Q4 2024 Cohen & Steers Inc Earnings Call
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Speaker Change: Thank you and welcome to the Cohen, <unk> Steers fourth quarter and full year 2024 earnings conference call.
As a reminder, this conference is being recorded Thursday January 23rd 2025.
Speaker Change: Joining me are Joe Harvey, our Chief Executive Officer, Raj <unk>, our Chief Financial Officer, and Jeff Palmer, our head of multi asset solutions.
Brian Heller: I would now like to turn the conference over to Brian Heller.
Brian Heller: Your Vice President and Deputy General Counsel of Cohen <unk> Steers. Please.
Brian Heller: Please go ahead.
Brian Heller: Okay.
Brian Heller: Thank you and welcome to the Cohen, <unk> Steers fourth quarter and full year 2024 earnings conference call.
Speaker Change: I want to remind you that some of our comments and answers to your questions.
Speaker Change: Forward looking statements.
Joining me are Joe Harvey, our Chief Executive Officer, Raj <unk>, our Chief Financial Officer, and Jeff Palmer, our head of multi asset solutions.
Speaker Change: We believe these statements are reasonable based on information currently available to us.
Speaker Change: But actual outcomes could differ materially.
Speaker Change: Number of factors, including those described in our accompanying fourth quarter and full year earnings release and presentation.
Speaker Change: I want to remind you that some of our comments and answers to your questions.
Speaker Change: Forward looking statements.
Speaker Change: Our most recent annual report on Form 10-K.
Speaker Change: We believe these statements are reasonable based on information currently available to us.
Speaker Change: Our other SEC filings.
Speaker Change: We assume no duty to update any forward looking statement.
Speaker Change: Actual outcomes could differ materially due to a number.
Speaker Change: Her of factors, including those described in our accompanying fourth quarter and full year earnings release and presentation.
Speaker Change: Further none of our statements constitute an offer to sell but the silver.
Speaker Change: Recitation of an offer to buy the securities of any fund or other investment vehicles.
Speaker Change: Our most recent annual report on Form 10-K, and our other SEC filings.
Speaker Change: Our presentation also contains non-GAAP financial measures.
Speaker Change: We assume no duty to update any forward looking statement.
Speaker Change: <unk> as adjusted financial measures that we believe are meaningful in evaluating our performance.
Speaker Change: Further none of our statements constitute an offer to sale.
Speaker Change: Elicit patient of an offer to buy the securities of any fund or other investment vehicles.
Speaker Change: These non-GAAP financial measures should be read in conjunction with our GAAP results.
Speaker Change: A reconciliation of these non-GAAP financial measures is included in the earnings release and presentation to the extent reasonably available.
Speaker Change: Our presentation also contains non-GAAP financial measures referred to as adjusted financial measures that we believe are meaningful in evaluating our performance.
Speaker Change: The earnings release and presentation as well as links to our SEC filings are available in the Investor Relations section of our website at Www Dot Cohen <unk> steers Dot com.
Speaker Change: These non-GAAP financial measures should be read in conjunction with our GAAP results.
Speaker Change: A reconciliation of these non-GAAP financial measures is included in the earnings release and presentation to the extent reasonably available.
Russia: With that I'll turn the call over to Russia.
Speaker Change: Thank you, Brian and good morning, everyone. My remarks today will focus on our as adjusted results a reconciliation of GAAP to as adjusted results can be found in the earnings release and presentation.
Speaker Change: The earnings release and presentation as well as links to our SEC filings are available in the Investor Relations section of our website at Www Dot Cohen <unk> steers Dot com.
Speaker Change: Yesterday, we reported earnings of 78 per share compared to <unk> 77 sequentially earnings for full year 2024 were $2 93 per share compared to $2 84 and 2023.
Roger: With that I'll turn the call over to Roger.
Roger: Thank you, Brian and good morning, everyone. My remarks today will focus on our as adjusted results a reconciliation of GAAP as adjusted results can be found in the earnings release and presentation, yes.
Speaker Change: Revenue for Q4 increased four 9% sequentially to $139 9 million.
Roger: Yesterday, we reported earnings of 78 per share compared to <unk> 77 sequentially earnings for full year 2024 were $2 93 per share compared to $2 84 and 2023.
Speaker Change: Revenue for full year, 2024 increased five 9% to $518 million the.
Speaker Change: The increase in revenue from the prior quarter was driven by two items.
Roger: Revenue for Q4 increased four 9% sequentially to $139 9 million.
Speaker Change: Primary driver was higher average AUM during the quarter. The secondary driver was the recognition of one 4 million in performance fees.
Roger: Revenue for full year, 2024 increased five 9% to $518 million the.
Speaker Change: These performance fees recognized in Q4 related to the full year results of certain institutional accounts.
Roger: The increase in revenue from the prior quarter was driven by two items. The primary driver was higher average AUM during the quarter. The secondary driver was the recognition of one 4 million in performance fees.
Speaker Change: Our effective fee rate during the quarter, excluding performance fees was 58 basis points, which was consistent with the prior quarter.
Speaker Change: Operating income was $49 $7 million during the quarter compared to $47 6 million sequentially.
Roger: These performance fees recognized in Q4 related to the full year results of certain institutional accounts.
Speaker Change: Our operating margin was 35, 5%, which was generally in line with the prior quarter.
Roger: Our effective fee rate during the quarter, excluding performance fees was 58 basis points, which was consistent with the prior quarter.
As noted we did experience higher average AUM during Q4 as compared to the prior quarter.
Roger: Operating income was $49 $7 million during the quarter compared to $47 6 million sequentially.
Speaker Change: We generated net inflows during Q4, primarily related to our open end funds. This is the second quarter of net inflows after a strong flow results in Q3.
Roger: Our operating margin was 35, 5%, which was generally in line with the prior quarter.
Roger: As noted we did experience higher average AUM during Q4 as compared to the prior quarter.
Speaker Change: However, our AUM was impacted by market depreciation during the quarter.
Speaker Change: As a result, AUM was $85 8 billion as of year end compared to $91 8 billion at the end of Q3, Joe Harvey will provide additional insights regarding our flows and our pipeline.
Roger: We generated net inflows during Q4, primarily related to our open end funds. This is the second quarter of net inflows after a strong flow results in Q3.
Roger: However, our AUM was impacted by market depreciation during the quarter.
Speaker Change: Total expenses were higher compared to the prior quarter, primarily due to an increase in compensation and benefits to a lesser extent expenses were impacted by increases in both distribution and service fees as well as G&A.
Roger: As a result, AUM was $85 8 billion as of year end compared to $91 8 billion at the end of Q3.
Roger: Joe Harvey will provide additional insights regarding our flows and our pipeline.
Joe Harvey: During the quarter the increase in compensation and benefits was generally in line with the sequential increase in revenue.
Roger: Total expenses were higher compared to the prior quarter, primarily due to an increase in compensation and benefits to a lesser extent expenses were impacted by increases in both distribution and service fees as well as G&A.
Joe Harvey: The compensation ratio for the full year was just below 45%, which was within our expectations.
Joe Harvey: Increase in distribution and service fees during the quarter was due to higher average AUM related to our open end funds.
During the quarter the increase in compensation and benefits was generally in line with the sequential increase in revenue.
Joe Harvey: In addition, we did experience higher G&A expenses during the quarter, primarily related to travel and other business development activities.
Roger: The compensation ratio for the full year was just below 45%, which was within our expectations.
Joe Harvey: Full year G&A was within our expectations, increasing by six 7% versus 2023 rigs.
Speaker Change: The increase in distribution and service fees during the quarter was due to higher average AUM related to our open end funds.
Joe Harvey: Regarding taxes, our effective rate was 25, 3% for the quarter.
Speaker Change: In addition, we did experience higher G&A expenses during the quarter.
Speaker Change: Merely related to travel and other business development activities. The full year G&A was within our expectations, increasing by six 7% versus 2023.
