Q1 2025 Affiliated Managers Group Inc Earnings Call
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Speaker Change: I would now like to turn the conference over to your host Ms. Patricia figure our head of Investor Relations for AMG. Thank you you may begin.
Speaker Change: Good afternoon, and thank you for joining us today to discuss Amg's result for the first quarter of 2020 five.
Speaker Change: Before we begin I'd like to remind you that during this call. We may make a number of forward looking statements, which could differ from our actual results materially and AMG assumes no obligation to update these statements.
Speaker Change: Also please note that nothing on this call constitutes an offer of any products investment vehicles or services of any AMG affiliate.
Speaker Change: A replay of today's call will be available on the Investor Relations section of our website along with a copy of our earnings release and a reconciliation of any non-GAAP financial measures, including any earnings guidance announced on this call.
Speaker Change: In addition, we have posted an updated investor presentation to our website and encourage investors to consult our site regularly for updated information.
Speaker Change: With us today to discuss the company's results for the quarter R. J Horrigan, President and Chief Executive Officer.
Tom: Tom would check Chief operating officer.
Speaker Change: And Dave Ritchie Chief Financial Officer.
Jay: With that I'll turn the call over to Jay.
Speaker Change: Thanks, Patricia and good afternoon, everyone.
Jay: Our first quarter results reflect the positive impact of our strategic capital allocation to areas of secular growth over the past several years.
Jay: Through our growth investments in new and existing affiliates, particularly those operating in private markets and liquid alternatives.
Jay: We are continuing to evolve our business towards a substantially greater contribution from higher fee and longer duration client assets.
Jay: In the quarter.
Jay: Led by significant momentum at two of our largest affiliates AQR and pantheon.
Jay: We generated a record 14 billion and net client cash inflows into alternative strategies.
Jay: Which largely offset outflows from our long only business.
Jay: We believe that the evolution of our business composition towards alternatives is fundamental to achieving sustained organic growth.
Jay: And given the progress we have made over the past several years.
Jay: Along with the current momentum in our alternative strategies, we expect our flow profile to continue to improve as our mix shift accelerates.
Jay: From a new affiliate investment perspective, we have announced three new partnerships. So far in 2025 with North bridge fruition and call. He taught us energy.
Jay: Having committed approximately 700 million to these new partnerships year to date.
Jay: And given our pipeline of prospective new affiliates the pace of our new investment activity is that one of the fastest levels in nearly a decade.
Jay: We expect that each investment will be accretive to our earnings and will improve our organic growth profile.
Jay: Despite the recent market volatility we continue to execute on our strategy investing in growing businesses that we believe are operating in areas of jewelry durable client demand.
Jay: And we are able to make these new investments from a position of strength.
Jay: Given the diversity of our business and flexibility of our balance sheet.
Jay: On the private market side, we have recently announced two new partnerships with firms operating in areas of secular growth.
Jay: In February we announced a new investment and Northbridge partners.
Jay: Private markets manager specializing in industrial logistics real estate.
Jay: A fast growing sector benefiting from the expanding digital economy.
Jay: Over the past decade, the firms experienced and entrepreneurial management team has delivered excellent performance for its L. PS while also diversifying its strategies and expanding its team and geographic footprint.
Jay: And this week, we announced a new investment in <unk> energy.
Jay: Leading global infrastructure manager specializing in energy transition with a focus on Europe, and a track record of delivering strong returns for clients over the past two decades.
Jay: Energy security and independents are critical issues to the European region.
Jay: We are driving demand for investments into renewable energy sources and energy transition assets.
Jay: <unk> energy has a distinctive competitive position with its opportunistic value added approach a vertically integrated industrial platform.
Jay: And locally based teams with deep knowledge of their respective geographic regions.
Jay: On the liquid alternative side, we have been focused on the multi strategy sector, given its growing investor allocations.
Jay: Strong risk adjusted returns.
Jay: And low correlation to other asset classes.
Jay: And in April we announced our partnership with fruition.
