Q2 2025 AllianceBernstein Holding L.P. Earnings Call

July 24, 2025

Question and answer session and I will give you instructions on how to ask questions at that time.

As a reminder, this conference is being recorded and will be available for replay on our website. Shortly after the conclusion of this call.

Thank you for standing by and welcome to the alliance. Bernstein second quarter 2025 earnings review.

Speaker Change: I would now like to turn the conference over to your host for this call head of Investor Relations for Alliancebernstein, Mr. You're honest Youre regardless. Please go ahead.

At this time, all participants are are in a listen-only mode. After the remarks, there will be a question and answer session and I will give you instructions on how to ask questions at that time.

Speaker Change: Good morning, everyone and welcome to our second quarter 2025 earnings review. This conference call is being webcast and accompanied by a slide presentation. That's posted in the Investor Relations section of our website Www Dot Alliance Bernstein Dot com.

Speaker Change: As a reminder, this conference is being recorded and will be available for replay on our website. Shortly after the conclusion of this call, I would now like to turn the conference over to your host for this call head of investor relations for Alliance Bernstein Mr. Giannis your Galas please go ahead.

Speaker Change: With us today to discuss the company's results for the quarter are Seth Bernstein, President and CEO and Tom Simione CFO.

Speaker Change: <unk> head of global client group and private wealth will join us for questions. After our prepared remarks.

Good morning everyone and Welcome to our second quarter 2025 earnings review. This conference call is being webcast and accompanied by slide presentation, that's posted in the investor relations section of our website www.alliancebernstein.com

Speaker Change: Some of the information we will present today is forward looking and subject to certain SEC rules and regulations regarding disclosure.

Speaker Change: With us today to discuss the company's results. For the quarter are Seth Bernstein president and CEO and Tom Simone CFO.

Speaker Change: So I would like to point out the safe Harbor language on slide two of our presentation.

Speaker Change: Horizon head of global client group and private wealth will join us for questions after our prepared remarks.

Speaker Change: You can also find our safe Harbor language in the MD&A of our 10-Q, which we filed this morning.

Speaker Change: We base our distribution to unitholders on our adjusted results, which we provide in addition to and not as a substitute for our GAAP results.

Speaker Change: Some of the information will present today is forward-looking and subject to certain SEC rules and regulations regarding disclosure.

Speaker Change: So I would like to point out the Safe Harbor language on slide 2 of our presentation.

Speaker Change: Our standard GAAP reporting and a reconciliation of GAAP to adjusted results are in our presentation Appendix press release and our 10-Q.

Speaker Change: You can also find our Safe Harbor language in the mdna of our 10q, which we filed this morning.

Speaker Change: Under regulation FD management may only address questions of material nature from the investment community in a public forum. So please ask all such questions. During this call.

Speaker Change: We base our distribution to unit holders on our adjusted results, which we provide in addition to and not as a substitute for our Gap results.

Seth Bernstein: Now I'll turn it over to Seth.

Speaker Change: Our standard Gap reporting and Reconciliation of gaap to adjusted results are in our presentation. Appendix press release and our 10 Q.

Seth Bernstein: Good morning, and thank you for joining us today during.

Seth Bernstein: During the second quarter investors grappled with concerns about escalating geopolitical tensions policy uncertainty and that sustainability sentiment improved as trade tensions ease and risk assets ultimately delivered solid returns for the period.

Speaker Change: Under regulation FD management, may only address questions of material nature from the investment community in the public forum. So please ask all such questions during this call.

Seth Bernstein: Now, I'll turn it over to Seth.

Seth Bernstein: Good morning, and thank you for joining us today.

Seth Bernstein: We ended the quarter with record assets under management of $829 billion, which.

Seth Bernstein: The helpful tailwind as we start the second half of the year.

Seth Bernstein: On slide three I'll review key business highlights for the quarter.

Seth Bernstein: During the second quarter, investors, grappled with concerns about escalating, geopolitical tensions, policy uncertainty and debt sustainability sentiment improved as trade tensions, eased and risk assets. Ultimately delivered, solid returns for the period.

Seth Bernstein: As I noted firm wide assets under management reached a post financial crisis high of 829 billion.

Seth Bernstein: Abbott wealth represents 17% of our assets and 35% of our base management fees as of the second quarter approximately.

Seth Bernstein: AB ended the quarter with record assets under management of 829 billion dollars, which provides a helpful Tailwind as we start the second half of the year.

On side 3, I'll review key business highlights for the quarter.

Seth Bernstein: Approximately 10% of our $685 billion asset management business consists of permanent capital manage for equitable.

Seth Bernstein: While market turbulence can impact short term flows it doesn't impact our connectivity with clients our pipeline AUM reached nearly $22 billion, reflecting sizable mandate editions across retirement insurance asset management and passive equities.

Seth Bernstein: As I noted firmwide assets under management reached a post financial crisis, high of 829 billion. Private wealth represents 17% of our assets and 35% of our base management fees. As of the second quarter,

Seth Bernstein: Approximately 10% of our 6855 billion Asset Management business consists of permanent Capital, managed for equitable.

Seth Bernstein: We are making good progress in accessing long duration capital pools that we can rapidly scale, leveraging our partnership with equitable and our differentiated distribution and investment capabilities.

Seth Bernstein: These include insurance asset management alternatives and retirement, where we've consistently gained market share including in the second quarter of 2025 <unk>.

Seth Bernstein: Reflecting sizable, mandated additions across retirement, Insurance asset management and passive equities.

Seth Bernstein: However, we did see pressure on firm wide net flows which turned negative in the second quarter with active strategy shedding $4 8 billion.

Seth Bernstein: We are making good progress in accessing long duration, Capital Pools that we can rapidly scale leveraging. Our partnership with Equitable and our differentiated distribution and investment capabilities.

Seth Bernstein: The outflows were largely concentrated in April during the height of the recent market volatility and we observed steady improvement as this turbulent subsided with June flows turning positive.

Seth Bernstein: These include Insurance Asset Management Alternatives and retirement, where we've consistently gained market share, including in the second quarter of 2025.

Seth Bernstein: Active equity shed 6 billion firm wide, primarily led by retail.

Seth Bernstein: However, we did see pressure on firmwide net flows, which turned negative in the second quarter with active strategies shedding 4.8 billion.

Seth Bernstein: Client redemptions were broad based across strategies, although we did see slight inflows into our active etfs thematic and international strategies.

Seth Bernstein: The outflows were largely concentrated in April during the height of the recent Market volatility and we observed steady Improvement. As this turbulence subsided with June flows, turning positive,

Seth Bernstein: After six consecutive quarters of organic growth active fixed income experienced slight outflows the downturn in overseas demand for our more key income strategies resulted in $1 5 billion a firm wide taxable outflows, which were largely offset by continued growth within our tax exempt franchise, which generated $1 2 billion of inflows.

Seth Bernstein: Active Equity shed, 6 billion, firmwide primarily led by retail.

Seth Bernstein: Client redemptions were broad-based across strategies. Although we did see slight inflows into our active ETFs thematic and international strategies.

Seth Bernstein: Our industry, leading retail Muni platform continues to deliver impressive market share gains growing organically at 14% annualized in the second quarter.

Seth Bernstein: Alternatives multi asset inflows totaled one 6 billion largely driven by strong deployments into our newly established private placements ABS strategy, our U S real estate debt platform.

Seth Bernstein: Those mortgages middle market lending.

Seth Bernstein: Our private markets platform reached $77 billion and fee paying and that fee eligible AUM at quarter end growing 20% year over year.

Seth Bernstein: We're focused on delivering consistent and profitable growth supported by scale gains improved operating leverage and a durable fee rate.

Seth Bernstein: Our diversified asset mix, coupled with our enhanced operational efficiency provides downside protection to our revenue base and margins, while we retain upside leverage to favorable markets.

Seth Bernstein: We're on track to deliver a 33% operating margin in 2025, assuming flat markets versus the fourth quarter of 2024.

Seth Bernstein: This would put us above the midpoint of our 2027 margin range target of 30% to 35%. Two years ahead of schedule, we see further potential for margin expansion over time as we scale our business.

Seth Bernstein: Finally, we continue to broaden our distribution coverage by expanding existing partnerships, forming new ones and expanding the addressable market for our differentiated investment capabilities via vehicle versatility year.

Seth Bernstein: Year to date, we've added four new general account relationships across six strategies and five new mandates across existing relationships. These relationships require high touch client service beyond conventional asset management.

Seth Bernstein: We've invested significant operational resources and institutional expertise to deliver a holistic client experience that is scalable unlocking incremental revenue opportunities beyond management fees.

Seth Bernstein: We entered the second half of 2025 with 18 active Etfs and nearly $8 billion AUM more than double the prior year level. The majority of our flows are coming from net new assets.

Seth Bernstein: Our SMA platform has surpassed $54 billion in assets under management generating more than $700 million of inflows in the second quarter driven by munis, we were among the industry pioneers in tax of our SMA still growing strong investment outcomes for our clients and the highest standards for client service.

Seth Bernstein: Our SMA platform has surpassed 54 billion in assets under management generating more than $700 million of inflows in the second quarter driven by munis, we were among the industry pioneers in tax aware SMA still growing strong investment outcomes for our clients and the highest standards for client service.

Seth Bernstein: Moving on to slide four I'll highlight our strategic relationship with equitable.

Seth Bernstein: Partnering with a leading insurance provider Gibbs Alliance Bernstein, our competitive edge supporting our client focused asset light approach.

Seth Bernstein: Moving on to slide four I'll highlight our strategic relationship with equitable.

Seth Bernstein: Leveraging the permanent capital commitments for macro helps us speed and scale, our higher feed longer dated private alternative strategies to date, we've deployed over $15 billion of the $20 billion commitment <unk> made to private market strategies.

Seth Bernstein: Partnering with a leading insurance provider Gibbs Alliance Bernstein, the competitive edge supporting our client focused asset light approach.

Seth Bernstein: Leveraging the permanent capital commitments for macro helps us seed and scale, our higher feed longer dated private alternative strategies to date, we've deployed over $15 billion of the $20 billion commitment <unk> made to a private market strategies.

Seth Bernstein: The attractive yields produced by these strategies allow equitable to offer compelling products to its policyholders driving growth in sales and more general account assets for AB manage this creates a positive flywheel effect, which benefits both companies.

Seth Bernstein: The attractive yields produced by these strategies allow equitable to offer compelling products to its policyholders driving growth in sales and more general account assets, we're able to manage this creates a positive flywheel effect, which benefits both companies.

