Q4 2023 Janus Henderson Group PLC Earnings Call
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Jordan: Good morning, My name is Jordan and I'll be your conference facilitator today. Thank you for standing by and welcome to the Janus Henderson group fourth quarter and full year 2020 free results briefing.
Jordan: All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there'll be a question and answer period.
Jordan: Interest of time questions will be limited to one initial and one follow up question.
Jordan: And today's conference call certain matters discussed may constitute forward looking statements.
Jordan: 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 and risk factors sections of the company's most recent Form 10-K and other more recent filings made with the SEC.
Jordan: Genesis Henderson assumes no obligation to update any forward looking statements made during the call.
Speaker Change: Thank you now it's my pleasure to introduce <unk>, Chief Executive Officer of Janus Henderson. Mr. <unk> you may begin your conference.
Speaker Change: Welcome everyone and thank you for joining us today on Janus Henderson is fourth quarter and full year 2023 earnings call.
Speaker Change: Ali Tobias I'm joined by our CFO Roger Thompson.
Roger Thompson: Today's call will start with some comments on the year. Roger will then go through the results and after that I'll provide an update on the strategic progress we made in 2023.
Speaker Change: After the prepared remarks, we will take your questions.
Speaker Change: Turning to slide two.
Speaker Change: After one of the most challenging market backdrop in 2022, most global markets rebounded and experienced growth in 2023 have concerns about inflation aggressive monetary policy recession fears and shocks to the banking system. In early 2023 were overshadowed by inflation coming off peak levels resilient economies, particularly in the.
Speaker Change: The expectation.
Speaker Change: The rate hikes.
Speaker Change: Even with positive market returns for the year headwinds remain as global markets looks set to remain conflicted with the consequences of historic rate hikes finally manifesting themselves.
Speaker Change: Amidst this volatility we ended the year strongly with fourth quarter results that delivered underlying net flows revenue operating expenses margin and EPS are all ahead of or in line with external expectations.
Speaker Change: Top of that our team delivered better than anticipated performance fees and tax rate.
Speaker Change: As I reflect upon the year there are several signs of clear progress that Janus Henderson.
Speaker Change: This progress was the result of the collaboration hard work and perseverance with colleagues across the firm and is squarely on the path to achieving our ambitions of organic growth and delivering superior outcomes for our clients their clients colleagues shareholders and other stakeholders.
Speaker Change: We are executing our strategic vision, which consists of three pillars protect and grow our core businesses amplify our strengths not fully leverage and diversified where clients gives us the right to win.
Speaker Change: Later on in the presentation I'll provide detail on the progress made for some of our strategic initiatives.
Speaker Change: 2023, net outflows of $700 million improve.
Speaker Change: Improved markedly from 2022 net outflows of $31 billion.
Speaker Change: The improvement was driven by lower redemptions and large wins in global institutional and a turnaround in the North America intermediary business, both of which are strategic initiatives that we've emphasized at Janus Henderson and previously discussed here.
Speaker Change: In early 2023, we re energized our culture by introducing our mission values and purpose companywide and we continue to embed this critical mindset across the firm.
Speaker Change: Cost efficiencies, our fuel for growth, which allow for investment in Janus Henderson strategic initiatives on behalf of our clients were realized at a faster pace than expected and a higher dollar amount, we achieved run rate cost efficiencies of more than $50 million by the end of 2023 compared to the original 40%.
Speaker Change: $45 million by the end of 2024.
Speaker Change: All of these cost savings have been or will be reinvested in the business.
Speaker Change: We simplified our operating model with the go live of our significantly upgraded or management system with transformed a crucial platform and we delisted from the FX, allowing us to focus on a sole more active exchange and reduce costs.
Speaker Change: Our improving financial results and cash flow generation, along with our strong and stable balance sheet enabled our board authorized a share buyback program.
Speaker Change: Buyback program, coupled with our quarterly dividend enabled gender Center center returned $321 million of cash to shareholders. In 2023 importantly, this return of cash to shareholders does not impede our pursuit to diversify the business through M&A, where clients give us the right to do so.
Speaker Change: The 2000 <unk> results on slide three illustrates how our improvement in the business are starting to bear fruit.
Speaker Change: Long term investment performance remained solid with the majority of assets ahead of benchmark on a three five and 10 year basis.
Speaker Change: Total AUM increased 17% in 2023, mostly reflecting strong fourth quarter market and currency translations.
Speaker Change: Ending AUM of $334 $9 billion is 7% higher than the 2023 average AUM.
Speaker Change: As I discussed on the previous slide net flows showed tremendous progress during 2023, resulting in an organic growth rate of less than negative 1% compared to negative 8% in 2022.
Speaker Change: Financial results remained solid and our financial performance and strong balance sheet continue to provide us the flexibility to invest in the business organically and inorganically and returning cash to shareholders.
Speaker Change: I'll now turn the call over to Roger to run into the details of the quarterly financial results.
Roger Thompson: Thank you Allie and thanks again to everyone for joining us on today's call.
Roger Thompson: Starting on slide four I'll look at the quarterly results.
Roger Thompson: I thought he has already discussed our solid investment performance I'll touch briefly on our AUM flows and bps.
Roger Thompson: Net outflows were $3 $1 billion in the quarter, However, ending AUM was up 9% from Q3 on adjusted financial results improved compared to the third quarter.
Roger Thompson: Adjusted earnings per share increased 28% to 82.
Roger Thompson: The prior quarter.
Roger Thompson: Fourth quarter EPS benefited from a stable management fee rate strong annual performance fees on them.
Roger Thompson: Lower tax rate.
Roger Thompson: Even without the upside from the better than expected performance space, a lower tax rate, our core fundamentals including flows.
Roger Thompson: Management fee rates revenues expenses operating income and EPS were either ahead of or in line with street expectations.
Roger Thompson: Finally on this slide the board declared a <unk> 39 per share quarterly dividend.
Roger Thompson: And we purchased $62 million of our shares outstanding as part of the buyback program announced last quarter.
Roger Thompson: On slide five we will look at the investment performance in more detail.
Roger Thompson: Long term investment performance versus benchmark remains solid with at least 60% of our AUM, beating their respective benchmarks over the three five and 10 year time periods.
Roger Thompson: Hello, one year number, it's driven by our equity and multi asset capabilities.
Roger Thompson: In equities the one year performance is impacted by the narrow leadership driving market gains in the U S and.
Roger Thompson: And the low quality rally, the small and mid cap growth stocks, which weighed on relative returns to benchmarks in the fourth quarter.
And our multi asset capability, the balanced strategy, which is the vast majority of assets in this bucket is marginally underperformed the benchmark on a one year basis.
Roger Thompson: Balance remains ahead of its benchmark over the three year and longer time periods and the performance is strong against peers.
