Q2 2025 Virtus Investment Partners Inc Earnings Call
Good morning. My name is fiti and I will be your conference operator today.
I would like to welcome everyone to the vertice Investment Partners quarterly conference call.
The slide presentation for this call is available in the investor relationship section of the vertice website. Www.veris.com this call is being recorded and will be available for replay on the vertice website.
At this time, all participants are in a listen-only mode. After the speakers remarks, there will be a question and answer period and instructions will follow at that time. I will now turn the conference to your host. Sean, roor
Speaker Change: Thanks DD and good morning everyone on behalf of virtus Investment Partners. I'd like to welcome you to the discussion of our operating and financial results for the second quarter of 2025. Our speakers today are George Elward president and CEO and Mike anger, all Chief Financial Officer
Following the prepared, remarks will have a Q&A period.
Speaker Change: Before we begin, please note the disclosures on page 2 of the slide presentation.
Certain matters discussed on this call may contain forward-looking statements within the meaning of the private Securities. Litigation Reform, Act of 1995.
Speaker Change: And as such our subject to known and unknown risks and uncertainties, including but not limited, to those factors set forth in today's news release and discussed in our SEC filings.
Speaker Change: these risks and uncertainties may cause actual results to differ materially from those discussed in the statements,
Speaker Change: In addition to results, presented on a gap basis, we certain non-gaap measures to evaluate our financial results.
Speaker Change: Our non-gaap financial measures are not substitutes for gaap, financial results and should be read in conjunction with The Gap results. Reconciliations of these non-gaap Financial measures. The applicant Gap measures are included in today's news release and financial supplement which are available on our website.
Mike Anger: Now, I'd like to turn the call over to George George. Thank you, Sean. And good morning, everyone. Today, I'll start with an overview of the results. We reported this morning and then I'll turn it over to Mike for more details.
The second quarter began with challenging market conditions and volatility, but then had steady Improvement culminating in momentum by June, which is reflected in our financial and operating results.
Mike Anger: As a certain management grew 2% on the quarter benefiting from the market rebound off the April lows.
and it outflows across products were primarily in our quality oriented Equity strategies, which faced headwinds in a market environment that largely favored, momentum-driven strategies,
Mike Anger: Keli, so the quarter included higher earnings per share and operating margin.
Continued positive, net Flows In ETFs.
Strong long-term relative investment performance, our highest level of sharing purchases in 3 years.
Mike Anger: And low, net, leverage and meaningful. Liquidity. Providing ongoing flexibility to invest in the business and return Capital to shareholders.
Mike Anger: We continue to focus on the execution of various initiatives related to expanding our offerings and channel availability, both organically, as well as through inorganic opportunities.
Mike Anger: As we commented on last quarter, we have been focused on expanding our offerings of retail separate accounts ETFs and Global funds.
Mike Anger: For ETFs and Global funds. We anticipate launching multiple products over the coming quarters including from Silent SES on Harbor and Alpha simplex.
Mike Anger: Leverage, multiple managers and strategies.
Mike Anger: In addition we are leveraging our fixed income capabilities with our first interval fund.
Mike Anger: We also have efforts underway to increase the availability of our growing ETF offerings. And to expand the asset raising capabilities of our world, regarded wealth management business within Keen Anderson which is grown to nearly 9 billion in assets.
Mike Anger: as we focus on growth opportunities, we would note that the environment continues to be highly attractive for
for product expansion to distribution, enhancing or scale oriented inorganic transactions.
Mike Anger: We remain optimistic about such opportunities, particularly in the areas of current and growing investor interest.
Mike Anger: Such as private markets and differentiated and compelling traditional strategies, which we are actively pursuing.
Mike Anger: The number of opportunities of various stages in the pipeline is at its highest level as far as a broad range of structures capabilities and sizes.
Mike Anger: Our strong liquidity and flexible balance sheet position as well as at on any strategically and financially compelling opportunities.
Turning to investment performance. We are pleased with the performance you've generated over Market Cycles, over the 10 year period, 74% of our Equity assets and 69% of our fixed income assets. Beat their benchmarks,
Mike Anger: we just mutual funds 73% of Equity Funds and 85% of fixed funds, outperformed the pure medium,
Mike Anger: I would also note that 27 of our retail funds are rated 4 or 5 stars and 86% of our rated fund retail fund assets were in 345 Stars.