Seth Bernstein: New capabilities, we have developed for <unk>, such as residential mortgages and private ABS can then be commercialized and offered to other insurance and institutional clients, helping drive sustainable growth in private markets AUM, we remain on target to grow our private markets AUM to $90 billion to $100 billion by 2027 up.

Seth Bernstein: The new capabilities, we've developed for alcohol, such as residential mortgages and private ABS can then be commercialized and offered to other insurance and institutional clients, helping drive sustainable growth in private markets. A U M. We remain on target to grow our private markets AUM to 90 to 100 billion by 2027 up for.

Seth Bernstein: 77 billion today.

Speaker Change: Slide five reflects a summary page of our key financial metrics, which Tom will cover shortly.

Speaker Change: Turning to slide six I'll review, our investment performance, starting with fixed income during the second.

Seth Bernstein: 77 billion today.

Seth Bernstein: Slide five reflects a summary page of our key financial metrics, which Tom will cover shortly.

Speaker Change: Second quarter major government bond markets, a steepening yield curves amid escalating geopolitical and trade tensions despite the uncertain backdrop credit markets displayed remarkable resilience supported by high all in yields and low net issuance.

Speaker Change: Turning to slide six I'll review, our investment performance, starting with fixed income.

Speaker Change: During the second quarter major government bond markets, a steepening yield curves amid escalating geopolitical and trade tensions despite the uncertain backdrop credit markets displayed remarkable resilience supported by high all in yields and low net issuance.

Speaker Change: Bloomberg U S aggregate index returned one 2%, while the global aggregate returned four 5% in the second quarter.

Speaker Change: Reflecting U S dollar depreciation versus major currencies.

Speaker Change: Bloomberg U S aggregate index returned 1.2%, while the global aggregate returned four 5% in the second quarter.

Speaker Change: Our portfolios continued to perform well in this challenging market, particularly through curve positioning in credit selection.

Speaker Change: Half of our fixed income assets outperformed over one year period by 87% outperformed over three years and 75% over the five year period.

Speaker Change: Reflecting U S dollar depreciation versus major currencies.

Speaker Change: Our portfolios continued to perform well in this challenging market, particularly through curved positioning in credit selection or.

Speaker Change: Our tax aware Muni SMA is continuing to generate strong relative performance across all periods.

Speaker Change: More than half of our fixed income assets outperformed over one year period by 87% outperformed every three years and 75% over the five year period.

Speaker Change: Global high yield performance has softened recently underperforming both the benchmark in the category over the one year largely due to underweight exposure to emerging markets sovereigns. However.

Speaker Change: Our tax aware Muni SMA is continuing to generate strong relative performance across all periods.

Speaker Change: However, our three and five year relative returns remain compelling vis vis the beer category.

Speaker Change: Our American income portfolio maintained strong absolute and relative performance in the second quarter, mainly driven by yield curve positioning AIP is outperforming its benchmark over the one three and five years, while also outperforming its category over the one and three year periods for the institutional share class.

Our American income portfolio maintained strong absolute and relative performance in the second quarter, mainly driven by yield curve positioning.

Speaker Change: Volatility in rates and foreign exchange, coupled with concerns around unpredictable physical and trade policies in the United States have dampened demand for U S dollar denominated assets.

Speaker Change: IP is outperforming its benchmark over the one three and five years, while also outperforming its category over the one and three year periods for the institutional share class.

Speaker Change: While the safe Haven status of dollar denominated assets as being question. The U S. Dollar remains the world's most liquid currency supported by compelling rate differentials in the world's deepest capital markets.

Speaker Change: While the safe Haven status of dollar denominated assets as being question. The U S. Dollar remains the world's most likely currency supported by compelling rate differentials in the worlds deepest capital markets.

Speaker Change: Diversification is a healthy process, particularly given the severely overweight exposure to U S assets.

Speaker Change: We have built a robust all weather platform that can help clients optimize their geographical exposures and capitalize on potential reallocations.

Speaker Change: Diversification is a healthy process, particularly given the severely overweight exposure to U S assets, we have built a robust all weather platform that can help clients optimize their geographical exposures and capitalize on potential reallocations, we're already seeing increasing interest for our European income portfolio.

Speaker Change: We're already seeing increasing interest for our European income portfolio balancing credit and duration offer a euro denominated barbell approach. This strategy has attracted over $200 million in inflows in the second quarter and continuous outperformance benchmark year to date.

Speaker Change: Balancing credit and duration and offer a euro denominated barbell approach. This strategy has attracted over $200 million in inflows in the second quarter and continuous outperformance benchmark year to date.

Speaker Change: Today's environment also increases potential excess return from security selection active systematic fixed income approaches may help investors harvest. These opportunities. We continue to see increased client interest for our systematic strategies with over $1 billion in inflows in the second quarter.

Speaker Change: Today's environment also increases potential excess return from security selection.

Speaker Change: <unk> systematic fixed income approaches may help investors harvest. These opportunities we continue to see increased client interest for our systematic strategies with over $1 billion in inflows in the second quarter.

Speaker Change: Turning to equities following the sharp pullback in early April U S equities quickly rebounded to new highs with the S&P 500 rallied 10, 6% in the second quarter.

Speaker Change: U S equity gains remain concentrated as big Kat surge that the S&P growth outperforming value by more than 15%.

Speaker Change: Turning to equities following the sharp pullback in early April U S equities quickly rebounded to new highs with the S&P 500 rallied 10, 6% in the second quarter.

Speaker Change: European and emerging markets outperformed U S stocks in the first half of the year largely driven by a weaker dollar.

Speaker Change: U S equity gains remain concentrated as big Ted surge that the S&P growth outperforming value by more than 15%.

Speaker Change: Our relative performance was mostly unchanged versus prior quarter of 24% of our assets outperforming one year and 48% over the three year periods continue to reflect the narrow leadership a few mega cap companies are five year performance improved with 50% of our equity AUM outperforming.

Speaker Change: European and emerging markets outperformed U S stocks in the first half of the year largely driven by a weaker dollar.

Speaker Change: Our relative performance was mostly unchanged versus prior quarter with 24% of our assets outperforming one year and 48% over the three year periods continue reflect the narrow leadership of a few mega cap companies are five year performance improved with 50% of our equity AUM outperforming.

Speaker Change: In the current environment, we maintain our proactive and disciplined approach to identifying high quality profitable companies with sustainable business models and significant recurring revenue streams. This defensive characteristics serve as a buffer against sudden spikes in market volatility.

Speaker Change: In the current environment, we maintain our proactive and disciplined approach to identifying high quality profitable companies with sustainable business models and significant recurring revenue streams. This defensive characteristics served as a buffer against sudden spikes in market volatility.

Speaker Change: Currently we have a diverse selection of active equity strategies with strong brands and high quality product offerings balanced across geographies. Examples include our highly rated international low volatility equity strategy, which was recently launched an ETF wrapper under the ticker <unk>.

Speaker Change: Importantly, we have a diverse selection of active equity strategies with strong brands and high quality product offerings balanced across geographies. Examples include our highly rated international low volatility equity strategy, which was recently launched an ETF wrapper under the ticker I L O W.

Speaker Change: We have over 30 global international and emerging market services with established track records that have exhibited strong performance nearly all of them are outperforming their respective benchmarks for composites over the three and five year periods and nearly three quarters of the retail products sitting in the top quartile or top decile of their morningstar categories.

Speaker Change: We have over 30 global international and emerging market services with established track records that have exhibited strong performance nearly all of them are outperforming then respective benchmarks our composites over the three and five year periods and nearly three quarters of the retail products sitting in the top quartile or top decile of their morningstar categories.

Speaker Change: For either of the three or five year periods.

Speaker Change: This includes one of our largest retail offerings international strategic equities, which continues to deliver alpha year to date and sits at the top 3% of its Morningstar category.

Speaker Change: For either a three or five year periods.

Speaker Change: <unk> also launched our first active ETF in emerging markets.

Speaker Change: We recognize the enduring appeal of U S stocks and we believe the U S market will continue to offer exceptional opportunities. We're also encouraged by the increased focus on physical and governance standards across Europe, and Asia that could potentially attract more capital. These regions. In this landscape flexibility is important and opportunistic adjustments to <unk>.

Speaker Change: We recognize the enduring appeal of U S stocks and we believe the U S market will continue to offer exceptional opportunities. We're also encouraged by the increased focus on fiscal and governance standards across Europe, and Asia that could potentially attract more capital. These regions. In this landscape flexibility is important and opportunistic adjustments to reach.

Speaker Change: Regional and sector exposures as crucial to capitalize on emerging opportunities.

We're witnessing growing momentum and systematic equity strategies as institutional investors, where we candidly neuro appreciation for this style, we won a $500 million mandate for our global core equity portfolio that utilizes fundamental stock selection combined with proprietary quantitative risk and return tools. The strategy has outperformed over the one.

Speaker Change: On sector exposures as crucial to capitalize on emerging opportunities.

Speaker Change: We're witnessing growing momentum and systematic equity strategies as institutional investors, where we candidly neuro appreciation for this style, we won a $500 million mandate for our global core equity portfolio that utilizes fundamental stock selection combined with proprietary quantitative risk and return tools. The strategy has outperformed over the.

Speaker Change: One three and five year periods, delivering consistent alpha with a lower tracking error.

Speaker Change: Finally, our private alternatives platform remains invested delivering better outcomes for our clients.

Speaker Change: Private credit investors, our middle market corporate lending platform continues to exhibit solid long term performance in line with stated objectives supported by the resilience of our invested sectors and our rigorous underwriting process.

Speaker Change: The one three and five year periods solid rent consistent alpha with a lower tracking error.

Speaker Change: Finally, our private alternatives platform remains invested delivering better outcomes for our clients a private credit investors, our middle market corporate lending platform continues to exhibit solid long term performance in line with stated objectives supported by the resilience of our invested sectors and our rigorous underwriting process.

Speaker Change: <unk> investment footprint spanning U S and Europe underscores our belief in the benefits of geographic diversification for optimizing risk adjusted returns.

Speaker Change: We're seeing increased deployment opportunities within our commercial real estate debt platform in the U S and Europe as the commercial real estate market has continued to show signs of stabilization.

Speaker Change: A b carve outs investment footprint spanning U S and Europe underscores our belief in the benefits of geographic diversification for optimizing risk adjusted returns, we're seeing increased deployment opportunities within our commercial real estate debt platform in the U S and Europe as the commercial real estate market has continued to show signs of stabilization.