Joe Harvey: Our earnings material presents at the end of Q4 and prior quarters our liquidity.
Joe Harvey: Our liquidity totaled $361 million at quarter end, which represents a slight increase versus the prior period.
Speaker Change: Regarding taxes, our effective rate was 25, 3% for the quarter.
Joe Harvey: As a reminder, our liquidity normally decreases during Q1 of each year due to our compensation cycle with bonuses paid in the quarter.
Speaker Change: Our earnings material presents at the end of Q4 and prior quarters our liquidity.
Joe Harvey: Let me now touch on a few items for 2025.
Speaker Change: Our liquidity totaled $361 million at quarter end, which represents a slight increase versus the prior period.
Joe Harvey: We continue to dedicate resources to new strategies vehicles and initiatives in Q1 of 2025, we will be launching three new Etfs. These will be the first Etfs for Cohen <unk> steers.
Speaker Change: As a reminder, our liquidity normally decreases during Q1 of each year due to our compensation cycle with bonuses paid in the quarter.
Speaker Change: Let me now touch on a few items for 2025.
Joe Harvey: While we believe these etfs will serve a variety of customers, we are particularly focused on opportunities within our wealth channel.
Speaker Change: We continue to dedicate resources to new strategies vehicles and initiatives in Q1 of 2025, we will be launching three new Etfs. These will be the first Etfs for Cohen <unk> steers.
Joe Harvey: With respect to the compensation and benefits, we would expect our compensation ratio to remain at 45% driver.
Speaker Change: While we believe these etfs will serve a variety of customers, we are particularly focused on opportunities within our wealth channel.
Joe Harvey: Drivers of compensation are disciplined investments in our sales and distribution channels and resources applied towards new vehicles, such as our Etfs.
Speaker Change: With respect to the compensation and benefits, we would expect our compensation ratio to remain at 45%.
Joe Harvey: We expect our G&A to increase in the range of 6% to 7% for the year as compared to 2024.
Speaker Change: Drivers of compensation are disciplined investments in our sales and distribution channels and resources applied towards new vehicles, such as our Etfs.
Joe Harvey: We continue to invest in our infrastructure, including our international offices. In addition, we expect increases in business development activities as we meet the needs of clients across a range of markets in which we operate.
Speaker Change: We.
Speaker Change: Specced, our G&A to increase in the range of 6% to 7% for the year as compared to 2024.
Joe Harvey: Further driving G&A, our technology and marketing spend related to the upcoming ETF launch.
Speaker Change: We continue to invest in our infrastructure, including our international offices. In addition, we expect increases in business development activities as we meet the needs of clients across a range of markets in which we operate.
Joe Harvey: Lastly, regarding 2025 guidance, we expect our effective tax rate to remain consistent at 25, 3%.
Speaker Change: I will now turn it over to Joe Harvey, who will leave discussions of our investment activities and business performance.
Speaker Change: Further driving G&A, our technology and marketing spend related to the upcoming ETF launch.
Speaker Change: Thank you Raj and good morning as noted we've adjusted the speaker lineup for todays call John <unk>, Our president and CIO, who usually joins these calls is traveling Jeff Palmer head of our multi asset solutions group will discuss the outlook for our asset classes.
Speaker Change: Lastly, regarding 2025 guidance, we expect our effective tax rate to remain consistent at 25, 3%.
Speaker Change: I'll now turn it over to Joe Harvey, who will lead discussions of our investment activities and business performance.
Raj: Thank you Raj and good morning as noted we have adjusted the speaker lineup for todays call John Shay, Our President and CIO, who usually joins these calls is traveling Jeff Palmer head of our multi asset solutions group will discuss the outlook for our asset classes.
Speaker Change: Following Jeff's remarks, I'll cover our investment performance and the market environment key business metrics, and our 2025 outlook, but first let's turn it over to Jeff.
Jeff Palmer: Thank you Joe I would like to take a few minutes to discuss the topic that research shows is a dominant driver of aggregate portfolio returns asset allocation, particularly during the current market and macro landscape.
Speaker Change: Following Jeff's remarks, I'll cover our investment performance and the market environment key business metrics and our 2025 outlook.
Jeff Palmer: On this topic, we wrote a paper recently called formal reversals of fortune and the opportunity in real assets, which has generated positive feedback from our clients and is available on our website.
Jeff: Let's turn it over to Jeff.
Jeff: Thank you Joe I would like to take a few minutes to discuss the topic that research shows is a dominant driver of aggregate portfolio returns asset allocation, particularly during the current market and macro landscape.
Jeff Palmer: I think it's resonating because market dynamics have truly been fascinating of late.
Jeff Palmer: But investors also need the occasional reminder, that we've seen this movie before.
Speaker Change: On this topic, we wrote a paper recently called Fomo reversals of fortune and the opportunity in real assets, which has generated positive feedback from our clients and is available on our website.
Jeff Palmer: To begin consider the last decade.
Jeff Palmer: Through 2024 global equities delivered annual total returns of more than 10% U.
Speaker Change: I think it's resonating because market dynamics have truly been fascinating of late.
Jeff Palmer: U S equities returned nearly 13, 5% annually in those same 10 years.
Speaker Change: Investors also need the occasional reminder, that we've seen this movie before.
Jeff Palmer: Private assets were likewise impressive with double digit returns in most categories.
Speaker Change: To begin considering the last decade through.
Speaker Change: Through 2024 global equities delivered annual total returns of more than 10% U.
Jeff Palmer: Ahmed extremely low reported volatility.
Jeff Palmer: Listed real assets were substantially lower by comparison over the last decade.
Speaker Change: U S equities returned nearly 13, 5% annually in those same 10 years.
Jeff Palmer: Returns on global real estate and commodities were less than 2% annualized.
Speaker Change: Private assets were likewise impressive with double digit returns in most categories.
Jeff Palmer: Mobile infrastructure and natural resource equities returned just under 5%.
Joe Harvey: Amit extremely low reported volatility.
Jeff Palmer: With a decade of near zero interest rates fixed income was challenged to driven by the low starting point of interest rates following the global financial crisis, and the sharp rise in rates since 2022.
Joe Harvey: Listed real assets were substantially lower by comparison over the last decade.
Joe Harvey: Total returns on global real estate and commodities were less than 2% annualized while global infrastructure and natural resource equities returned just under 5%.
Jeff Palmer: Now consider the 10 years that ended in 2010, it's a stark contrast.
Joe Harvey: With a decade of near zero interest rates fixed income was challenged to driven by the low starting point of interest rates following the global financial crisis, and the sharp rise in rates since 2022.
Jeff Palmer: During that decade equity markets were the worst performing asset class with barely positive total returns.
Jeff Palmer: Treasury returns were strong and well above equities.
Jeff Palmer: Private markets were also substantially weaker and registered higher volatility.
Joe Harvey: Now consider the 10 years that ended in 2010, it's a stark contrast.
Conversely listed real assets were standout performers.
Joe Harvey: During that decade equity markets were the worst performing asset class with barely positive total returns.
Jeff Palmer: In short assets that performed well between 202010 third worst in the last decade and vice versa.
Joe Harvey: U S Treasury returns were strong and well above equities.
Joe Harvey: Private markets were also substantially weaker and registered higher volatility.
Jeff Palmer: It's easy to become enamored with what has worked best recently and it's challenging to resist promo or the fear of missing out which is why many investors tend to stick with what's worked in the past expecting it to work in the future.
Conversely listed real assets were standout performers.
Joe Harvey: In short assets that performed well between 202010 third worst in the last decade and vice versa.
But it is common to see reversals of fortune.
Jeff Palmer: It should come as no surprise that returns are often unstable and mean reverting, which starting valuations being key to future performance.
Joe Harvey: It's easy to become enamored with what has worked best recently and it's challenging to resist promo or the fear of missing out which is why many investors tend to stick with what's worked in the past expecting it to work in the future.