Mike Anger: We have included a new slide that provides additional investment performance information.
Mike Anger: Turning now, to review of the results total assets under the management were 171 billion of June 30th of 4 billion, sequentially due to market performance.
Mike Anger: Total sales of 5.6 billion compared with 6.2 billion in the first quarter, with modest decline across products, which was in part a reflection of Market disruption, particularly early in the quarter.
Trends improved over the course of the quarter with June being our best month of net flows, including essentially Break, Even net flows in open-end funds.
Mike Anger: Total net, outflows for the quarter of 3.9 billion were largely in equity, strategies as fixed income Alternatives and multi assets. Each had modest net, outflows
Mike Anger: We did continue to have positive net Flows In ETFs which through each 3.7 billion in AUM with our organic growth rate of 74% over the trailing 12 months in which a 3.9 billion as of yesterday.
Mike Anger: Looking at froze across assets.
Mike Anger: The equity. Net, outflows were driven by strategies with a quality orientation in a market that favored momentum, as well as we've reduced sales from the soft closing of the smid cap. Core Equity model offering late last year.
Mike Anger: Fixed income. Net flows were modestly negative for the quarter with net, outflows in April and May and a return to positive flows in June.
Mike Anger: Relative investment performance of our fixed income. Strategies has been strong for the recent 1 year period, as well as the longer term, creating demand for funds, across the spectrum of credit quality and duration, several of which were among our top selling funds in ETFs in the quarter.
Net flows of alternative. Strategies were also modestly negative with favorable Trends throughout the quarter including positive, net flows in June,
Mike Anger: In terms of what we're seeing in July Market, sentiment has continued to Trend more favorably. And we are seeing a stronger flow profile for our fixed income funds though. Not yet for the Equity Funds ETF says. I noted continue the positive trend with an increase in sales.
Mike Anger: An Institutional Trends are similar to the second quarter with known redemptions exceeding known wins with redemptions primarily in quality large gap. While known wind span a range of strategies including Emerging Market debt and Global and domestic rates.
Mike Anger: We also anticipate launching a new cllo later in the third quarter targeting approximately 400 million in AUM.
Turning now to our financial results, the sequential improvement in our financial results reflect to the impact of the prior quarter seasonal expenses, partially offset by lower average, AUM levels.
Mike Anger: The operating margin was 31.3% up sequentially from 27.6, which included the impact of the seasonal expenses.
Mike Anger: Earnings per share as adjusted of 6,025 cents increased from 5.73 in the first quarter.
Mike Anger: Relative to the more comparable prior year period earnings per share as suggested decreased 4% on Lower average assets.
Mike Anger: in terms of our balance sheet and capital during the quarter, we report, we increase our share buyback to 30 billion to repurchase over 175,000 shares, which represented, 3% of, beginning outstanding shares,
And return Capital to shareholders. So with that, I'll turn the call over to Mike Mike.
Mike Anger: Thank you, George. Good to be with you all this morning.
Mike Anger: Starting with our results on slide 7 assets under management.
Mike Anger: Our total assets under management of June 30th or 170.7 billion.
Mike Anger: And represented, a broad range of products and asset classes.
By product institutional is our largest category at 33% of AUM.
Mike Anger: Retail separate accounts including wealth management at 28%.
Mike Anger: And US retail, mutual funds at 27%.
Mike Anger: The remaining 12%, comprises closed. End funds, Global funds and ETFs.
Mike Anger: We are also Diversified within asset classes in equities between International and domestic.
Mike Anger: and within domestic well-represented among mid small,
Mike Anger: And large cap strategies.
Mike Anger: And fixed income is well Diversified across duration, credit quality and geography.
Mike Anger: Turning to slide 8 asset flows.
Sales of 5.6 billion compared with 6.2 billion in the first quarter.
Mike Anger: Reviewing by product institutional sales of 1.3 billion compared with 1.5 billion last quarter.
Mike Anger: As higher sales of alternative strategies were offset by lower sales of fixed income and Global equity.
Mike Anger: Retail separate account sales of 1.5 billion declined, from 1.7 billion in the prior quarter, primarily due to lower smid cap equity.
Mike Anger: open-end fund sales of 2.8 billion compared with 3 billion as higher sales of large cap and International
Or offset by other strategies within open-end funds, ETF sales were again strong.
Mike Anger: 0.4 billion essentially unchanged from the first quarter.