Speaker Change: Now turning to slide seven.

Speaker Change: Retail flows turned negative in the second quarter as macro turbulence halted the streak of seven consecutive quarterly inflows actor.

Speaker Change: Active equity shed $3 7 billion across a wide range of different services U S. Large cap growth accounted for approximately $1 5 billion of those outflows primarily concentrated within the United States. It is noteworthy that U S. Large cap growth flows in Japan remained slightly positive for the quarter.

Speaker Change: Now turning to slide seven.

Speaker Change: Retail flows turned negative in the second quarter as macro turbulence halted the streak of seven consecutive quarterly inflows active.

Speaker Change: Active equity shed $3 7 billion across a wide range of different services U S. Large cap growth accounted for approximately one and a half billion of those outflows primarily concentrated within the United States. It's noteworthy that U S. Large cap growth flows in Japan remained slightly positive for the quarter.

Speaker Change: Otherwise client interest was limited to thematic global and international strategies.

Speaker Change: Taxable fixed income also generated $2 4 billion in outflows as demand for our more key income strategies, such as American income and global high yield remained weak in the second quarter.

Speaker Change: Otherwise client interest was limited to thematic global and international strategies.

Speaker Change: As rate volatility subsided, we observed a slight improvement in demand dynamics, particularly for AIP, where outflows decreased compared to prior quarter.

Speaker Change: Taxable fixed income also generated $2 $4 billion in outflows as demand for our more key income strategies, such as American income and global high yield remained weak in the second quarter as.

Speaker Change: <unk>, we are seeing constructive demand for European income strategy, which replicates, our barbell approach for euro denominated assets.

As rates volatility subsided, we observed a slight improvement in demand dynamics, particularly for AIP, where outflows decreased compared to prior quarter.

Speaker Change: We're also excited about our ETF driven market share gains in the taxable fixed income space within the U S retail channel, where we've historically been underexposed to the asset class.

Speaker Change: <unk>, we are seeing constructive demand for European income strategy, which replicates, our barbell approach for euro denominated assets.

Speaker Change: We continued to gain retail market share in tax exempt for the 10th consecutive quarter growing at a strong 14% annualized rate.

Speaker Change: Retail Alton Emas generated $300 million in inflows in the second quarter, our adjusted base management fees were up 6% versus prior year, while the channel fee rate was down 2% sequentially reflective of lower daily average AUM for higher fee active equity services.

Speaker Change: We continued to gain retail market share in tax exempt for the 10th consecutive quarter growing at a strong 14% annualized rate.

Speaker Change: Retail Alton M. A S generated $300 million in inflows in the second quarter, our adjusted base management fees were up 6% versus prior year, while the channel fee rate was down 2% sequentially reflective of lower daily average AUM for higher fee active equity services.

Speaker Change: Moving on to slide eight.

Speaker Change: Excluding the impact of passive redemptions, our core active strategies generated slight inflows within the institutional channel during the second quarter, notably a single institutional index redemption is expected to bring in $1 billion in net inflows over the coming quarters, the clients entrusting us to redeploy the proceeds from the redemption with incremental capital.

Speaker Change: Moving on to slide eight excluding the impact of passive redemptions, our core active strategies generated slight inflows within the institutional channel during the second quarter, notably a single institutional index redemption is expected to bring in a 1 billion in net inflows over the coming quarters, the clients entrusting us to redeploy the proceeds.

Speaker Change: To manage and passive equities. This mandate has already reflected within our pipeline.

Speaker Change: Institutional organic growth was primary driven by inflows of approximately $1 billion each into taxable fixed income and alternatives are U S investment grade systematic fixed income strategy continues to gain strong traction with institutional clients and those received solid support from consultants recently, earning an a rating from a top consultants.

Speaker Change: The redemption with incremental capital to manage and passive equities. This mandate has already reflected within our pipeline.

Speaker Change: Institutional organic growth was primary driven by inflows of approximately $1 billion each into taxable fixed income and alternatives are U S investment grade systematic fixed income strategy continues to gain strong traction with institutional clients and has received solid support from consultants recently, earning an a rating from a top consultant.

Speaker Change: Within alternatives, we continued to deploy the healthy pace despite market volatility.

Speaker Change: The distributions, we've put over $900 million to work across private placements commercial real estate asset based finance and private credit.

Speaker Change: Within alternatives, we continued to deploy at a healthy pace despite market volatility net of distributions, we put over $900 million to work across private placements commercial real estate asset based finance and private credit.

Speaker Change: Active equity outflows continued in the second quarter, the trend continues to moderate year over year and sequentially our.

Speaker Change: Our pipeline includes $5 billion from RGA, and we're thrilled to expand our relationship with this important partner.

Speaker Change: Although active equity outflows continued in the second quarter, the trend continues to moderate year over year and sequentially.

Speaker Change: These assets are related to the recent RGA equitable reinsurance transaction, which we expect to result in an overall net outflow of approximately $4 billion of lower fee AUM.

Speaker Change: Our pipeline includes $5 billion from RGA, and we're thrilled to expand our relationship with this important partner.

Speaker Change: These assets are related to the recent RGA equitable reinsurance transaction, which we expect to result in an overall net outflow of approximately $4 billion of lower fee AUM. Other notable wins in the second quarter, including $3 billion in customized retirement, and 500 million dollar wins in third party insurance and structure.

Speaker Change: Other notable wins in the second quarter included a $3 billion in customized retirement and $500 million wins, and third party insurance and structured equity.

Speaker Change: Our best in class defined contribution platform manages nearly $100 billion in assets, including nearly $13 billion in lifetime income.

Speaker Change: The decrease in pipeline fee rate is influenced by the asset mix and the magnitude of the wins in the second quarter.

Speaker Change: Third equity.

Speaker Change: Our best in class defined contribution platform manages nearly $100 billion in assets, including nearly 13 billion in lifetime income.

Speaker Change: Turning to slide nine net flows into our private wealth channel flip to negative weighed by seasonal tax related selling coupled with turbulent macro conditions as.

Speaker Change: The decrease in pipeline P rate is influenced by the asset mix and the magnitude of the wins in the second quarter.

Speaker Change: As we've discussed in the past our private wealth net flows exclude reinvested dividends and interest income, which is typically reported within net new assets across key wealth management peers on a net new assets basis, our client channel grew at a two 6% annualized rate.

Speaker Change: Turning to slide nine net flows into our private wealth channel flip to negative weighed by seasonal tax related selling coupled with turbulent macro conditions as.

Speaker Change: Quarterly dividends and interest to range between one two and $1 $5 billion over the last four quarters. This is a durable and underappreciated source of growth for our private wealth asset base.

Speaker Change: Quarterly dividends and interest to range between 1.2 and $1 $5 billion over the last four quarters. This is a durable and underappreciated source of growth for our private wealth asset base.

Speaker Change: Demand dynamics within the channel favored passive equities and alternatives and multi asset passive.

Speaker Change: Passive tax loss harvesting strategy eclipsed 7 billion in AUM growing organically in the second quarter at a 7% annualized rate.

Speaker Change: Demand dynamics within the channel favored passive equities and alternatives and multi asset passive.

Speaker Change: We fund raised over half a billion dollars in private alternatives in the second quarter.

Speaker Change: Passive tax loss harvesting strategy Eclipse 7 billion in AUM growing organically in the second quarter at 7% annualized rate.

Speaker Change: General redemptions were primarily concentrated with an active equities totaling $1 billion in outflows taxable and tax exempt fixed income posted marginal outflows. We continue to grow our high net worth and ultra high net worth client base underscoring the distinctive value proposition that Bernstein offers to this important client segment.

Speaker Change: We fund raised over half a billion dollars in private alternatives in the second quarter.

Speaker Change: General redemptions were primarily concentrated with inaccurate equities totaling 1 billion in outflows taxable and tax exempt fixed income posted marginal outflows. We continue to grow our high net worth and ultra high net worth client base underscoring the distinctive value proposition that Bernstein offers to this important client segment.

Speaker Change: Base management fees grew 5% year over year and declined marginally on a sequential basis.

Speaker Change: Now I will pass it to Tom to cover our financial results Tom.

Tom Simione: Thank you Seth good morning, everyone and thank you for joining our call. We're pleased to report strong financial performance in the second quarter, reflecting market driven growth in asset management fees continued expense discipline and enhanced operational leverage.

Speaker Change: Base management fees grew 5% year over year and declined marginally on a sequential basis.

Tom Simone: Now I will pass it to Tom to cover our financial results Tom.

Tom Simone: Thank you Seth good morning, everyone and thank you for joining our call. We're pleased to report strong financial performance in the second quarter, reflecting market driven growth in asset management fees continued expense discipline and enhanced operational leverage.

Tom Simione: Adjusted earnings for the second quarter came in at <unk> 76 per unit, representing a 7% increase compared to the prior year.

Tom Simione: Distributions in EP grew uniformly as we distribute 100% of our adjusted earnings to unit holders.

Tom Simone: Adjusted earnings for the second quarter came in at 76 cents per unit, representing a 7% increase compared to the prior year.

Tom Simione: On slide 10, we present, our adjusted results, which exclude certain items that are considered part of our core operating business for a detailed reconciliation of GAAP and adjusted financials. Please refer to our presentation appendix or our 10-Q.

Tom Simone: Distributions in EP grew uniformly as we distribute 100% of our adjusted earnings to unit holders.

Tom Simone: On slide 10, we present, our adjusted results, which exclude certain items that are considered part of our core operating business for a detailed reconciliation of GAAP and adjusted financials. Please refer to our presentation appendix or our 10-Q.

Tom Simione: In the second quarter net revenues reached $844 million, a 2% increase compared to the prior year.

Tom Simione: Base fees saw a 4% increase year over year.

Tom Simione: Total performance fees of $30 million decreased by $12 million from the prior year, primarily due to lower public market performance fees.

Tom Simone: In the second quarter net revenues reached $844 million, a 2% increase compared to the prior year.

Tom Simone: Base fees saw a 4% increase year over year.

Tom Simione: Dividend and interest revenue along with broker dealer related interest expense declined compared to the prior year, reflecting lower cash and margin balances within private wealth.

Tom Simone: Total performance fees of $30 million decreased by $12 million from the prior year, primarily due to lower public market performance fees.

Tom Simione: Investment gains doubled to $8 million, while other revenues remained flat versus the prior year.

Tom Simone: Dividend and interest revenue along with broker dealer related interest expense declined compared to the prior year, reflecting lower cash and margin balances within private wealth.