Jeff Palmer: And that leads me to today's to today's markets recently.
Jeff Palmer: Recent market leaders now face headwinds and recent market laggards, notably for our firm, including rail assets have tailwind.
Joe Harvey: But it is common to see reversals of fortune.
Joe Harvey: It should come as no surprise that returns are often unstable and mean reverting with starting valuations being key to future performance.
Jeff Palmer: The S&P 500 returned over 25% in each of the last two years for the fear of missing out investors may be over allocated to large cap equities.
Joe Harvey: And that leads me to today's to today's markets recently.
Joe Harvey: Recent market leaders now face headwinds and recent market laggards, notably for our firm, including rail assets have tailwind.
Jeff Palmer: But equity markets increasingly depend on the fate of a handful of stocks valuations are unappealing and stock bond correlations are near 50 year highs.
Joe Harvey: The S&P 500 returned over 25% in each of the last two years for the fear of missing out investors may be over allocated to large cap equities.
Consider the shiller P/e a measure evaluations is near an all time high.
Jeff Palmer: History suggests that 10 year forward returns tend to be challenged when the starting point for valuations is this elevated.
Joe Harvey: But equity markets increasingly depend on the face of a handful of stocks valuations are unappealing and stopped bond correlations are near 50 year highs.
Jeff Palmer: There are also reasons to believe private markets. The other leader over the past decade will struggle to repeat recent trends.
Joe Harvey: Consider the shiller P/e measure evaluations is near an all time high.
Jeff Palmer: For one we believe interest rates of around four 5% represents fair value in U S treasuries.
Joe Harvey: History suggests that 10 year forward returns tend to be challenged when the starting point for valuations is this elevated.
Jeff Palmer: Consequently, the opportunity for private equity investors to lever investments at ultra low interest rates is gone.
Joe Harvey: There are also reasons to believe private markets. The other leader over the past decade, we will struggle to repeat recent trends.
Jeff Palmer: Higher rates also suggests that private valuations should fall as has already happened in private real estate.
Joe Harvey: For one we believe interest rates of around four 5% represents fair value and U S treasuries.
Jeff Palmer: Tight credit spreads and potentially different difficult exits from investments may also create headwinds.
Joe Harvey: Consequently, the opportunity for private equity investors to lever investments at ultra low interest rates is gone.
Jeff Palmer: In contrast, all core real assets categories are either neutrally or attractively valued and we believe positioned for meaningfully better returns compared to the last decade and other asset classes.
Speaker Change: Higher rates also suggests that private valuation should fall.
Speaker Change: It's already happened in private real estate.
Speaker Change: Tight credit spreads and potentially different difficult exits from investments may also create headwinds.
Jeff Palmer: I'd like to make one final point.
Jeff Palmer: Diversification is a key aspect to portfolio construction.
Speaker Change: In contrast, all core real assets categories are either neutrally or attractively valued and we believe positioned for meaningfully better returns compared to the last decade and other asset classes.
Speaker Change: And our favorable return outlook for rail assets.
Speaker Change: And in addition to their history of strong full cycle returns.
Speaker Change: Real assets offer valuable diversification potential and inflation sensitivity, which make them increasingly attractive and portfolios.
Speaker Change: I'd like to make one final point.
Speaker Change: Diversification is a key aspect to portfolio construction.
Speaker Change: Most people we've met with recently understands the issues at play the challenge is that timing. These moves is difficult.
Jeff Palmer: And our favorable return outlook for rail assets.
Jeff Palmer: And in addition to their history of strong full cycle returns.
Speaker Change: It's why fomo plays such a strong role as it influences timing.
Jeff Palmer: Real assets offer valuable diversification potential and inflation sensitivity, which make them increasingly attractive and portfolios.
Speaker Change: We believe that demand for asset classes that are currently out of favor will be strong when the tide turns.
Jeff Palmer: Most people we've met with recently understands the issues at play there.
We understand the pressures of fomo, particularly when so many investors haven't experienced anything but a market environment in which rates were low inflation was contained and stock returns were so consistently strong, but we know from our experience that allocating by looking in the rearview mirror may be a recipe for poor future return.
Jeff Palmer: Challenge is that timing these moves as difficult that's why fomo plays such a strong role as it influences timing we.
We believe that demand for asset classes that are currently out of favor will be strong when the tide turns.
Jeff Palmer: We understand the pressures of fomo, particularly when so many investors haven't experienced anything but a market environment in which rates were low inflation was contained and stock returns were so consistently strong, but we know from our experience that allocating by looking in the rearview mirror may be a recipe for poor future return.
Speaker Change: <unk>.
Speaker Change: Thank you Jeff.
Speaker Change: After a third quarter that looked like a turning point with the beginning of monetary easing and a positive inflection in our flows the fourth quarter was decidedly mixed.
Speaker Change: Continued economic strength persistent inflation and a recalibration in the macro for the Trump presidency caused the bond market to sell off and lifted the 10 year Treasury yield 80 basis points to four 6%.
Jeff Palmer: <unk>.
Jeff Palmer: Thank you Jeff.
Speaker Change: After a third quarter that looked like a turning point with the beginning of monetary easing and a positive inflection in our flows the fourth quarter was decidedly mixed.
Speaker Change: It's a reminder that regime change mostly happens over a period of time.
Jeff Palmer: Continued economic strength.
<unk> inflation and a recalibration in the macro for the Trump presidency caused the bond market to sell off and lifted the 10 year Treasury yield 80 basis points to four 6%.
Speaker Change: Market depreciation in most of our asset classes and a lower batting average of outperformance tempered our second consecutive quarter of positive flows and a notable increase in business activity.
Jeff Palmer: As a reminder, that regime change mostly happens over a period of time.
Speaker Change: Turning to our performance scorecard, 49% of our AUM outperformed its benchmark in the quarter.
Jeff Palmer: Market depreciation in most of our asset classes and a lower batting average of outperformance tempered our second consecutive quarter of positive flows and a notable increase in business activity.
Speaker Change: While our outperformance metrics softened, we focus on longer term results, which remain strong.
Speaker Change: For one year, 95% of our AUM has outperformed its benchmark, while our three five and 10 year outperformance stands at 90, 697 and 99% respectively.
Jeff Palmer: Turning to our performance scorecard, 49% of our AUM outperformed its benchmark in the quarter.
Jeff Palmer: Our outperformance metrics softened, we focus on longer term results, which remain strong.
Speaker Change: Our one three and five year excess returns are 288 basis points, 162, and 224 basis points respectively.
Jeff Palmer: For one year, 95% of our AUM has outperformed its benchmark, while our three five and 10 year outperformance stands at 90, 697 and 99% respectively.
Speaker Change: 94% of our open end fund AUM is rated four or five star by Morningstar.
Jeff Palmer: Our one three and five year excess returns are 288 basis points, 162, and 224 basis points respectively.
Speaker Change: In short we are delivering alpha consistently for our clients.
Speaker Change: Transitioning to market conditions, the fourth quarter was modestly positive for stocks with growth in tech generally outperforming value listed real assets pulled back following the strong absolute performance in the third quarter.
Jeff Palmer: 94% of our open end fund AUM is rated four or five star by Morningstar.
Jeff Palmer: In short we are delivering alpha consistently for our clients.
Speaker Change: For example, U S rates declined eight 2% in the fourth quarter, while global listed infrastructure fell five 7%.
Jeff Palmer: Transitioning to market conditions, the fourth quarter was modestly positive for stocks with growth in tech generally outperforming value.
Speaker Change: By comparison U S equities rose two 4% and the EMS Ci World was flat.
Jeff Palmer: Listed real assets pulled back following the strong absolute performance in the third quarter for.
Speaker Change: While the federal reserve cut interest rates in the quarter with 225 basis point rate reductions.