Jay: Fruition as a leader in the multi strategy space with.
Jay: With a strong risk framework and a proven ability to consistently deliver excellent results for our clients.
Jay: In addition, <unk> ability to attract and retain talent across its 150 teams managing more than 12 billion in AUM.
Jay: Distinguishes the firm relative to its peers and is highly attractive to new and existing clients.
Jay: Our three new partnerships are in line with our strategy of investing in high quality independent firms operating in areas of secular growth.
Jay: And together.
Jay: These new investments will add approximately 18 billion and assets under management across illiquid alternatives and private markets.
Jay: Fruition northbridge in call it ties to energy were each attracted amg's value proposition given our unique approach.
Jay: We collaborate and strategically engage with our affiliates to make their great firms, even better providing access to a broad range of proven strategic capabilities to enhance their long term success.
Jay: Well actively preserving each affiliate's independents.
Jay: These new partnerships underscore the ongoing demand for Amg's differentiated partnership approach, our ability to source new opportunities organically and our focus on investing in areas of secular growth.
Jay: Yeah.
Jay: Finally, we also announced the transaction that demonstrates our ability to create shareholder value by supporting our affiliates long term strategic goals.
Jay: Earlier this week Peppertree agreed to be acquired by diversified private market's manager, resulting in a significant gain on afg's minority stake doubling our initial investment.
Jay: Given that our partnership structure aligns us with our affiliates. Their success is our success and we are very pleased that this partnership will culminate in an excellent outcome for all stakeholders.
Jay: Looking ahead, our new investment pipeline remains strong.
Jay: And given the ongoing attraction of Amg's differentiated partnership approach.
Jay: Along with our excellent competitive position.
Jay: And proprietary relationships, we continue to have active discussions with a number of firms in our pipeline.
Jay: And with our strong capital position, we have ample flexibility to execute on these opportunities and also return capital through share repurchases as we did in the first quarter repurchasing 173 million in additional shares.
Jay: As always we will remain disciplined in our capital allocation decisions as we evaluate our opportunities against a common framework to create value for shareholders.
Jay: Taken altogether with our enhanced opportunity set.
Jay: Excellent capital position and our unique competitive advantages, we are confident in our ability to generate incremental shareholder value overtime.
Tom: And with that I'll turn it over to Tom.
Tom: Thank you Jay and good afternoon, everyone.
Tom: AMG allocated significant capital towards growth investments to start the year.
Tom: Furthering our strategy to evolve our business mix toward areas of secular demand most notably alternatives.
Tom: Our affiliate partners are increasingly focused on leveraging amg's unique strategic capabilities, including product development and distribution through our capital formation platform.
Tom: We continue to believe that our growth investments across new and existing affiliates as well as amg's strategic capabilities.
Tom: We will collectively lead to sustainable long term organic growth earnings growth and shareholder returns.
Tom: In the first quarter net client cash flows were roughly flat.
Tom: Reflecting ongoing strength in alternatives.
Tom: Offset by industry headwinds and long only equities.
Tom: As we continue to shift our business mix more toward alternatives, we expect amg's organic growth trajectory and the quality of our flows to continue to improve over time.
Tom: Our private markets affiliates raised $3 billion in the quarter.
Tom: Primarily in credit infrastructure and private market solutions.
Aided by Amg's efforts in the U S wealth channel.
Tom: On the heels of a record fundraising year in 2020 for.
Tom: Our affiliates ongoing fundraising strength reflects investors' conviction and theyre specialist investment strategies and the positive fundamentals of their sectors.
Tom: Amg's private markets affiliates continue to generate outstanding investment performance across a number of attractive areas, including infrastructure credit.
Tom: Robert market solutions, and specialty areas, including industrial Decarbonization.
Tom: <unk> Sciences multifamily real estate and industrial logistics.
Tom: As we continue to form new partnerships with the highest quality independent firms in areas of secular growth.
Tom: Such as our recently announced investments in Northbridge partners and quality energy.