Tom Simione: Moving to expenses, our second quarter total expenses remained relatively flat at $571 million.

Tom Simone: Investment gains doubled to $8 million, while other revenues remained flat versus the prior year.

Tom Simione: Compensation and benefits expense of $419 million, which includes other compensation cost of $10 million was up 1% versus the prior year, reflecting 2% higher revenues offset by a lower compensation ratio of 48, 5% in line with our guidance and below the 49% compensation ratio in the prior year.

Tom Simone: Moving to expenses, our second quarter total expenses remained relatively flat at $571 million.

Tom Simone: Compensation and benefits expense of $419 million, which includes other compensation cost of $10 million was up 1% versus the prior year, reflecting 2% higher revenues offset by a lower compensation ratio of 48, 5% in line with our guidance and below the 49% compensation ratio in the prior year.

Tom Simione: Given the volatile market backdrop, we will continue to accrue at a 48, 5% compensation to adjusted revenue ratio in the third quarter of 2025.

Tom Simione: Compared to the prior year second quarter promo and servicing costs were roughly flat.

Tom Simone: Given the volatile market backdrop, we will continue to accrue at a 48, 5% compensation to adjusted revenue ratio in the third quarter of 2025.

Tom Simione: While G&A expenses decreased by 6%, reflecting lower occupancy costs due to the relocation of our New York City office.

Tom Simone: Compared to the prior year second quarter promo and servicing costs were roughly flat.

Tom Simione: Year to date non compensation expenses amounted to $293 million and are tracking better than our prior full year 2025 guidance range of $600 million to $625 million driven by continued expense discipline and enhanced operational efficiency.

Tom Simone: While G&A expenses decreased by 6%, reflecting lower occupancy costs due to the relocation of our New York City office.

Tom Simone: Year to date non compensation expenses amounted to $293 million and are tracking better than our prior full year 2025 guidance range of $600 million to $625 million driven by continued expense discipline and enhanced operational efficiency.

Tom Simione: Therefore, we're tightening our non compensation expense projection to fall within $600 million to $620 million for the full year with a seasonal uptick later in 2025.

Tom Simione: We expect promotion and servicing to make up roughly 20% to 25% of non comp expenses with G&A accounting for 75% to 80%.

Tom Simone: Therefore, we're tightening our non compensation expense projection to fall within $600 million to $620 million for the full year with a seasonal uptick later in 2025.

Tom Simione: Second quarter interest on borrowings decreased by $3 million versus the prior year due to lower cost of debt and lower debt balances. Following the repayments we made it using the proceeds from the Bernstein joint venture and the private unit issuance.

Tom Simone: We expect promotion and servicing to make up roughly 20% to 25% of non comp expenses with G&A accounting for 75% to 80%.

Tom Simone: Second quarter interest on borrowings decreased by $3 million versus the prior year due to lower cost of debt and lower debt balances. Following the repayments we made using the proceeds from the Bernstein joint venture and the private unit issuance.

Tom Simione: It is important to note that we plan to utilize the additional debt capacity in the future to support our commitment to the Ruby recycler and capitalize on potential growth opportunities that may arise.

Tom Simione: <unk> effective tax rate was six 7% in the second quarter in line with our full year guidance of 6% to 7%.

Tom Simone: It is important to note that we plan to utilize the additional debt capacity in the future to support our commitment to the Ruby Re-side car and capitalize on potential growth opportunities that may arise.

Tom Simione: Turning to slide 11 allow me to walk through the trajectory of our firm wide base fee rate net of distribution expenses.

Tom Simone: <unk> effective tax rate was six 7% in the second quarter in line with our full year guidance of 6% to 7%.

Tom Simione: In the second quarter of 2025, our firm wide fee rate decreased to $38 seven basis points down versus the prior quarter and the prior year.

Tom Simone: Turning to slide 11 allow me to walk through the trajectory of our firm wide base fee rate net of distribution expenses.

Tom Simione: The decline was primarily driven by a mix shift in AUM and flows.

Tom Simone: In the second quarter of 2025, our firm wide fee rate decreased to $38 seven basis points down versus the prior quarter and the prior year.

Tom Simione: During periods of market volatility the simple average AUR may not accurately reflect the daily asset base fluctuations of individual funds.

Tom Simone: The decline was primarily driven by a mix shift in AUM and flows.

Tom Simione: For example.

Tom Simione: Quite the strong recovery in the U S equity markets. The average daily net for key services like U S. Large cap growth was lower in the second quarter of 2025 compared to the prior quarter.

Tom Simone: During periods of market volatility the simple average AUR may not accurately reflect the daily asset base fluctuations of individual funds.

Tom Simione: Consequently, our base fee growth lagged the market appreciation of the underlying assets.

Tom Simone: For example, despite the strong recovery in the U S equity markets. The average daily NAV for key services like U S. Large cap growth was lower in the second quarter of 2025 compared to the prior quarter.

Tom Simione: Flow dynamics also had a negative impact on the fee rate in the second quarter due to outflows from higher fee retail services, coupled with organic growth in lower fee categories, such as SME Etfs insurance asset management and retirement.

Tom Simone: Consequently, our base fee growth lagged the market appreciation of the underlying assets.

Tom Simone: Flow dynamics also had a negative impact on the fee rate in the second quarter due to outflows from higher fee retail services, coupled with organic growth in lower fee categories, such as Smes Etfs insurance asset management and retirement.

Tom Simione: We continue to see good momentum in these secondarily growing long duration capital pools, as we leverage our partnership with equitable and our differentiated distribution capabilities.

Tom Simione: We are excited about the value proposition for our clients and shareholders from the scalable long duration assets, and we prioritize sustainable organic growth and long term profitability over focusing solely on the fee rate.

Tom Simone: We continue to see good momentum in these secondarily growing long duration capital pools, as we leverage our partnership with equitable and our differentiated distribution capabilities.

Tom Simone: We are excited about the value proposition for our clients and shareholders from the scalable long duration assets, and we prioritize sustainable organic growth and long term profitability over focusing solely on the fee rate.

Tom Simione: Over the past five years, our fee rate has remained relatively stable in the 39 to 40 basis point range as our regional sales mix and strategic growth initiatives have helped to mitigate industry wide fee erosion.

Tom Simone: Over the past five years, our fee rate has remained relatively stable in the 39 to 40 basis point range as a regional sales mix and strategic growth initiatives have helped to mitigate industry wide fee erosion.

Tom Simione: Looking forward, we expect the fee rate trajectory will continue to reflect the mix of organic growth and market movements, which have been more supportive in early <unk>.

Tom Simione: Slide 12 offers a breakdown of our performance fees across private and public strategies.

Tom Simone: Looking forward, we expect the fee rate trajectory will continue to reflect the mix of organic growth and market movements, which have been more supportive in early <unk>.

Tom Simione: Second quarter performance related fees from our private market strategies totaled $22 million.

Tom Simione: <unk> consistent alpha generation from our middle market lending platform.

Tom Simone: Slide 12 offers a breakdown of our performance fees across private and public strategies.

Tom Simione: Sully public strategies contributed $8 million predominantly fueled by our top rated U S select long short portfolio.

Tom Simone: Second quarter performance related fees from our private market strategies totaled $22 million showcasing consistent alpha generation from our middle market lending platform.

Tom Simione: Which has demonstrated resilience in outperformance across market cycles.

Tom Simione: We now project total performance fees for 2025 or $110 million to $130 million up from our prior estimate of $90 million to $105 million.

Tom Simone: Additionally, public strategies contributed $8 million predominantly fueled by our top rated U S select long short portfolio.

Tom Simone: Which has demonstrated resilience in outperformance across market cycles.

Tom Simione: This upward revision is primarily driven by the flow through of slight upside in public markets into more active deployment outlook for our commercial real estate debt platform.

Tom Simone: We now project total performance fees for 2025 or $110 million to $130 million up from our prior estimate of $90 million to $105 million.

Tom Simione: Assuming flat markets, we view the lower end of our guidance as a floor rather than a ceiling. Although we caution that last year's upside was largely driven by public alternatives and the robust equity market performance.

Tom Simone: This upward revision is primarily driven by the flow through of slight upside in public markets into more active deployment outlook for our commercial real estate debt platform.

Tom Simone: Assuming flat markets, we view the lower end of our guidance as a floor rather than a ceiling. Although we caution that last year's upside was largely driven by public alternatives and the robust equity market performance.

Tom Simione: For the remainder of the year, we expect our private alternatives strategies will be the primary contributors to our performance fees as they have been in recent years.

Tom Simione: These strategies include commercial real estate debt.

Tom Simione: Val and middle market lending also known as AB private credit investors or <unk>, which is the largest contributor.

Tom Simone: For the remainder of the year, we expect our private alternative strategies will be the primary contributors to our performance fees as they had been in recent years. These.

Tom Simione: Turning to slide 13, despite slightly lower average AUM in the first half of 2025 versus <unk> 24, coupled with a negative mix shift our year to date operating margin remains in line with 33% expectation.

Tom Simone: These strategies include commercial real estate debt carve out in middle market lending also known as AB private credit investors or a b PCI, which is the largest contributor.

Tom Simone: Turning to slide 13, despite slightly lower average AUM in the first half of 2025 versus <unk> 24, coupled with a negative mix shift our year to date operating margin remains in line with 33% expectation.

Tom Simione: We continue to view, 33% is a reasonable baseline for our full year 2025 operating margins assuming stable market conditions.

Tom Simione: Focusing on this quarter the adjusted operating margin of 32, 3% was up 150 basis points versus the prior year reflective of lower real estate expenses since our move to Hudson yards.

Tom Simone: We continue to view, 33% is a reasonable baseline for our full year 2025 operating margins assuming stable market conditions.

Tom Simione: We will remain disciplined on expenses, while also investing in growth to generate long term value for our unit holders.

Tom Simone: Focusing on this quarter the adjusted operating margin of 32, 3% was up 150 basis points versus the prior year reflective of lower real estate expenses since our move to Hudson yards.

Tom Simione: Targeted growth investments may include Onboarding, new investment teams and launching new products, which we expect to drive future growth and profit.

Tom Simone: We will remain disciplined on expenses, while also investing in growth to generate long term value for our unit holders.

Tom Simione: Before we proceed to the Q&A session I want to express my sincere appreciation to all my colleagues for their significant contributions.

Tom Simone: Targeted growth investments may include Onboarding, new investment teams and launching new products, which we expect to drive future growth and profits.

