has grown from.
You know less than $1 billion five years ago to almost $5 billion today.
And you know in the U S. We've had this value bias from our launch almost 20 years ago and what was been really strong in Europe has been our megatrend in somatic family that launched in Europe , which was really heavy into the growth side of the style map and couldn't be more relevant this year. Our all you hear about is artificial.
Intelligence dominating the technology trends in the magnificent seven stocks and this is a great example of approaching things globally as the firm when we started in Europe five years ago, when we wash W. T. A I was really our first the math back in 2018, and then we gain conviction in the theme and we launched in the U S. A few years later.
And this year, we've seen about $300 million of flow to AI and knew we built expertise in Europe reported that to a proprietary U S offering and we couldn't be more excited about the long term potential of this AI been now three quarters of $1 billion between the U S and Europe and a good growth.
In going forward for global synergies testing the concept in one market and bring it globally.
Say another example of these global synergies and product as have been our quality range we've seen.
This quality family start in the U S 10 years ago, but in usage has now surpassed 1 billion three and in total our U M. This year has taken and $300 million in UCITS year to date flows to our quality family and globally in the U S has been also leading our inflows within equities as well we've had about $2.
$5 billion of global inflows to this quality range. This year. It started the year just under $11 billion of assets and all of our quality funds now it's approaching $15 billion of assets with market move and flow. So we'd say it's quality range is meaningful but also when we started with quality dividends. This year, we launched a quality growth.
Find for the U S. It's one of our faster funds to reach $50 million of AUM within nine months of organic interest.
And we're excited to build upon that success globally with with further launches in the U S and Europe . So no in short the European and U S businesses possess their unique strengths, but our product development strive to find diversifying assets and a global revenue mix with with new launches.
Great. Thanks, Jeremy.
And then our last question from individual shareholders I'm going to ask Jarrett Lilien, our president and Chief operating officer to answer this one.
The question is what types of customers are using wisdom tree models and how big do you think wisdom tree models can get in the next couple of years.
Thanks, Jeremy and.
All great questions been interesting to hear them I mean, covering the exciting parts of what we're working on from a.
Wisdom tree Prime 200, great product positioning.
And just jumping on before I get to models on Jeremy Schwartz his comments.
The product suite that we have the strength of it is what gives us confidence in our three year streak of of great performance and flows are continuing.
Models is another reason for that confidence it's a major contributor to our best in class growth and a leverage is one of the largest macro trends in wealth management, which is this movement to using centralized models. Our models are now available to over 65.
Thousand advisors.
And we've got.
A different approach for the different segments of customers. So right to your question what kind of clients.
We're interested in models well first of all we start with I'll tell you about four types of wins that we have our models first is just getting a position in someone's existing portfolio.
That could be a retail investor that could be an existing adviser.
In their portfolio or model or it could be in our home office model. So that's that's blocking and tackling for US every day.
And we also build wisdom tree models for third party platforms like Merrill Lynch and Morgan Stanley That's another way.
And really another client segment that we're working with then a third one is we work with advisors to build custom models for them and we add additional services there to help them build implement and trade. These models really replicating the wire house easy button.
Infrastructure that exist for the wire houses and then a fourth win and really a fourth customer group is through wisdom tree Prime.
With.
Our vision to build models like experiences in a token iced form that we're working on today. So Panama in many types of clients. Many approaches many solutions for each and a very important opportunity today, it's about 12% of our flows.
Our coming from models.
We see this as a number that can increase.
As the size of this market is growing and so overall continues to be a very exciting opportunity.
For us in our future.
Yes.
Great. Thanks Derrick.
No. It's a busy earnings day for everybody here, but let me kick it over to Daryl and feel free to open it up for any Q&A from the phone lines.
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Our first questions come from the line of Brennan Hawken.
With UBS. Please proceed with your question.
Good morning, Thanks for taking my question.
Was curious John you spoke a little bit about prime.
And I know, we've got the launch here recently.