Tom: We are broadening our exposure to fast growing specialty areas within private markets and further diversifying our business.
Tom: And liquid alternatives, our affiliates value proposition continued to gain momentum with clients and resulted in $10 billion in net inflows driven primarily by tax aware solutions and representing the strongest quarterly flow number and liquid alts that AMG has delivered and our.
Tom: History.
Tom: As market volatility increases following more than a decade of falling rates and rising equity markets. We continue to believe that high quality liquid alternative firms are well positioned to deliver excellent risk adjusted returns for clients and attract new flows over time.
Tom: Our affiliates managing liquid alternative strategies have excellent long term track records across both beta sensitive and absolute return strategies.
Tom: Including global macro.
Tom: <unk> value fixed income <unk>.
Tom: Aware solutions and trend following.
Tom: Our recently announced investment in information one of the industry's premier multi manager businesses is an excellent addition to our liquid alternatives portfolio and will enhance.
Tom: The diversification and stability of our earnings profile.
Tom: <unk> excellent long term risk adjusted return profile and low correlation to risk assets.
Tom: Demonstrated over nearly two decades positions the firm for future success, and we are excited to welcome them to AMG.
Tom: In equities, we saw net outflows of approximately 14 billion in the quarter.
Tom: Reflecting industry and near term performance headwinds.
Tom: Multi asset and fixed income net flows were flat in the quarter.
Tom: Over the last several years AMG has invested in and broadened its strategic capabilities that can magnify affiliates efforts most prominently in product development and capital formation and we are seeing strong results.
Tom: Our continued collaboration with affiliates to develop and support alternative products for the U S. Wealth market is driven approximately $2 5 billion in net flows over the last 12 months, including at the AMG Pantheon Fund one of the largest and most established private markets products in the channel.
Tom: Which has grown its assets under management to approximately $5 billion today.
Tom: We continue to work with our affiliates to bring new products to market to capitalize on the multi decade growth opportunity that is clearly ahead of us and alternatives in U S wealth.
Tom: Importantly, the success that we're having in the wealth channel is resonating not only with clients and existing AMG affiliates, but also with new investment prospects as accessing this attractive market requires scale.
Tom: And it's difficult if not impossible for independent firms to do on their own given the resources required to be effective in the channel.
Tom: As we continue to make new investments in alternative firms, we look forward to collaborating with additional affiliates to broaden their reach and expand their platforms.
Tom: Our capital formation efforts also contributed to an excellent outcome for all stakeholders and pepper trees recently announced sale.
Tom: When we partnered with Pepper tree it's.
Tom: Its partners were focused on diversifying their client base and growing their business as an independent firm and.
Tom: In AMG was able to make meaningful contributions to support their growth.
Tom: We wish the pepper tree team the best in the next leg of their journey and are proud to have been their partner.
Tom: Our approach to investing in the growth of our business is highly intentional.
Tom: The successful execution of Amg's growth strategy through the deliberate capital allocation decisions, we are making across new investments investments in existing affiliates.
Tom: And investments to enhance our capabilities is driving the evolution of our business mix more towards secular growth areas.
Tom: And as we continue to execute our strategy, we expect the contribution from alternatives to further increase.
David: With that I'll turn the call over to David to discuss our first quarter results and guidance.
David: Thank you Tom and good afternoon, everyone.
Speaker Change: As Jay and Tom described we've had an active start to the year in terms of capital allocation committing nearly $700 million in capital across growth investments and completing 173 million of share repurchases during the first quarter.
Speaker Change: The strength of our balance sheet and underlying health and diversity of our business enabled us to execute our growth and capital allocation strategy during a period of relative market turbulence.
Speaker Change: I will start with our results for the quarter before covering the impact of this capital activity on the forward earnings power of our business.
And conclude with the impact on our balance sheet.
Speaker Change: In the first quarter.
Speaker Change: We reported adjusted EBITDA of 228 million, which included $20 million and net performance fee earnings.