Tom Simione: We are steadfast in our commitment to efficiently allocate capital create value for our clients investors employees and stakeholders, while simultaneously diversifying and expanding our business.

Tom Simone: Before we proceed to the Q&A session I want to express my sincere appreciation to all my colleagues for their significant contributions.

Tom Simone: We are steadfast in our commitment to efficiently allocate capital create value for our clients investors employees and stakeholders, while simultaneously diversifying and expanding our business.

Tom Simione: With that we're pleased to take your questions.

Tom Simione: Operator.

Speaker Change: Thank you the floor is now open for questions. If you have dialed in and would like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue.

Tom Simone: With that we're pleased to take your questions operator.

Tom Simione: If you would like to Australia question simply press Star one again.

Tom Simone: Thank you the floor is now open for questions. If you have dialed in and we'd like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue.

Tom Simione: We are called upon to ask a question and are listening via loud speaker on your device. Please pickup your handset and ensure that your phone is not on mute when asking your question. Please.

Tom Simione: Please limit your initial questions too.

Tom Simone: If you would like to Australia, a question simply press Star. One again, if you are called upon to ask a question and are listening via loud speaker on your device. Please pickup your handset and ensure that your phone is not on mute when asking your question.

Tom Simione: To provide all callers an opportunity to ask questions.

Tom Simione: You are welcome to return to the queue to ask follow up questions.

Speaker Change: Your first question comes from the line of Craig Siegenthaler of Bank of America. Your line is open.

Speaker Change: Please limit your initial questions too.

Speaker Change: To provide all callers an opportunity to ask questions.

Speaker Change: Good morning, this is <unk> on for Craig.

Speaker Change: Youre welcome to return to the queue to ask follow up questions.

Speaker Change: With Pacific Life insurer now joining your multi insurer lifetime income platform. How are you thinking about scaling your retirement income business more broadly and how should we think about any share of economics on the retirement income platform is this more of a pass through structure.

Speaker Change: Your first question comes from the line of Craig Siegenthaler of Bank of America. Your line is open.

Speaker Change: Good morning, this is <unk> on for Craig.

Speaker Change: Okay.

Speaker Change: Hi, its owner thanks for the question let me.

Speaker Change: Answered in a couple of different ways. One is as we highlighted in our earnings announcement and call insurance segment is very critical for us and we continue to expand our engagements and deepening of the insurance segment in many different aspects of the business and lifetime income is one of those.

Speaker Change: Yes.

Speaker Change: Hi, its owner thanks for the question let me.

Speaker Change: Answered in a couple of different ways and one is as we highlighted in our earnings announcement and call insurance segment is very critical for us and we continue to expand our engagements and deepening of the insurance segment in many different aspects of the business and lifetime income is one of those BR.

Speaker Change: One of the pioneers in lifetime income, obviously, we haven't seen an uptick in interest and lifetime income solutions, given the demographics aging of baby boomers as well as some of the secure act to that all kind of dynamics.

Speaker Change: So there's no material change in our product structure, we continue to add insurers and some insurers drop off so that's the backdrop on the Pac life announcements that we're excited about our relationship with them and their ability to do more over time.

Speaker Change: So there's no material change in our product structure, we continue to add the insurers and some insurers drop off so that's the backdrop on the Pac life announcement that we are excited about our relationship with them and ability to do more over time.

Speaker Change: In terms of the economics on these products.

Speaker Change: Ultimately, we continue to focus on delivering the guaranteed income for our clients. So although these can be relatively sizeable mandates.

Speaker Change: In terms of the economics on these products.

Speaker Change: I tend to be lower fee from an asset management perspective.

Speaker Change: Ultimately, we continue to focus on delivering.

Speaker Change: While some of the economics, obviously accrued to the insurers based on the liability structure.

Speaker Change: Guaranteed income for our clients. So although these can be relatively sizeable mandates data.

Speaker Change: And then finally, we continue to work on different lifetime income solutions, both with our main shareholder equitable and as well as other third party insurers over time, we might come to the market with different.

Speaker Change: They tend to be lower fee from an asset management perspective, while some of the economics, obviously accrued to the insurers based on the liability structure.

Speaker Change: The economics that could be even more accretive to our overall top line.

Speaker Change: Thank you and just as a quick follow up following the amended exchange agreement with equitable can you clarify how we should think about the likelihood of further exchanges into alliance Bernstein holding units.

Speaker Change: The economics that could be even more accretive to our overall top line.

Speaker Change: Thank you and just a quick follow up following the amended exchange agreement with equitable can you clarify how we should think about the likelihood of further exchanges into alliance Bernstein holding units.

Speaker Change: Sure, let me start and Tom and et cetera, and his team can add.

Speaker Change: Look the actual conversion from private to public from public and private unit is really driven by a more beneficial tax treatment.

Speaker Change: Sure.

Speaker Change: Sure, let me start and Tom and et cetera, and Steve can add.

Speaker Change: For the private units so it really has no bearing.

Speaker Change: Look the actual conversion from private to public from public Kings private units is really driven by a more beneficial tax treatment.

Speaker Change: On the daily trading volume or anything else and and it has been something that has been done before so theres nothing unusual about it.

Speaker Change: For the private units so it really has no bearing.

Tom Simione: Tom do you have anything you want to add.

Speaker Change: On it.

Speaker Change: Daily trading volume or anything else and and it has been something that has been done before so theres nothing unusual about it Tom.

Speaker Change: Yes, I guess, the only thing I'd add there is.

Speaker Change: And everybody that this brings everybody equitable back to similar to what they had pre 2022 before the carve out acquisition.

Tom Simone: Tom do you have anything you want to add.

Speaker Change: You mean in terms of their total holding all of Asia.

Speaker Change: I guess, the only thing I'd add there is.

Speaker Change: And everybody that this brings everybody equitable back to similar to what they had pre 2022 before the carve out acquisition.

Speaker Change: Yes.

Speaker Change: Great.

Speaker Change: Thank you. Your next question comes from the line of Alex <unk> of Goldman Sachs. Your line is open.

Speaker Change: You mean in terms of their totals holding all of Asia, Yes.

Speaker Change: Hey, Good morning. This is Anthony on for Alex I wanted to hit on the capital allocation strategy. There were some recent headlines on maybe potential M&A. So if you could speak to your willingness to go down that route and what that would look like.

Speaker Change: Yes.

Speaker Change: Great.

Speaker Change: Thank you. Your next question comes from the line of Alex Blaustein of Goldman Sachs. Your line is open.

Speaker Change: Hey, good morning, this without Anthony on for Alex I wanted to hit on the capital allocation strategy. There was some reset headlines on maybe potential M&A. So if you could speak to your willingness to go down that route and what that would look like.

Speaker Change:

Speaker Change: Alex Hi, its set just sorry with regard to the optimization optimization of capital that Tom was referring to or with respect to our investment and I think I'm Gonna M&A just wanted to clarify.

Speaker Change:

Speaker Change: Alex Hi, its at just sorry with regard to the optimization optimization of capital that Tom was referring to where with respect to our investment and I think I'm Gonna M&A just wanted to clarify.

Speaker Change: It's M&A.

Speaker Change: Okay, sorry, yes. So look we continue to look at a number of opportunities.

Speaker Change: Whether it's insurance side cars or other forms of partnerships.

Speaker Change: M&A, Okay, sorry, yes. So look we continue to look at a number of opportunities.

Speaker Change: With.

Speaker Change: Key insurer clients around the world.

Speaker Change: It's been pretty active and.

Speaker Change: Whether it's insurance side cars or other forms of partnerships with.

Speaker Change: And we think that we have an opportunity, particularly if we can utilize equitable's underwriting skills and analyzing those risks to actually utilize our capital potentially.

Speaker Change: Key insurer and clients around the world and it's been pretty active and and we think that we have an opportunity, particularly if we can utilize equitable's underwriting skills and analyzing those risks to actually utilize our capital potential.

Speaker Change: <unk> capital or a combination of the two.

Speaker Change: To realize incremental flows into our key private alternative strategies and so there is obviously a limit we don't want to become an asset heavy or a capital heavy.

Speaker Change: Potentially equitable's capital or a combination of the two.

Speaker Change: To realize incremental flows into our key private alternative strategies and so there is obviously a limit we don't want to become an asset heavy or a capital heavy.

Speaker Change: Type of entity and we would raise the money.

Speaker Change: Through issuance of units.

Speaker Change: To fund that as a general proposition just as we did in the case of <unk>.

Speaker Change: Type of entity and we would raise the money.

Speaker Change: So I don't think it will ever be a material amount of money on our balance sheet.

Speaker Change: Through issuance of units.

Speaker Change: And we are going to watch it very closely.

Speaker Change: To fund that as a general proposition just as we did in the case of Ruby re.

Speaker Change: We do think it's a competitive edge, we have particularly with equitable's underwriting skills that we wanted to take advantage of owner if there's anything you want to add.

Speaker Change: So I don't think it will ever be a material amount of money on our balance sheet.

Speaker Change: And we are going to watch it very closely.

One minor add one additionally.

Speaker Change: We do think it's a competitive edge, we have particularly with equitable's underwriting skills that we wanted to take advantage of owner if there's anything you want to add.

Speaker Change: Extension.

Speaker Change: These sidecar investments obviously, we have been looking at it for multiple years and looking at.

Speaker Change: The return profile does tend to generate.

Speaker Change: One minor add then one additionally.

Speaker Change: Extension.

Speaker Change: Low to mid teen kind of ROE. So they're also attractive on a standalone basis at any economics, we get on the investment management side as accretive or additive to that are <unk>. So we really like the Roe profile.

Speaker Change: D as a sidecar investments obviously, we have been looking at it for multiple years and looking at.

Speaker Change: The return profile these tend to generate.

Speaker Change: Low to mid teen kind of Iowa. So they're also attract they want a standalone basis at any economics, we get on the investment management side as accretive or additive to that our Oes are we really liked our OE profile.

Speaker Change: Number one number two I think some of the obviously the press has been around our active posture in wealth management.

Speaker Change: That shouldnt be new news, if you will going back to previous earnings calls and other market communication. We are always active in the wealth management space, we like wealth management.

Speaker Change: Number one number two I think some of the obviously the press has been around our active posture in wealth management.

Speaker Change: We have an at scale platform in terms of independent platforms with $150 billion.

Speaker Change: And we have been in this business for a long time and we believe we do a good job of serving our clients then.

Speaker Change: We have an at scale platform in terms of independent platforms with Honda that $50 billion and we have been in this business for a long time and we believe we do a good job of serving our clients then.

