Q3 2023 Janus Henderson Group PLC Earnings Call
Okay.
Good morning, My name is Lauren and I will be your conference facilitator today think.
Keep standing by and welcome Jonathan Henderson Group third quarter 2023 results briefing.
All lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there'll be a question in all periods.
In the interest of time questions will be limited to one initial and one follow up question.
In today's call critical certain matters discussed may constitute forward looking statements.
Actual results could differ materially from those projected in the forward looking statements due to a number of factors, including but not limited to those described in the forward looking statements in response to sections of the company's most recent Form 10-K and other more recent filings made with the S. E C.
John Pederson It seems no obligation to update any forward looking statements made during the call.
Thank you.
Now, it's my pleasure to introduce Alistair Bulge, Chief Executive Officer Jonathan.
Is it the Bulge you may begin your conference.
Welcome everyone and thank you for joining us today on Janus Henderson third quarter 2020 earnings call I'm Alex.
Joined birth CFO Roger Thompson.
On today's call I'll start with some thoughts on the quarter before handing it over to Roger to run through more detail.
For the prepared remarks, we will take your questions.
Turning to slide two.
Global markets were volatile during the third quarter headwinds, including rising global bond yields due to a higher for longer interest rate environment uncertain economic outlook geopolitical unrest and stubborn inflationary pressures are contributing to challenging market conditions.
Even with the market downturn in the quarter Janus Henderson delivered good quarterly results.
Investment performance remains solid with the majority of assets ahead of benchmark at 135, and 10 year basis.
Assets under management decreased 4% to $308 3 billion. However remained up 7% since the beginning of the year.
Third quarter flows were negative $2 6 billion.
Better results compared to the range, we communicated on last quarter's earnings call.
As I said on the previous earnings call, our institutional pipeline needed time to mature and our retail flows continue to be negative.
We saw both of those factors play out in net flows in the third quarter, but a little bit better than we expected as we gained share.
The other item I spoke about with a few pockets of internal transition that will make us a stronger firm for the long term it could negatively impact our flows in the short term.
Transitions such as these can create uncertainty with flows and how clients react.
I'm pleased that given the trust clients have placed in us along with the efforts and dedication of our investment and distribution teams. We did not experience significant outflows related to these internal transitions during the third quarter.
Looking at the broader flow picture, our 2023 year to date flows are positive at $2 4 billion of.
Operator: Thank you for standing by and welcome to Janus Henderson Group 3rd quarter 2023 results briefing. All lines have been placed on mute for Bentley background rules. After the speakers remarks, there will be question and answer periods. In the interest of time, questions will be limited to one initial and one follow up question. In today's conference call, certain matters to start to make constitute forwarded statements. Actual results could differ materially from those projected in the forward-looking statement due to a number of factors including, but not limited to those described in the forward-looking statements and risk factors sections of the company's most recent, form 10K and other, more recent findings made with the SEC. Janus Henderson issues no obligations to update any forward-looking statements made during the call.
From a market improvement from the almost $20 billion of outflows during the same period of 2022.
We continue to be on pace to show great improvement for last year's total annual net flows of negative $31 billion.
Our financial results remained solid better topline lower expenses and non operating benefits delivered adjusted diluted EPS of <unk> 64 cents better than both last quarter and the third quarter of 2022.
Our financial performance and strong balance sheet continue to provide us the flexibility to invest in the business, both organically and Inorganically and returning cash to shareholders, which I'll talk more about in a moment.
Turning to slide three.
I wanted to touch briefly on progress being made in the business.
We continue to be in the execution phase of our strategic vision, which consists of three pillars protecting our core businesses amplify our strengths not fully leverage and diversify where clients gives us the right to win.
Operator: Thank you.
Ali Dibadj: Now it is my pleasure to introduce Ali Dibadj, Chief Executive Officer of Janus Henderson, Mrs Dibadj, may begin your conference. Welcome everyone and thank you for joining us today on Janus Henderson's third quarter 2023 earnings call. I'm Ali Dibadj and joined by CFO Roger Thompson. In today's call, I'll start with some thoughts on the quarter before handing it over to Roger to run through more details. After those prepared remarks, we'll take your questions.
And protecting grow we've talked previously about the importance of protecting and growing our U S intermediary business and have been investing in and supporting this channel.
As you know we've recruited a new head of the North American client group launched a national brand campaign selectively upgraded talent align compensation with our growth strategy and increase the pace and quality of client engagements.
Ali Dibadj: Turning to slide two, global markets were volatile during the third quarter as headwinds, including rising global bond yields due to a higher philometer instrument environment and certain economic outlook, cheap look on rest and stubborn inflationary pressures are contributing to challenging market conditions. Even with the market downturn in the quarter, Janus Henderson delivered good quarterly results. The investment performance remained solid, but the majority of assets ahead of benchmarked on a 135 and 10-year basis.
These changes are allowing us to be on the front foot with our intermediary decline and their clients.
The progress in U S. Intermediary is showing up in our results in aggregate third quarter flows in North America intermediary were positive for the first time in over three years.
Flows into the advisor group have been positive in each quarter of 2023, which up until now have been offset by negative flows in the retirement channel, reflecting changing demographics and a softening economy.
Ali Dibadj: As the federal management decreased 4%, the $308.3 billion, however it remained up 7% since the beginning of the year. Third quarter flows were negative $2.6 billion, a better result compared to the range we communicated on last quarter's earnings call. As I said on the previous earnings call, our institutional pipeline needed time to mature, and our retail flows continued to be negative. We saw both of those factors play out in net flows in the third quarter, but a little better than we expected as we gained share.
Very importantly, we are capturing market share in this important market.
Under amplified we've previously talked about our institutional and diversified alternative businesses and our product development and expansion efforts.
Our product expansion efforts include the launch of the successful global life Sciences strategy during the third quarter.
In product development. Our successful example is our suite of active Etfs that have grown by over 50% annually since 2018 and is nearly $9 billion.
Ali Dibadj: The other item I spoke about was a few pockets of internal transition that will make us a stronger firm for the long term, but could negatively impact our flows in the short term. Transitions such as these can create uncertainty with flows and have clients react. I'm pleased that given the trust clients have placed in us, along with the efforts and dedication of our investment and distribution teams, we did not experience significant outflows related to these internal transitions during the third quarter.
At the end of the third quarter.
With this growth Janus Henderson is now the fifth largest provider of active fixed income Etfs in the U S with more to come from us.
In the institutional business, which is over $8 billion of positive flows year to date, we've restructured coverage to be more aligned to different client types, helping us to serve their needs better through greater specialization.
Ali Dibadj: Looking at the broader flow picture, our 2023 year-to-day flows are still positive at $2.4 billion, a market improvement from the almost $20 billion of outflows during the same period of 2022. We continue to be on pace to show great improvement for last year's total annual net flows of negative $31 billion. Our financial results remain solid, better top line, lower expenses, and not offering benefits delivered adjusted, diluted EPS of 64 cents, better than both last quarter and the third quarter of 2022.
You completed the majority of appointments and we're seeing a number of consultants advise wins, which is vital to the future growth of the institutional business over time.
Under our diversified pillar, we continue to look actively to buy build or partner to diversify where clients gives us the right to win.
As an example last quarter, we announced the joint venture <unk> that look to take advantage of the democratization of private alternatives into the retail channel.
We remain on track with building out the pivot core business with a target of being fully operational by year end and in the market in early 2024.