Jeff Palmer: For example, U S rates declined eight 2% in the fourth quarter, while global listed infrastructure fell five 7%.
Speaker Change: Projected more modest cuts in 2025, the resulting upward effect on real interest rates pressured REIT share prices, even as fundamentals remained mostly positive.
Jeff Palmer: By comparison U S equities rose two 4% and the EMS Ci World was flat.
Jeff Palmer: While the federal reserve cut interest rates in the quarter with 225 basis point rate reductions.
Private real estate. Meanwhile, had a total return of 1% as measured by the Nig Creek Odyssey index preliminary preliminary results.
Jeff Palmer: The projected more modest cuts in 2025, the resulting upward effect on real interest rates pressured REIT share prices, even as fundamentals remained mostly positive.
Speaker Change: This marked the second consecutive quarter of positive total returns.
Speaker Change: This underscores our view that private commercial real estate valuations have likely trough.
Private real estate. Meanwhile, had a total return of 1% as measured by the Nig Creek Odyssey index preliminary preliminary results.
Speaker Change: Although we expect an uneven recovery across property types.
Speaker Change: Within listed infrastructure, the ryzen bond yields weighs on certain rate sensitive sectors, notably cell tower companies.
Jeff Palmer: This marked the second consecutive quarter of positive total returns.
Jeff Palmer: This underscores our view that private commercial real estate valuations have likely trough.
Speaker Change: Midstream energy companies on the other hand at a large gain continuing to benefit from an improving growth profile.
Jeff Palmer: Although we expect an uneven recovery across property types.
Speaker Change: Importantly, as Jeff discussed our core real asset classes are either neutrally or attractively valued and while markets have been enamored of stocks over the past two years, we believe macro conditions plus valuations should favor our asset classes, we see improvements in tax and regulatory.
Jeff Palmer: Within listed infrastructure, the ryzen bond yields weighs on certain rate sensitive sectors, notably cell tower companies.
Jeff Palmer: Midstream energy companies on the other hand at a large gain continuing to benefit from an improving growth profile.
Speaker Change: Importantly, as Jeff discussed our core real asset classes are either neutrally or attractively valued and while markets have been enamored of stocks over the past two years, we believe macro conditions plus valuations should favor our asset classes, we see improvements in tax and regulatory.
Speaker Change: Conditions and underlying business confidence this should be positive for FERC future earnings power and provide potential ballasts to elevated bond yields.
Speaker Change: Turning to our key metrics in flows.
Speaker Change: We had firm wide net inflows of $860 million in the fourth quarter down from one 3 billion in the third quarter.
Speaker Change: Conditions and underlying business confidence this should be positive for future earnings power and provide potential ballasts to elevated bond yields.
Speaker Change: One 2 billion in net inflows in our open end funds drove the flows parse.
Speaker Change: Turning to our key metrics and flows.
Speaker Change: Partially offset by $101 million of advisory outflows and $205 million in sub advisory outflows.
Speaker Change: We had firm wide net inflows of $860 million in the fourth quarter.
Speaker Change: <unk> from one 3 billion in the third quarter.
Speaker Change: Over the full year net inflows in the third and fourth quarters offset some large institutional redemptions in the beginning of the year with firm wide net outflows improving to $171 million out overall for 2024.
Speaker Change: One 2 billion in net inflows in our open end funds drove flows.
Speaker Change: Partially offset by $101 million of advisory outflows and $205 million in sub advisory outflows.
Speaker Change: Over the full year net inflows in the third and fourth quarters offset some large institutional redemptions in the beginning of the year with firm wide net outflows improving to $171 million out overall for 2024.
Speaker Change: Open end funds had positive flows in every sub segment, including U S offshore model portfolios SMA and are non traded REIT the.
Speaker Change: The majority of flows were in U S. REIT funds and in large part came from independent registered investment advisors.
Speaker Change: Open end funds had positive flows in every sub segment, including U S offshore model portfolios SMA and are non traded REIT the.
Speaker Change: We also had positive but lesser flows and our global listed infrastructure, our multi strategy real assets and our future of energy funds.
Speaker Change: The majority of flows were in U S. REIT funds and in large part came from independent registered investment advisors.
Speaker Change: We had outflows from our global real estate and limited duration preferred funds.
Speaker Change: Advisory had net outflows of $101 million with $305 million of account terminations driven by clients' funding private allocations or de risking into fixed income as.
Speaker Change: We also had positive but lesser flows and our global listed infrastructure, our multi strategy real assets and our future of energy funds.
Speaker Change: Had outflows from our global real estate and limited duration preferred funds.
Speaker Change: As well as $204 million of net inflows from existing clients.
Speaker Change: Advisory had net outflows of $101 million with $305 million of account terminations driven by clients' funding private allocations or de risking into fixed income as well as $204 million of net inflows from existing clients.
Speaker Change: Sub advisory ex Japan had outflows of 172 million and.
Speaker Change: In Japan sub advisory had $33 million of outflows.
Speaker Change: Our one unfunded pipeline was $530 million compared with $651 million last quarter and the average of 1 billion per quarter over the past three years.
Speaker Change: Sub advisory ex Japan had outflows of $172 million.
Speaker Change: And Japan sub advisory had $33 million of outflows.
Speaker Change: About 50% of the pipeline is in various real estate strategies.
Speaker Change: Our one unfunded pipeline was $530 million compared with $651 million last quarter and the average of 1 billion per quarter over the past three years.
Speaker Change: <unk>, 42% is in global listed infrastructure and 8% is in multi strategy real assets.
Speaker Change: As we mentioned last quarter, we have indicated redemptions.
Speaker Change: Now around $800 million, which are expected to occur occur in the first half of the year driven by Reallocations to private investments one restructuring of the investment lineup and in our variable annuity vehicle.
Speaker Change: About 50% of the pipeline is in various real estate strategies.
Speaker Change: 2% is in global listed infrastructure and 8% is in multi strategy real assets.
Speaker Change: As we mentioned last quarter, we have indicated redemptions.
Speaker Change: And client rebalancing.
Speaker Change: Now around $800 million, which are expected to occur in the first half of the year driven by Reallocations to private investments.
Our search activity has increased driven by asset allocation normalization.
Speaker Change: Fixed income allocations are shoring up.
Speaker Change: One restructuring of the investment lineup and in our variable annuity vehicle.
Speaker Change: Private allocations are loosening somewhat.
Speaker Change: And there is more conviction around inflation and real asset allocations.
Speaker Change: And client rebalancing.
Speaker Change: Our search activity has increased driven by asset allocation normalization.
Our continued strong performance and client engagement also contribute to this trend.
Speaker Change: Fixed income allocations are shoring up.
Speaker Change: We continue to see takeaway opportunities from underperforming managers.
Speaker Change: Private allocations are loosening somewhat and there is more conviction around inflation and real asset allocations.
Speaker Change: Some conversion of passive to active mandates and continued adoption of our asset classes around the world.
Speaker Change: Our continued strong performance and client engagement also contribute to this trend.
Speaker Change: We believe we are well positioned for growth in 2025 with the macro environment beginning to be more favorable for our core strategies.
Speaker Change: We continue to see takeaway opportunities from underperforming managers.
Speaker Change: In addition, investor investment initiatives that we have been working on the past several years are coming to fruition. These.
Some conversion of passive to active mandates and continued adoption of our asset classes around the world.
Speaker Change: These include our launch of active Etfs Bill.
We believe we are well positioned for growth in 2025 with the macro environment beginning to be more favorable for our core strategies.
Speaker Change: Building, the private real estate strategy and our non traded Reits.
Speaker Change: Growing our listed infrastructure business.
Speaker Change: In addition, investor investment initiatives that we have been working on the past several years are coming to fruition. These.
Speaker Change: And capitalizing on Investor interest in utilizing both listed and private strategies side by sides.
Speaker Change: These include our launch of active Etfs Bill.