Speaker Change: Growing our business.

Speaker Change: We think about M&A is an enabler, it's not a hammer looking forward to nail we're not a private equity backed rollout but.

Speaker Change: But we believe we have operating leverage in our business and scalability and private wealth and as a result, we can easily double triple our advisor headcounts.

Speaker Change: Growing our business.

Speaker Change: We think about M&A is an enabler, it's not a hammer looking forward the nail we're not a private equity backed rollout.

Speaker Change: Organically continue to hire advisors in attractive geographies and segments. We will continue to add experienced advisors and teams and in certain cases, adding small to mid sized business might be a faster path to getting that expanded growth that being said, we're always very selective from it.

Speaker Change: But we believe we have operating leverage in our business and scalability and private wealth and as a result, we can easily double triple our advisor headcounts, we organically continue to hire advisors in attractive geographies and segments will continue to add experienced advisors and teams and in certain.

Speaker Change: Culture perspective from a platform perspective, as well as our financial discipline, but the good news is we are getting a lot of inbounds and this is true both for reinsurance transactions as well as wealth management transactions and just to add I guess, Alex it's important that owner made the point about small to mid size.

Speaker Change: Cases, adding a small to mid sized business might be a faster path to getting that expanded growth that being said, we're always very selective from a culture perspective from a platform perspective, as well as our financial discipline, but the good news is we are getting a lot of inbounds and this is true both for insurance.

Speaker Change: We're very cognizant of the prices for these kinds of businesses. So.

Speaker Change: <unk> transactions as well as wealth management transactions and just to add I guess, Alex it's important that owner made the point about small to mid size.

Speaker Change: We need to be careful.

Speaker Change: That's it for me thanks.

Speaker Change: Because we're very cognizant of the prices for these kinds of businesses. So.

Speaker Change: Your next question comes from the line of Bill Katz of TD Cowen Your line is open.

Speaker Change: We need to be careful.

Bill Katz: Great. Thank you very much for taking the question good morning, everybody.

That's it for me thanks.

Bill Katz: Maybe just coming back to the margin discussion for a moment I appreciate the affirmation of the 33% guide. It does look like either on end of period number now even thing to the averages that you are running a bit ahead of where you were at the end of the year. So maybe a two part question how to think about the incremental margin as we look out to the second half of the year.

Speaker Change: Yeah.

Speaker Change: Your next question comes from the line of Bill Katz of TD Cowen Your line is open.

Bill Katz: Great. Thank you very much for taking the question good morning, everybody.

Bill Katz: Maybe just coming back to the margin discussion for a moment because I appreciate the affirmation of the 33% guide. It does look like either on an end of period number now even think to the averages that you are running a bit ahead of where you were at the end of the year. So maybe a two part question how to think about the incremental margin.

Bill Katz: And then since you're already running at the mid point of view 27 guidance, how do we think about the trajectory into 'twenty six and beyond.

Bill Katz: Hey, Bill.

Bill Katz: For the second half of the year and then some.

Bill Katz: Thank you for the question.

Bill Katz: Or are you running at the mid point of view 27 guidance, how do we think about the trajectory into 'twenty six and beyond.

Bill Katz: I think we're now at a 33% margin on a year to date basis, and that's what we're hoping for planning and forecasting for the second half of the year just as we noted in our guidance here. So I think it's going to equal 33 first half 33 in the second half.

Bill Katz: Hey, Bill.

Bill Katz: Thank you for the question.

Bill Katz: And then as far as our guidance into 2026.

Bill Katz: We we would plan to be.

Bill Katz: What we're not prepared to answer that just yet we haven't done the 2026 forecasting yet and we'll provide that information.

Bill Katz: And then as far as our guidance into 2026.

Bill Katz: Possibly.

Bill Katz: We we would plan to be.

Bill Katz: End of the year.

Bill Katz: Okay. Thank you and then maybe one for owner.

Bill Katz: But we're not prepared to answer that just yet we haven't done the 2026 forecasting yet and we will provide that information.

Bill Katz: Or is that I'm sort of curious since you're generating significant incremental yield or cash flows to the financial advisers, but not.

Bill Katz: Possibly at the end of the year.

Speaker Change: Okay. Thank you and then maybe one for owner.

Bill Katz: Sort of disclosing it in a way that's sort of comparable to what your peers do what's the hold back to sort of shifting the the organic growth calculation part one and then part two just in terms you mentioned you could scale up two to three X in terms of financial advisers is that just on the existing book.

Speaker Change: Or Seth I'm sort of curious since you're generating significant incremental yield or cash flows to the financial advisers, but not.

Speaker Change: Sort of disclosing it in a way that's sort of comparable to what your peers do.

Speaker Change: What's the hold back to sort of shifting the audio.

Bill Katz: The platform if you will and then soon.

Speaker Change: Organic growth calculation part one and then part two just in terms you mentioned you could scale up two to three X in terms of financial advisers is that just on the existing book of the platform. If you will and then.

Bill Katz: Got a lot of pressure were hearing from some of your peers around private equity sponsored players for a recruitment could you speak a little bit about what youre seeing in terms of transition assistance as you think about scaling beyond your sort of de Novo focus. Thank you.

Speaker Change: He has got a lot of pressure were hearing from some of your peers around private equity sponsored players for a recruitment could you speak a little bit about what youre seeing in terms of transition assistance as you think about scaling beyond your sort of de Novo focus. Thank you.

Bill Katz: Sure. Thanks for the questions. So let me answer those questions.

Bill Katz: I mean number one why do we talk about net new client assets. In addition to net flows.

Speaker Change: Sure. Thanks for the questions about sorry, let me answer those questions.

Bill Katz: Simple, we have a wealth management business, that's comparable to other pure wealth management players or wealth managers embedded in larger institutions.

Speaker Change: I mean number one why why do we talk about net new client assets. In addition to net flows it's very simple.

Bill Katz: Wanted to make sure we make the life easy for analysts and other buy side community to be able to make apples to apples comparisons between our growth rate and most of the wealth management industry works on net new client assets versus the asset management metric of net flows. So that's the reason why we wanted to.

Speaker Change: Our wealth management business, that's comparable to other pure wealth management players our wealth managers embedded in larger institutions.

Speaker Change: Wanted to make sure we make the life easy for analysts and other buy side community should be able to make apples to apples comparisons between our growth rate and most of the wealth management industry works on net new client assets versus the asset management metric of net flows. So that's the reason why we wanted to probe.

Bill Katz: Why that information, there's no catalyst other than ongoing improvements in terms of how we represent the key metrics in our business.

Bill Katz: In terms of like my point around doubling or tripling the.

Speaker Change: Why that information, there's no catalyst other than ongoing improvements in terms of Harvey represents the key metrics in our business.

Bill Katz: <unk>.

Bill Katz: Advisor My point is given we have been in this business for a long time, given we have a very.

Bill Katz: Established infrastructure, we have our own cost of the unclear and we have a robust investment.

Speaker Change: In terms of like my pointed out and doubling or tripling the there.

Speaker Change: Advisor My point is given we have been in this business for a long time, given we have a very.

Bill Katz: Organization manager selection capabilities direct indexing et cetera, et cetera for us, it's pretty straightforward to add new advisers to our platform. It doesn't require massive improvements to our platform to add new.

Speaker Change: Established infrastructure, we have our own cost of the unclear and we have a robust investment.

Speaker Change: Organization manager selection capabilities direct index thing et cetera, et cetera for us, it's pretty straightforward to add new advisers to our platform. It doesn't require massive improvements to our platform to add new.

Bill Katz: Advisors are sales points. If you will so that was my key point around around that.

Bill Katz: And in terms of our transitional support in a highly competitive industry relative.

Bill Katz: Relative to private equity backed platforms et cetera, again, we have been bringing over advisors.

Speaker Change: Advisors are sales points. If you will so that was my key point around around that.

Bill Katz: Our business for decades.

Speaker Change: And in terms of our transitional support in a highly competitive industry.

Bill Katz: Strong transitioning capabilities, both in the technology team as well as in the investment team. So everything about it our private wealth business has thousands of employees. So as the railroad that established platform compared to some of the <unk> in terms of our scale, probably we compare very well against even the very largest raw. So I believe we can compete head to head.

Speaker Change: Relative to private equity backed platforms et cetera, again, we have been bringing over advisors.

Speaker Change: Our business for decades, we have strong transitioning capabilities both in the technology team as well as in the investment team. So everything about it our private wealth business has thousands of employees so as to where we're established platform compared to some of the <unk> in terms of our scale, probably we compare very well against even the very largest.

Bill Katz: And not to mention we have the benefits of the balance sheet. The backing off a larger public entered the alliancebernstein with also the global infrastructure behind it.

Speaker Change: So I believe we can compete head to head and not to mention we have the benefits of the balance sheet. The backing off a larger public entered the alliancebernstein with also the global infrastructure behind it.

Bill Katz: But we take your point.

Bill Katz: Yes.

Bill Katz: Around the notion around net new assets because.

Bill Katz: Look it's clear we have 1 billion $2 billion five a quarter that sits there that we don't.

Speaker Change: But we take your point.

Speaker Change: Hi.

Speaker Change: Around the notion around net new assets because look it's clear we have 1 billion $2 billion five a quarter that sits there that we don't in the net flows calculation doesn't get reflected but given that we're an asset manager principally that's how we've been reporting.

Bill Katz: The net flows calculation doesn't get reflected but given that we are an asset manager principally that's how we've been reporting. So that's why we tried to give you more color yes exactly.

Bill Katz: Exactly.

Bill Katz: Not very different than some other peers frankly in talks about both as an example, as well right.

Speaker Change: Thank you for taking the questions.

Speaker Change: That's why we tried to give you more color yes exactly.

Speaker Change: Your next question comes from the line of John Dunn of Evercore ISI. Your line is open.

Speaker Change: Exactly it's maybe.

Speaker Change: Not very different than some other peers frankly in talks about what is an example, as well right.

Speaker Change: Thank you.

Speaker Change: Yes.

Speaker Change: Thank you for taking the questions.

Speaker Change: It was a nice increase in the institutional pipeline, how do you look at kind of the timing of <unk>.

Speaker Change: Your next question comes from the line of John Dunn of Evercore ISI. Your line is open.

Speaker Change: The funding or the new mandates you just added going to take a while to flow through.

Speaker Change: Thank you.

Speaker Change: Yeah.

Speaker Change: Yes.