Curious about what the early reads are right can you, let us know how take ups have been initially I know, we're just getting started but but.
Curious about that and then if you could also please define well how do you define success in for this platform and I know you've said that you've committed to not spend any more than you are currently spending unless it's successful. So could you just let us know how you define that success. So we can understand how to calibrate for that.
Yeah.
So well I'm going to turn it to you to start, but then I'm going to conclude.
Conclude if you don't mind.
Yeah sure. So thanks for the question look it's very early right. We've only gone live in 21 states about a month ago.
Actually not spending very much money on marketing because we want to get make sure Thats a high ROI spend marketing right. So that's going to be waiting until we're in the right States and we've got the right product features that will generate the greatest returns for us. So it is very early kind of metrics on that front necessarily meaningful right now, but the metrics that we're seeing are very encouraging.
And it works right.
That's not necessarily an easy thing to do for a lot of people and the platform works great working as expected.
Converting users from downloads in the way that we expected. So we're very encouraged by the early results on that front.
John over to you.
Yeah. So.
A couple of points I would like to.
So first on success.
We thought that this would be towards the next evolution in financial services. So partly the success will be macro I believed that token is de Shin and blockchain enabled students that everyone is coming not dissimilar from what you saw in ETF.
And in the early days of Etfs, there was tons of skepticism not quite sure why it would be successful. The reason it was successful was.
The better user experience for the consumer and we believe that is going to drive success in this.
And again I think that everybody is coming.
Excuse me, but.
I would say the reason that we're doing this is.
Not just for the consumer having a better investing experience or consumer finance experience, but this is going to lead to.
Faster organic growth and higher margins for wisdom tree, we think that this is and as well as significantly diversifying our revenue streams. So I.
I expect a highly profitable segment of our business, that's how I define the success and that we would be the early winter.
What will become the secular trends that will drive financial services.
I think I answered the question, where both of US did Brendan Yeah. It's it's a tricky question to answer in detail I. Appreciate it so thanks for that color.
Next question, maybe a bit more provocative.
So look I, John Bonn, your stock, but but it does seem wise so the engagement with the Actavis doesn't really seem the most productive.
Youre spending money on activism defense so be curious as to why you think that's a good use of shareholder cash flow I understand you back it out of your adjusted earnings, but it's still a cash flow draw and why do you think that it's a better decision to be a little bit more combative or or push back against the activism.
As opposed to just working with them.
So first.
You know.
We don't determine if there would be a contest the actavis does.
We have a very distinct.
Envision one, including what we're doing in digital assets.
So it would be a surrender of that when we bought ETF securities.
From grant talk well.
It was very intentional that this wasn't.
A reverse takeover this wasn't.
An opportunity for him to join the board will run the company. It's why he agreed even though you had 18% of the economics that he would only vote, 10% and so.
We would not do it for that.
For those reasons would change.
Really wisdom treats culture wisdom tree business model can be.
Honest.
The seller didn't have a vision for commoditization and fee pressure like wisdom tree does.
And I guess, what I would also say is that.
Wisdom tree.
One five out of six seats.
We got I would say strong affirmation of our coke innovation strategy, especially where or newer directors Daniel.
Hello, Matt.
<unk> and <unk> they do.
Q <unk> and payment experts got overwhelming support and then if I'm being blunt for shareholders.
Blunt.
There was a resounding rejection of grant talk was himself is serving on the board, which is really what he would like to see.
Any votes, 10% of the stock and only got 12% of the vote.
And what was also interesting shareholders voted to maintain the shareholder rights plan.
By overwhelming margin of over 70 million votes and that that rights plan was designed to keep.
Grant talk well or ETF securities from taking control of the company without paying a premium so shareholders have told us to do this I would say.
<unk> is.
Very supportive of wisdom tree now we hope we don't have a fight, but I do believe that we have a mandate from shareholders continue to do what we're doing to drive this strategy and success and by that I mean, we have three years of best in class organic growth and three years either.
Best or second best relative stock performance so I.