Roger Thompson: Second Morningstar quartile, one and three years.
Roger Thompson: First quartile everybody's five and 10 years.
Roger Thompson: Composite performance has had a strong start to 2024 and as we sit here today is back above its benchmark on a one year basis.
Roger Thompson: Short term fixed income performance versus benchmark has steadily improved during 2023 pleasingly, 79% of AGM is now ahead of benchmark on a one year basis.
Roger Thompson: The longer term periods remain very strong we believe our fixed income performance and differentiated breakfast products across different vehicles and regions positions us well for the anticipated movements into fixed income as interest rates stabilize and bonds provides diversification benefits to clients.
Roger Thompson: Overall investment performance compared to peers continues to be competitively strong with 63, 68, AC and 89% of AUM in the top two Morningstar quartile over the 135 and 10 year time periods.
Roger Thompson: Slide six shows total company flows by quarter for the quarter net outflows of $3 $1 billion.
Roger Thompson: Sure flows by client side on slide seven.
Roger Thompson: Net outflows for the intermediary channel were breakeven compared to walk with $3 billion of outflows in the third quarter. This is the best quarterly result for intermediary in over two years.
Roger Thompson: Quarterly results with a 10 two regions.
Roger Thompson: Growth in EMEA, and Latam were offset by net inflows in U S intermediary Ritchie.
Roger Thompson: Outflows in EMEA were not unique to Janus Henderson in 2023, as EMEA in general space meaningful flow with headwinds.
Roger Thompson: U S intermediary U S quarter flows in four years supported by strong gross sales and positive place in several strategies, including the AAA CLO ETF.
Roger Thompson: Mortgage backed security ETF multi sector income short duration income ETF pleasingly, we captured market share during the quarter and for the full year 2023.
Roger Thompson: As we've spoken about previously U S. Intermediary is a key initiative under our protecting price strategic pillar.
Roger Thompson: We're encouraged by the results for the quarter and for the year Oliver.
Roger Thompson: Andy will provide further details on the progress we've made in U S. Intermediary later in the presentation.
Roger Thompson: Institutional net outflows were $2 billion for the fourth quarter compared to $400 million in the third quarter.
Roger Thompson: In line with our previous comments after large mandate fundings in the first half of the year, we were not anticipating large fundings during the quarter. We are pleased with the work our distribution team is doing to build a sustainable pipeline, but as we've said it will take time.
Roger Thompson: Net outflows for the self directed channel, which includes direct to seek market investors with $1 $1 billion compared to $900 million in the prior quarter. The increase in net outflows, primarily due to seasonal year end tax planning in the U S.
Roger Thompson: Slide eight displays in the quarter by capability.
Roger Thompson: Equity flows were negative $3 $2 billion in the fourth quarter compared to negative $2 $3 billion in the third quarter and negative $7 $5 billion a year ago.
Roger Thompson: The environment for active equities remains challenging across all regions.
Roger Thompson: Net inflows of fixed income, we won't with $7 billion, bringing total net flows to a positive $7 2 billion for 2023.
Roger Thompson: We're encouraged by the improvements in short term investment performance to go along with our solid long term investment performance in fixed income and we believe we are well positioned to capture flows if the industry reputation into fixed income because in 2024.
Roger Thompson: Several strategies contributed positive fixed income flows.
Roger Thompson: <unk>, our fixed income Etfs, which had positive flows of $3 2 billion in the quarter.
Roger Thompson: Other strategies contributing to positive flows for the quarter were multi sector credits, you aspire and maintain credit and global multi sector fixed income.
Roger Thompson: Total net outflows to the multi asset and alternatives capability.
Roger Thompson: $4 billion and $200 billion respectively.
Roger Thompson: Moving onto the financials slide nine is our U S. GAAP statement of income and on Slide 10, we explained the adjusted financial results.
Roger Thompson: Adjusted revenue increased 12% compared to the prior quarter due to high performance space, partially offset by lower average AUM.
Roger Thompson: Q4 was 315 billion.
Roger Thompson: Period end AUM was 335 billion, giving a tailwind into Q1.
Roger Thompson: Fourth quarter performance fees of $42 million include annual performance fees of $58 million generated primarily from a number of funds and capabilities with December 31, crystallization dates the largest of which is our health care franchise.
Roger Thompson: Offsetting this revenue was negative $17 million from the U S Mutual fund performance fees.
Roger Thompson: Net management fee margin was 48 seven basis points consistent with the prior quarter.
Roger Thompson: Full year net management fee margin of $48 nine basis points was down by less than the basis points compared to 49 six basis points in 2022.
Roger Thompson: The slight decline was primarily due to large low fee institutional fundings in the first half of the year.
Roger Thompson: Continuing on to expenses.
Roger Thompson: Adjusted operating expenses in the fourth quarter with $299 million, an increase of 7% compared to the prior quarter.
Roger Thompson: Adjusted employee compensation, which includes fixed and variable costs was up 4% compared to the prior quarter as higher incentive costs on higher revenues was partially offset by lower fixed compensation.
Roger Thompson: Adjusted LTI was up 18% compared to the third quarter largely due to mark to market on mutual Fund awards and in the Appendix you provided the usual table on the expected future amortization of existing grants along with an estimated range for the 2020 full grants btu's new models.
Roger Thompson: The fourth quarter adjusted comp to revenue ratio was 42, 9% and our full year comp ratio was 45, 8% in line with expectations, which we previously provided.
Roger Thompson: Adjusted non comp operating expenses increased 8% compared to the prior quarter, primarily due to higher G&A expenses.
On a year over year basis, adjusted non comp expenses increased two 5% compared to our revised expectation of percentage growth in the mid single digits, reflecting our commitment to strong cost management.
Roger Thompson: Adjusted operating income increased 25% over the prior quarter to $156 million in the fourth quarter.
Roger Thompson: And our fourth quarter adjusted operating margin improved over 300 basis points to 34%.
Roger Thompson: Adjusted diluted EPS was <unk> 82 up 28% from the prior quarter and up 34% from the same quarter a year ago.
Roger Thompson: Fourth quarter adjusted diluted EPS, primarily reflects higher operating income coupled with a lower tax rate.
Roger Thompson: With respect to 2020 core expense expectations.
Roger Thompson: Fully delivered on our fuel for growth targets, we've identified further fixed compensation and non compensation operational efficiencies and as a result, we anticipate the compensation ratio in the range of 43% to 45% down from 40, almost 46% in 2023.
Roger Thompson: Non compensation, we anticipate percentage growth of mid to high single digits as it was.
Roger Thompson: Out of the investments supporting our strategic initiatives as well as inflation and amortization.
Roger Thompson: Where we can we will continue to be mindful about discretionary cost base and be disciplined in our cost management.