Ali Dibadj: Our financial performance and strong balance should continue to provide us a flexibility to invest in the business, but organically and inorganically, and return cash to shareholders, which I'll talk more about in a moment. Turn to slide three. I want to touch briefly on progress being made in the business. We continue to be in the execution phase of our strategic vision, which consists of three pillars, protecting grow our core businesses, amplify our strengths, not fully leveraged, and diversify where clients give us the right to win.
We are enhancing our culture with our new mission values and purpose is a critically important as we augment our culture performance collaboration and accountability built upon our stable and client focused processes that Janus Henderson.
Fuel for growth, which allows for reinvestment in Janus Henderson strategic initiative on behalf of our clients has been realized at a faster pace than expected and in a higher dollar amount.
We expect run rate cost efficiencies of $50 million by the end of 2023 compared to the original $40 million to $45 million by the end of 2024. All of this cost savings has been or will be reinvested in the business.
Ali Dibadj: In protecting growth, we've talked previously about the importance of protecting and growing our U.S, intermediary business and have been investing in and supporting this channel. As you know, we've recruited a new head of the North American client group, launched a national brand campaign, selectively upgraded talent, aligned compensation with our growth strategy, and increase the pace and quality of client engagements. These changes are allowing us to be on the front foot with our intermediary clients and their clients.
As part of fuel for growth, we announced early today are tend to deal with from the ASX.
With 95% of shares and a significant portion of the trading volume on the New York Stock Exchange. This move will allow Janus Henderson to focus on a sole exchange reduce costs and simplify the structure as we continue to invest in Australia in the APAC region as a key growth market for us.
Ali Dibadj: The progress in U.S, intermediary is shown up in results. In aggregate, third-core flows in North America intermediary were positive for the first time in over three years. This flows into these visor groups have been positive in each quarter of 2023, which up until now have been offset by negative flows in the retirement channel, reflecting changing demographics and assessing economies. Very importantly, we're capturing market share in this important market. Under amplified, we've previously talked about our institutional and diversified alternative businesses and our product development and expansion efforts.
Our improving financial results and cash flow generation, along with our strong and stable balance sheet have enabled the board to authorize a share buyback program of up to $150 million to be completed by April 2024.
I want to stress that this new buyback does not change our desire and pursuit to diversify our business through M&A, where clients want us to do so.
At this stage our liquidity profile allows us to do both.
Wrapping up I want to thank each and every one of my colleagues at Henderson for their hard work and dedication as we continue to show real progress on our strategic path to deliver consistent organic growth.
Ali Dibadj: Our market expansion efforts include the launch of the successful globalized science strategy in an OX during the third quarter. In product development, a successful example is our suite of active ETFs that has grown by over 50% annually since 2018 and has nearly $9 billion in AUM at the end of the third quarter. With this growth, Janet Henderson is now the fifth largest provider of active fixed income ETFs in the U.S, with more to come from us.
There is still seen as the opportunity for improvement or financial results are solid we are generating good cash flow, we have a strong and stable balance sheet.
I'll now turn the call over to Roger to run you through the financial results.
Thank you Rami and thank you again to everyone for joining us on today's call.
Turning to slide forward investment performance.
Performance versus benchmark remains solid with the majority of assets, beating their respective benchmarks over all time periods.
Ali Dibadj: In the institutional business, which is over $8 billion of positive flows year-to-date, we've restructured coverage to be more aligned to different client types, helping us to serve their needs better through greater specialization. We've completed the majority of appointments and we're seeing a number of consultants advise wins, which is vital to the future growth of the institutional business over time. Under our diversified pillars, we continue looked actively to buy, build, or partner to diversify our clients to give us the right to win.
In equities, the one and five year performance versus benchmark improved compared to a year ago, most notably on the one year basis were 83% of AUM is now, beating benchmark compared to 42% a year ago.
Short term fixed income performance versus benchmark continues to improve.
It is now at 56% of AUM ahead of benchmark on a one year basis.
Ali Dibadj: As an example, last quarter, we announced a joint venture, Privacore, to look to take advantage of the democratization of private alternatives into the retail channel. We remain on track with building out the Privacore business with a target of being fully operational by year end and in the market in early 2024. We're enhancing our culture with our new mission values and purpose. This is critically important as we've augmented our culture of performance, collaboration, and accountability built upon our stable and client-focused processes at Janice Henderson.
The longer term periods remained very strong.
Our improving fixed income performance differentiated breadth of products across different vehicles and regions. An example, being our active fixed income ETF strengths that has just mentioned.
Positions us really well for the anticipated movement into fixed income as interest rates stabilize and bonds provides diversification benefits to clients.
In the multi asset capability, the balanced strategy, which is the vast majority of assets in this bucket switch to underperforming the benchmark on a one year basis 91 basis points balance remains ahead of its benchmark over three year and longer time periods and is in the top Morningstar quartile over the five and 10 year time periods.
Ali Dibadj: Fuel for growth, which allows for investment in Janice Henderson's strategic initiatives on behalf of our clients, has been realized at a faster pace than expected and at a higher dollar amount. We expect run rate consequences of $50 million by the end of 2023, compared to the original $40 to $45 million by the end of 2024. All of this cost savings has been or will be reinvested in the business. As part of fuel for growth, we announced early today our 10-to-deal list from the ASX.
Investment performance compared to peers continues to be competitively strong with 70 560, 79%, 87% of AUM in the top two Morningstar quartile over the 135 and 10 year time periods.
Looking further into performance equities have 64% of AUM in the top quartile on a one year basis.
Ali Dibadj: With 95% of shares and a significant portion of the trading volume on the New York Stock Exchange, this move will allow Janice Henderson to focus on a sole exchange, reduce costs, and simplify the structure. As we continue to invest in Australia and the APEC region as a key growth market for us. Our proven financial results and cash regeneration, long with a strong and stable balance sheet, have enabled the board to authorize a share-by-back program of up to $150 million to be completed by April 2024.
Great result, and a testament to the ability of our world class investment team to deliver differentiated insights on investment discipline in these extremely challenging market conditions.
Slide five shows company flows.
Ali Dibadj: I want to stress that this new buy-back does not change our desire and pursuit to diversify our business through M&A requires one as to do so. At this stage, our liquidity profile allows us to do both.
As I've mentioned net outflows were $2 6 billion in the quarter, which is consistent with our messaging last quarter and reflects the continuation of net outflows in retail and less institutional gross sales as we continue to mature the pipeline. Following the funding of several large mandates in the first half of the year.
Year to date net inflows of $2 4 billion demonstrates.
Significantly improving trend compared to 2022.
Ali Dibadj: Wrapping up, I want to thank each and every one of my colleagues at Hansen, for their hard work and dedication, as we continue to show real progress, our strategic path to deliver consistent organic growth. There's still a thing of the opportunity for improvement, our financial results are solid, we're generating good cash flow, we have a strong and stable balance sheet.
Yeah.
Turning to slide six for a look at flows by client type.
Net outflows into the intermediary channel improved to $1 3 billion compared to $1 $6 billion in the second quarter.
Most of the outflows from the EMEA and Latam regions as higher interest rates inflation and recessionary fears of weighing on flows Jonathan.
Roger Thompson: I'll not turn the call over to Roger to run you through the financial results. Thank you, Abby, and thank you again to everyone for joining us in today's cool. I'll tell you the slide for an investment performance. Investment performance versus Benchmark remains solid with the majority of assets beaten their respective benchmarks over all time periods. In equities, the one and five year performance versus Benchmark improves compared to a year ago, most notably on the one year basis, where 83% of AUM is now beating Benchmark compared to any 42% a year ago.
Jonathan This is not unique.
EMEA industry in general has experienced a challenging slower environment with meaningful year to date net outflows across most regions.