Speaker Change: Major trends in asset management, such as growth in the RIAA segment.
Speaker Change: Building, the private real estate strategy and our non traded Reits.
Speaker Change: Increased allocations to alternatives and greater use of active Etfs will help guide our strategy.
Speaker Change: Growing our listed infrastructure business.
Speaker Change: And capitalizing on Investor interest in utilizing both listed and private strategies side by sides.
Speaker Change: I also strongly believe that investors should focus more on the opportunity cost of illiquidity.
Speaker Change: Major trends in asset management, such as growth in the RIAA segments.
Speaker Change: The drag of shifting portfolios at opportune times <unk>.
Speaker Change: Increased allocations to alternatives and greater use of active Etfs will help guide our strategy.
Speaker Change: Particularly in asset classes, where private allocations havent generated a return premium.
Speaker Change: I also strongly believe that investors should focus more on the opportunity cost of illiquidity.
Speaker Change: This applies specifically to core private real estate.
Speaker Change: And I believe this will also play out over the long term in infrastructure.
Speaker Change: The drag of shifting portfolios at opportune times.
Speaker Change: Listed real estate is our most active area, particularly as we go through the bottoming of the real estate price cycle and as investors increasingly recognize the consistent outperformance of listed over core private real estate.
Speaker Change: Particularly in asset classes, where private allocations havent generated a return premium.
Speaker Change: This applies specifically to core private real estate.
Speaker Change: And I believe this will also play out over the long term in infrastructure.
Listed infrastructure activity has picked up the most on a relative basis. We believe listed infrastructure complements private in terms of sector exposures return cycle phasing and access to some of the most powerful themes today, such as AI power generation and data centers.
Speaker Change: Listed real estate is our most active area, particularly as we go through the bottoming of the real estate price cycle and as investors increasingly recognize the consistent outperformance of listed over core private real estate.
Speaker Change: Listed infrastructure activity has picked up the most on a relative basis. We believe listed infrastructure complements private in terms of sector exposures return cycle phasing and access to some of the most powerful themes today, such as AI power generation and data centers.
Speaker Change: <unk>.
Speaker Change: Finally, with respect to multi strategy real assets, we're seeing increased activity from health care plans and smaller allocators reinforced by market expectations that Trump policies will bolster investor interest and the inflation mitigation benefits of real assets.
Speaker Change: <unk>.
Speaker Change: Finally, with respect to multi strategy real assets, we're seeing increased activity from health care plans and smaller allocators reinforced by market expectations that Trump policies will bolster investor interest and the inflation mitigation benefits of <unk>.
Speaker Change: Preferred securities search activity has been slower than than I would've expected, especially as our team delivered 11, 3% for our core strategy in 2024 with 220 basis points of Alpha.
Speaker Change: Competition from private credit and the normalization of the yield curve explains some of the slower pace, but I'd expect confidence and prefers to continue to strengthen as time passes from the basic bank sector volatility of early 2023.
Speaker Change: Assets.
Speaker Change: Preferred securities search activity has been slower than than I would've expected, especially as our team delivered 11, 3% for our core strategy in 2024 with 220 basis points of Alpha <unk>.
We expect to launch three active Etfs in the first quarter of this year.
Speaker Change: Competition from private credit and the normalization of the yield curve explains some of the slower pace, but I'd expect confidence and prefers to continue to strengthen as time passes from the bank sector volatility of early 2023.
Speaker Change: In active U S. REIT strategy, our preferred stock strategy that has broader using more global securities and our natural resources equity strategy. We have an excellent track record with resource equities as a core component of our multi strategy real asset portfolio.
Speaker Change: We expect to launch three active Etfs in the first quarter of this year.
Speaker Change: And active U S. REIT strategy, our preferred stock strategy that has broader using more global securities and our natural resources equity strategy. We have an excellent track record with resource equities as a core component of our multi strategy real asset portfolio.
Speaker Change: Yet the ETF will be our first standalone vehicle.
We intend to see these etfs with firm capital and our initial distribution focus will be with <unk>.
Speaker Change: As in the model builders at those firms.
Speaker Change: We had a significant market share of actively managed open end funds and U S and in preferreds.
Speaker Change: Yet the ETF will be our first standalone vehicle.
Speaker Change: We intend to see these etfs with firm capital and our initial distribution focus will be with our eyes in the model builders at those firms.
Speaker Change: We believe given our track record in those asset classes, we can take our share of the growing ETF pie.
Speaker Change: Where passive strategies alone and rights for example totaled $119 billion.
Speaker Change: We had a significant market share of actively managed open end funds and U S and in preferreds.
We've also put renewed focus into distribution for our offshore <unk>, which now total $1 billion across five vehicles.
Speaker Change: We believe given our track record in those asset classes, we can take our share of the growing ETF pie.
Speaker Change: Our offshore see calves have had a positive flows in 18 of the past 20 quarters.
Speaker Change: Where passive strategies alone and rights for example totaled $119 billion.
Speaker Change: We expect to launch a short duration preferred <unk> next month.
Speaker Change: We've also put renewed focus into distribution for our offshore <unk>, which now total $1 billion across five vehicles.
Speaker Change: On the private real estate front, we are very focused on raising AUM in our non traded REIT Cohen <unk> steers income opportunities and deploying capital in private real estate markets that we believe have bottomed. So far. This has included a portfolio of five open air shopping centers.
Speaker Change: Our offshore <unk> have had a positive flows in 18 of the past 20 quarters.
Speaker Change: We expect to launch a short duration preferred <unk> next month.
Speaker Change: On the private real estate front, we are very focused on raising AUM in our non traded REIT <unk> income opportunities and deploying capital in private real estate markets that we believe have bottomed. So far. This has included a portfolio of five open air shopping centers.
Speaker Change: CNS rights total return in 2024 since its inception last January was 11, 6% for class a shares.
Speaker Change: That return put us in the number two spot for performance among our peers for 2020 for.
Speaker Change: Positioning the non traded REIT and is property portfolio as an important component of the expansion in our real estate franchise to span listed and private strategies, along with investment strategy and asset allocation advice.
Speaker Change: CNS rights total return in 2024 since its inception last January was 11, 6% for class a shares.
Speaker Change: That return put us in the number two spot for performance among our peers for 2024.
Speaker Change: I'll close by noting that we have a goal this year of enhancing focus on generating.
Speaker Change: Positioning the non traded REIT and is property portfolio is an important component of the expansion in our real estate franchise to span listed and private strategies, along with investment strategy and asset allocation advice.
Speaker Change: Distribution Alpha.
Speaker Change: At the margin will be adding professionals for the wealth channel and the <unk> segment as well as other sales and distribution resources globally.
At this point I'll turn the call back to the operator julienne.
Speaker Change: I'll close by noting that we have a goal this year of enhancing focus on generating.
Speaker Change: Facilitate.
Speaker Change: Q&A.
Speaker Change: Distribution Alpha.
Speaker Change: Thank you as a reminder to ask a question. Please press star followed by the number one on your telephone keypad.
Speaker Change: At the margin will be adding professionals for the wealth channel and the <unk> segment as well as other sales and distribution resources globally.
Speaker Change: Our first question comes from John Dunn from Evercore ISI. Please go ahead. Your line is open.
Speaker Change: At this point I'll turn the call back to the operator julienne.
Alright, thank you.
Facilitate.
Speaker Change: Q&A.
Speaker Change: Maybe could you just give us a little more color on the kind of the temperature of the sales conversation you guys are having in the wealth management channel for reaching preferred just given the cross current rate cross currents, we could see in 'twenty five and then also your expectations for like the appetite for redemptions.
Speaker Change: Thank you as a reminder to ask a question. Please press star followed by the number one on your telephone keypad.
Our first question comes from John Dunn from Evercore ISI. Please go ahead. Your line is open.
John Dunn: Alright, thank you.
