Q2 2026 Artisan Partners Asset Management Inc Earnings Call

July 29, 2026

Speaker #1: Good day, everyone, and welcome to the Artisan Partners Asset Management Business Update and second quarter 2026 earnings call. All participants will be in a listen-only mode.

Operator: Good day everyone. Welcome to the Artisan Partners Asset Management business update and Q2 2026 earnings call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to Artisan Partners Asset Management. Please go ahead.

Speaker #1: Should you need assistance, please say no at conference specialists by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions.

Speaker #1: To ask a question, you may press star and then one. To withdraw your questions, you may press star and two. Please also note that today's event is being recorded.

Operator: To ask a question, you may press star and then one. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to Artisan Partners Asset Management. Please go ahead.

Speaker #1: At this time, I'd like to turn the conference call over to Artisan Partners Asset Management. Please go ahead.

Speaker #2: Welcome to the Artisan Partners Asset Management Business Update and earnings call. Today's call will include remarks from Jason Gottlieb, CEO, and CJ Daley, CFO.

David Brown: Welcome to the Artisan Partners Asset Management business update and earnings call. Today's call will include remarks from Jason Gottlieb, CEO, and CJ Daley, CFO. Following these remarks, we will open the line for questions. Our latest results and investor presentation are available on the investor relations section of our website. Before we begin today, I would like to remind you that comments made during today's call, including responses to questions, may include forward-looking statements. These are subject to known and unknown risks and uncertainties, including, but not limited to, the factors set forth in our earnings release and detailed in our SEC filings. These risks and uncertainties may cause actual results to differ materially from those disclosed in the statement. We assume no obligation to update or revise any of these statements following the presentation.

Ryan Bruhn: Welcome to the Artisan Partners Asset Management business update and earnings call. Today's call will include remarks from Jason Gottlieb, CEO, and CJ Daley, CFO. Following these remarks, we will open the line for questions. Our latest results and investor presentation are available on the investor relations section of our website.

Speaker #2: Following these remarks, we will open the line for questions. Our latest results in investor presentation are available on the Investor Relations section of our website.

Speaker #2: Before we begin today, I would like to remind you that comments made during today's call, including responses to questions, may include forward-looking statements. These are subject to known and unknown risks and uncertainties.

Ryan Bruhn: Before we begin today, I would like to remind you that comments made during today's call, including responses to questions, may include forward-looking statements. These are subject to known and unknown risks and uncertainties, including, but not limited to, the factors set forth in our earnings release and detailed in our SEC filings.

Speaker #2: Including but not limited to the factors set forth in our earnings release in detailed in our SEC filings. These risks and uncertainties may cause actual results to differ materially from those disclosed in the statement, and we assume no obligation to update or revise any of these statements following the presentation.

Ryan Bruhn: These risks and uncertainties may cause actual results to differ materially from those disclosed in the statement. We assume no obligation to update or revise any of these statements following the presentation. In addition, some of our remarks today will include references to Non-GAAP financial measures.

Speaker #2: In addition, some of our remarks today will include references to non-GAAP financial measures. You can find reconciliations of these measures to the most comparable GAAP measures in the earnings release and supplemental materials.

David Brown: In addition, some of our remarks today will include references to non-GAAP financial measures. You can find reconciliations of these measures to the most comparable GAAP measures in the earnings release and supplemental materials, which can be found on our investor relations website. Also, please note that nothing on this call constitutes an offer or solicitation to purchase or sell an interest in any Artisan investment product or a recommendation for any investment service. I will now turn it over to Jason.

Ryan Bruhn: You can find reconciliations of these measures to the most comparable GAAP measures in the earnings release and supplemental materials, which can be found on our investor relations website. Also, please note that nothing on this call constitutes an offer or solicitation to purchase or sell an interest in any Artisan investment product or a recommendation for any investment service. I will now turn it over to Jason.

Speaker #2: Which can be found on our Investor Relations website. Also, please note that nothing on this call constitutes an offer or solicitation to purchase or sell an interest in any artisan investment product or a recommendation for any investment service.