And then the early lead in terms of digital assets and again you know.
Larry take good Blackrock, certainly there's someone all of us in asset management.
Take seriously because of their scale their support you know of.
What is coming I think truly validates what we are doing and.
And one of the goals of.
Early success of our digital asset strategy was to be first in market as opposed to in Etfs. We were 13 years. After the Spider This gives us a.
Really a tremendous.
First to market advantage. So I guess, that's how I would answer it.
Yeah no. Thanks, Thanks for all that detail John O and certainly, especially on this topic I would expect nothing else, but for you to be blunt that is on brand. So thanks a lot.
Okay.
Thank you our next questions come from the line of Michael Cyprus with Morgan Stanley . Please proceed with your questions.
Hi, Good morning, this is Stephanie on for Mike.
First is on primes and now that you've launched it are you able to give us a sense of the different components of revenue streams that you're able to earn.
Revenue opportunities between management fees transaction fees and any help to size that contribution or mix. Thank you.
Well, how would you answer that.
Yeah, we're not providing guidance across the different categories, but we have had slides in the past have talked about the different areas of revenue. So obviously the funds have management fees on which we would earn management fees like we do today. We do also charge brokerage commissions with century Securities does which is disclosed if you go to support that wisdom tree Prime dot com in terms of what.
Those numbers are on the digital asset side. There is kind of trading spreads you can think about it that way. That's also disclosed number and then as we add debit cards.
Call. It later this year early next year, there's obviously a healthy interchange fee. There. So no guidance in terms of the mix of these that when John says, earning higher revenue capture a higher margin. It's really the combination of all of these revenue streams, which as I think about it for the customer is a smaller pie with centuries, just taking a greater percentage of the pie if that makes sense.
Okay, Great. That's helpful and maybe just a follow up to that I heard your ambitious roadmap, adding products and functionalities. So just wanted to get your thoughts around what impact your decision between building organically versus hiring the appropriate talent or partnering and acquiring capabilities. As you think about further off from here.
Well, we love you.
Yeah, I guess I'll start I mean in terms of everything that we're doing at this point is kind of done from our organic product and tech development teams right. We've got a few key partners like <unk> currency firebox Galileo in terms of some of the technology that we use to kind of put this platform together.
So one thing that has been what we've been doing for the past couple of years. So it's really our team that's kind of deciding new products. New features it's real prioritizing in terms of what we think is going to be the highest payback, what's going to drive returns for the firm is how we make the decisions there where it's kind of I'd say that north star for this year is by the end of this year early next year really having that great connectivity.
Between investing and spending is what we're driving towards.
And I would just add that really there's nothing that you can buy I mean, you could buy sort of a maybe a token as Asian platform, but that's more of a service not.
In the background sort of.
Infrastructure, which would be a very very different business model for wisdom tree, there's really nothing at this stage. We're so early that there is nothing to buy.
Yeah.
Great. Thank you.
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Our next questions come from the line of Keith Howlett with Northcoast Research. Please proceed with your question.
Good morning, gentlemen, a question. Another question for you here on wisdom tree Prime so it sounds like you know throughout the year you guys are building additional features make it available to a wider audience throughout the U S. But by Nox thing on marketing dollars. It sounds like you don't expect significant growth throughout this year. So what's your expectations in terms of when you might see some you know.
Revenue we were able.
To start offsetting some of your expenses and then as you think out longer longer term should we expect additional expenses next year as you start ramping this up so.
I'll stop there.
Well you want to start.
Yeah, I'll start and then maybe you can turn it over to Brian are huge auto for kind of future guidance, but look.
What I said is we haven't really spent any money on marketing to date I think we're gonna be spending.
Appropriate amount on marketing the rest of the year in terms of just adding users onto the platform confirming our expectations around their usage.
And just getting more data to help inform our decision making process going forward. So I wouldn't say that I wouldn't expect to have any users over the course of this year, we're certainly going to be adding users through paid marketing, but also through.