Roger Thompson: Net we're comfortable with external expectations of us.
Roger Thompson: 2020 for total operating expense dollar costs.
Roger Thompson: Finally, we expect defense tax rates on adjusted net income attributable to <unk> to be in the range of 23% to 25%.
Speaker Change: Skipping over to slide 11, I'm moving to slide 12, and look at our liquidity profile.
Speaker Change: Our capital position remains strong.
Speaker Change: Cash and cash equivalents of $1 1 billion as at the 31st two December which is roughly flat to the end of last year as excess cash flow generation was used to fund our quarterly dividend and to repurchase $2 3 million shares for $62 million in the fourth quarter.
Speaker Change: This return of excess cash is consistent with our capital allocation framework.
Speaker Change: We'll look to return capital to shareholders, where there isn't an immediately more compelling investments either organically or inorganically in the business.
Speaker Change: The board has declared a <unk> 39 per share dividend to be paid on 28 February to shareholders of record as at the 12% February.
Speaker Change: In summary, we've maintained a strong liquidity position and we continue to balance the capital needs and the investment opportunities of the business with returning capital to shareholders.
Speaker Change: Finally, slide 13 looks at our annual return of capital to shareholders.
Speaker Change: Being disciplined and consistently returning excess capital to shareholders as the historical data reflects.
Speaker Change: Since 2018, we've returned over 70% of our cash flow from operations were $2 $5 billion to shareholders in the form of our quarterly dividends and accretive share buybacks.
Speaker Change: Our dividends has increased 11% and we've reduced shares outstanding by 18, 5% since our first accretive buyback program commenced in the third quarter of 2018.
Speaker Change: In 2023, we returned 73% of our cash flow from operations to shareholders, including $359 million in dividends and $62 million in buybacks.
Speaker Change: Our capital allocation philosophy has not changed.
Speaker Change: Cash for our regulatory capital requirements and liquidity needs and then set aside capital for contractual obligations.
Speaker Change: We then look to utilize cash for organic and inorganic reinvestment in the business and then consider returning excess cash via dividends and share repurchases.
Speaker Change: Our return of capital reflects our positive financial outlook, our cash flow generation and a strong and stable balance sheets are buybacks and stable dividends do not impair our ability to execute M&A should the opportunity arise and we continue to actively look to buy build or partner to diversify where clients give us there.
Speaker Change: Right to it.
Speaker Change: With that I'd like to turn it back over to Ali to give an update on our strategic progress.
Ali Dibadj: Thanks Roger.
Ali: Turning to slide 14, and a reminder of our three strategic pillars of protect and grow our core businesses amplify our strengths not fully leverage and diversify where clients give us the right to win.
Ali: We are in the execution phase and we believe this strategic vision will lead to consistent organic revenue growth over time.
Ali: Over the next few slides I'll highlight the progress being made across the three pillars.
Ali: Moving to slide 15, which describes the investment and efforts in the U S intermediary channel, which are leading to improved business trends.
Ali: In protect and grow we've talked previously about the importance of protecting and growing our U S intermediary business, which as Dennis Hendersons largest client segment.
In 2023, we set the foundation for this channel we had several investments, including launching an award winning National brand campaign selectively upgrading talent and aligning compensation with our growth strategy. We also increased the pace and quality of client engagements.
Ali: These changes are allowing us to be on the front foot with our intermediary clients and their clients.
Ali: The progress in U S. Intermediary is tangible net flows were positive for this channel for the first time in seven years, resulting in a 1% organic growth rate a tremendous result, given industry headwinds.
Ali: Importantly, we're capturing market share in both gross sales and net flows reversing a trend of losing market share for many years.
Ali: While there is always much work to do the U S. Intermediary business is a great example of our ability to create and execute on our strategic plan the specific area to drive culture change and improved results.
Ali: As we move into 2024, we will expand our strategic efforts to the EMEA and Latin American intermediary segments.
Ali: Slide 16 details our meaningful progress made under the strategic pillar of amplify.
Ali: Within amplify we've previously discussed our institutional and diversified alternatives businesses, and our product development and expansion efforts.
Ali: In the institutional business flows are positive for the first time since 2018 that $7 billion of net inflows compared to $14 billion of net outflows in 2022.
Ali: This improvement was driven by increased gross sales and reduced gross redemptions.
Ali: We've restructured cover should be more aligned to different client types, helping us to serve their needs better through greater specialization and we're seeing a number of consultant advised wins, which is critical to the future growth of the institutional business overtime.
Ali: Diversified alternatives, which includes multi strategy hedge funds and enhanced index funds generated positive flows and over 35% AUM growth in 2023.
Ali: Our suite of active Etfs experienced a very successful year.
Ali: Flows were positive <unk> 6 billion.
AUM finished the year at $12 billion.
Ali: Equating to an annual growth rate of 65% since 2018.
Ali: With this growth Janus Henderson is now the fourth largest provider of active fixed income Etfs in the U S.
Ali: Impressively during 2023, roughly one out of every $5 invested into an active fixed income ETF went to Janus Henderson.
Ali: We have momentum in active Etfs and we aim to do more in this space in 2024.
Ali: In 2023, we established several new products and vehicles based on what our clients are telling us we get a large global life Sciences, and a global property as equity funds at <unk>.
Ali: Securitized income ETF and a sustainable credits, yes, and emerging markets innovation fund in a CCAR and additional SMA strategies in the U S.
Ali: Turning to slide 17, our third pillar of diversified.
Ali: We continue to look to actively buy build or partner to diversify where clients give us the right to win.
Ali: The M&A pipeline is active with several opportunities and we're going to be very disciplined in our approach.
Ali: In 2023, we began a joint venture protocol that look to take advantage of the democratization of private alternatives into the retail channel.
Ali: <unk> mission to partner with the best in class managers of alternative investments paired with extensive relationships at wire houses broker dealers and <unk>.
Create value on both ends of the value chain accelerating GP fundraising and bringing differentiated institutional quality investment opportunities to set of clients that are notably under allocated to our alternatives today.
Ali: I'm excited to say that we remain on track with building out the critical business and political will be distributing its first product this quarter.
Ali: <unk> dropped to 21 employees is higher its retail distribution team serving the U S.
Ali: Finally, our emerging markets debt team, which was brought into Janus Henderson in September 2022 had positive flows in 2023 and <unk>.
Ali: <unk> has grown to more than $1 billion.
Ali: Another focus in 2023 with a reenergizing of our culture through our mission values and purpose, our MVP that we rolled out companywide and as shown on slide 18.
Ali: I'm a firm believer that strong MVP is essential to the success of our company my experience and the facts prove it.
Ali: We introduced our MVP define who we are and what we stand for as a collection of individuals and as a firm not just for today, but for what we want to be in the future. It gives us a clear north star and this is critically important as we augment our culture performance collaboration urgency and accountability built upon our store.