Speaker Change: These results represent a decline of 12% year over year, driven by lower EBITDA from performance fees and the comparison to a one time private market catch up fee occurring during the prior year quarter.
Speaker Change: Excluding these items fee related earnings grew 4% year over year, driven primarily by higher average AUM as a result of organic growth in our alternative strategies and market data.
Speaker Change: This was partially offset by outflows within fundamental equity strategies.
Speaker Change: Economic earnings per share of $5 20.
Speaker Change: Benefited from 720 million of share repurchases over the last four quarters and declined 3% year over year.
Speaker Change: In the quarter of $77 million write down was recorded to the indefinite lives carrying value of certain mutual fund assets and a product closure at our fundamental equity affiliate.
Speaker Change: Which also impacted intangible related deferred taxes for the quarter.
Speaker Change: Now moving to the second quarter guidance, we expect adjusted EBITDA to be in the range of $210 million and $225 million.
Speaker Change: This is based on current AUM levels, reflecting our market blend, which was up 1% quarter to date as of May 7th and includes seasonably lower net performance fees of up to $10 million.
Speaker Change: This guidance includes a partial contribution from our new investment in <unk> and no impact from our recently announced investment in Kuala tough energy or the sale of Amg's interest and pepper tree, both of which are expected to close later this year.
Speaker Change: We expect collective accretion and run rate economic earnings per share from our three new investments Northbridge partners progression and <unk> energy.
Speaker Change: Net of the sale of our stake in pepper tree to be approximately 8% with strong future upside potential to both earnings and organic growth given the excellent positioning of our three new affiliates. This assumes the after tax proceeds from the Peppertree sale are redeployed into growth investments share repurchases or.
Speaker Change: Other capital allocation purposes.
Speaker Change: The table will be adjusted to include new investments as they close with fruition.
Speaker Change: $12 6 billion to be added in the second quarter and quality has likely following later this year.
Speaker Change: In the case of Pepper tree, approximately 5 billion and a U M will be removed in the third quarter. When the transaction is expected to close.
Speaker Change: Finally, turning to the balance sheet and capital allocation.
Speaker Change: The work we've done on strengthening our balance sheet over the last several years well positioned us to be able to execute our growth strategy across all stages of a market cycle.
Speaker Change: We entered the year with one a strong liquidity position operating at a historically lower leverage level.
Speaker Change: Two our long dated capital structure with average duration of more than 20 years and three access to additional capital from our $1 5 billion Undrawn revolver.
Speaker Change: Our balance sheet is further supported by a healthy underlying business generating annual recurring cash flow from a highly diverse set of affiliates.
Speaker Change: Combination of these factors enabled us to effectively deploy capital at attractive opportunities materialize.
Speaker Change: With the announcements of Northbridge partners fruition and Koala tests NRG, we have committed to deploying nearly $700 million of capital to growth investments. So far this year.
Speaker Change: And our new investment pipeline continues to be full with active dialogues ongoing as Jay had discussed earlier.
Speaker Change: And the expected proceeds from the Pepper Cherry transaction of approximately $240 million at closing, which is not only a sizable gain and return on capital for our shareholders, but a liquidity event that enhances our ability to continue to deploy capital toward strategic growth areas and deliver value to our shareholders.
Speaker Change: We repurchased approximately $173 million in shares in the first quarter and for the full year 2025, we expect to repurchase approximately 400 million subject to market conditions and new investment activity.
Speaker Change: Inclusive of the commitments to new investments and repurchases to date, our balance sheet remains strong and we continue to be well positioned to deploy capital into attractive opportunities.
Speaker Change: We will continue to apply our disciplined capital allocation framework and we are confident in our ability to make forward thinking decisions for the benefit of our shareholders that will generate meaningful long term value.
Speaker Change: Now we are happy to take your questions.
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Speaker Change: To allow for as many as possible we ask that you each keep to one question. Thank you.
Speaker Change: Our first question comes from the line of Alex Blaustein with Goldman Sachs. Please proceed with your question.