Total net, outflows of 3.9 billion compared with 3 billion. Last quarter and reviewing byproduct.
Mike Anger: Institutional net outflows of 2.2 billion.
Mike Anger: Increased from 1.2 billion with the net, outflows driven by quality oriented, large cap growth.
As always, institutional flows, will fluctuate, depending on the timing of client actions.
Mike Anger: Retail separate accounts at net, outflows of 0.8 billion.
Mike Anger: Largely reflecting the continued impact of the soft closing of a smid cap core Equity model offering late last year.
Mike Anger: We do offer other smid cap strategies as well as midcap where we have significant capacity and flows have been positive.
Mike Anger: In addition, we recently introduced an SMA leveraging, the strong performance of our high conviction, large cap growth capability.
Mike Anger: For open-end funds, net outflows of 1 billion, or eighty generally, the same level as the prior quarter.
Mike Anger: And we're driven by Equity strategies as fixed income. Net flows were flat.
Mike Anger: that flows trended favorably during the quarter with June essentially break even
Within open-end funds. ETFs continue to generate a strong double-digit, organic growth rate with 0.2 billion of positive, net flows.
Mike Anger: Turning to slide 9 Investment Management fees as adjusted of 171.9 million decreased 4% reflecting the 4% sequential decline in average assets under management.
And a lower average fee rate.
Mike Anger: The average fee rate was 41.3 basis points.
Mike Anger: Or 41.1 basis points, excluding performance fees.
Mike Anger: And compared with 41.7 basis points in the first quarter.
Mike Anger: The change in the fee rate from the first quarter, largely reflected the mix of asset classes within retail funds.
Mike Anger: Given relatively stronger flows of fixed income strategies.
Mike Anger: Looking ahead, we believe the second quarter, normalized average fee rate is reasonable for modeling purposes. As always, the fee rate will be impacted by markets and the mix of assets.
Mike Anger: Reflecting the impact of seasonal expenses in the prior quarter as well as lower variable incentive compensation.
Mike Anger: Employment. Expenses were 50.9% of revenues as adjusted.
Mike Anger: Up from the seasonally adjusted prior quarter, level of 50.3%.
Due to lower revenues.
Mike Anger: Looking ahead, it is reasonable to anticipate employment expenses as a percentage of revenues would Trend toward the middle of our 49% to 51% range.
As always, it will be very variable based on market performance in particular.
Mike Anger: As well as profits and sales.
Mike Anger: Turning to slide 11.
Mike Anger: Other operating expenses has adjusted worth 32 million.
With the 2% sequential increase due to 0.9 million of annual Equity grants to the board of directors.
Excluding the grants other operating expenses declined modestly from the prior quarter.
Mike Anger: As a percentage of second quarter revenues, other operating expenses were 16.7%.
Mike Anger: Up from 15.8%, primarily due to the annual grants.
Mike Anger: Operating expenses have remained within a narrow range of 30 to 32 million per quarter.
Mike Anger: And we continue to believe that this level is appropriate for modeling purposes.
Mike Anger: Slide 12 illustrates the trend in earnings.
Mike Anger: Operating income as adjusted of 59.8 million, increased 10% sequentially due to the impact of the prior quarter seasonal expenses.
excluding those items operating income decreased 7%, primarily due to lower average assets under management
Mike Anger: The operating margin has adjusted of 31.3%.
Mike Anger: Compared with 27.6% in the first quarter.
With respect to non-operating items.
Mike Anger: Interest and dividend income of 5.3, million included an elevated level of Cl, interesting income.
Mike Anger: Looking ahead to the third quarter, it would be reasonable to anticipate interest in dividend income of approximately 4.3 million.
Mike Anger: other income which largely reflects the earnings from our Equity stake in Zevon, Bergen Capitol,
Mike Anger: Increased modestly to 1.2 million.
Mike Anger: Non-controlling interests, which reflect minority interest in SGA, where higher sequentially by 7 million.
Mike Anger: For both other income and non-controlling interests. The second quarter is a reasonable run rate for modeling.
Mike Anger: That income has adjusted of $6.25 per day, diluted share, increased 9% from 5.73, in the first quarter.
Mike Anger: In terms of Gap results, net income per share of $6.12 increased from $4.05 per share in the first quarter due to the impact of first quarter, seasonal items, as well as 50 cents of fair value. Adjustments to minority interests.
Mike Anger: And 32 cents of fair value, adjustments to contingent considerations.