Speaker #2: I will now turn it over to Jason.

Speaker #3: Thank you for joining the call today. Our purpose at Artisan Partners remains unchanged. To generate and compound wealth for our clients over the long term.

Jason Gottlieb: Thank you for joining the call today. Our purpose at Artisan Partners remains unchanged: to generate and compound wealth for our clients over the long term. That purpose continues to guide every aspect of our business. We believe our autonomous investment team model, combined with a disciplined business management and thoughtful long-term growth initiatives, differentiates Artisan Partners and creates durable value for clients and shareholders alike. The Q2 demonstrated the resilience of that business model. We delivered record quarter-end assets under management, strong investment performance across much of the platform, continued growth in credit and alternatives, another quarter of attractive financial performance despite continued headwinds in several equity strategies. As we have discussed, we are building a diversified global investment platform focused on producing attractive long-term growth across market cycles. The results this quarter reinforce that strategy.

Speaker #3: That purpose continues to guide every aspect of our business. We believe our autonomous investment team model combined with the disciplined business management and thoughtful long-term growth initiatives differentiates Artisan Partners and creates durable value for clients and shareholders alike.

Speaker #3: The second quarter demonstrated the resilience of that business model. We delivered record quarter-end assets under management, strong investment performance across much of the platform, continued growth in credit and alternatives, and another quarter of attractive financial performance despite continued headwinds in several equity strategies.

Speaker #3: As we have discussed, we are building a diversified, global investment platform focused on producing attractive long-term growth across market cycles. The results this quarter reinforced that strategy.

Speaker #3: Strong investment performance continues to create opportunities for growth, particularly as clients increasingly seek differentiated active managers. Long-term investment performance remains strong across our platform, with 86% of our AUM outperforming their benchmarks over three years, 77% over five years, and 99% over 10 years, gross of fees.

Jason Gottlieb: Strong investment performance continues to create opportunities for growth, particularly as clients increasingly seek differentiated active managers. Long-term investment performance remains strong across our platform, with 86% of our AUM outperforming their benchmarks over three years, 77% over five years, and 99% over 10 years, gross of fees. The 12 Artisan strategies with track records over 10 years have compounded capital at average annual rates between 6% and 13%. Since inception, their average annual rates of return have, in the aggregate, exceeded their benchmarks by an average of 189 basis points annually, net of fees. The investment performance of our equity strategies improved meaningfully over the one- and three-year time horizons, with 81% of our AUM outperforming their benchmarks over one year and 84% over three years, gross of fees. During the quarter, global equity markets rebounded sharply before volatility returned in June.

Speaker #3: The 12 Artisan strategies with track records over 10 years have compounded capital at average annual rates between 6% and 13%. Since inception, their average annual rates of return have, in the aggregate, exceeded their benchmarks by an average of 189 basis points annually, net of fees.

Speaker #3: The investment performance of our equity strategies improved meaningfully over the one- and three-year time horizons, with 81% of our AUM outperforming their benchmarks over one year, and 84% over three years, gross of fees.

Speaker #3: During the quarter, global equity markets rebounded sharply before volatility returned in June. Our investment teams navigated well, generating more than $20 billion of returns for our clients.

Jason Gottlieb: Our investment teams navigated well, generating more than $20 billion of returns for our clients. Turning to slide four. We continually evaluate our investment franchises against both client demand and long-term economic viability. As previously announced, following the loss of two large sub-advisory mandates in the U.S. Value business, we concluded the prudent decision was to wind down the U.S. Value team and redeploy resources toward areas where we see substantially greater long-term opportunity. The U.S. Value franchise has been an important part of Artisan Partners for nearly 30 years, and we are extremely proud of what the team has accomplished for clients and shareholders during that time. We expect the wind down to be largely completed by the end of Q3, and CJ will describe the financial impact during his remarks. Including the U.S. Value outflows, net client outflows totaled $10.5 billion during the quarter.