Alex Blaustein: Hey, good morning. Good afternoon. Thank you for the question first maybe a little bit on the strategic side for you guys over the last couple of years.
Alex Blaustein: We've seen several private market manager sales, obviously being the latest one can you just maybe walk through what drives the decision to decide to part with one of the affiliates.
Alex Blaustein: Especially in areas like private markets, which obviously the machine the fastest growth for you and the industry broadly.
Alex Blaustein: And as you kind of think forward should we expect any other potential sales and would those be limited just to minority Stakes or you could see yourself also selling down one of your majority owned affiliates as well thanks.
Speaker Change: Yes, Thanks, Alex Good afternoon to you all see if I can I'll see if I can take that.
Speaker Change: Question that had several parts if I Miss anything maybe Tom you can add please.
Speaker Change: So the first thing.
Speaker Change: To address your strategic question as you know our strategy. It remains unchanged, we partner with high quality independent firms to magnify their success and actively support their independence.
Speaker Change: So as you know and you've been following us for some time now you know our business model centered around the competitive advantages of independent firms aligned with their clients.
Speaker Change: AMG has developed a range of capabilities that enable these partner owned firms to grow and maintain their independence over time, so when an affiliate chooses AMG.
Speaker Change: You know, it's choosing to stay independent.
Speaker Change: Our model that aligns with their long term direction.
Speaker Change: And it also aligns us to their long term director direction and the choices that they make.
Speaker Change: So at the inception of our partnership our expectation is that our affiliates will remain independent because thats why they chose us.
Speaker Change: But all businesses and partnerships evolve.
Speaker Change: And sometimes circumstances change such as independents is no longer the optimal long term structure for any given firm.
Speaker Change: So in those cases in some cases I should say.
Speaker Change: This may result, in a transaction, which we and our affiliates sort of mutually agree to evolve our relationship.
Speaker Change: And given the structure of the partnership structure that we have.
Speaker Change: Strategic decisions that are driven by our affiliates in collaboration with AMG.
Speaker Change: If results sometimes in these these transactions I think it's important to note and you kind of alluded to it that.
Speaker Change: In our partnership model, we cannot unilaterally impose strategic decisions on our affiliates.
Speaker Change: And in the same vein, we have certain rights to ensure that AMG shareholders are treated fairly to the extend a strategic transaction occurs.
Speaker Change: One of the things I would say as you know to me. These liquidity events that we've had and I'll address them and total in a minute a highlight the underlying business value of our affiliates and the cases are bearing veritable and peppertree. It highlights how much these businesses grew and thrived under AMG and because we're aligned with those affiliates.
Speaker Change: Their success is our success.
Speaker Change: I will just make one other point, which is.
Speaker Change: Across baring variable and pepper tree, we did have significant realized return on our invested capital. So thats good for AMG and AMG shareholders were able to redeploy that capital.
Speaker Change: And also return capital to shareholders, we continue to push forward with our strategy of continuing to invest in alternatives both liquid.
Speaker Change: Alternatives and private markets, which you've seen year to date as David had mentioned $700 million of capital that went to those investments and we continue to change our business mix in favor of alternatives that has not changed and even though we've had a few.
Speaker Change: Our affiliates that have chosen a different direction over the long term, we see that business next moving very much in favor of alternatives and also keeping in the spirit of our ethos, we would like our independent firms to be healthy and thriving and we'll do everything that we can to help them, but to the extent there.
Speaker Change: They choose a different direction for strategic reasons again their success is our success.
Speaker Change: Thank you. Our next question comes from the line of Dan Fannon with Jefferies. Please proceed with your question.
Dan Fannon: Hi, Thanks. Good afternoon, just wanted to follow up on the liquid alternative flows as you mentioned record quarter.
Dan Fannon: And some of the you mentioned a few firms, but I was hoping you could talk about just the diversity of flows in the quarter. The conversations with clients are having around these products and how to think about this quarter versus the outlook based upon the conversations and the backlog youre, having around the institutional products.
Dan Fannon: Driving these flows.