Media that we already do today as well as word of mouth, which is what we've seen so far.
So that's where we're at on the marketing side.
Ryan do you want to give any color on guidance going forward.
I would just say look we'll provide guidance next year, but I think what we've said and our message has been consistent we would anticipate this to be what our largest spend year. So if we have an incremental increase in expensive would be offset with future revenue as well.
Great. Thank you.
Thank you our next questions come from the line of Aegon Hall.
With K B W. Please proceed with your questions.
Hi, This is David on for Mike Brown, Thanks for taking my question.
Just a follow up on wisdom tree Prime well you mentioned earlier that the early metrics youre seeing for the App are positive can you just put some more color around the metrics that you are referencing here.
I'm not going to get into too much detail on like the specific metrics, but just like.
Like a hypothetical you want to see like conversion rates working correctly, right, where you're getting downloads and thats converting into a funded user at the right rate. So that's what I'm seeing so far that's an encouraging sign but again, it's very early theres no marketing there's lots of people that are downloading the app that actually can't use it yet because they're not in one of the states that we have so just early green shoots are positive.
Red flags by any means so that's what I'm referring to.
Okay.
Yeah.
Thank you. Our next question is coming from the lineup Stephanie MA with Morgan Stanley . Please proceed with your questions.
Great. Thanks for taking my follow up maybe just turning to fixed income opportunity USF. Alright, then they're successful, but if people start to rotate off them using it as a cash proxy and maybe beginning to extend duration. What other products are tickers you could be in demand that wasn't changed to capture that money in motion.
Jeremy.
Well a few things I mean, we do think not to overreact in this prime story, but the ability to have payments tied to things like treasuries and other options in prime we've heavily indexed to fixed income within prime So theres, a big a big component, there, including tips, which we don't have in etfs, including long duration treasuries, which.
We don't have an ETF, but within Etfs, we've seen some some good flows and we're talking a lot about opportunities.
Our high yield fund Wf H Y has is one of our proprietary fixed income funds. We haven't really had a credit cycle. Yet. This has a quality screen on top of high yield bonds, you're getting 8% yield which is competitive to send the long term stock returns from where we see stocks price right now so we loved WPS.
Why we are talking a lot about that we also launched a fund with Voya U N I Y which is a universal funding you've got $1 billion.
Right away. So we're excited about the future opportunities from that and we've had core fixed income with a yield enhanced AG E. G. G Y AGGY. We also have mato opportunities in fixed income that we've been competing for so I think we have a very robust product. Obviously, we've done very well with you as hard, but we think there's a lot.
We can do.
Yeah.
And just this is Jared just jumping in as well.
A lot of people use U S F R for different things some view it as fixed income.
But atlanta other people see it as a better cash holding.
'cause of the yield and and the way the product works. Most advisors that we're dealing with are keeping 10% to 20% of their portfolio and cash at any time. So this is a core holding is one note I'd make and especially for those that are looking for a small.
Artur cash like investment. This is a this is an important corner holding and that's why we continue to see great flows into it. The other point I'd make is that it's not just pivoting into other fixed income products.
For those especially the viewed as cash yeah, they might be moving into fixed income.
But they are also moving into equities and we saw a lot of that in the first quarter and in the second quarter. If you look to last year.
Flows in the U S. It far we're a much bigger percentage of our overall positive flows.
This year, we've seen still great flows in U S. It far but we've also seen some of that pivot into other fixed income, but also into other equity products and that gets back to the importance of the product suite that we have right now being so so strong that we.
Whatever happens in the market, we feel good about being involved with where that cash goes.
Okay.
Thanks Scott.
Any more questions.
No. There's no questions at this time I'll hand, the call back over to Jonathan Steinberg for any closing comments.
I just want to thank all of you for your time this.
Afternoon, and we look forward to speaking to you next quarter. Thank you everybody have a good day.
Thank you. This does conclude today's teleconference. We appreciate your participation you may disconnect. Your lines at this time enjoy the rest of your day.