U S. Intermediary flows was slightly positive supported by strong positive flows from several strategies, including the AAA CLO Etfs, a mortgage backed security ETF and U S mid cap growth.
As already discussed and we've spoken about previously U S. Intermediary is a key initiatives under our protect and grow strategic pillar and we're pleased that we have positive flows this quarter or year to date flow results have improved by over $5 billion compared to the same period, a year ago and that we are capturing market share.
Roger Thompson: Short term 16C performance versus Benchmark continues to improve, and is now at 56% of AUM ahead of Benchmark on a one year basis. The longer term periods remain very strong. Our improving 16C performance and differentiated breadth of products across different vehicles and regions, and example being our active fixing committee as strength that is just mentioned. That positions us really well for the anticipated movement into 16C as interest rates, favourise and bonds provide diversification benefits to clients.
Institutional net outflows were $400 million in the third quarter.
In line with our comments from last quarters call.
Following onto the large inflows that we had in the first half of the year, we were not anticipating large fundings in the third quarter.
Our distribution team is working to build a sustainable pipeline and it will take time.
Roger Thompson: In the multi aspect capability, the balance strategy, which is the vast majority of assets in this bucket, switch to underperforming the benchmark on a one year basis, but only by one basis point. Balance remains ahead of its benchmark over three year and longer time periods, and is in the top morning star quarter over the five and ten year time periods. Investment performance compared to peers continues to be competitively strong with 75%, 60, 79 and 87% of AUM in the top two morning star quarter over the one three five and ten year time periods.
Finally, net outflows for the self directed channel, which includes direct supermarket investors with $900 million.
Slide seven is flows in the quarter by capability.
Equity flows were negative $2 $3 billion in the third quarter compared to breakeven in the prior quarter.
Employment for active equities remains challenging across all regions. Despite the outflows, we're encouraged that U S equities captured market share during the quarter.
Net inflows for fixed income with $900 million, taking net positive flows to $5 $5 billion year to date, we're encouraged by the steady improvement in the short term investment performance to go along with our solid longer term investment performance in fixed income.
Roger Thompson: Looking further into performance, equities have 64% of AUM in the top course aisle on a one year basis. A great result and a testament to the ability of our world class investment team to deliver differentiated insights and investment discipline in these extremely challenging market conditions.
Several strategies contributed to positive fixed income flows.
<unk>, our fixed income Etfs, which had positive flows of $1 $4 billion in the quarter.
Roger Thompson: Slide 5 shows company flows. As I mentioned, net outflows with $2.6 billion in the quarter, which is consistent with our messaging last quarter and reflects the continuation of net outflows in retail and let institutional growth sales as we continue to mature the pipeline following the funding several large mandates in the first half of the year. Yes, a date net in flows of $2.4 billion, demonstrate to significantly improving trend compared to 2022.
Other strategies Contra.
Contributing to the positive flows for the quarter, where the U S by maintain credits multi.
Multi sector credit on Australia, and fixed income strategies.
Total net outflows for the multi asset and alternative capabilities with $700 million and $500 billion respectively.
Moving on to the financials slide eight is our U S. GAAP statement of income.
Nine we explained the adjusted financial results.
Roger Thompson: Turning to slide to fix for a look at flows by client type. Net outflows for the intermediary channel, improved to $1.3 billion compared to $1.6 billion in the second quarter. The quarterly outflows from the in-mea and Latin regions has higher interest rates, inflation, and recessionary fears away on flows. Janus Henderson is not unique, and the in-mea industry in general has experienced a challenging flow environment with meaningful years to date net outflows across most regions.
Adjusted revenue increased 1% compared to the prior quarter as increased management fees on higher average AUM, partially offset by lower performance fees.
Net management fee margin for the third quarter was 48 seven basis points compared to the prior quarter of 48 five basis points. The increase is primarily due to mix shift.
Last quarter, we told you that we expected the fee rate to be relatively flat in the third quarter. After a decrease in the second quarter due to the large low fee institutional fundings in the first half of the year.
Roger Thompson: U.S, intermediary flows were slightly positive, supported by strong positive flows from several strategies, including the Triple A CLOETF, our mortgage-back security ETS, and U.S. Make Cap Growth. As Ali discussed, and we spoke about previously, U.S, intermediary is a key initiative under a protecting growth strategic pillar, and we've pleased that we had positive flows this quarter. Our U.S, date flow results have improved by over $5 billion compared to the same period a year ago, and that we are capturing market share.
Third quarter performance faced with negative $16 million driven by U S. Mutual fund performance fees of negative $17 5 million.
As we sit here today based on current investment performance, our estimates of aggregate performance space for the full year remains unchanged towards the negative end of negative $35 million to $45 million.
This includes roughly negative $65 million from U S Mutual fund performance fees.
Clearly the results will be dependent on future performance.
Roger Thompson: Institutional net outflows were $400 million in the third quarter. In line with our comments from last quarter's call, following onto the large inflows that we had in the first half of the year, we were not anticipating large fundings in the third quarter. Our distribution team is working to build a sustainable pipeline, and it will take time. Finally, net outflows for the self-directed channel, which includes direct and supermarket investors were $900 million.
Continuing on to expenses.
Adjusted operating expenses in the third quarter with $290 billion flat compared to the prior quarter.
Adjusted LTI was down 5% compared to the prior quarter largely due to mark to market on mutual Fund awards in the appendix, we've provided the usual table and the expected future amortization of existing grants for you to use in your models.
Roger Thompson: Flight 7 is a flows in the course by capability. Equity flows were negative $2.3 billion in the third quarter compared to break even in the prior quarter. The environment for active equities remains challenging across all regions. Despite the outflows, we're encouraged that U.S, equities captured market share during the quarter. Net inflows were $900 million, taking net positive flows to $5.5 billion year to date. We're encouraged by the steady improvement of the short term investment performance to go along with our solid long-term investment performance in fixed income.
The third quarter adjusted comp to revenue ratio was 45, 3% in line with expectations.
Adjusted non comp operating expenses declined 1% compared to the prior quarter, primarily due to lower G&A expenses.
Yeah.
Adjusted operating income increased 3% over the prior quarter to $125 4 million in the third quarter.
Third quarter, adjusted operating margin improved to 31%.
And finally adjusted diluted EPS was <unk> 64 cents up from both the prior quarter and the same quarter a year ago.
Roger Thompson: Several strategies contributed to positive fixed income flows, including our fixed income ETFs, which had positive flows of $1.4 billion in the quarter. Other strategies can contribute into the positive flows for the quarter, where the U.S, by maintain credits, multi-factor credit, and Australian fixed income strategies. Total net outflows for the multi-factor alternative capabilities were $700 million and $500 million respectively.
Updating on our expectations for full year 'twenty three operating expenses as already mentioned, we now expect to deliver $50 million in fuel for growth cost savings to strategically reinvest back into the business. We're pleased with this result, but we will continue to maintain our cost discipline and seek ways to operate our business more efficiently going forward.
As we're approaching the end of 'twenty three we're refining our previous guidance.
Roger Thompson: Moving on to the financials, Flight 8 is our U.S, gap fate with the income, and on Flight 9, we explain the adjusted financial results. Adjusted revenue increased 1% compared to the prior quarter, as increased management fees on higher average AUM were partially offset by lower performance fees. The management fee margin for the third quarter was 48.7 basis points compared to the prior quarter of 48.5 basis points. The increase is primarily due to mixed shift.
The expected.
Adjusted compensation ratio remains unchanged in the mid Forty's.
We've lowered the range of our adjusted non compensation expense percentage growth compared to the prior year and now expect it to be mid single digits.
We've also updated our expected statutory tax rate to approximately 24% from the previous range of 24% to 26%.