Dan Fannon: Great well. Thank you Dan for your question. Good afternoon, I think this when Tom should take.
Dan Fannon: Thanks, Dan So you're right liquid alternatives definitely were the standout for us this quarter with $10 billion in net inflows.
Dan Fannon: And that was driven primarily by tax aware solutions and we've really begun to see those tax aware solutions ramp quite a bit over the course of the last couple of quarters.
Speaker Change: I think importantly, a lot of that is actually in the wealth space.
Speaker Change: And equally as important the combination of that liquid alternative wrapper and exposure to wealth means that the stickiness.
Speaker Change: As well as the fee rate associated with some of these flows is really attractive to us.
Speaker Change: Overall across liquid alternatives and Jay has been talking about this theme really over the course of the last couple of years as we see market volatility continuing to increase and we sort of move out of this world, where it's simply an up into the right rate driven equity market. We continue to believe that these high quality liquid.
Speaker Change: Alternative firms are really well positioned to deliver excellent risk adjusted returns for their clients and to attract new flows over time and the trajectory that we've seen in terms of that flow profile has been building nice momentum over the last couple of quarters and really came through for us this quarter.
Speaker Change: In addition to that the recently announced investment that we've made in <unk>.
Speaker Change: It gives AMG yet another opportunity to really benefit from the growth that we expect to see in the overall hedge fund space on the back of some of those volatility and absolute return driven themes and in particular in the multi strat space. So I think Dan as you know we have a lot of great businesses.
Speaker Change: In our liquid alternatives.
Speaker Change: Set of affiliates.
Speaker Change: And that diversification and the fact that year in year out we have businesses that continue to perform for our clients puts us in a really good place puts us in a good place in terms of attracting flows in delivering outcomes for clients as well as benefiting from performance fees as those businesses outperform overtime.
Speaker Change: Thank you. Our next question comes from the line of Bill Katz with TD Cowen. Please proceed with your question.
Bill Katz: Okay. Thank you very much I appreciate taking the question Okay afternoon.
Bill Katz: Maybe just switching gears a little bit on the equity side of the equation and I was wondering if you could talk a little bit about what youre seeing there in terms of allocation discussions by investors either coming into equities, just given the market dynamics going out of equities and if there is any kind of change maybe overlaying growth versus value of international versus.
Speaker Change: Domestic appeal. Thank you.
Bill Katz: Okay.
Speaker Change: Thanks, Bill why don't I take a first shot at that and Jay may want to add as well.
Speaker Change: In equities as you saw from the flows this quarter, we do continue to see some headwinds along with the overall industry.
Speaker Change: That said as you kind of alluded to in your question. There is a lot going on beneath the surface with respect to the overall long only equity complex in the industry.
Speaker Change: We are seeing this recent market volatility creates some opportunities for very high quality investment teams at our affiliates to differentiate themselves.
Speaker Change: And many of our affiliates do you have more of a quality oriented or a more defensive approach to building portfolios. So we've seen some nice pockets of outperformance. So far in 2025, and we will certainly continue to watch some of those trends that are long only managers.
Speaker Change: Element that you asked about in your question.
Speaker Change: We do have quite a bit of exposure to international global products as well.
Speaker Change: And we've seen a bit of a change in this multi year theme of a stronger dollar being a bit of a headwind there with the weakening of the dollar in the quarter you were able to see the beta and sort of market driven impact an uplift in some of our global strategies and I think thats also changing the conversations a bit in terms of the overall thought process around allocations. So.
Speaker Change: I'd say overall a lot of moving parts in equities. We continue to have an outstanding group of long only firms with multi decade track records, who have been able to perform and deliver for clients through cycles and.
Speaker Change: And notwithstanding some of the challenges in the industry. We think a lot of these businesses continued to be very well positioned to deliver for clients into the themes that they are most focused on.
Speaker Change: Thank you. Our next question comes from the line of Brian Bedell with Deutsche Bank. Please proceed with your question.
Brian Bedell: Great. Thanks, good afternoon folks.