John Dunn: Could you just give us a little more color on the kind of the temperature of the sales conversation you guys are having in the wealth management channel for reaching preferreds, just given the cross current rate cross currents, we could see in 'twenty five and then also your expectations for like the appetite for redemptions.
Speaker Change: Well in the wealth channel as our.
Speaker Change: Statistics support we've had very strong interest in U S rights.
Speaker Change: Mostly.
Speaker Change: The preferreds have been less strong.
Speaker Change: Outlines some of the reasons why in my comments on the U S REIT front.
John Dunn: Well in the wealth channel as our.
Speaker Change: Statistics support we've had very strong interest in U S rights.
Speaker Change: First our performance has been.
Speaker Change: Very strong both.
Speaker Change: Absolute as rates have bottomed and led the recovery.
Speaker Change: Mostly.
The preferreds have been less strong.
Speaker Change: Real estate generally.
Speaker Change: And our.
Speaker Change: Outlines some of the reasons why in my comments on the U S REIT front.
Speaker Change: Our excess returns or alpha.
Speaker Change: And preferreds I just think there are a lot more there's a lot more competition for fixed income now that the yield curve is normalized or particularly with private credit now becoming more widely available in the wealth channel.
Speaker Change: First our performance has been.
Speaker Change: Very strong both.
Absolute as rates have bottomed and led the recovery.
Speaker Change: Real estate generally.
Speaker Change: Our.
Speaker Change: Our excess returns or alpha.
Speaker Change: Most of our flows.
Speaker Change: Come over the past two quarters from the.
Speaker Change: And preferreds and just think there are a lot more there's a lot more competition for fixed income now that the yield curve is normalized or particularly with private credit now becoming more widely available in the wealth channel.
Speaker Change: Channel, which is a place where.
Speaker Change: AUM is growing the fastest and we can talk about some of those reasons, but.
Speaker Change: I mentioned, we are focusing more of our resources on those types of investors because there.
Most of our flows.
Speaker Change: Come over the past two quarters from the.
Speaker Change: Their bottles, which tend to be more like <unk>.
Speaker Change: Channel, which is a place where.
Speaker Change: University Endowment model.
Speaker Change: AUM is growing the fastest and we can talk about some of those reasons, but.
Speaker Change: Tend to align better with how we do things in our active management.
Speaker Change: As I mentioned, we're focusing more of our resources on those types of investors because there.
Speaker Change: So.
I guess big picture.
Speaker Change: Hi.
Speaker Change: As you've seen.
Speaker Change: Their bottles, which tend to be more like a <unk>.
Speaker Change: For the past several years, our flows have been tended to be more correlated to interest rates.
University Endowment model.
Speaker Change: Tend to align better with how we do things in our active management.
Speaker Change: Then they have been in a long term I think a large part of that relates to the very long period of.
Speaker Change: So.
Speaker Change: I guess big picture.
Speaker Change: As you've seen.
Speaker Change: Monetary policy post Dfc, where rates have been pegged to zero and then the normalization.
Speaker Change: For the past several years, our flows have been tended to be more correlated to interest rates.
Speaker Change: <unk> of rates, but now that things have.
Speaker Change: Than they've been in a long term I think a large part of that.
Speaker Change: Stabilized so to speak or normalize.
Speaker Change: I think.
Speaker Change: Relates to the very long period of.
Speaker Change: My belief my view is it.
Speaker Change: Flows should be a little less.
Speaker Change: Monetary policy post Dfc, where rates have been pegged to zero and then the <unk>.
Speaker Change: Sensitive to changes in.
Speaker Change: Rates as is.
Speaker Change: Normalization of rates.
Marches on.
Speaker Change: But now that things have.
Speaker Change: Got it.
Speaker Change: Stabilized so to speak or normalize.
Speaker Change: We've seen that active Etfs can really take off.
Speaker Change: I think my.
Speaker Change: And my belief my view is that.
Speaker Change: Great you guys are getting into it but it is new to you guys. So maybe could you just talk a little bit.
Speaker Change: Those should be a little less.
Speaker Change: Sensitive to changes in.
Speaker Change: More about the plan for rolling It out you mentioned alright.
Speaker Change: Rates as is.
Speaker Change: Marches on.
Speaker Change: How is it different from selling or marketing than the vehicles you have now.
Speaker Change: Got it.
We've seen that active Etfs can really take off.
Early indicators on an interest in any concern on the potential cannibalization.
Speaker Change: Great you guys are getting into it but it is new to you guys. So maybe could you just talk a little bit.
Speaker Change: Well.
Speaker Change: More about the plan for rolling It out you mentioned alright.
Speaker Change: We're leading with our core asset.
Speaker Change: The asset.
Speaker Change: How is it different from selling or marketing vehicles.
Speaker Change: Asset classes so.
Speaker Change: And the way that we have gained market share in the wealth channel.
Speaker Change: Vehicles, you have now.
Speaker Change: Early indicators or an interest in any concern on the potential cannibalization.
Speaker Change: And it's a significant as I mentioned earlier, but just to put some some statistics on that and.
Speaker Change: Well.
Speaker Change: We're leading with our core asset.
Speaker Change: Preferred securities in the open end fund vehicles, our market share is 38% and.
Speaker Change: Our asset classes so.
Speaker Change: And the way that we have gained market share in the wealth channel.
Speaker Change: U S Reits in the mid 40%. So the reason why we've been able to garner that is.
Speaker Change: And it's a significant as I mentioned earlier, but just to put some some statistics on that and.
Speaker Change: Our performance, but B R.
Speaker Change: Preferred securities in the open end fund vehicles, our market share is 38% in.
Speaker Change: Educational efforts and.
Speaker Change: And explain to advisers wide those.
Speaker Change: <unk> sits in the mid 40%. So the reason why we've been able to garner that is.
Speaker Change: Asset classes makes sense in a diversified portfolio.
Speaker Change: How they should allocate over.
Speaker Change: Our performance, but B R.
Speaker Change: Economic cycles, so we will bring that knowledge in.
Educational efforts and.
Speaker Change: That education too.
Speaker Change: And explaining to advisers wide those.
Speaker Change: The.
Speaker Change: Targeted investors for Etfs, we will initially start with that.
Speaker Change: Asset classes makes sense in a diversified portfolio and how they should allocate over.
Speaker Change: Market, we need to gain some critical mass before we can get on boarded.
Speaker Change: And economic cycles, So we will bring that knowledge in.
Speaker Change: The wire houses.
Speaker Change: So it's going to be.
That education too.
Speaker Change: Aggressive campaign of.
Speaker Change: The.
Speaker Change: Targeted investors for Etfs, we will initially start with.
Speaker Change: Introducing our vehicles, but also educating those.
Speaker Change: Market and we need to gain some critical mass before we can get on boarded at.
Speaker Change: Those advisors on.
Speaker Change: Our asset classes and how the.
Speaker Change: The wire houses.
Speaker Change: The nuances and the strategies that were.
Speaker Change: So it's going to be.
Speaker Change: Aggressive campaign of.
Speaker Change: We're bringing it to market.
Speaker Change: Add value in their portfolios.
Speaker Change: Introducing our vehicles, but also educating those.
Speaker Change: Thank you.
Speaker Change: Those advisors on.
Speaker Change: Our next question comes from Ben Rubin from UBS. Please go ahead. Your line is open.
Speaker Change: Our asset classes.
Speaker Change: The.
Speaker Change: The nuances and the strategies that were.
Hi, Thanks for taking my questions My first questions for Roger.
Speaker Change: We're bringing it to market.
Speaker Change: <unk> add value in their portfolios.
Speaker Change: Last year, you guys saw some solid growth in your open end vehicles and also firm wide flows inflected positively later into the year as you touched on in your prepared remarks. Despite that we still saw operating expenses outpaced management fee growth.
Speaker Change: Thank you.