Mike Anger: Slide 13 shows the trend of our Capital liquidity, and select balance sheet items, cash and equivalents at June 30th, were 172.2 million.
Mike Anger: In addition, we had 148.2 million of seed Capital Investments to support growth initiatives and 126.7 million of other Investments.
primarily in our cos
Mike Anger: Working capital was 144 million up 5%.
Mike Anger: From 137.2 million.
Mike Anger: As cash generated more than offset return of capital.
Mike Anger: During the second quarter, we repurchased, 175,872 shares of common stock at an average price of 171 per share.
Mike Anger: For a total of 30 million.
Mike Anger: That is up from 20 million in the first quarter.
Mike Anger: And for the year to date period, our repurchases have contributed to a 3% reduction. In our share count
Mike Anger: At June 30th. Gross debt to Evita was 0.7 times.
Mike Anger: Unchanged from March 31st.
Mike Anger: and we ended the quarter with 62.5 million of net debt or
Mike Anger: Our adequate levels of liquidity, including an undrawn 175 million revolver.
And modest leverage provide Financial flexibility to continue to invest in the business and return capital.
Looking ahead, we would note that anticipated Capital uses in the third quarter.
Mike Anger: Include the potential new Co.
Mike Anger: Where our commitment would be about 30 million.
Mike Anger: Also, as a reminder, we will have the last of our scheduled minority interest purchases, with SGA
Mike Anger: Which should also approximate 30 million.
Speaker Change: With that. Let me turn the call back over to George George. Thank you! Mike. So we're now going to take your questions. Uh, DD, would you please open up the lines?
Thank you as a reminder.
Speaker Change: To ask a question. Please press star 1, 1 on your telephone and wait for your name to be announced to withdraw your question. Please, press star, 1 1 1, again please, stand by while we compile the Q&A roster,
Speaker Change: And our first question comes from bamboo, this is Barclays, your line is open.
Speaker Change: Hi, good morning, and thank you for taking the questions. Um, maybe first Mike you just talked about about 30 million in share repurchases, in Q2. It's the highest number I think in in quite some time. Um, so just curious, how should we be thinking about? I, I imagine there are some, you know, uh, being opportunistic in that you also talked about some, you know, upcoming uses of capital uh you know, CLC capital and the SGA minority interest, pay down. So how should we think about what's what else is? Maybe available for repurchases and and your kind of current appetite between repurchases and dividends
Speaker Change: yeah, and
you know, I I
appreciate you highlighting.
Speaker Change: As you know, we take a balanced approach to to Capital Management and we have leaned in both in the, in this quarter, as we, particularly saw a compelling valuation in our stock and, uh, year to date. We've now done 50 million of BuyBacks, which eclipsed the total level of 2024. So, uh, I think that brings a payout ratio over 100%. So we'll look at, you know, all all factors around highest and best use of capital. Um, George alluded to uh inorganic opportunities, uh, potentially uh, coming down continuing to invest in the business, as well as the 2. Uh, specific uses of capital here in the third quarter.
Speaker Change: So we will balance all of that as we uh continue to make Capital decisions that we think um will deliver long-term shareholder value.
Speaker Change: I appreciate that, maybe along the same lines. Um, you know George you mentioned. The environment is attractive for a number of things and your pipeline is at its highest level. Um, you know, curious if you could share any additional color on, you know, the the sort of the types of assets you're looking at, um, has there been any change to to what you're thinking about the strategy, um, you know, you mentioned private Market, specifically kind of curious, how do you think about, you know, the ability to compete given so many of these scaled competitors? You know where are there? Maybe more, um, types of opportunities, that make sense. But but any any, uh, additional commentary in there? That would be helpful. Thank you.
Speaker Change: Sure. Yeah. So again what what I kind of indicated is just uh it the the level of activity is is at its highest level so where spending a lot of time evaluating different uh opportunities and as we look at those that could come along the lines of either, you know, attractive, you know, products of extensions distribution expansion or or those that will just fundamentally enhance scale and therefore accretion. So it's very it's been a very interesting. I think there's um a great environment out there. As I think the opportunities between you know, I specifically reference private markets. But in addition to private markets there, there are very attractive, you know, traditional strategies that are still things that are in demand, um, to to investors.