Ali: <unk> and client focused DNA at Janus Henderson.
Ali: Our MVP, coupled with our strategy on a foundation of cost efficiencies guides, our decision, making and prioritization and allows all colleagues to move together in the same direction to help us win in this competitive landscape.
Ali: I have been extremely encouraged by how quickly colleagues have embedded our mission values and purpose into the work and by the clear signs of progress across the firm.
Ali: Moving to slide 19, which is an illustrative view of our strategy and where we believe it can take us.
Ali: Executing our strategic plan and believe our strategy will lead to organic revenue growth over time.
Ali: Success will not happen overnight and progress will not be linear even so there's real progress in all three pillars of our strategic framework as evidenced by U S intermediary and protecting grow institutional diversified alternatives and product development and expansion and amplify and pivot and diversify.
Ali: The undeniable advancement of our strategy culture and execution in 2023 is Genesis Henderson squarely on the path to delivering desired results for our clients shareholders employees and all our other stakeholders.
Ali: Now wrapping up on slide 20.
Speaker Change: Proud of the progress made in 2023 and I want to thank each and every one of my colleagues at Janus Henderson for their hard work and dedication as we continue to show real progress on our strategic path to deliver consistent organic growth.
Speaker Change: Our destination, yet, but we are clearly on our way.
Speaker Change: Progress is evident across several aspects of the business net flows improved markedly over the last year, we reinforce our culture by introducing mission values and purpose and embedding. It company wide, we achieved run rate cost savings efficiencies of over $50 million sooner and at a higher dollar amount than expected with this fuel for growth allows for reinvestment in <unk>.
Speaker Change: Janus Henderson strategic initiatives on behalf of our clients and their clients.
Speaker Change: Simplified our operating model, we have a strong.
Speaker Change: Balance sheet and good free cash flow generation, which enabled us to return cash to shareholders and reinvest in the business looking.
Speaker Change: Looking ahead, our focus continues to be helping clients define achieve superior financial outcomes and to deliver desired results for our clients shareholders employees and all our stakeholders.
Now I'll turn the call over to the operator for questions.
Speaker Change: Thank you as a reminder, if you'd like to register an audio question. Please press star one on your telephone keypad. If you change your mind. Please press star two please ensure you're on mute when speaking.
Our first question comes from Dan Fannon of Jefferies down the line is yours.
Dan Fannon: Thanks, Good morning.
Dan Fannon: Ali I was hoping you could expand upon the fixed income or the active ETF strategy. Obviously a lot of success. This year in terms of growth can you talk about where those products are being sold through in the intermediary in those channels and then as you think about the roadmap for additional products what does that look like within that active ETF framework.
Ali: Hey, Dan Thanks for the question.
Ali: So our active ETF franchise right now dressed crossover around $12 billion in assets under management are very good success in a relatively short period of time.
Ali: That allows us to have come in in fourth place overall on a league tables practice <unk> come Etfs in the U S and really that means in the world.
Ali: And the strategy that we've employed there is democratizing.
A set of institutional level investment skill sets and bringing that to the retail channel both in the wire houses and in the <unk> to your question.
Ali: And that strategy has been obviously a fairly successful so we want to continue down that path.
Ali: We launched a new.
Ali: New.
Ali: ETF last year called Ksi for securitized.
Ali: I think theres a lot more opportunity to continue down that path democratization as a broader theme.
Ali: Remember these are active fixed income Etfs, and we're always going to be client led so we do a tremendous amount of research to understand our clients' entire before we launch these but we think there's more potential.
Speaker Change: Understood and then I guess, just shifting to the inorganic opportunity.
Speaker Change: Your statements have been consistent you've obviously looked at a lot of properties over the last year plus can you talk about what's been the biggest holdup in terms of actually getting to the finish line with the transaction has your priorities shifted at all during this time to maybe thinking more about lift outs and smaller scale transactions to broaden your product offering versus something.
Speaker Change: <unk>.
Speaker Change: Maybe a little bit more sizable.
Speaker Change: Yes.
Speaker Change: I wouldn't say our strategy has changed at all on this we've continued to be very active in thinking about buying building and partnering.
Speaker Change: In terms of M&A to support our strategy, whether that be protecting and growing our core businesses are amplifying our strengths where of course diversifying.
Speaker Change: Clients give us the right to do so.
Speaker Change: I was going to be client led in the M&A.
Speaker Change: So even when we find something that could be interesting to us we often figure.
Speaker Change: Figure out whether it's the right thing for our trusted set of clients.
Speaker Change: And right now there is a very active pipeline several opportunities out there both large and small.
Speaker Change: That we're looking at and we're going to remain very disciplined in our approach from a valuation perspective, and importantly from a cultural fit perspective, and sometimes to use your words thats. The holdup is trying to make sure. We have the best teams that will fit from a value perspective, and a culture perspective.
Speaker Change: As everybody on this phone call knows.
Speaker Change: Timing M&A is very difficult to predict you could get a slew of no activity for quite some time that we were a lot of activity for some period of time and we just want to be sure that we're making the right decisions. We're looking for the right partners, who want to grow with US and are again, the right cultural fit.
Speaker Change: Understood. Thank you.
Speaker Change: Our next question comes from Craig Siegenthaler Al.
Craig Siegenthaler: Bank of America Merrill Lynch. Please go ahead.
Craig Siegenthaler: Hey, good morning Ali.
Craig Siegenthaler: I had a follow up here on fixed income.
Craig Siegenthaler: So yes, there was a nice improvement in sales in the quarter.
Craig Siegenthaler: That's not unusual just given typical seasonality for <unk>.
Speaker Change: Wanted to use this as an opportunity if you could update us on your own view for the potential for inflows in your fixed income business.
Speaker Change: As your clients extend duration fixed income.
Speaker Change: Yes, thanks for the question Craig.
Look our fixed income performance.
Speaker Change: <unk> breadth and depth of product is quite attractive we're trying to be quite attractive to two clients.
Speaker Change: If you think about fixed income more broadly.
There is now reason to own fixed income accordingly.
Speaker Change: According to our clients that's a yield number one number two it's actually providing diversification and number three perhaps a theme that had always been there for a subsegment of our client base.
The regulatory reasons to do it you know, it's lower capital charges for insurance companies et cetera, and those reasons.
Are much more important today.
Speaker Change: For our client base, and we're feeling a little bit of a of an industry wide.
Speaker Change: Inflexion point here again gladly, we are in a lot of great performing sectors of fixed income.
Speaker Change: We're well positioned on multi asset credit for example, our multi sector income for folks who want kind.
Speaker Change: Income themed products.
Speaker Change: Have ETF suite, where again, we've taking something that is an institutionalized.