Speaker Change: It was a nice increase in institutional pipeline, how do you look at kind of the timing of that.

Speaker Change: Owner again, I'll, let me take that I mean look at the.

Speaker Change: Typically it takes depending on the asset class I mean and blended it takes 12 months too.

Speaker Change: That funding or the new mandates you just added going to take a while to flow through.

Speaker Change: 15 months.

Speaker Change: Yes.

Speaker Change: Deploy in general obviously is longer for some private assets is much shorter for publix.

Speaker Change: Owner again, I'll, let me take that I mean look at the items that typically it takes depending on the asset class I mean, the blended it takes 12 to.

Speaker Change: I think youre going to have a little bit of an exploration.

Speaker Change: 15 months to deploy in general obviously is longer for some private assets is much shorter for publix.

Speaker Change: Timeline.

Speaker Change: This time around given the RGA transaction its impact it will have on us.

Speaker Change: I think youre going to have a little bit of an exploration.

Seth Bernstein: As Seth mentioned in his opening remarks, so theres going to be felt a little bit of a higher velocity at this time, given the unique composition of the pipeline, but that's kind of how we think about it.

Speaker Change: Timeline this time around given the RGA transaction its impact it will have on us.

Speaker Change: As Seth mentioned in his opening remarks, so theres going to be probably a bit of a higher velocity at this time given the unique composition of the pipeline, but that's kind of how we think about it.

Seth Bernstein: And we continue to see also strong commercial activity is also set mentioned.

Seth Bernstein: We have been advancing on couple of <unk>.

Seth Bernstein: Strategic insurance relationships that might.

Speaker Change: And we continue to see also strong commercial activity is also set mentioned.

Seth Bernstein: That has the potential to add meaningfully to our <unk>.

Seth Bernstein: Pipeline as well if that happens although on average is a good thing.

Speaker Change: We have been advancing on couple of <unk>.

Speaker Change: Strategic insurance relationships that might.

Seth Bernstein: <unk>.

Seth Bernstein: Recognized.

Seth Bernstein: The partnerships and private all that might be a little bit of a longer deployment cycle as well, but that's the picture.

Speaker Change: That has the potential to add meaningfully to our alts pipeline as well if that happens although on average is a good thing.

Seth Bernstein: Got it and then just because it's such an important driver of flows.

Speaker Change: You.

Speaker Change: Recognize.

Speaker Change: The partnerships and private all that might be a little bit of a longer deployment cycle as well, but that's the picture.

Speaker Change: Can you talk about some of the drivers of demand for American income and the outlook.

Speaker Change: For continued improvement over the rest of the year.

Speaker Change: Got it and then just because it's such an important driver of flows.

Speaker Change: Sure, Yes, I mean in the second quarter.

Speaker Change: Can you talk about some of the drivers of demand for American income and the outlook.

Speaker Change: Things got a little rougher with.

Speaker Change: For continued improvement over the rest of the year.

Speaker Change: Liberation day uncertainty tariffs and impact on the.

Speaker Change: Sure Yeah, I mean in the second quarter.

Speaker Change: The rate outlook and the.

Speaker Change: Dollar right down to the day American income by definition.

Speaker Change: Things got a little rougher with.

Speaker Change: Strong U S dollar exposure in treasury exposure, so as a result.

Speaker Change: Liberation day uncertainty tariffs and impact on.

Speaker Change: The rate outlook and the dollar right, we're down to the day American income by definition.

Speaker Change: We were limited in the middle of that we have seen a normalization starting in <unk>.

Speaker Change: A strong U S dollar exposure in treasury exposures as a result.

Speaker Change: June and then that continues in July so we have seen positive days in July just to give you a little bit of air in one day doesn't make a trend and I don't want you to extrapolate that but ultimately we see definitely a great signs of.

Speaker Change: We were limited in the middle of that we have seen a normalization starting in.

Speaker Change: June and then that continues in July so we have seen positive days in July just to give you a little bit of air in one day doesn't make a trend and I don't want to extrapolate that.

Speaker Change: Stabilization, but it is a cyclical product we have seen this over time when the rate outlook is stable and healthy.

Speaker Change: Healthy upward sloping yield curve et cetera, there are times from a macro perspective.

Speaker Change: But ultimately we see definitely a great signs of stabilized.

Speaker Change: Stabilization, but it is a cyclical product we have seen this over time when the rate outlook is stable. When you have a healthy upward sloping yield curve et cetera, there are times from a macro perspective.

Speaker Change: It does very well when the duration is in demand and in other environments. It pulls back and it pulls back.

Speaker Change: Assets pulled back quite fast as well so we're not structurally concerns, but we recognized the cyclical product I guess that would add that.

Speaker Change: It does very well when the duration is in demand and in other environments. It pulls back and it pulls back.

Speaker Change: As a consequence of the tariff announcements the dollar weakened pretty significantly, particularly in Asia and that obviously hit us.

Speaker Change: Assets pulled back quite fast as well so we're not structurally concerns, but we recognized the cyclical product I guess I would add that.

Speaker Change: But I have to say it does seem to have stabilized and normalized and we are seeing more positive days.

Speaker Change: As a consequence of the tariff announcements the dollar weakened pretty significantly, particularly in Asia and that obviously hit us.

Speaker Change: With the caveat that owner had provided I'd also say, we're seeing better.

Speaker Change: Hello activity.

Speaker Change: But I have to say it does seem to have stabilized and normalized and we are seeing more positive days.

Speaker Change: Domestically in fixed income as well.

Speaker Change: So that in retail so that has been helpful. And we are seeing more institutional focus in the in the fixed income and even in the equities basis. So.

Speaker Change: With the caveat that owner had provided I'd also say, we're seeing better.

Speaker Change: Hello activity.

Speaker Change: Domestically in fixed income as well.

Speaker Change: So that in retail so that that has been helpful. And we are seeing more institutional focus in the in the fixed income and even in the equity spaces. So.

Speaker Change: Look.

Speaker Change: The really pronounced low volatility of markets, it's interesting given the the <unk>.

Speaker Change: Underlying uncertainties, but its certainly seeming.

Speaker Change: Look.

Speaker Change: Moving people to be deploying more than they had been six to eight weeks ago. So.

Speaker Change: The really pronounced low volatility of markets is interesting given the the underlying uncertainties, but its certainly seeming.

Speaker Change: These are sort of insights that can change with changing policy announcements, but thats, where I think we are now.

Speaker Change: Moving people to be deploying more than they had been six to eight weeks ago. So.

Speaker Change: Thank you.

Speaker Change: These are sort of insights that can change with changing policy announcements, but thats, where I think we are now.

Speaker Change: Your next question comes from the line of Benjamin <unk> of Barclays. Your line is open.

Benjamin: Hi, good morning, and thank you for taking the question.

Speaker Change: Okay.

Speaker Change: Thank you.

Benjamin: You've talked about the wealth business and sort of adding new advisors over the years.

Speaker Change: Your next question comes from the line of Benjamin Brutish of Barclays. Your line is open.

Benjamin: I was wondering if you could talk more specifically about some of the more recent news about seeking more inorganic growth opportunities in that channel. Just curious if you can comment on why now what's changing and what are your broader ambitions. It seems like this is a focus on the ultra high net worth channel, but any other color there and given we see a lot of other wealth managers that compete in this way.

Benjamin Brutish: Hi, good morning, and thank you for taking the question.

Speaker Change: You've talked about the wealth business and sort of adding new advisors over the years.

Speaker Change: I was wondering if you could talk more specifically about some of the more recent news about seeking more inorganic growth opportunities in that channel. Just curious if you can comment on why now what's changing and what are your broader ambitions. It seems like this is a focus on the ultra high net worth channel, but any other color there and given we see a lot of other wealth managers that compete in this way.

Benjamin: There's a little bit of a different level of capital intensity, given ta payments and things like that how do you think about the sort of capital needs of these ambitions. Thank you.

Speaker Change: Yeah sure.

Speaker Change: First of all again, although the press coverage might have it.

Speaker Change: Theres, a little bit of a different level of capital intensity, given ta payments and things like that how do you think about the sort of capital needs of these ambitions. Thank you.

Speaker Change: Increase.

Speaker Change: Our intentions or what we talked about is not new again, we've talked about it I think over the last two or three years.

Speaker Change: Yeah sure.

Speaker Change: First of all again, although the press coverage might have it.

Speaker Change: In terms of our advisor growth we typically.

Speaker Change: Increase our.

Speaker Change: Our intentions or what we talked about is not new again, we've talked about it I think over the last two or three years.

Speaker Change: Targets mid single digits advisor growth every year from an organic perspective year to date, we are tracking towards that.

Speaker Change: In terms of our advisor growth we typically.

So that's healthy.

Speaker Change: In terms of.

Speaker Change: Target mid single digit advisor growth every year from an organic perspective year to date, we are tracking towards that.

Speaker Change: Inorganic stuff as I mentioned.

Speaker Change: It's not.

Speaker Change: We're not trying to hit that target, we don't have a.

Speaker Change: So that's healthy.

Speaker Change: Number of acquisitions to make.

Speaker Change: In terms of.

Speaker Change: The inorganic stuff as I mentioned.

Speaker Change: AUM.

Speaker Change: GAAP or anything like that if we hit our targets.

Speaker Change: It's.

Speaker Change: So as a result this is more.

Speaker Change: We're not we're not trying to hit that target we don't have a.

Speaker Change: An extension of our strategy and an enabler of our strategy is M&A by itself is not our strategy.

Speaker Change: Number of acquisitions to make.

Speaker Change: AUM gap or anything like that if we had a target we would have shared it. So as a result this is more.

Speaker Change: In terms of what we typically look at continuing to look at more on the.

Speaker Change: An extension of our strategy and an enabler of our strategy is M&A by itself is not our strategy.

Speaker Change: It settles emphasize small to mid size space.

And what we have seen the marketplace is actually there is a little bit up there.

Speaker Change: In terms of what we typically look at it we continue to look at more on the.

Speaker Change: A change in the multiple that puts a significant change in the multiple if you go to the for instance, the five plus billion AUM range. The reason is there is a scarcity value, particularly for the private equity platforms as they get bigger they are looking for larger acquisitions to get there faster given their exits timelines on all that we don't have those kind of pressures on our business.

Speaker Change: As it settles emphasize small to mid size or a space.

Speaker Change: And what we have seen the marketplace is actually there is a little bit up there.