Skipping over to slide 10, I'm moving to slide 11, our liquidity profile.
Our balance sheet remains very strong cash and cash equivalents increased to $1 $1 billion as it affects the September an increase of approximately $150 million, resulting primarily from good operating cash flow generation.
Roger Thompson: Last quarter we told you that we expected the fee rate to be relatively flat in the third quarter after a decrease in the second quarter due to the large low fee institutional fundings in the first half of the year. Third quarter performance fees were negative $15 million, driven by U.S, mutual fund performance fees of negative $17.5 million. As we sit here today, based on current investment performance, our estimate of Agil's performance fees for the full year remains unchanged towards the negative end of negative 35 to 45 million dollars.
We've maintained a strong liquidity position and we continue to balance the capital needs and the investment opportunities that the business with returning capital to shareholders.
Along these lines as I mentioned earlier the board has approved a new share repurchase authorization of up to $150 million to be completed by April 2024.
Roger Thompson: This includes roughly negative 65 million dollars from U.S, mutual fund performance fees. Clearly, the result will be dependent on future performance. Continuing on to expenses, adjusted operating expenses in the third quarter with $280 million flat compared to the prior quarter. Adjusted LTI with down 5% compared to the prior quarter, largely due to market on mutual fund awards. In the appendix, we've provided the usual table on the expected future amortization of existing grants fees to use in your models.
Our capital allocation philosophy has not changed the buyback authorization reflects our improved financial outlook compared to where we started the year better cash flow generation on a strong and stable balance sheet.
I want to reiterate how these comments that this buyback authorization does not impair our ability to execute M&A should the opportunity arise.
We continue to look actively to buy build or partner to diversify where clients gives us the right to win.
We'll also continue to return cash to shareholders through our quarterly dividend and the board has declared a <unk> 39 per share dividend to be paid on the 15th of November to shareholders of record as at the 13th of November.
Roger Thompson: The third quarter of adjusted comp to revenue ratio was 45.3% in line with expectations. Adjusted non-comp operating expenses declined 1% compared to the prior quarter, primarily due to lower G&A expenses. Adjusted operating income increased 3% over the prior quarter to 125.4 million in the third quarter. Third quarter adjusted operating margin improved to 31% and finally adjusted diluted EPS with 64 cents up from both the prior quarter and the same quarter a year ago.
With that I'd like to turn it back over to the operator to open it up for questions.
Operator.
Thank you.
If you would like to ask a question. Please press star one on your telephone keypad.
Your question, Please press star bulk tea.
Please ensure that you find it you should likely.
A reminder, please limit.
Limit yourself to one initial and one follow up question again.
Again stocks baseball one to ask a question.
Roger Thompson: Updating on our expectations for full year 23 operating expenses. As Ali mentioned, we now expect to deliver $50 million in fuel for growth cost savings to strategically reinvest back into the business. We're pleased with this result, but we will continue to maintain our cost discipline and seek ways to operate our business more efficiently going forward. As we're approaching the end of 23, we're refining our previous guidance. The expected and adjusted compensation ratio remains unchanged in the mid 40s.
Our first question comes from Craig Silicon Fader from Bank of America. Please go ahead.
Thanks, Good morning Ali.
First question is on capital management, So a lot of fresh commentary on M&A and buybacks in the prepared remarks, both will drive EPS higher.
Roger Thompson: We've lowered the range of our adjusted non-compensation expense percentage growth compared to prior year and now expected to be mid single digits. We've also updated our expected statutory tax rate to approximately 24% from the previous range of 24 to 26%.
First we wanted to get an update on the potential for an M&A announcements over the near term and I think Ali you made it clear in the commentary that you can buy back stock.
And do M&A at the same time.
And also just in terms of the focus is private credit still the number one strategic focus.
Hey, Craig Thanks for the questions.
First from a capital allocation perspective.
Our framework in a hierarchy hasnt changed so we are kind of three buckets to think about the first one is cash that we have to have on hand, so whether it be for regulatory needs, our liquidity needs or capital, we set aside for contractual obligations or kind.
Roger Thompson: Skipping over slide 10 and moving to slide 11 and a look at our liquidity profile. Our balance sheet remains very strong. Cash and cash equivalents increased to $1.1 billion as at the 30th of September and increased to approximately $150 million resulting primarily from good operating cash flow generation. We've maintained a strong liquidity position and we continue to balance the capital needs and the investment opportunities that the business with returning capital to shareholders.
Kind of a recurring payments things like that that's that's the basis of.
<unk> won the next pieces, we look to invest back in the business both organically as we've been doing to grow the business and of course inorganically as well.
Funding thing technology other things.
Roger Thompson: Along these lines, as Ali mentioned earlier, the borders has proved a new share repurchase authorization of up to $150 million to be completed by April 2024. Our capital allocation philosophy has not changed. The buyback authorization reflects our improved financial outlook compared to where we started the year, better cash flow generation and a strong and stable balance sheet. I want to reiterate Ali's comments that this buyback authorization does not impair our ability to execute M&A should the opportunity arise. We continue to look actively to buy, build, or partner to diversify where clients give us the right to win.
And then if we have anything left.
Turn excess cash to shareholders.
We are announcing that we're going to start doing today, thanks to the board approval.
The reason, we're doing that as Roger mentioned, a while ago is because we've delivered better results than we had anticipated and so now we do have the opportunity to return cash to shareholders.
And are able to do that and and invest in the business both organically and inorganically.
Appropriately so.
We certainly think we can do both now.
To your point that doesn't change our M&A stance whatsoever, our M&A stance continues to be client led.
Roger Thompson: We'll also continue to return Caster shareholders through our quarterly dividends, and the Board has declared a 39-cent per share dividend to be paid on the 30th of November to shareholders of record as a 13th of November.
Adding capabilities that clients want us to add you saw us do too for example over the past little while one as per the core in the private space and one is the emerging market debt business that we brought on board, which continues to grow quite quite nicely.
Operator: With that, I'd like to turn it back over to the operator to open it up for questions. Operator? Thank you. If you would like to ask a question, please press Starvelis by one on your telephone keypad. To withdraw your question, please press Starvelis by two. Please also ensure that your phone is unmissed locally. Has a reminder, please close the limit yourself to one initial and one follow up question. Again, that is Starvelis by one to ask a question.
So we want to be client led in what we are acquiring are there's plenty of stuff out there private credit to your point is certainly one of the areas that we're focused on it is an area where clients want us to participate and we're certainly looking for opportunities, but there are plenty of other opportunities out there as well that allows us to have a broader scope on behalf of our clients.
Thanks Ali.
Just as my follow up your active equity performance.
Craig Siegenthaler: If that's a question, comes from Craig Slogan, say you'd have a thanks America. Craig, please have a head. Thanks.
Is a lot stronger 80% of aam's, beating benchmark.
And Peter is roughly over one year now like we all know there are some secular and cyclical headwinds here.
Ali Dibadj: Good morning, Ollie. My first question is on capital management. So, a lot of fresh commentary on M&A and Bibax and the prepare remarks. Both would drive EPS higher. First, we want to get an update on the potential for an M&A announcement over the near term. And I think Ollie, you made it clear in the commentary that you can buy back stock and do M&A at the same time. And also, the just in terms of the focus is private credit still the number one strategic focus.
Wanted to see if youre seeing an improvement in client conversations.
Either on the sales side, where the redemption side of the equation.
Look it's a great observation.
Our.
Teams are doing an extraordinarily good job of sticking to the process being disciplined and delivering what we do best here at Janus Henderson, which is active investment performance you see that across the board.