Speaker Change: Quality and level of investment strategies, and we've turned that into a democratized.
Speaker Change: Vehicle that can reach many many broader audiences that are under exposed to those types of categories. We have a lot of really exciting regional strategies as well.
Speaker Change: Fraley as an example of that or others and of course, we've done a lot on the emerging market side and the fixed income world as well.
Speaker Change: And we think we could have potential to do more in emerging markets as well. So we think we have the right breadth of product. Our clients are clearly looking for these opportunities and so look I think us and everybody else are looking forward to serving our clients and delivering fixed income products that fit their needs.
Speaker Change: Yeah.
Speaker Change: Thank you Ali.
Ali: For my follow up is on the insurance channel. So I know the insurance channel is quite attractive and you actually have a lot of experience in this channel from your prior role.
Speaker Change: Wanted to get an update us on what is the current appetite to form strategic relationships with third party insurance company.
Speaker Change: And are there any recent successes in expanding this channel with which you haven't really highlighted.
Speaker Change: Sure.
Speaker Change: Thanks for the question again look insurance is a very large portion of our fixed income institutional book here at Janus Henderson.
Speaker Change: And we have the right skills to broaden that and take that to more clients and ideally more strategic partners as well in that field. We have historically had strong strategic partnership here.
Speaker Change: Yeah.
Speaker Change: With insurance companies that are global in nature, and we want to continue down that path.
Speaker Change: Right that happened to have had a little bit of experience in developing relationships with insurance companies and developing the right products for themselves for the insurance companies and their policyholders very importantly, remember that the cultural tie in for US, We think a lot about our clients and our clients' clients in the insurance landscape is in.
Speaker Change: The area that fits very culturally with us at Janus Henderson, because we do want to deliver better performance for those policyholders and for the firm. So we do see opportunity there we have a great base to start with and.
Speaker Change: And we do think that it's a place that we have potential to grow in.
Speaker Change: Both organically and Inorganically.
Speaker Change: Thanks Ali.
Speaker Change: Our next question comes from Ken Worthington of JP Morgan Ken. Please go ahead.
Ken Worthington: Hi, good morning, and thanks for taking the questions.
Ken Worthington: You called out the improvements in the intermediary intermediary platform.
Ken Worthington: And the achievement of breakeven flows in <unk>.
Ken Worthington: Looks like these improvements are largely being driven by the success, you're having in the CLO and MBS Etfs I think the one $3 billion improvement and intermediary sales this quarter equal.
Ken Worthington: Equals the increase in sales in those two Etfs. So first how broad based is the progress in U S. Intermediary since it seems like the success you are having is concentrated in the two etfs.
Ken Worthington: Second outflows seem to be rising in the retail equity fund business or at least they did in four Q where fees are two to three times higher than the Etfs.
Ken Worthington: So what is the outlook for fee rate based on the mix changes here and then lastly can you compare the margins of the ETF business as it scales compared to the fund business. So basically if the ETF business continues to succeed here what happens to Janus margins.
Speaker Change: Great. Thanks for those questions Ken.
Speaker Change: First from a U S intermediary perspective.
Ken Worthington: It is very broad based success, we are gaining market share and growing across across the board.
Ken Worthington: And absolutely being able to deliver something like an active fixed income Etfs just increases both that product breadth and growth and we still have a long way to go by the way, but also increases our relevance with the client base to bring them other products.
Ken Worthington: As part of the suite of products that we bring to bear the changes that we've made in U S. Intermediary are quite apparent.
Ken Worthington: Include investments in technology and data they include.
Ken Worthington: Selectively changing talent upgrading talent. They include changing the incentive plans. So that they are aligned with growth growth exactly as you would think about it Ken and both from a revenues perspective, as well as a profitability perspective and so.
Ken Worthington: The improvements are pretty broad and of course, there are sometimes some stars in those areas and we're happy to have one, but theyre very broad base taking.
Ken Worthington: Taking a step even more broad than that if you think about where we've had the highest inflows.
Ken Worthington: Exactly have in fixed income and half in equities of our top 10 inflows call. It over the course of the period of time, So we feel like they're pretty broad based.
Speaker Change: I'll start with the equities piece and then maybe hand, it off to Roger for the performance fees element to that and the margins Elena.
Speaker Change: Even in equities.
Speaker Change: You are aware and we are all aware for better for us that the trend in flows in the U S. Intermediary channel has been negative from a flow perspective.
Roger Thompson: So we would be having to gain a ton of share not just a little bit of share, which is what we're doing but a ton of share to change that trajectory that is our intent overtime that is certainly what we're gunning for but right now we are gaining share in that marketplace as best as we can tell even on the equity side.
Roger Thompson: And overall, we're gaining share obviously that include the active fixed income ETF suite that we have.
Roger Thompson: Roger do you want to talk about.
Roger Thompson: Our revenues and our margins.
Roger Thompson: Sure.
Roger Thompson: Yes, as you say.
Roger Thompson: Right. So on the fixed income on the fixed income Etfs as Alex pointed out the active products.
Roger Thompson: So they are they have real fees on them they are lower than equity mutual funds, yes.
Roger Thompson: But they are.
Roger Thompson: Certainly products that have <unk>.
Roger Thompson: Scale to them.
Roger Thompson: So from a margin point of view as we grow. These then very much state.
Roger Thompson: To add to the bottom line and again as a reminder, as Alex just said, it's a mix of products that we're selling and our overall fee rate is something that I think does differentiate us.
Roger Thompson: Our overall fee rate year on year was down less and less of the base.
Roger Thompson: A percentage point.
Roger Thompson: Sorry.
Roger Thompson: Right.
Roger Thompson: And that's a trend that we've seen.
Roger Thompson: Over a few years.
Roger Thompson: Very stable fee rate.
Roger Thompson: And that's because of the mix of products that we sell and again what will drive that in the future in the short term. It's most driven by markets if equity markets go up our fee rate will go up probably.
Roger Thompson: And over the longer term it depends on the mix the mix of products that we sell probably the biggest opportunity we have.
Roger Thompson: Is following the success that we've had.
Roger Thompson: Turning round that hopefully there's more growth to come from U S institutional and broader as you say.
Roger Thompson: It's turning around the the EMEA business, which has been really tough in the marketplace generally, but obviously thats also a higher fee business, EMEA and Latam and Asian businesses.
Roger Thompson: So there's a mix of products that we've got out there with a mix of phase, but yes, we're very.
Roger Thompson: It's a strong product with strong profitability as we as we add assets to it and we hope to continue to add assets to those those fixed income Etfs.
Roger Thompson: Our next question comes from Patrick Davitt of Autonomous Research. Please go ahead.
Patrick Davitt: Hi, good morning. Thanks.