Speaker Change: Our next.
Speaker Change: Comes from Ben Rubin from UBS. Please go ahead your line is open.
Speaker Change: So obviously appreciating that operating leverage tends to lag inflows in general AUM build do you think you can grow operating margins off the 35% clip in 2025 and if so do you require another year of positive market beta or appreciation to unlock that thank you.
Speaker Change: Hi, Thanks for taking my questions My first questions for Roger.
Speaker Change: Last year, you guys saw some solid growth in your open end vehicles and also firm wide flows inflected positively later into the year as you touched on in your prepared remarks. Despite that we still saw operating expenses outpaced management fee growth.
Speaker Change: So obviously appreciating that operating leverage tends to lag inflows in general AUM build do you think you can grow operating margins off the 35% clip in 2025 and if so do you require another year of positive market beta or appreciation to unlock that thank you.
Speaker Change: Yes, let me just maybe kick it off and then I'll turn it over to Joe to go deeper on that so I think as we've talked about with the initiatives on the investments that we have in process that we've been undertaking.
Speaker Change: Most recently and also that we're looking for into 2025 and the future years.
Joe Harvey: Yes, let me just maybe kick it off and then I'll turn it over to Joe to go deeper on there. So I think as we've talked about with the initiatives on the investments that we have in process that we've been undertaking.
Speaker Change: Level of operating expense, that's associated with those but obviously those initiatives will have revenue attached to them in the medium and the long term and that's going to create positive operating leverage and so that's how we think about the context of the investments and the initiatives and the approach that we take towards.
Speaker Change: As most recently and also that we're looking forward into 2025 and the future years Theres a level of operating expense that's associated with those but obviously those initiatives will have revenue attached to them in the medium and the long term and that's going to create positive operating.
Speaker Change: Balancing operating leverage in the near term as well as investing in the firm.
And so that's how we think about the context of the investments and the initiatives and the approach that we take towards balancing operating leverage in the near term as well as investing in the firm.
Speaker Change: Thank you.
I appreciate that Roger that color I.
Speaker Change: I believe in the last call you guys guided to $1 billion of known redemptions from a combination of both advisory and sub advisory clients that would be split over is expected to be split evenly between the fourth quarter and in this quarter. So just wanted to clarify did the $500 million that you expected to come out did come out of the last last quarter's numbers.
Speaker Change: Thank you.
Speaker Change: I appreciate that Roger in that color I believe in the last call you guys guided to $1 billion of known redemptions from a combination of both advisory and sub advisory clients that would be split or is expected to be split evenly between the fourth quarter and in this quarter. So just wanted to clarify that the $500 million that you expected to come out.
Speaker Change: And does your updated guidance of the 800 million.
Speaker Change: <unk> redemptions in the first half of this year reflects some portion of that previous amount just wanted to clarify the updated redemption guidance. Thank you.
Speaker Change: Ladies and gentlemen, this is the operator, we are experiencing technical difficulties. Please stay on the line the color resume shortly.
Speaker Change: Come out.
Speaker Change: This quarter's numbers and does your updated guidance of the $800 million.
Speaker Change: Expected redemptions in the first half of this year, our flex some portion of that previously just wanted to clarify the updated redemption guidance. Thank you.
Speaker Change: Ladies and gentlemen, this is the operator, we are experiencing technical difficulties. Please stay on the line the color resume shortly.
Speaker Change: The Speaker line has now reconnected.
Speaker Change: Okay. This is <unk>.
Speaker Change: Joe Harvey, we got disconnected, but I was responding to the question on operating leverage.
Speaker Change: Just to recap.
Speaker Change: The drivers of opera related operating leverage number one our market levels or appreciation or depreciation second is organic growth and the third as well.
Speaker Change: Okay.
Speaker Change: Mr. <unk> your line is now reconnected.
Speaker Change: Okay. This is Joe Harvey, we got disconnected, but I was responding to the question on operating leverage.
Speaker Change: What we're doing from a new investment perspective.
Speaker Change: The first one depreciation depreciation we can't control. The second one we can organic growth and then third as it relates to the investments.
Speaker Change: Just to recap.
Speaker Change: The drivers of opera related operating leverage number one our market levels or appreciation or depreciation second is organic growth and the third is.
Speaker Change: And specifically to where we're situated today, we've made a lot of the investments for our private real estate business. What we're doing on our active Etfs is factored into our <unk>.
What we're doing from a new investment perspective.
The first one depreciation depreciation we can't control the second one we can or organic growth.
Speaker Change: Comp ratio guidance for and G&A guidance for 2025 so.
Speaker Change: Third as it relates to the investments.
Speaker Change: And as you'll note the comp ratio guidance is similar to what it was in 2024, so I would say that.
Speaker Change: And specifically to where we're situated today, we've made a lot of the investments for our private real estate business. What we're doing on our active Etfs is factored into our comp ratio guidance for and G&A guidance for 2025. So.
Speaker Change: Progression will be a function of what the what the markets do and how we do on generating organic growth.
Speaker Change: And you'll note that comp ratio guidance is similar to what it was in 2024, So I would say the progression will be a function of what the what the markets do and how we do on generating organic growth.
Speaker Change: Got it thanks for those thanks for the responses. So it sounds like more of like a longer term theme as opposed to a near term phenomenon. So I believe in the last call you guys guided to $1 billion of known redemptions from a combination of both advisory and sub advisory clients and it was expected that that $1 billion will be split.
Speaker Change: Got it thanks for those.
Speaker Change: Evenly between the fourth quarter and this quarter. So just wanted to confirm did the $500 million come out in the fourth quarter and does your updated guidance for $800 million of <unk>.
Speaker Change: Launches.
Speaker Change: It sounds like more like a longer term theme as opposed to a near term phenomenon. So I believe in the last call you guys guided to $1 billion of known redemptions from a combination of both advisory and sub advisory clients and it was expected that that $1 billion would be split evenly between the fourth quarter and this quarter. So just wanted to confirm did the five.
Speaker Change: <unk> in the first half of this year includes some portion of that previously amount I just want to clarify the updated guidance. Thanks.
Speaker Change: The $800 million would be the same on the same basis as the $1 billion. So.
Speaker Change: <unk> hundred million come out in the fourth quarter and does your updated guidance for $800 million of redemptions in the first half of this year include some portion of that previously amount I just want to clarify the updated guidance.
Speaker Change: About 200 of it already occurred before year end.
Speaker Change: $200 million came a sorry, Tien generally came out in the fourth quarter.
Speaker Change: Correct.
Speaker Change: Got it thanks.
Speaker Change: The $800 million would be the same on the same basis as the $1 billion. So.
Speaker Change: And then just squeeze a last one in.
Speaker Change: We see a number of deals announced in the space in terms of active managers acquiring private managers are buying differentiated capabilities is that something you too would be open to pursuing and if so which act which asset classes will be most appealing and would you be open to putting debt on the balance sheet to finance finance such a transaction. Thank you.
Speaker Change: About 200 of it.
Speaker Change: Already occurred before year end.
Speaker Change: $200 million came ESR turns it only came out in the fourth quarter.
Speaker Change: Correct.
Speaker Change: Got it thanks.
Speaker Change: And then just squeeze a last one in.
Speaker Change: We see a number of deals announced in the space in terms of active managers acquiring private managers are buying differentiated capabilities is that something you too would be open to pursuing and if so which act which asset classes would be most appealing and would you be open to putting debt on the balance sheet to finance finance such a transaction. Thank you.
Speaker Change: Yes.
Speaker Change: We've historically been very focused on organic growth and I've had a lot of success with that and as you can surmise from these comments today, whether it's our private real estate business are active etfs or.
Speaker Change: International C. Cavs, we've got a lot of opportunities and growth initiatives.
Yes.
Speaker Change: We've historically been very focused on organic growth and have had a lot of success with that and as.