Speaker Change: And then just going directly against, you know, a scale player with a general, uh, type of uh, strategy. So generally we always look at strategies that are a little different, a little differentiated and have a different set of attractions and can really balance out the exposures that that people have. So we find it interesting. We we do think that the the industry continues to contemplate how to converge, you know, some of the privates and the Publix. And I think on the public side I just think there's opportunities to enhance and further consolidate on on uh distribution opportunities.
Speaker Change: All right, thank you very much, appreciate it. Uh, your response.
Speaker Change: Thank.
Speaker Change: You.
Bill: And our next question comes from Bill cats of TD, cow, and your line is open.
Speaker Change: Great. Thank you very much for taking the questions this morning, happy Friday everybody. Um just in terms of um just thinking through the guidance on the calm side, you guys have been terrific of managing expenses. How much of the sort of comp is just related to the variable Revenue, the revenue backdrop. How much is more structural? So I guess the question is as we look ahead to the extent that markets continue to normalize, is there any catch up spending uh that needs to potentially uh come back? And if so, where might that be?
Speaker Change: Yeah, I think uh, we did guide on specifically on the employment row uh that back to the middle of our range. As you know, we've been in that 49 to 51% range and this quarter where the beginning period assets were were impacted, um, by the draw down in March and April, we, we ticked up toward the high end of the range. I think we're ending assets are about 2% above average. We would, you know, all else being equal, um, just using appropriate midpoint of that employment range for modeling purposes going forward. And as you know, that range is always impacted by
Speaker Change: uh, by market, uh, conditions, as well as profits and sales. But I think, you know, there is, uh, a positive impact on The Leverage ability of the market, I think other operating we've been, uh, managing that at at also, in a tight range, 30 to 32 million which remains appropriate um, for, for modeling purposes. So, you know, I don't foresee any catch up spending, I think, uh, you know, we're we're in a position to continue to deliver incremental margins and that 50 to 505% level as we look forward. Yeah, I mean, the 1 thing I would just add to it because I think embedded in your question was um specifics around the extent of which our comp is variable. So uh you know, as a reminder our our compensation is, is highly variable, right? Our our
Speaker Change: Investment managers incentives are really, uh, profit-based. Uh, our sales-based are generally based on sales or performance and even our overarching, uh, corporate plans are all highly variable. So I got, we do have base salaries, Etc. But in terms of of a catch-up, it would really just be through the variable as a percentage of Revenue, if if that's helpful.
Speaker Change: Yep, makes sense uh maybe turn to flows for a moment. Um, just wondering if you could maybe step back and so give us what the Nets look like in July, seems like some ins and outs, uh, across the different segments. And maybe the broader question is just on the institutional side. How are the conversations going from the, uh, the client side? Where are you seeing the allocations? Migrate toward? Uh, just as we think through Equity, fixed income, or us non us, Etc. Thank you.
Speaker Change: Yeah, so I mean on the flows in terms of July so we gave a little bit of of an impression and again July is only 1 month but you know going back to the second quarter you know, obviously June was a much more pleasurable month than was that of April. And and and you know, there was really a pausing in terms of certain investor appetite at the end of the first quarter into the beginning. And then uh, Liberation day obviously did create a little bit of uncertainty around where people can invest. So you know, we saw that in our sales. Uh we also saw that in terms of, you know, the the whole
Quality versus momentum environment, which for us is more cute because we are slightly over concentrated on the on the quality side, for some of our Equity strategies. So I I think as we signaled in the
Speaker Change: Is continued in July, we continue to see strength around the fixed income, which is very helpful. And in particular the ETFs uh again our business has been a smaller business, but it's been growing at a very good rate and, you know, as we've indicated we don't have, you know, full availability for all of our ETFs everywhere we want it. So that's a, a big focus and we're pleased to see some of that um, growing um, in terms on on the on the institutional side again with with the longer time Horizons uh that they have. There's there's little less cyclicality in in terms of what they're looking for. We again, we did highlight where we have had the outflows has been in more of the, the quality large cap side. Uh, but we indicated on the, the inflow side, we do actually see opportunities and it's been a long time for emerging market debt. Uh, I hope that this trend, uh, as well as in some of our Global and and domestic reads, Mike is there other things you should
Speaker Change: Highlight there. Hey, I would just, uh, remind you that we do have the, A C that we anticipate offering, uh, and issuing in the, in the back half of the year and there is breadth in the uh, in in the institutional pipeline, uh, across managers, uh, including our focused growth, sort of momentum, uh, managers where we've seen, uh, some uh, some success there as well.