Patrick Davitt: So you've been talking about rebuilding the pipeline for a few quarters now could you maybe update us on how that process is progressing and is there any idea when we could see more tangible and visible progress rebuilding that pipeline and more specifically any known big wins or losses coming through in the first half of the year. Thank you.
Patrick Davitt: Yeah.
Speaker Change: Hi, Patrick Thanks.
Speaker Change: You are right we are rebuilding the pipeline.
Speaker Change: Remember that last year.
Speaker Change: We had around $7 billion positive inflows in the institutional pipeline or an institutional numbers that we had in terms of net flows all of that happened in the first quarter. So as we've talked about before there is real pent up demand to kind of figure out what Janus Henderson was all about a transformation period and that pent up demand.
Speaker Change: Has been has been released so since then really in the back half of 2023 and ongoing we're building up that pipeline again and that as you know in every on the phone knows it takes quite a quite a bit of time in the institutional channel.
Speaker Change: The progress, we're making is actually quite tangible so if you think of leading indicators.
Speaker Change: Meetings as an example, with clients or consulting discussions that we're having.
Speaker Change: It looks quite positive in the early to mid stage pipeline I would call. It looks looks good but these things take time.
Speaker Change: We've talked about things, taking 12 to 18 months or more right in terms of actually going from.
Speaker Change: Concept or an RFP to actual delivery and that's the timeframe. We should think about from an early winter losses perspective.
Speaker Change: We're finding real areas of interest in semantics for us in solutions.
Speaker Change: In areas of income, we mentioned fixed income on an earlier discussion as well as enhanced index and multi asset areas.
Speaker Change: Plus some regional kind of specialization that we have so we expect that to continue as well.
Speaker Change: The pipeline as it builds over the next for a while.
Speaker Change: Thanks, and then.
Speaker Change: So my second question I have a higher level.
Speaker Change: Question, Blackrock highlighted significant acceleration and passive etfs that etfs in EMEA on their call in and we can certainly see that in the numbers and regulators both in the U K and the continent appear to be very focused on value for money in asset management. So with all that in mind. How are you thinking about the EMEA business positioning.
Speaker Change: If that region truly is on the same path as the U S. And are you concerned that could complicate your path to consistent net inflow. Thanks.
Speaker Change: Yes, thanks for the question.
Speaker Change: Look we're aware of what some of our competitors say and we're obviously very much in touch with both the regulators and what happens in the marketplace.
Speaker Change: I would say maybe three things the first one is that we clearly have strengthen.
Speaker Change: ETF.
Speaker Change: Our franchises that we built in the U S and we do think that there is an opportunity to grow those over time in other parts of the world as well using some of the similar skill sets now what I would say is.
Speaker Change: The nascent of Etfs in the EMEA and other markets.
Speaker Change: Still early.
Speaker Change: In the U S. We're certainly certainly getting to the party, where there is a real resurgence of flows so.
Speaker Change: It's a resource allocation question and certainly the U S and is the main place where we're going to focus for that for the activity for the time being the second thing that I'd say.
Speaker Change: Is that.
Speaker Change: We have learned a lot in taking a strategic.
Speaker Change: Plan executing it in the North American market opportunity on the intermediary side and.
Speaker Change: <unk> seen results that were broad based.
Speaker Change: So far as you can tell.
Speaker Change: We think that there's a real opportunity to lift and shift.
Those experiences into UK EMEA.
Latam other areas that have not been as successful for us given some market trends for the passenger awhile. So certainly that is something that we're very focused on for that marketplace and the teams here are very very conscious of what's happened in the U S and how we can apply with adjustments some of those tools to lift and shift to success and in the email.
Speaker Change: And the third thing that I'd say is.
Speaker Change: For that marketplace.
Speaker Change: We are seeing some success.
Speaker Change: Applied there. So for example, if you think about our market share in some areas take Latin America. For example, take U S. Offshore market. For example, we continue to do well over long periods of time, there and have our brand two to build on.
Speaker Change: As Roger was saying a moment ago the headwinds of that marketplace has been quite steep from a market perspective from an industry perspective. So.
Speaker Change: When hopefully those headwinds turn a little bit more of a tailwind as we are in a really good position to grow those and in that case going to the first point.
Speaker Change: We should be very flexible and focused on bringing resources in the right vehicles for the right investment strategies that that market in EMEA in particular, it would require so last point effectively is to be agile and flexible as we see trade winds move and apply resources in different ways.
Speaker Change: Our next question comes from Michael Cyprus of Morgan Stanley Michael. Please go ahead.
Michael J. Cyprys: Great. Thanks. Good morning, just a question on Etfs you spoke about the fixed income side, just curious how youre thinking about the opportunity with respect to active equity Etfs and any thoughts on mutual fund ETF conversions, how youre thinking about that maybe what holds you back and more broadly on launching more.
Michael J. Cyprys: And driving more growth on the active equity ETF side, how you're thinking about that what sort of products might make sense there.
Speaker Change: Sure. Thanks, a lot Michael.
Speaker Change: So first off from the ETF franchise in and of itself I mentioned this a little while ago, but it's important perhaps underlying that the strategy. We are putting in place with the ETF franchise is very much one around democratization of institutional level investment skill sets so taking those skills.
Speaker Change: That we have securitized the first transition of that more broadly in the fixed income world and bringing that to our client base.
Speaker Change: That has been successful we've learned a lot.
Speaker Change: We think there are point number two opportunities to bring that to other areas of our business as well as long as they're.
Speaker Change: And along the strategy of democratizing things that are institutional in nature from investment perspective. The good news is as you know Michael we have a lot.
Speaker Change: In our in our menu a lot in our palette that is institutional level investment strategies that we can bring to our client base and so it leads to the third point, which is well how do you do that.
Speaker Change: Well, we mentioned Etfs for sure, but there's a broader palette of vehicles, we can bring to bear in other words, we want to be vehicle agnostic. We said this before we said this publicly several times, we won't be vehicle agnostic and be able to deliver in different forms again to democratize and broaden the skill sets that we have to different client sets. So Patrick.
Patrick Davitt: Question earlier.
Patrick Davitt: EMEA could be example that other channels can be example of that for example in retirement that CIT launched.
Patrick Davitt: <unk> launched that we've had our SMA is that we've had et cetera, along the way and we want to broaden the scope not just in Etfs.
Patrick Davitt: More agnostic from a vehicle perspective and deliver on that line.
Speaker Change: Great. Thanks, So just a follow up question on the expense side I was hoping you could elaborate a bit on the cost savings where you are finding them. How you were able to deliver better than your initial expectations and as you looked at 'twenty four maybe you could just elaborate on.
Speaker Change: Where youre looking for savings and efficiencies in 24. Thank you.
Speaker Change: Yes, hi.
Speaker Change: We start on that and then.