Obviously that entails clients piquing their interest and being interested in talking with us. So certainly performance improving helps that and as you mentioned.
Ali Dibadj: Hey Craig, thanks for the questions. First from a capital allocation perspective. Our framework in a hierarchy hasn't changed. We have three buckets to think about. The first one is cash that we have to have on hand. So whether it be for regulatory needs, or liquidity needs, or capital we set aside for contractual obligations, or kind of recurring payments, things like that. That's the basis of step one. The next piece is we look to invest back in the business, both organically, as we've been doing to grow the business.
We've done a pretty good job at that.
Now what I will say is that performance in a vacuum isn't necessarily the only thing that clients want right. They want really clear client service and in sales support and.
<unk> seen in some of the comments before in some of our numbers, we continue to deliver that very well and clients Trust us They trust to deliver both performance and great client service and so the combination of that has seen a significant increase significant increase in client interactions both in the intermediary channel and the institutional channel as well as kind of a supporting areas like consulting.
Ali Dibadj: And of course, energetically, as well, thinks heat funding, things technology, other things. And then if we have anything left, we return excess cash to shelters, which we are announcing that we're going to start doing today. Thanks to the board approval. The reason we're doing that, as Roger mentioned a little while ago, is because we've delivered better results than we anticipated. So now we do have the opportunity to return cash to shelters and are able to do that.
Discussions as well.
Thank you Ali.
Thank you.
Our next question comes from Dan Fannon from Jefferies. Please go ahead.
Thanks, I was hoping to follow up a bit on the first question just with regards to what are the minimum levels of cash that you want to hold onto that you need to for the reasons you mentioned as well as how you think about leverage in this environment and what you're willing to put on the balance sheet.
Ali Dibadj: And invest in the business both organically, and we've been organically appropriately. So we certainly think we can do both now. To your point, that doesn't change our M&A stance whatsoever. Our M&A stance continues to be client-led, adding capabilities that clients want us to add. You saw us do two, for example, over the past little while. One is Privacore and the private space. And one is the Merge Market debt business that we bought on board, which continues to grow quite nicely.
Hi, John It's Roger Let me, let me, let me pick up on that I think.
As Ali said, we've got we've got a profile.
Capital and our cash and cash equivalents are up.
About $100 million.
From where they were in Q3 22.
<unk>.
And.
To your point actually some structural work, we've done and efficiencies in the business has actually reduced.
Ali Dibadj: So we want to be client-led in what we are acquiring. There's plenty of stuff out there. Private credit to your point is certainly one of the areas that we're focused on. It is an area where clients want us to participate. And we're certainly looking for opportunities, but there are plenty of other opportunities out there as well. That allows us to have a broader scope on behalf, of our clients.
Our Reg capital requirements that as you know is largely driven in the U K.
So no there isn't there isn't a single number but we look at we look at that.
That cash and capital balance and that is that is now significantly above where it was.
A year ago.
Ali Dibadj: Thanks, Ali. Just as my follow-up, your active equity performance is a lot stronger, 80% of AUM's being benchmarked, and peers roughly over one year. Now, like, we all know there are some secular and tickled headwinds here, but I want to see if you're seeing an improvement in client conversations, either on the sales side or the redemption side of the equation. Look, it's a great observation. Our teams are doing an extraordinarily good job of sticking to the process, being disciplined and delivering what we do best here at Kenneth Henderson, which is active investment performance.
Little bit before that when we when we stopped the buyback previously and that gives us that gives us.
The fuel to do both.
Strong dividend the buyback and to <unk> point.
Continuing with looking in M&A opportunities.
Great and then just.
Given the success you've had in reducing.
More finding more efficiencies and operating the business.
As I said more efficiently can you talk about the longer term expense framework as we think about maybe next year and even further given the balancing of continuing to invest for growth but.
Ali Dibadj: You see that across the board. Obviously, that entails clients peeking their interest and being interested in talking with us. So, certainly, performance improving helps that, and, as you mentioned, we've done a pretty good job at that. Now, what I will say is that performance in a vacuum isn't necessarily the only thing that clients want, right? They want really clear client service and sales support. As you've seen in some of the comments, the forms of our numbers, we continue to deliver that very well, and clients trust us.
Some of the some of the footprint and reduce fixed costs that may be coming out of the business over time.
The growth rate.
The overall expenses.
Again, let me kick off on that and then added perhaps you want to chip in as well, we're investing in our business.
Been very clear about the areas that we think we can grow in.
And.
We've been investing in those areas and at least at least laid those out one of those is our U S intermediary business.
As Ali said, we've invested both in people.
Ali Dibadj: They trusted to deliver both performance and great client service, and so the combination of that has been a significant increase, significant increase in client interactions, both in the intermediary channel and the institutional channel, as well as the supporting areas like consultant discussions as well.
As well as brand in other areas and it's great to see that coming through.
It's a market share guidance and positive flows.
What's difficult environment.
That being said.
We're constantly looking at how to balance that investment with with efficiencies and deciding where we will be less or we can do better and where we can do less.
Ali Dibadj: Thank you, Ollie.
Operator: Thank you.
Operator: All next question comes from down the front and down the chest, please. Go ahead. Thanks.
And that's a constant act, but we've said that we.
We laid out this $40 million to $45 million, we caught a little bit further than that quick of met which is great and we'll continue to look at that and in 2020 for.
Roger Thompson: I was hoping to follow a bit on the first question, just with regards to what are the minimum levels of cash that you want to hold on to, that you need to for the recent you mentioned, as well as how you think about leverage in this environment, what you're following to put on the balance sheet. Thanks, Ollie. Let me take up on that. As Ali said, we've got a profile of capital.
In order to in order to continue to invest.
So I'm not going to give expense guidance today for 2024 will do that.
Full year coal.
But again, you should expect us to remain balanced and investing in the business and try to find efficiencies to offset.
Those investments.
Roger Thompson: Our cash and cash equivalents are up just over at about $100 million from where they were in Q3-22, and to your point actually, some structural work we've done and efficiencies in the business have actually reduced our red capital requirement, as you know, is largely driven in the UK. There isn't a single number, but we look at that cash and capital balance, and that is now significantly above where it was a year ago, or a little bit before that, when we stopped doing a buy-back previously, and that gives us the fuel to do both strong dividends to buy-back and to at least point, you know, continue with looking in M&A opportunities.
Anything you'd add to that.
Yeah, maybe maybe just a little bit.
Look we're going to continue to be a client led an ROI driven and in our investments.
We have a relatively short period of time.
It really reoriented, our thinking about it as a portfolio of expenses, we've reoriented our portfolio expenses can be much more focused on meeting client needs and focusing on ROI again aligned with our strategy. So we feel like we're on our front foot right now.
Youre seeing that in our market share gains relative to our peers.
Pretty much across the board.
We believe we're certainly.
Building, a stronger firm in a very challenging environment, and we will continue to look for opportunities too.
Take our expenses and reorient them and the most client led an ROI driven manner.
Roger Thompson: Great, and then just given the success you've had in reducing, you know, more finding more efficiencies and you're operating the business, and as it's more efficiently, can you talk about the long-go-term expense framework, as we think about maybe next year, even further, given, you know, the balancing of continuing best for growth, but some of the footprint and reduced fixed costs that may be becoming out of the business some of the time, but you know, the growth rate for the overall expenses. Yeah, again, let me kick off on that, and then Alec, perhaps you want to chip in as well.
Great. Thank you.
Okay.
Yes.
Thank you.
Our next question comes from Nigel <unk> from Citigroup Nigel. Please go ahead.
I'm wondering Ali and Roger.