Speaker Change: If I can ask a two parter.
Brian Bedell: Just to clarify again, I think you said it.
Speaker Change: Like 8% accretion from the deal.
Speaker Change: Three investments and the silicon for treating on a net basis and I assume that's a run that's an annualized run rate basis.
Speaker Change: After fully completed as opposed to 2025 and then.
Speaker Change: If you can comment on.
Speaker Change: Is that 8% on an EBIT.
Speaker Change: <unk> economic EPS and then if I can layer. Another question on organic growth, it's kind of a perfect balance this quarter between.
Speaker Change: Alternatives versus long only equities on both sides.
Speaker Change: So kind of a neutral overall, a U M net flow profile, but.
Speaker Change: Can you comment on whether it was a positive or negative base fee organic growth profile, considering the fee rates and your ownership stakes in those entities.
Speaker Change: Great well thanks, Brian. Thanks for your question. Good afternoon, David Why don't you take the first question and then and then maybe Tom can follow it up on the organic growth.
Speaker Change: Great. Thanks, Brian I appreciate the question.
Speaker Change: Your point is exactly right. So when you think about the 8% accretion overall, we are thinking about that on an annualized basis, it's really beginning in 2026.
As you know the Ah.
Speaker Change: <unk> has not yet closed yet that will close sometime in the third quarter Koala task will close most likely before the end of the year and so as we were guiding here, we were really talking about the impact of this on a full year basis, starting in 2026, and we will provide you with some guidance along the way as to how it could impact that.
Speaker Change: The course of this year when.
Speaker Change: When you think about that 8% accretion number is to economic earnings per share.
Speaker Change: And I think with respect to the organic growth question. There are obviously a lot of elements that go into that and as you know we don't disclose an organic growth impact to EBITDAR to earnings, but if you think about the drivers.
Speaker Change: On the alternative side continued strong growth in private markets very long duration locked up capital high fee rates on a base fee basis as well as the ability to generate long term carry which we will own going into the future as well and then on the liquid alternative side, which was the lion's share of flows in the quarter as I mentioned in the response to our <unk>.
Speaker Change: <unk> question, a lot of that was driven by tax aware liquid alternative strategies.
Speaker Change: Again, very sticky asset base attractive fee rates.
Speaker Change: So across liquid alternatives and private markets you get not only the combination of high base fee rates, but also the opportunity to gain.
Speaker Change: Earnings from performance fees over time, so all of those things extremely valuable on a long on the outflow side you tend to see lower fee rates from a base fee perspective, oftentimes, we do tend to own a little bit more of those businesses. So that balances it a bit but I would say overall the fee impact and the earnings impact from flows in a quarter like this.
Speaker Change: You know pretty positive to us on a long term basis and in particular that duration and stickiness and the ability to earn over the course of years on those assets is really valuable.
Speaker Change: Through our long term earnings growth story.
Speaker Change: Yes. Those were those are great summary, thanks, David Thanks, Tom I wanted to maybe take it up a level and look.
Speaker Change: Forward a bit more.
Brian Bedell: Brian and so.
Speaker Change: It may be using this year to date period.
Speaker Change: Just as a lens to talk about that so this has been an incredibly exciting period for AMG year to date, which.
Speaker Change: Which is really at the output of our strategy that we've been executing on for more than five years now and just kind of recap we've announced three new partnerships that we believe will add not only to our earnings as David mentioned, but also to to our organic growth profile in this quarter, we saw improving flow trends driven by.
Speaker Change: Our alternative managers and.
Speaker Change: And we expect with the combination of these new investments and the continued growth of our existing business that our mix shift is going to change in favor of longer duration higher fee assets as we see these these this new growth contribute to that that profile. So we do expect looking ahead.
Speaker Change: That alternatives are now over 50% of our earnings in the future growing from there, which will have positive implications to our future organic growth and then finally may I just round it out on the forward outlook to say, we remain committed to disciplined capital allocation. It resulted in a $173 million of additional repurchases. This year after <unk>.