Speaker Change: You might want to pick up on it but yes, I mean, we started the year and guided to I think it was low double digits on non comp.
And have done a lot during the year.
Speaker Change: Refine that.
Things that we worked out how did they are cheaper.
Speaker Change: Things that we of course, where it didn't make sense to do it.
Speaker Change: And then there are investments that we obviously, we obviously made.
Speaker Change: As we pointed out what we've done.
Speaker Change: It was very much under that fuel for growth pattern.
Speaker Change: We've taken the money we've taken it we've taken it from one place.
Speaker Change: And then reinvested in a place where we thought we could.
Speaker Change: Where we felt we could see better returns in the U S. Intermediary space is a good example of that we invested in our brand for the first time in many years.
A lot of people know of Janus Henderson below people haven't really work considering investing with Genesis Henderson in building that brand is really important.
Speaker Change: So there are a number of places we've done that we did that we achieved our fuel for growth as Ali said.
Speaker Change: A little bit more and a little bit quicker than we'd originally.
Speaker Change: We had originally indicated which is pleasing and we will continue to tell you that I mean, I think that's the important thing is.
Speaker Change: This is a this is a business that you need to constantly manage you need to constantly be looking at where should you be spending money.
Speaker Change: And and refining that so.
Speaker Change: We will continue to take some targeted actions.
And reinvest that money, where we can where we can see the strength in.
Speaker Change: The results.
Speaker Change: Some of those things are hard results its flows and some of them.
Speaker Change: Things that we measure really hard so a brand campaign is difficult to measure the results, but we measure that really hard to decided to determine are we being successful and can we take that further so that's something we've done in the U S. So far.
Speaker Change: We're starting to leverage that a little bit around around the rest of the world.
Speaker Change: And should and should we continue to see success, there and Thats something we do more again all of that is built into the to the guidance that I've given.
Speaker Change: But yes, it's an ongoing management of expenses both on the comp side on the non comp side I don't think the <unk>.
Speaker Change: Other bidders around automation.
Speaker Change: As we as we seek efficiencies and we automate things you do move a little bit from comp to non comp.
Speaker Change: So again, you would expect our fixed comp expenses are pretty flat.
Speaker Change: Year on year, including the.
Speaker Change: The inflationary element.
Speaker Change: Non comp as I've set up regarding guiding to.
Speaker Change: To sort of mid to high single digits.
Speaker Change: Our next question comes from Adam Beatty of UBS. The line is yours.
Adam Beatty: Thank you very much good morning.
Adam Beatty: I wanted to ask about the retirement channel, which can be seasonally strong, especially here in the U S in first quarter and first half.
Adam Beatty: Just maybe using <unk> construct of leading indicators just wondering what youre seeing in terms of activity, maybe your discussions with plan sponsors or other signs of momentum and how you feel you're positioned for the retirement contribution season. Thank you.
Speaker Change: Thanks, a lot Adam.
Speaker Change: It's certainly an area of focus for us and Thats.
Speaker Change: In the U S. In particular part of our North America client group, which was newly formed and very much focused on again lifting and shifting but within region. Some of the experiences that we've developed on the U S intermediary channel to that channel.
Speaker Change: <unk> strong relationships with some of the leading providers in the space, we see lots of interest from them to develop products that are new but also to support the products that we do have to bring to bear there one of the big drivers of.
Speaker Change: While we've been successful in that channel and we are seeing some some clear green shoots there although to be fair. It is a small business for us at this point, we see potential again with this lift and shift is the city market.
Speaker Change: We haven't been present and at least until relatively recently in the right areas and so we do want to continue pushing on the CIP World, where we do see some potential.
Speaker Change: Don't have Adam.
Speaker Change: Short term beginning of year type numbers to give you and I probably wouldn't anyway.
Speaker Change: But clearly I think you've hit on an interesting opportunity for us to continue to grow.
Speaker Change: Fair enough I appreciate that and just a follow up you mentioned products a couple of times in the broad palette you have and obviously some recent success with product launches. So wondering how youre thinking about that for this year 2024 in terms of maybe more same or worse in terms of product launches, whether it's number of products are.
Speaker Change: Our seed capital deployed or what have you and what areas might be the focus there. Thank you.
Sure.
Speaker Change: We have had thanks for noticing some good successes in product launches over the past year.
Speaker Change: We've launched several products for example, taking again core <unk>.
Speaker Change: Investment strategies that we have and applying them in and other areas. For example, we do global life Sciences, and global property as an <unk>.
Speaker Change: We did sustainable credit and securitized income as Etfs as you know obviously emerging market debt that we have returned it to seek having plenty of SMA as I just mentioned cit's.
Speaker Change: So we are on pace to.
Speaker Change: Continue to grow that in 2024 as well.
Speaker Change: We don't actually think about it and maybe we should but we don't actually think about it in terms of number of launches. We don't have targets in terms of number of launches.
Speaker Change: And the pipeline when you think about it very much as a portfolio of new products in our portfolio of new products that deliver on client needs. So client led I guess, that's how we think about it that's our filter for frankly everything at this firm, but in particular for new product launches because we already have a great suite, we want to scale, but we do see that there's more products to launch.
Speaker Change: We do believe that there's opportunities for us more broadly and this could be organic or inorganic.
Speaker Change: And in some areas and areas like Etfs in areas like emerging markets as well and again that fits with client needs that we have.
Speaker Change: I guess the last part of that to that Adam is around around seed capital that you mentioned.
Speaker Change: Have a good a good amount of <unk> capital.
Speaker Change: Our current expectation is we'll probably add some things that we will harvest.
Speaker Change: <unk> been successful and we can we can bring that St back and Thats, something we manage very carefully but there were a number of other things to all these points that either will be seeding something new.
Speaker Change: Or where we've got something which is very successful as a proven product, but it's not yet at scale and we've got clients that are interested in investing in.
Speaker Change: We call ramp it.
Speaker Change: To bring capital into it so you probably expect a straight capital to go up a little bit this year net of those things again, given that that pipeline.
Speaker Change: A satisfied client interests.
Speaker Change: I am putting what we've got good.
Speaker Change: That available in the marketplace.
Speaker Change: Our next.
Speaker Change: <unk> comes from Brian Bedell of Deutsche Bank, Brian. Please go ahead.
Brian Bedell: Alright, great. Thanks, good morning folks.
Brian Bedell: Maybe just.
Brian Bedell: On the back of the continued success in the intermediary channel Ali if you could.
Speaker Change: Comment on.
Speaker Change: Going back to slide 19.
Speaker Change: Past you get into more sustainable organic growth, where you think you are in that journey I think.
Ali: On a prior call you mentioned, obviously, it's still not linear.
Ali: But you talked maybe one to two quarters a year could have positive flows do you think we're in a place now in 2020 for where that might improve just say every other quarter I know, it's really hard to predict but just trying to get a sense of how you feel you're on that path to more sustainable organic growth.