Just a question on the call Scott, let's see if I can you brought that down to mid single digit on the non comp costs, but it looks like even a 10% increase in the fourth quarter on what you've done in third quarter, what I didn't bring you to that 3% increase.
Roger Thompson: We're investing in our business. We've been very clear about the areas that we think we can grow in, and, you know, we've been investing in those areas, and Alec's laid those out. One of those is our U.S. Intermediary Business, where Alec said we invested both in people, as well as brand and other areas, and it's great to see that coming through in some market share gains and positive flow in what's a difficult environment.
Are you flagging sort of a significant increase in the fourth quarter and if so why is that going to come from.
Yes.
We are expecting an increase in Q4, which is more seasonal than anything else around things like things like brand and some professional work that we're doing.
That will be a pickup in Q4 again I think when youre looking year on year, you should be looking at our spend for 23 compared to 24 as opposed to Annualizing Q4, but yes, we do expect a pickup in Q4 again, we will continue to try and balance that will continue to look for efficiencies.
Roger Thompson: That being said, we're constantly looking at how to balance that investment with efficiencies and deciding where we'll do less or where we can do better and where we can do less. And that's a constant act, but we've said that we laid out this 40 to 45 million dollars, we've got a little bit further than that and a quick of that which is great. And we'll continue to look at that in 2024 in order to continue to invest.
But we brought in that that guidance from I think it was low single digits at the beginning of the year.
Now too.
Sorry, low double digits at the beginning of the year.
Now.
Signal digits, we'll continue to try and balance that we would expect we do expect to spend a little bit more in Q4, but that's more timing than anything else.
Okay. Thanks, Yeah, that's right the same once a year on year, but nonetheless.
Thank you for that and then also on the comp ratio, it's almost the opposite.
Ali Dibadj: So I'm not going to give expense guidance today for 2024, we'll do that on the full year call. But again, you should expect us to remain balanced in investing in the business and trying to find efficiencies to offset those investments. Ali, anything get out to that? Yeah, maybe just a little bit. Look, we're going to continue to be client led and ROI driven in our investments. We have in a relatively short period of time, really reoriented our think about it as a portfolio of expenses.
You're going to have to have pretty low compression in the fourth quarter to meet that full year guidance is that is that the right way to think about that one as well again.
Again, there's a little bit of that's a little bit of <unk>.
Timing and that is clearly part of the year is always a little bit higher.
Yes.
Yeah.
Talked about mid forties.
43, 45% this quarter.
We don't expect to be too far off that may be a little bit higher in Q4 than Q3.
Ali Dibadj: We've reoriented our portfolio expenses to be much more focused on meeting client needs and focusing on ROI again aligned with our strategy. So we feel like we're on our front foot right now. You're seeing that in our market share gains relative to our peers pretty much across the board. We believe we're certainly building a stronger firm in a very challenging environment. And we will continue to look for opportunities to take our expenses and reorient them in the most client led in our wide driven manner.
Okay. Thank you for that and then finally, maybe just starting on <unk>.
<unk> performance.
It has sort of improved on the number of the durations et cetera, but let's say that the three year performance, but she is often viewed as key has sort of deteriorated quite a bit.
Operator: Great, thank you.
Do you see that as a hurdle of solar or are people just sort of willing to look at one year and five year end.
And not sort of like it's too much on that through yet.
Thanks.
So we obviously strive to deliver on all.
Performance cycle, we all know what happened roughly three years ago from a COVID-19 perspective, which.
Drove quite a significant dislocation in the marketplace.
Our investment teams remain disciplined in their processes, our clients know that when you look at the process.
Nigel Pittaway: Thank you. Our next question comes from Nigel Pithaway from City Group. Nigel, please go ahead.
So generally speaking I'd argue people look at all time frames and make a judgment at that way.
Roger Thompson: I'm William Ali and Roger. Just a question on the cost guidance. If I can, you brought that down to mid single digit on the non-com cost, but it looks like even a 10% increase in the fourth quarter on what you've done in third. The third quarter will only bring you to the 3% increase. So are you flanging sort of a significant increase in the fourth quarter? And if so, where's that going to come from?
Okay. Thank you.
Yeah.
Thank you.
Next question comes from Ken Worthington from J P. Morgan Ken. Please go ahead.
Hi, good morning, and thanks for taking the question.
When you talk about the institutional pipeline needing to mature can you update us on what a fully mature pipeline looks like to you versus what the pipeline looks like today and what is the timeline do you think you need to reach that pipeline maturity.
Roger Thompson: Nigel, yeah, that we are expecting an increase in Q4, which is more seasonal than anything else around things like brands and some professional work that we're doing that will be a pick up in Q4. Again, I think when you're looking year on year, you should be looking at our spend for 23 compared to 24 as opposed to annualising Q4. But yeah, we do expect a pick up in Q4. Again, we'll continue to try and bounce that, we'll continue to look for efficiencies.
It's a great question so.
Look remember institutional business. So far has delivered $8 5 billion positive flows for the year.
Roger Thompson: But we've brought in that that guidance from, I think it was low single digits at the beginning of the year. Now to, sorry, low double digits at the beginning of the year to now min signal digits, we'll continue to try and bounce that, but we do expect to spend a little bit more in Q4. That's more timing than anything else.
And that can being in our pipeline pick a number six to 12 months ago.
And that has to be replenished.
So if you go forward that is something that we would like to do obviously in.
The cheeky answer to your question is we like the pipeline to be bigger than it is today now from a timeframe perspective.
These are longer cycle sales as you as you know.
Roger Thompson: Okay, thanks. Yeah, the truth the same was here on year, but nonetheless, thank you for that. And then also on the compression, it's almost the opposite that you're going to have to have pretty low compression, the fourth quarter to meet that four year guidance, is that the right way to think about that one as well. Again, there's a little bit of timing in there that the early part of the year is a little bit higher. But yeah, we've talked about mid-40s, what's 43 in a bit, 45 in a bit this quarter, we don't expect to be too far off that, maybe a little bit higher in Q4 and Q3.
Roger Thompson: Thank you for that.
You can think about the sales as far out as two years from now depending on what needs are there from a client perspective. So these things take time.
The good news is that they are ramping up significantly in terms of the activity levels.
Clearly our consultant wins have come up quite significantly our discussions with institutional investors has gone up quite significantly and as you well know one of our strategic initiatives is to invest in our institutional distribution pipeline, including adding.
A better team and we've done that for now and with who are quite significantly in the marketplace talking to institutional clients. So it will take time I don't have a precise answer for you, but we're certainly on the right track and getting stronger and in a tough environment.
Ali Dibadj: And then finally, maybe just on investment performance. I know it has improved on a number of durations, etc. But obviously, the three-year performance, which is often viewed as key, has deteriorated quite a bit. Do you see that as a hurdle at all or are people just willing to look at one year and five year and not focus too much on that three-year performance? So we obviously strive to deliver on all performance cycles.
Okay. Thank you.
And then on the ASX listing how and when will the delisting from the ASX be executed.
How much of Janus as market cap is listed today on the ASX and are there any steps that you're taking to kind of protect shareholders. During this transition.
So the.
Ali Dibadj: We all know what happened roughly three years ago, from a COVID perspective, which drove quite a significant dislocation in the marketplace. Our investment teams remain disciplined in their processes. Our clients know that. They look at the process. And so generally speaking, I'd argue people look at all time frames and make a judgment that way.
FX is about 5% of our shareholders right now you might remember it was close to north of 40% I think 44% at its peak of shareholders at a certain point, so clearly that's come down quite significantly.
Operator: Okay, thank you.
Remember our decision to do the day list.