Speaker Change: A change in the multiple at a pretty significant change in the multiple if you go to the for instance, the five plus billion AUM range. The reason is there is a scarcity value, particularly for the private equity platforms as they get bigger they are looking for larger acquisitions to get there faster given their exits timelines on all that we don't have those kind of pressures on our business.

We are more permanent capital, we are not looking to buy and sell.

Speaker Change: So as a result, we have the ability to be patient we have the ability to look at.

Speaker Change: Lower size.

Speaker Change: <unk> that are in our target markets, Yes, I'll try network would be one focus area, it's not the only focus area.

Speaker Change: We are more permanent capital, we're not looking to buy and sell.

Speaker Change: So as a result, we have the ability to be patient we have the ability to look at.

Speaker Change: There are other interesting verticals, if you will be like for instance.

Speaker Change: Lower size.

Speaker Change: Is that are in our target markets, Yes, I'll try network would be one focus area, it's not the only focus area.

Speaker Change: Entertainers that leaves the business owners, a global family as family office.

Speaker Change: Different flavors of this there'll be like platforms, either that adds more geographical breadth to our business or more specialized capabilities either in terms of client access or underlying.

Speaker Change: There are other interesting verticals, if you will be like for instance, there.

Speaker Change: And entertainers at Lids business owners, a global families family office and so there are different flavors of this there'll be like platforms, either that adds more geographical breadth to our business or more specialized capabilities either in terms of client access or underlying.

Speaker Change: Expertise again, let me remind you we only have 20 locations I mean private wealth is the national business, but also our local business.

Speaker Change: That's the reason for looking for additional.

Speaker Change: Expertise again, let me remind you we only have 20 locations I mean private wealth is they're both national business, but also our local business. So as a result, that's the reason for looking for additional <unk>.

Speaker Change: Tires teams and businesses as they become available at the right price in new jurisdictions.

Speaker Change: Okay that was all for me. Thank you very much.

Speaker Change: Okay.

Speaker Change: Tires teams and businesses as they become available at the right price in new jurisdictions.

Speaker Change: Again, if you wish to join the queue. Please press star one on your telephone keypad.

Speaker Change: Your next question comes from the line of Bill Katz of TD Cowen Your line is open.

Speaker Change: Okay that was all for me. Thank you very much.

Speaker Change: Great. Thanks for taking the follow up just thinking just strategically now.

Speaker Change: Okay.

Speaker Change: Again, if you wish to join the queue. Please press star one on your telephone keypad.

Speaker Change: To the extent that you continue to scale up your alternatives platform and performance fees become a larger percentage of the overall revenue pie.

Bill Katz: Your next question comes from the line of Bill Katz of TD Cowen Your line is open.

Bill Katz: Great. Thanks for taking the follow up just thinking just strategically now.

Speaker Change: Should we think about the comp ratio in particular is there any leverage to the platform or Conversely are the payouts on performance fees, a little bit higher than the sort of the overall rate. Thank you.

Speaker Change: To the extent that you continue to scale up your alternative platform and performance fees become a larger percentage of the overall revenue pie.

Speaker Change: Should we think about the comp ratio in particular is there any leverage to the platform or Conversely, how the payouts on performance fees, a little bit higher than the sort of the overall rate. Thank you.

Speaker Change: Well, let me start and.

Tom Simione: Tom May jump in.

Bill Katz: Bill first of all most of our credit focus is in performance fee driven.

Speaker Change: Well, let me start and.

Bill Katz: Just by the nature of what we're doing with higher credit quality pieces go into the insurance marketplace. There is the performance fee element and I suspect that will continue and as you know we also have it on the on the public equity side as well.

Tom Simone: Tom May may jump in.

Tom Simone: Built but first of all most of our credit focus is in performance fee driven.

Tom Simone: Just by the nature of what we're doing with higher credit quality pieces going to the insurance marketplace. There is the performance fee element and I suspect that will continue and as you know we also have it on the on the public equity side as well.

Bill Katz: But.

Bill Katz: Your inclination that the rep. The Rev share on performance fees tends to be more favorable to <unk> than the underlying base fees.

Tom Simone: But.

Bill Katz: It were to happen, but it's just not that huge number for us.

Tom Simone: Your inclination that the rep. The Rev share on performance fees tends to be more favorable to the team then the underlying base fees if that were to happen, but it's just not that huge number for us.

Bill Katz: So I do think that there is leverage in the system as we get larger and private at all but Tom why don't you.

Ben: Hi, Ben.

Bill Katz: No I agree with everything you just said.

Tom Simone: So I do think that there is leverage in the system as we get larger and private at all but Tom why don't you.

Bill Katz: Obviously as we talk about the compensation ratio, we continue to measure what we need to pay our people competitively.

Bill Katz: Evaluate that against our revenue and we'll continue to do so whether it's <unk> or performance fees.

Ben: Hi, Ben.

Tom: No I agree with everything you just said.

Speaker Change: Obviously as we talk about the compensation ratio, we continue to measure what we need to pay our people competitively and evaluate that against our revenues that will continue to do so whether it's base fees or performance fees.

Speaker Change: Great. Thanks for taking my question.

Bill Katz: Yes.

Speaker Change: Your next question comes from the line of Dan Fannon of Jefferies. Your line is open.

Dan Fannon: Oh, great. Thanks for squeezing me in here. So just just a question on gross sales no surprise given some of the turbulence in the early in the quarter that gross sales slowed but just as you think about kind of whats happened as the quarter progressed and as we.

Speaker Change: Great. Thanks for taking my question.

Speaker Change: Yeah.

Speaker Change: Your next question comes from the line of Dan Fannon of Jefferies. Your line is open.

Dan Fannon: Oh, great. Thanks for squeezing me in here. So just just a question on gross sales.

Dan Fannon: Surprise, given some of the turbulence in the early in the quarter that gross sales slowed but just as you think about kind of whats happened as the quarter progressed and as we.

Speaker Change: Sitting here in July.

Speaker Change: Gross sales perspective, do you see that more as <unk> dip more as temporary or are we seeing kind of more momentum on a go forward basis.

Speaker Change: Yes so.

Dan Fannon: Sitting here in July from.

Speaker Change: Actually year to date, our sales are I think up in the asset management side, 1%. So again I'm not overly concerned about the sales trends and we eat net not gross.

Dan Fannon: From a gross sales perspective, do you see that more as two Qs dip more as temporary or are we seeing kind of more momentum on a go forward basis.

Dan Fannon: Yes so.

Speaker Change: Look at the redemption for instance on the institutional side, our redemption rate came down as well so as a result, although it is an important metric in terms of momentum in the business I mean I look at both.

Dan Fannon: Actually year to date, our sales is adding up and asset management side, 1%. So again I'm not overly concerned about the sales trends and we eat net not gross.

Dan Fannon: If you look at the redemptions for instance on the institutional side, our redemption rate came down as well.

Speaker Change: Growth in outflows and I'm also quite happy with some of the improvement in debt redemptions, we had.

Dan Fannon: So as a result, although it is an important metric in terms of momentum in the business I mean I look at both.

Speaker Change: In the institutional channel I think we probably as I mentioned, a little bit in the context of AIP in my previous comments.

Dan Fannon: Growth in outflows and I'm also quite happy with some of the improvement in debt redemptions, we had.

Speaker Change: We hit a little bit of air pockets.

Dan Fannon: In the in the institutional channel I think we probably as I mentioned, a little bit in the context of AIP in my previous comments.

Patrick: Patrick about six to eight week timeframe early April to mid to late.

Speaker Change: <unk> Memorial day.

Dan Fannon: We hit over the air pockets.

Speaker Change: <unk> have seen some signs of momentum starting in June and July is that continuation.

Dan Fannon: Maybe particularly for six to eight week timeframe early April to mid to late May.

Speaker Change: So as a result, I remain relatively optimistic and bullish about our ability to.

Dan Fannon: May Memorial day.

Speaker Change: <unk> have seen some signs of momentum starting in June and July is a continuation.

Speaker Change: Growing our flagship strategies and expanding into new areas and we definitely see a lot of opportunities as I mentioned the insurance our ETF platform continues to scale I will remind us that.

Speaker Change: So as a result, I remain relatively optimistic and bullish about our ability to.

Speaker Change: In the ETF business as it would have a J curve when you launch a new product.

Speaker Change: Typically it takes.

Speaker Change: While for the product to make sure to AUM level et cetera, or H two we put in major platforms. So we will see some of the tailwind benefit of Etfs, our monthly sales volumes on Etfs continues to grow exponentially and we have the ability to expand in Etfs is another growth area like.

Speaker Change: In the ETF business days that would have a J curve when you launch a new product.

Speaker Change: Typically it takes.

Speaker Change: While for the product to make sure to an AUM level et cetera or age. So we put in major platforms. So we will see some of the tailwind benefit of Etfs, our monthly sales volumes on Etfs continues to grow exponentially and we have the ability to expand in Etfs is another growth area like.

Speaker Change: New Taiwan, ETF, which opened the complete a new geography for us.

Speaker Change: So all in all it is.

Speaker Change: Hard to predict the exact sales volumes then there's definitely some remaining uncertainty in terms of geopolitics tariffs policy et cetera. So there could be definitely some continued sloppiness in sales, but I'm also optimistic that we have new ways to win or additional waste to generate business in terms of.

Speaker Change: New Taiwan, ETF, which opens a completely new geography for us.

Speaker Change: So all in all it's hard to predict the exact sales volumes then there's definitely some remaining uncertainty in terms of geopolitics tariffs policy et cetera are there could be definitely some continued sloppiness in sales, but I'm also optimistic that we have new ways to win or additional.

Speaker Change: One distribution channels different vehicles, and again I focus on net so it's both the retention game as well as a sales guy.

Speaker Change: Waste to generate business in terms of <unk>.

Speaker Change: Okay.

Speaker Change: Understood. Thanks for all the detail.

Speaker Change: One distribution channels different vehicles, and again I focus on net so it's both a retention game as well as a sales guy.

Speaker Change: There are no further questions at this time, Mr. <unk> I'll turn the call back over to you.

Speaker Change: Okay.

Speaker Change: Thank you January thank you everyone for participating today, if you have any questions. Please reach out to Investor Relations. We look forward to hearing back from you Bye bye.

Speaker Change: Understood. Thanks for all the detail.

Speaker Change: There are no further questions at this time, Mr. Joe Galli, I turn the call back over to you.

Speaker Change: Yes.

Speaker Change: Thank you January thank you everyone for participating today, if you have any questions. Please reach out to Investor Relations. We look forward to hearing back from you Bye bye.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

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