Speaker Change: Hey, Brian.
No.
Brian Bedell: Janus Henderson is is at a point in its transformation, where I think we can say, we're squarely on the right path and we're making tons of progress and you mentioned flows will get back to in a second we're making tons of progress in many areas and overall were probably a little bit ahead of our own expectations at this point.
Brian Bedell: But but it's still we're still not at our destination down that path to continue the analogy.
Brian Bedell: We have lots of potential left we have lots of room to go in and looked at the potential for our clients and potential for our shareholders. Our employees. Our other stakeholders. So we haven't we do have a long way to go.
Brian Bedell: We are quite proud of having gone from negative $31 billion in outflows in 2022 to seven.
Brian Bedell: $7 billion in outflows in 2023.
Brian Bedell: You are right that the U S. Intermediary business was a great example of that it was a great example of our ability to to create and execute our strategic plan put that into place and get some good results out of that we do want to lift and shift that to more areas around around the firm.
Brian Bedell: Whether it be an email latam that we talked about before whether it be institutional networks raising a question before.
As well.
Look we don't give guidance in terms of.
Brian Bedell: On an annual basis or on a quarterly basis for sure.
Brian Bedell: But I would argue that it's not going to be linear.
Brian Bedell: <unk>.
Brian Bedell: We still have to fix the pipeline and we're getting good leading indicators to the Patrick's question earlier, but.
Brian Bedell: I'll have to fill the pipeline on institutional side, we still have to make sure that we can improve on EMEA and Latam maintained the progress we're making in the U S.
Brian Bedell: We're not there yet.
Speaker Change: What I would say.
Speaker Change: On.
Speaker Change: Firing on all cylinders are being at our destination.
Speaker Change: Yes, that's great color and then maybe one for Roger just on the performance fees, obviously, a very strong quarter.
Speaker Change: The fourth quarter.
Just as you think about moving into 2024 I think on the.
Speaker Change: On the Janus fund side.
Speaker Change: I believe that still trending more consistently maybe just your view on that sort of a sort of a steady but slow and steady improvement.
Speaker Change: But any other.
Speaker Change: View on any potential Lumpiness in 2024, and then also just if you can just remind us the comp ratio on performance fees I'm sure. It differs by product, but it looked like it wasn't particularly high in the fourth quarter.
Speaker Change: Sure.
Speaker Change: Yeah sure Thanks, Brian.
Speaker Change: I guess first of all.
We're obviously really pleased that our teams have delivered on behalf of clients and deliberate so well.
Speaker Change: That has resulted in some strong performance phase in the fourth quarter, particularly with with performance in the second half of the year in the fourth quarter, particularly.
Speaker Change: As you say.
Speaker Change: Performance fees are incredibly difficult to predict it depends on on future performance.
I certainly can't do that.
Speaker Change: The only thing that we can at least give an indication of US is the U S. Mutual fund fulcrum fees, which are three year rolling and we obviously know what's rolling off.
Speaker Change: So any indication of that if you add flat performance for this year.
Speaker Change: Our historical performance.
Speaker Change: This year.
Speaker Change: Then the 66 I think we were so negative Falcon phasing in 2023 is sort of mid <unk>.
Speaker Change: In 2004.
Speaker Change: Really pleasing to see improvements in things like the research fund Thats got some really good numbers its added.
Speaker Change: Since some changes that were made.
Speaker Change: Around a year ago.
Speaker Change: So we are moving the right direction there.
Speaker Change: You would expect that still to be negative for the year.
Speaker Change: For other things honestly like I say it.
Speaker Change: Your guess is as good as mine we saw some great teams I hope I hope they deliver performance for clients if they will deliver performance space from a from a.
When.
When the when does that happen as a reminder.
Speaker Change: The vast majority of our performance fees.
Speaker Change: All.
Speaker Change: Annual.
Speaker Change: We have about $37 billion of assets subject to performance fees about $3 billion of that.
Speaker Change: Quarterly performance phase the rest is annual.
Speaker Change: The vast majority of that is Q4, and Q2 has a lump as well.
Speaker Change: Which is really the European C cavs.
Speaker Change: So don't expect much in Q1 or Q3.
Speaker Change: But like I said I cant predict on the on the.
Speaker Change: On the <unk>.
Speaker Change: Comp ratio point of view, yes, we don't we don't provide specifics on compensation, but as you say if it's by product.
Speaker Change:
Obviously, there's also discretionary elements in there.
Speaker Change: But remember the comp compares deferrals in it.
Speaker Change: So some of the some of the.
Speaker Change: The performance fees that we've recognized in 'twenty three has some tail into future years as those comp deferrals come through.
Speaker Change: But again, that's all built into guidance, it's built into the table on LTI that we've given you.
Speaker Change: Back to the deck. So again, you can say that and that's built into that lower comp guidance for 2024.
Speaker Change: Our next question.
Our expectations perspective is probably roughly in the right realm of things, but we'll get some more sense of it.
As the year goes on.
Proven as clearly there are tons of progress is clearly there and we're not blind to exactly trying to broaden the success across a.
Broader piece of our palette of products channels geographies et cetera.
Okay, and just a follow up the big picture for you just as you think through the M&A model from here and obviously have great experience in your previous role.
What is the right model in your mind, just given sort of the blurring between traditional managers alternative managers, you mentioned insurance a couple of times isn't Apollo or kick hero model are intriguing to you as a Blackstone mall intriguing to you or is it more of a some of your contemporary peers that are much larger in terms of Tricia platform it sort of make the most.
Your mind thank you.
Given the success of that Blackstone and Apollo have had it certainly is something thats intriguing to us on behalf of our shareholders and delivering for client results.
We are open minded to.
How we can grow this business again on behalf of shareholders and clients, we don't close doors.
We have a priority list of things, which against on which you mentioned and which we've talked about.
You've seen our recent successes in different vehicles for example.
So we do have a priority list, but we're not blind to opportunities that may arise there are more opportunistic in nature that we might want to tackle again, we're going to continue to be very very disciplined.
On culture on valuation or potential for growth and most importantly, very very client led in the way we bring things in house.
Or partner with a different entity.
With that I'll hand back to the team for any closing remarks.
Thanks Jordan.
Janus Henderson at this point in this transformation is feeling squarely like we're on the right path, we're making tons of progress ahead.
I'm ahead of our expectations I still I still don't think we're at our destination, yet so there's lots of potential for shareholders employees and other stakeholders and clients.
And hopefully this quarter it starts to manifest some of those proof points. So thank you all for your interest and Janus Henderson today and have a nice rest of the day.
Ladies and gentlemen. This concludes today's call. Thank you for joining you may now disconnect your lines.
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