Is to be able to focus on 95% of our share.
Shares to focus on that sole exchange New York stock exchange.
Kenneth Worthington: Thank you. Our next question comes from Tang Worthington from JP Morgan. Can please go ahead. Hi, good morning and thanks for taking the question. When you talk about the institutional pipeline needing to mature, can you update us on what a fully mature pipeline looks like to you versus what the pipeline looks like today? And what is the timeline you think you need to reach that pipeline maturity? That's a great question. So look, remember our institutional business so far has delivered a-and-a-half billion dollars of positive flows for the year.
To reduce significant cost as we fuel growth and to simplify our structure for regulatory reasons M&A reasons and other reasons.
And so that's.
Clearly a focal point for us.
If you think about that that's call it 10, or 11 days of trading volume for us.
There'll be roughly and Roger can jump in with more details there'll be roughly 120 calendar days too.
To work through that 5%.
And people can convert directly from an ASX listing to a new York stock exchange listing, which will probably reduce that 5% as well.
Kenneth Worthington: Imagine that can be in a pipeline pick a number six to 12 months ago and that has to be replenished. So if you go forward, that is something that we would like to do obviously and the cheeky answered your question is we'd like the pipeline to be bigger than it is today. Now, from a time frame perspective, these are longer cycle sales as you know. You know, you can think about the sales as far out as two years from now depending on what needs are there from a client perspective.
It's important to note Ken as well that this has no bearing.
On our clients our investments in Australia itself.
It's a very important market for us I was there 10 days ago.
I want to go back very soon because we're growing in that market have been growing for three years, we want to continue to do that in a very vibrant market. Roger you may have some better detail on dates.
Yes.
So can you can say that we've published timeline would work, but essentially we announced we announced that the process today, we become delisted.
Kenneth Worthington: So these things take time. The good news is that they are ramping up significantly in terms of the activity levels. Clearly, our consultant wins have gone up quite significantly. Our discussion with institutional investors has gone up quite significantly and as you well know, one of our strategic initiatives is to invest in our institutional distribution pipeline including adding a better team and we've done that for now and we are quite significantly in the marketplace talking to the social clients. So it will take time. I don't have a precise answer for you, but we're certainly on the right track and getting stronger in a tough environment.
On the sixth of December.
There has been there was that it.
Two facilities a voluntary facility at <unk>.
<unk> III facility that.
That will probably take us through sort of mid to the back end of the first quarter, which is which is what I would say it is really this is a 120 day.
Trading trading window.
This will happen.
In terms of in terms of Investor protection as Alex said, it's a relatively small amount over a long period of time.
Obviously like any selling pressure and the other thing I'd say is that this is a transfer or can be a transfer of shares.
Ali Dibadj: Okay, thank you. And then on the ASXD listing, how and when will it be listing from the ASX be executed? How much of Janice's market cap is listed today on the ASX? And are there any steps that you're taking to kind of protect shareholders during this transition? So the ASX is about 5% of our shareholders right now. You might remember it was close to, you know, north of 40%, I think 44% of its peak of shareholders at a certain point.
It's not an automatic cancellation people some people who will hopefully move over to the NYSE.
Actually some of that 5% will move over and then whilst the buyback is definitely not directly linked to the <unk> list, we will be in the market during.
During the day less period with the buyback as well so.
We will be buying shares.
During that period from a buyback perspective.
That's the process happy to take any one through it in more detail how it works.
Ali Dibadj: So clearly, that's come down quite significantly. Remember our decision to do the D-List is to be able to focus on 95% of our shares to focus on that solar exchange, the New York Stock Exchange to reduce significant costs as we fuel growth and to simplify our structure for regulatory reasons, M&A reasons, and other reasons, and so that's clearly a focal point for us. If you think about that, that's call it 10 or 11 days of trading volume for us.
Okay.
More process than anything else.
Ali Dibadj: There'll be roughly, and Roger can jump in with more details, there'll be roughly 120 calendar days to work through that 5%, and people can convert directly from an ASX listing to a New York Stock Exchange listing which will probably reduce that 5% as well. It's important to note Ken as well that this has no bearing on our clients or investments in Australia itself. It's a very important market for us there 10 days ago.
Great. Thank you very much.
Thank you.
As a reminder to ask any further questions. Please press star one on your today. Thank you.
<unk>.
Our next question comes from John Dunn Evercore John Please go ahead.
Alright, thank you.
It was great to see the improvement in the U S. Intermediary channel maybe could you just talk a little more about the kind of puts you.
Fund level puts and takes there and anything that we should be kind of looking at that might move from being a drag to being more of a tailwind.
Sure. We are very pleased with the progress in the U S intermediary channel.
We put a lot of.
Focus on it from a strategic perspective, and we've done a few things. There for example, we brought in a new leader of that organization and new people as.
As well as given blue Sky.
From people internally to supplement the folks we're bringing in from the external world. So clearly a change in people was part of it.
We put in new Kpis, new compensation metrics, which.
Ali Dibadj: I want to go back very soon because we're growing in that market. We've been growing for three years and want to continue to do that in that very vibrant market. Roger, you may have them better detail and date. Ken, you can see that we've published how the timeline will work, but essentially we announced the process today. We've become delisted on the 6th of December. There is then a two facilities of voluntary facility and a compulsory facility that will probably take us through to sort of mid to the back end of the first quarter, which is what Alisa is really.
Ali Dibadj: This is 120-day trading window that this will happen in. In terms of investor protection, as Alisa said, it's a relatively small amount over a long period of time. You obviously don't like any selling pressure. The other thing I'd say is that this is a transfer or can be a transfer of shares, so it's not an automatic cancellation. Some people will hopefully move over to the NYSE, so hopefully some of that 5% will move over.
It was very clear on what we wanted to get out strategically from that business and that has clearly delivered and of course very much to your point John.
Have a set of products and great performance to the earlier question to deliver for our clients.
If you think about.
Our products that have done well in that channel, but frankly more broadly it's a similar set of products we have.
Done quite well in the fixed income business.
Part of that is from the innovation that we've brought to bear in that channel with our securitized suite of Etfs.
And we have more to come on that over time that can deliver for the needs of our clients in the U S. Intermediary channel and we've also been quite successful actually on the equity side as well so things like mid cap growth have been quite attractive as well.
In that in that channel, so, it's actually pretty broad based actually.
If you take a step back and you think about the top 10.
In flowing.
Ali Dibadj: The buyback is definitely not directly linked to the delist. We will be in the market during the delist period with the buyback as well. We'll be buying shares during that period from a buyback perspective. That's the process. I'm happy to take anyone through it in more details as it works, but it's more process than it is.
Strategies from a firm wide perspective.
About five of them are in fixed income and about five of them are from equities, which is a really broad balanced focus but the changes we made in that channel.
Excellent efforts of that team there in the U S has been fantastic and quite a motivation for the rest of the firm as well.
Operator: Great. Thank you very much. Thank you. Has the reminder to ask any further questions. Please press start later by one on your telephone keypad.
Got you and then you mentioned investing in.
Institutional distribution, but with the potential coming wave of demand for fixed income can you talk about the process and how are you.
John Dunn: On its question comes from John Dunn from Epical. John, please go ahead. Thank you. It was great to see the improvement in the US intermediary channel. Maybe could you just talk a little more about the fun level puts and takes there. Anything that we should be looking at that might move from being a drag to being more retail one. Sure. We are very pleased with the progress in the US intermediary channel.
We are getting in front of clients and trying to get prepared for that in bulk.
Intermediary channel and then the institutional channel.