Speaker Change: All right, thank you. I'll get back to you. Thank you.
Thanks, thank you.
Speaker Change: And our next question comes from Kristen love of Piper Sandler. Your line is open.
Kristen Love: Thank you. Uh, good morning. Appreciate taking my questions. First on the following up on the m&a, Outlook you mentioned there, there are conversations, plenty of activity. You're looking at private markets traditionals but can you dig into some of the of the valuations that you're seeing on a big picture? Uh way does it still remain tough from evaluation standpoint and private markets? And then just within private markets, where are some of the areas that you might be most interested in?
Speaker Change: Yeah, well I I I'm not going to give into
Speaker Change: specific specifics. Uh, but you know, starting, you know, in terms of valuations, right? The the valuations of the private markets uh are higher than the price, the valuations of of the public markets. And I think there's some Divergence within those depending upon the subcategory whether it's you know, PE private credit real assets and also whether it's really more focused on, you know, direct origination uh, versus really more Alec of an allocator. Uh, and then within that, in terms of how differentiated or strategy is so, you know there's there's it, it's still a very hard area in terms of, you know, isolating
Speaker Change: Ating the specific, uh, valuation multiple, uh, as it is as well on on the traditional side, uh, which continues obviously to be lower than the private side. But again, there's a a premium for those things that are more attractive and more stable and unless for others. So it it, it's part of the the conversation. Um, as you sort of think through those types of things but you know, fundamentally as we and I assume others. Look at it, it's really about, you know, what is the long-term strategic?
Speaker Change: Additive capability. That's really going to be important, going forward. And I think, you know, we like everyone else do fundamentally believe that, you know, there needs to be both the public and and the private uh, elements within the world Diversified portfolio.
Great. Uh, thank you. That makes sense. And then just, um, just following up on flows as well. Uh, you did mention early in the second quarter was tougher but, uh, but June was a brighter picture, um, on July. Can you just frame a little bit how July compares to June, um, versus a little bit earlier in the quarter? Did that momentum? Continue, pull back a little bit, just a little bit more color than that. Would be great.
Speaker Change: Yeah, I mean the Mansion continues so from June. So again, you know, June was again, a much better month than than obviously April and then that that continued and I think it even highlighted in some areas, even like our ETFs, there's actually or fixed income in general. Uh, there was a
Speaker Change: Um, not only continued, but maybe slight, uh, increase in that. So, we're really, um, optimistic. As we kind of see that and then really even on the equity side, uh, you know,
Speaker Change: Characterizes more style, agnostic. And then we have another capability that would characterize as aggressive. And we've actually seen, you know, opportunities there and actually and that's some of the newer stuff that we've
Speaker Change: Recently expanded into the retail separate accounts. So that's an area that we're hopeful. If someone is, um, more of a, of a risk on, uh, appetite that those will become more attractive. So, and also made reference to on the fixed income side where again, we've seen the flows on on the open-end funds, in the ETFs becoming more attractive, particularly in that June, and July time frame. That is an area where we've also very recently, expanded our SMA offerings to to again some investors prefer to use the, uh, the the registered fund vehicles. But there are those that obviously prefer that more in an SMA rapper and that is something that's currently actively being offered. Uh and that's where very recent actually.
Speaker Change: Great. Uh thank you I appreciate you taking my questions.
Speaker Change: Thank you.
Michael Cyprus: And our next question comes from Michael Cyprus of Morgan Stanley. Your line is open.
Hey, good morning, thanks for taking the question. Uh just wanted to ask about ETFs. I was hoping you might be able to elaborate a bit on the success that you're seeing across your ETF platform the gross sales.
Flows up uh year to date nicely. Um maybe you also talk about some of the initiatives that you're thinking about over the next 12 months to drive even accelerated growth across the ETF platform. As you look out from here, maybe you can just remind us how you're sending the sales force to drive growth on the sale of ETFs and how sort of those sales incentive compensation payments and such compared to mutual funds. Thanks.
Sure. So on the ETFs again, we've been very pleased with what we've seen as a reminder, you know, or our complex is a slightly newer complex and over the last, you know, 5 or 6 years. We have been introducing product and building track records, uh, because the nature of the products that we offer again, the majority of which are more actively managed as opposed to passive, you know, do need to generate a little bit of a track record. So we're we're pleased to see that, you know, those have now started raising assets and I think we refer to the growth of about 74% rate and then the consistent um growth sales and and positive net flows.