Speaker Change: Underway and so we're going to stay very focused on that.
Speaker Change: So those activities require capital because reseeding all of those vehicles and so our very strong balance sheet.
Speaker Change: You can surmise from these comments today, whether it's our private real estate business are active etfs or.
Speaker Change: International <unk>, we've got a lot of opportunities and growth initiatives.
Speaker Change: As <unk>.
Speaker Change: Puts us in a very good position to pursue these types of opportunities.
Speaker Change: Underway and so we're going to stay very focused on that.
Speaker Change: Our history, we've made one small acquisition and that enabled us to.
Speaker Change: So those activities require capital because reseeding all of those vehicles and so our very strong balance sheet.
Speaker Change: Expand our what was one strategy at the time U S rates into our global strategy and began the process of us.
Speaker Change: As a push.
Speaker Change: Puts us in a very good position to pursue these types of opportunities.
Speaker Change: <unk> global as it relates to distribution.
Speaker Change: And so.
Speaker Change: In our history, we've made one small acquisition and that enabled us to.
Speaker Change: There are there are circumstances, where.
Speaker Change: And accurate acquisition can really be.
Speaker Change: Expand our what was one strategy at the time U S rates into our global strategy and began the process of us.
Speaker Change: Strategic.
Speaker Change: Change for the company.
Speaker Change: Right now, it's not what we're focused on but.
Speaker Change: Going global.
Speaker Change: <unk> distribution.
Speaker Change: If we could find distressed investment strategy that would make sense to enhance our lineup something that we would have the interest in it.
Speaker Change: And so.
Speaker Change: There are there are circumstances, where.
And accurate acquisition can really.
Speaker Change: And doing and have the resources to do.
Strategic.
Speaker Change: But.
Change.
Speaker Change: Change for the company.
Speaker Change: Acquisitions M&A is not.
Speaker Change: Right now it's not what we're focused on that.
Speaker Change: Part of our day to day business.
Speaker Change: If we could find distressed investment strategy that would make sense to enhance our lineup something that we would have the interest in it and doing and have the resources to do.
Speaker Change: Delivering excess returns and generating organic growth.
Speaker Change: Yes.
Speaker Change: Great. Thank you for taking my questions.
Speaker Change: Our next question comes from John Dunn from Evercore ISI. Please go ahead. Your line is open.
Speaker Change: But.
Speaker Change: Acquisitions M&A is not.
Speaker Change: Part of our day to day business.
Speaker Change: Thanks.
Delivering excess returns and generating organic growth is.
Speaker Change: So.
Speaker Change: You mentioned that you're investing in your international offices. So maybe could you talk about like what are the best and most important markets outside the U S for flow demand and are there any.
Speaker Change: Great. Thank you for taking my questions.
Speaker Change: Our next question comes from John Dunn from Evercore ISI. Please go ahead. Your line is open.
Speaker Change: Like preferences or behavioral differences to point to.
Are those markets.
Speaker Change: Thanks.
John Dunn: So you mentioned that Youre investing in your international offices. So maybe could you just talk about like what are the best and most important markets outside the U S for flow demand and are there any different like preferences or behavioral differences to point to.
Speaker Change: Well I believe roger's comment on G&A.
Speaker Change: <unk>. The fact that we have expanded some of our international offices.
Speaker Change: London.
Speaker Change: And.
Speaker Change: Tokyo, and Hong Kong and.
Speaker Change: Those markets.
Speaker Change: In most cases, where we've expanded our our footprint because we need more more space.
Speaker Change: Well I believe Roger's comment on G&A reflected the fact that we have expanded some of our international offices.
But the essence of your question.
Speaker Change: London and.
Speaker Change: <unk>.
Speaker Change: We think there are opportunities in.
Speaker Change: Tokyo, and Hong Kong and in.
Speaker Change: In many parts of the world.
Speaker Change: In most cases, where we've expanded our our footprint because we need more more space.
Speaker Change: We opened an office in Singapore.
Speaker Change: I don't know a year and a half or so ago.
Speaker Change: And that was driven by.
Speaker Change: But.
Speaker Change: The essence of your question.
Speaker Change: Two two.
Speaker Change: Factors one is that we wanted to have another office in case.
Speaker Change: We think there are opportunities in.
Speaker Change: In many parts of the world.
Speaker Change: Our employees.
Speaker Change: We opened an office in Singapore.
In Hong Kong wanted too.
Speaker Change: Locate to domicile, but also there are many clients in Singapore.
Speaker Change: I don't know a year and a half or so ago and that was driven by.
Speaker Change: And in the region that that want to see you have an office in.
Speaker Change: Two two.
Speaker Change: Factors one is that we wanted to have another office in case our employees.
Speaker Change: And Singapore.
Speaker Change: Hi.
Speaker Change: In Hong Kong wanted to.
Speaker Change: I have been talking about for several quarters now how we're starting to see adoption of our asset classes real estate infrastructure, primarily in Asia ex Japan and that is continuing.
Speaker Change: Locate too to another domiciled, but also there are many clients in Singapore.
Speaker Change: And in the region that that want to see you have an office in.
Speaker Change: And Singapore.
Speaker Change: It's.
Speaker Change: It's a slow process in some cases, but it's.
Speaker Change: Got it.
Speaker Change: I have been talking about for several quarters now how we're starting to see adoption of our asset classes real estate infrastructure, primarily in Asia ex Japan and that is continuing.
Speaker Change: Certainly justifies, having a bigger commitment.
Speaker Change: Personnel wise in the region. So so we have confidence to do that.
Speaker Change: And.
Speaker Change: In Japan, I've talked about the investment Renaissance. It Hasnt played out in terms of our flows yet but.
Speaker Change: It's.
Speaker Change: It's a slow process.
Speaker Change: Some cases, but it's <unk>.
Speaker Change: Certainly justifies, having a bigger commitment.
Speaker Change: We continue to add some sales resources to support our partner.
Speaker Change: Personnel wise in the region. So so we have confidence to do that.
Speaker Change: Asset management there.
Speaker Change: That will be subject to market conditions, but still confident in that very positive trajectory.
Speaker Change: And.
Speaker Change: In Japan, I've talked about the investment Renaissance. It Hasnt played out in terms of our flows yet but.
Speaker Change: On the investment.
Speaker Change: In asset management.
Speaker Change: We continue to add some sales resources to support our partner.
Speaker Change: Industry.
Speaker Change: In Japan. So those are just some some.
Speaker Change: <unk> asset management there.
Some color but.
Speaker Change: That will be subject to market conditions, but still confident in that very positive trajectory.
Speaker Change: Sure.
Speaker Change: So we think we have a lot of opportunities.
Speaker Change: Markets outside of the U S.
Speaker Change: And the investment.
Speaker Change: Thanks again.
Speaker Change: In asset management.
Speaker Change: Industry.
Speaker Change: Have no we have no further questions I will now turn the call back over to Joe Harvey for closing remarks.
Speaker Change: In Japan.
Speaker Change: So those are just some some.
Speaker Change: Some color but.
Speaker Change: And we are.
Joe Harvey: Okay well.
Speaker Change: So we think we have a lot of opportunities.
Speaker Change: You for listening.
Speaker Change: Markets outside of the U S.
Speaker Change: This quarter and I look forward to talking about the progress on.
Speaker Change: Thanks again.
Speaker Change: On our strategic plan is.
Speaker Change: We progress throughout 2025, and we will talk to you next in April so thank you.
Speaker Change: No. We have no further questions I will now turn the call back over to Joe Harvey for closing remarks.
Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
Speaker Change: Okay well.
Speaker Change: Thank you for listening.
Speaker Change: [music].
Speaker Change: This quarter and I look forward to talking about the progress on our strategic plan as we progress throughout 2025, and we will talk to you next in April so thank you.
Speaker Change: [music].
Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
Speaker Change:
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Thank you.
Speaker Change: [music].