Yeah, absolutely we have a broad suite of fixed income products and strategies to bring to bear to our clients and institutional channel to build on your intermediary comment earlier.
We certainly have the securitized a skill set that can be brought to our clients in different forums I mentioned ETF form in particular intermediary channel, but certainly can be brought in different forms.
John Dunn: We put a lot of focus on it from a strategic perspective. We've done a few things there. For example, we've brought in a new leader of that organization and new people as well as given blue sky from people internally to supplement the folks we're bringing in from the external world. A change in people was part of it. We put in new KPIs, new compensation metrics, which was very clear on what we wanted to get out strategically from that business and that had clearly delivered.
The institutional parents as well separate accounts and otherwise.
Obviously, we have some less innovative but storied franchises like the Australian fixed income franchise, the multi sector credit franchise.
Maintain franchises, whether it be in Europe, U K or the U S.
That bring a great performance to our client base in our fixed income and fixed income world now that's the kind of product by product sale. So to speak but we also have obviously a solutions business that we can bring to our clients a outcome oriented solution based on some combination of.
John Dunn: Of course, very much to your point, John. We have a set of products and great performance to the earlier question to deliver for our clients. If you think about our products that have done well in that channel but frankly more broadly it's a similar set of products, we've done quite well in the fixed income business. Part of that is from the innovation that we've brought to bear in that channel with our secure ties, sweet of ETFs.
Some of those fixed income products, but also things that are more bespoke in nature.
You couple our product base focus as well as our solutions or outcome based focus and the intellectual capital that we have among our investors and researchers here.
To be able to share knowledge to our institutional investors and we're finding quite a lot of interest across the board in a lot of activity exactly as you say as the market is looking like there is some interest in that broad fixed income asset class.
John Dunn: And we have more to come on that over time that can deliver for the needs of our clients in the rest intermediary channel. We've also been quite successful actually on the equity side as well. So things like midcap growth have been quite attractive as well in that in that channel. So it's actually pretty broad-based. Actually, if you take a step back and you think about the top 10 influence strategies from a firm wide perspective, about five of them are in fixed income and about five of them are from equity, which is a really broad-balanced focus.
Thanks very much.
Thank you.
Our final question comes from Mark <unk> from Bell Potter Marcus Please go ahead.
Yes, good morning Gents.
Just interested on the buyback sort of partly following on from Ken's question.
I take your points about the strength of the balance sheet leading to the.
The resumption of the buyback.
John Dunn: But the change that we made in that channel, the excellent efforts of that team there in the US has been fantastic and quite a motivation for the rest of the firm as well. Roger, and then you mentioned investing in institutional distribution, but, you know, with the potential, you know, coming wave of demand for fixed income. Can you talk about the process of how you are getting in front of clients and trying to get prepared to that in both the intermediary channel and then it's institutional channel.
It seems a bit coincidental that it comes at the same time.
Doing the <unk>.
I guess question one is it.
All the two linked.
Just a complete coincidence.
The second question is really.
The discount does open up between the price of the CDI.
On the NYSE stock are you going to use the buyback to help manage that discount.
Thanks.
Thanks for the question so.
The buyback is not exclusively linked to the D list at all.
We obviously think about these things holistically.
John Dunn: Yeah, absolutely. We have a broad suite of fixed income products and strategies to bring to bear to our clients in the institutional channel. It's a build on your intermediary comment earlier. We certainly have the security skills set that can be brought to our clients in different forms. I mentioned the ETF form in particular in the intermediary channel, but certainly can be brought in different forms to the institutional pairings as well, separate accounts and otherwise.
Of course, and the holistic view is that our current liquidity profile as we mentioned earlier that allows us to both implement a buyback and continue to invest in the business organically and through M&A, whether we buy or partner with others.
That's that's the view that we have across the board.
Anything to add.
As I said I think.
John Dunn: Obviously, we have some less innovative, but story franchises like the Australian 16 income franchise, the multi-sector credit franchise, the by maintain franchises, whether being Europe, UK, or the US. That bring a great performance to our client base in the 16 income and the 16 income world. Now, that's the kind of product by product sales, so to speak. But we also have, obviously, a solutions business that we can bring to our clients a outcome oriented solution based on some combination of some of those 16 income products, but also things that are more bespoke in nature.
Yes, the buyback.
They are not connected.
At our capital.
But.
Yes.
Well it will yeah.
Some liquidity.
Sure. It's a fungible so there isn't a discount they equalized between the two.
That doesn't happen that way given the given the paddle <unk>.
<unk> work.
I was thinking more of an intra die level when.
When you shop.
The Australian market is open.
The buyback will be done on the New York stock exchange.
John Dunn: You couple our product base focus, as well as our solutions are outcome based focus, and the intellectual capital that we have among our investors and researchers here, to be able to share knowledge to our institutional investors. We're finding quite a lot of interest across the board and a lot of activity exactly as you say, as the market is looking like there's some interest in that broad fixing income asset class. Thanks very much.
And we'll be out on the New York stock. Thank you.
Thanks.
Thank you.
Thank you.
That is now being just the Q&A session.
I would like to match the closing remarks.
Great Lauren Thank you very much.
Everybody for listening.
This is another quarter that that hopefully demonstrates our commitment to deliver for our clients their clients. Our employees who've worked so hard our shareholders.
Ali Dibadj: Thank you. Our final question comes from Marcus Bernard from Bow Potter. Marcus, please go ahead. Yeah, I'm only just interested on the by-back sort of partly following on from Ken's question. I think your point is about the strength of the balance sheet leading to the the resumption of the by-back. But it seems a bit coincidental that it comes at the same time that you're doing the CBID listing. So I guess question one is, is it?
Janus Henderson continues to get stronger and stronger in a very challenging environment.
So thank you all for your interest in our firm and have a good day.
This concludes today's call. Thank you for joining you may now disconnect your lines.
[music].
Yes.
Yes.
Yes.
[music].
Ali Dibadj: Are the two linked, or is it just a complete coincidence? And I guess the second question is really if a discount does open up between the price of the CDIs and the NYFC stock, are you going to use the buyback to help manage that discount? Thanks. Thanks for the question. So, the buyback is not exclusively linked to the delift at all. We obviously think about these things holistically, of course. And the holistic view is that our current liquidity profiles we mentioned earlier allows us to both implement a buyback and continue to invest in the business organically and through M&A, whether we buy or partner with others.
Okay.
Ali Dibadj: So, that's the view that we have across the board, Roger, if you have anything to add. As I said, the buyback and the delift are not connected at our capital, but it will absorb some liquidity. The shares are fundable, so there isn't a discount, they equalize between the two, so that doesn't happen that way, given the total CDIs work. I was thinking more on a sort of interday level when New York shut the Australian market open. Yeah, the buyback will be done on the New York Stock Exchange. It will be done on the New York Stock Exchange. Okay, thank you.
[music].
Ali Dibadj: Thank you.
Okay.
Operator: That is now the end of the Q&A session.
Yes.
[music].
Yes.
Yes.
[music].
Okay.
Okay.
Yes.
Yes.
Yes.
Okay.
Sure.
Thanks.
Yes.
[music].
Yes.
[music].
Yes.
[music].
Ali Dibadj: For now, I'll hand back over to Alita Badge, the closing remarks. Great, Lauren. Thank you very much. Everybody for listening. This is another quarter that hopefully demonstrates our commitment to deliver for our clients, their clients, our employees. We've worked so hard, our shareholders. You know, Janice Henderson continues to get stronger and stronger in a very challenging environment. So, thank you all for your interest in our firm and have a good day.
Operator: This concludes today's course. Thank you for joining. You may now disconnect your lines.
Operator: Thank you very much.