And that has been growing because as the funds get larger and bigger with that, that really allows us to deal with the the other part of the equation which is access. So we've really been focused on 2 things. 1 of which is to make sure that we are continuing to expand our offerings. And we've been very active in the product introduction side. And then in in the comments, uh I I reference um, some other new things that we think are are are are very exciting uh mostly on the actively managed side of that range, but we're also on the access, right? Which part of that is getting it to the right level of scale, getting it accepted in certain of the channels or the sub channels. Um, so all of those, those foundational steps, uh, continue, and we're happy to see that the, the net results so far. Early Innings has actually been, uh, quite positive on in terms of the the, the, the wholesale.
Seller and the sales force, right? So the sales force, you know, that their obligation is really to work with the financial adviser with their vehicle of choice and it just, you know, the the the market has really moved to the point where financial advisors, you know, some will have a preference for different structures, whether it be the retail separate account the ETF or the fund. Um, so so in the conversations and the activities, the wholesalers are really determining, which of
Michael Cyprus: Those are the the right fit and there are many financial advisors who are entirely focused on ETFs as opposed to funds. Uh so as as we structure, our compensation as we always do, we we want to structure to to incent the right Behavior? Have that be aligned with the contribution that it makes um, to the company. And then also, you know, just as importantly, trying to have it focused on
Michael Cyprus: The best efforts to to, to maintain and defend assets as well as just grow them.
You would look to take to navigate complexity of potentially bringing in a liquids to a platform that historically is operated and and and liquid public markets.
Speaker Change: Yeah. So, in terms of the, the different types of opportunities, all of them have different, uh, attractive characteristics. And then I also reference that in terms of structures. And again, our model is a little more flexible in terms of how we partner. In terms of minority majority JV wholly owned Etc. Right? So each of them, you know, as we evaluate things like that, we we we we we look at them, you know, individually and the nature of their contribution and then relative to the nature of
Speaker Change: Uh, the, the the other. So again, we will only do, uh, an inorganic transaction. If we do believe fundamentally, it is a way to create, uh, uh, a good use of capital to create long-term shareholder value, uh, in terms of the second part of your question about, you know, in integrating into a platform that's more, um, traditionally public. Uh, again, I think that goes back to
Speaker Change: you know, the way that you're partnering because, you know, we, we basically, you know, partner with firms and work with firms or or, or have that expertise
Speaker Change: But in, in many ways, some of the private markets, you know, uh are being sold by the same uh by wholesalers that are selling the public markets. Um, so in many ways, you know, we we've always say that, you know, our sales force is really dealing with 80% of the book of the financial advisor. And we just need the other product to address the other 20% of the need. And again, we do have a view that on the private Market side, uh, investors, uh, need to have more choices, uh, than what is currently available. And that's really our goal is to sort of find that and then to Leverage The, the infrastructure we have on the distribution side as, as well as in many ways on the operational side to bring that to Market.
Speaker Change: Is there a view that private Market opportunities might fit better with the JV or partnership as opposed to, uh, more wholly owned the path? You've you've taken often times in the past, just curious how you think about that and and many others have tried in the private markets and the traditional space and maybe hasn't lived up to expectations. So just curious any lessons you take away how that informs your approach as you look forward as you look to optimize uh and maximize the opportunity set.
Oh, well, yeah, no. Uh, other people's experience is absolutely do influence how how we would look at things as the influence others. Um, because you know, there there are differences between the Publix and the private markets. So I think and how you approach them, you know, you really do have to sort of think through the, the nuances of that differences. And you know, we have not done a transaction in a period of time. Uh, and that in part, I would say that. That's because as we kind of think, through particularly on the, on the private Market piece, you know, doing it in the way that makes sense. That is correct. Uh, but no, we do absolutely think that in some of the private Market capabilities, some of the structures might be different than they might be say on a traditional, just because you want to have the right alignment of interests. And then the right fit, uh, between the 2 at least, you know, that's our perspective on, on those
Speaker Change: great. Thank you.
Mr. Award: Thank you. This concludes our question and answer session. I would now like to turn the conference back over to Mr. Award.
Mr. Award: Well, I just want to thank everyone today for joining us and absolutely as we always do please. If you have any other questions reach out, thank you. That concludes today's call. Thank you for participating and you may now disconnect