Speaker Change: $700 million last year, and I'm excited about the remainder of the year as we see the pace of new investment activity remain high and I am excited about the future of our strategy, which is as it continues to drive our business towards areas of secular growth.
Speaker Change: Okay.
Speaker Change: Thank you our final question this morning.
Speaker Change: Comes from the line of Patrick Davitt with Autonomous Research. Please proceed with your question.
Speaker Change: Hey, good afternoon, everyone.
Speaker Change: You mentioned the alternative wealth opportunity, so maybe update us on how distribution expansion for the existing products is going if there are any newly filed products you could point to and then maybe medium to longer term.
Speaker Change: Help frame how many new products are in the laboratory to be launched later in the year and into 2026. Thank you.
Speaker Change: Yes excellent question.
Speaker Change: Patrick really appreciate it good afternoon to you I'm going to let Tom take it but I wanted to say just one thing that.
Speaker Change: We believe as part of our strategy that are <unk>.
Speaker Change: <unk> ability to offer.
Speaker Change: Resources and help to our affiliates to help magnify their own business.
Speaker Change: Objectives is key to our strategy to both winning new investments as well as supporting the growth of our affiliates. So wealth as it is a key important area that we are focused on so maybe I'll, let Tom elaborate further.
Speaker Change: Thanks for the question Patrick and for the insurer there Jay I think it leads right into thinking about U S wealth specifically.
Tom: AMG has a vertically integrated U S wealth platform, meaning we're able to cover all the different elements that are required for an affiliate to move into that market and it's a very complex market.
Speaker Change: For our affiliates to cover and.
Speaker Change: And therefore, we play a very important role in helping them to move into this space.
Speaker Change: We've been successful in bringing affiliates strategies to market through this platform over the last five years alternatives AUM on our U S. Wealth platform has grown grown more than tenfold. We ended last year north of $6 billion and we've started the year off to a good start as well.
Speaker Change: In the past year, we've invested alongside our affiliates and launched three new evergreen products and also filed for two additional strategies that we anticipate to go live later this year and that spans across credit secondaries and infrastructure with pantheon, a non traded BDC with converse.
Speaker Change: And two liquid alternative funds with systematically.
Speaker Change: In combination with the AMG Pantheon fund, which I mentioned earlier recently crossed 5 billion in AUM will now have six alternative continuously offered solutions designed specifically for Amg's U S wealth platform in the market.
Speaker Change: And to your question Patrick we continue to work with our affiliates and have a number of new ideas that we're working on both in terms of alternative product, but also importantly in terms of <unk>.
Speaker Change: Active etfs on the long only side as well so theres a lot of product development and innovation happening at.
Speaker Change: At AMG.
Speaker Change: Along with our own U S wealth platform I think it's also important that our affiliates, especially pantheon outside of the U S and AQR. They also continued to take advantage of these tailwind and well through their own product development and.
Speaker Change: And as a result, when you really put AMG, what we're doing at the center and our affiliates together collectively we're one of the largest sponsors of alternative products for wealth markets globally, we are more than $40 billion now in total AUM in the wealth space around the world at AMG and at our affiliates.
Speaker Change: And the other thing that you alluded to is how this is helping us and Jamie at this point as well in terms of not only helping our existing affiliates to grow but also continuing to fuel that flywheel to bring in excellent new investment prospects.
Speaker Change: Jay referenced the strength of the ongoing pipeline, we have a number of things.
Speaker Change: On the future pipeline, where wealth is core to that value proposition and firms are looking to AMG as their entry point to build a third fourth or fifth leg of the stool in a way.
Speaker Change: That they know that is very difficult or even impossible for them to do on their own. So this is a big part of our story, it's really been working and driving growth and we see it being a much larger part of the story going forward.
Speaker Change: Thank you ladies and gentlemen, this does conclude our Q&A session and thus concludes our call today. We thank you for your interest and participation you may now disconnect your lines.
Speaker Change: Okay.