Speaker #3: Turning to slide four, we continually evaluate our investment franchises against both client demand and long-term economic viability. As previously announced, following the loss of two large sub-advisory mandates in the U.S. value business, we concluded the prudent decision was to wind down the U.S. value team and redeploy resources toward areas where we see substantially greater long-term opportunity.

Speaker #3: The US value franchise has been an important part of Artisan Partners for nearly 30 years. And we are extremely proud of what the team has accomplished for clients and shareholders during that time.

Speaker #3: We expect the wind-down to be largely completed by the end of the third quarter, and CJ will describe the financial impact during his remarks.

Speaker #3: Including the US value outflows, net client outflows total 10.5 billion dollars during the quarter. Approximately 9.2 billion or nearly 90% of the total net outflows came from the US value and growth teams.

Jason Gottlieb: Approximately $9.2 billion, or nearly 90%, of the total net outflows came from the U.S. Value and growth teams, with $6.4 billion from U.S. Value and $2.8 billion from growth. We continue to diversify our platform and execute on growth opportunities. Credit strategies generated nearly $700 million of net inflows, representing our 16th consecutive quarter of positive organic growth and a 15% annualized organic growth rate. Alternative strategies have gathered approximately $300 million of net inflows, representing a 25% annualized organic growth rate and positive organic growth in five of the last six quarters. Within equities, we secured a $1 billion Global Discovery institutional mandate, and our Sustainable Emerging Markets Strategy continues to attract meaningful new client capital. Throughout the history of Artisan Partners, we have evolved the platform while remaining true to the principles that have defined the firm since its founding.

Speaker #3: With 6.4 billion from US value and 2.8 billion from growth. We continue to diversify our platform and execute on growth opportunities. Credit strategies generated nearly 700 million dollars of net inflows representing our 16th consecutive quarter of positive organic growth and a 15% annualized organic growth rate.

Speaker #3: Alternative strategies have gathered approximately 300 million of net inflows, representing a 25% annualized organic growth rate and positive organic growth in five of the last six quarters.

Speaker #3: Within equities, we secured a $1 billion global discovery institutional mandate, and our sustainable emerging market strategy continues to attract meaningful new client capital.

Speaker #3: Throughout the history of Artisan Partners, we have evolved the platform while remaining true to the principles that have defined the firm since its founding.

Speaker #3: High value-added investing, talent-driven strategies, and alignment with long-term asset allocations. Consistent with these principles, we have successfully added new investment teams expanded into attractive asset classes and increased the capabilities of our existing investment franchises.

Jason Gottlieb: High value-added investing, talent-driven strategies, and alignment with long-term asset allocations. Consistent with these principles, we have successfully added new investment teams, expanded into attractive asset classes, and increased the capabilities of our existing investment franchises. EMsights Capital Group demonstrates that strategy in action. This quarter marks the four-year anniversary of EMsights Capital Group. In four years, the team has built a distinctive business spanning three investment strategies, combining emerging markets debt expertise with sophisticated derivative capabilities to deliver differentiated investment solutions for clients. Today, the team manages more than $5 billion of assets, supported by strong investment performance and growing client demand. We believe EMsights remains in the early stages of its growth opportunity. Looking ahead, we see meaningful potential to continue expanding the business through additional investment vehicles and broader distribution.

Speaker #3: MCITE's capital group demonstrates that strategy in action. This quarter marks the four-year anniversary of MCITE's capital group. In four years, the team has built a distinctive business spanning three investment strategies combining emerging markets debt expertise with sophisticated derivative capabilities to deliver differentiated investment solutions for clients.

Speaker #3: Today, the team manages more than $5 billion of assets, supported by strong investment performance and growing client demand. We believe MCITE remains in the early stages of its growth opportunity. Looking ahead, we see meaningful potential to continue expanding the business through additional investment vehicles and broader distribution.

Speaker #3: MCITE demonstrates what our platform is designed to do. Identify exceptional investment talent, provide the resources and autonomy to succeed, and build enduring investment franchises that create long-term value for clients and shareholders.

Jason Gottlieb: EMsights demonstrates what our platform is designed to do: identify exceptional investment talent, provide the resources and autonomy to succeed, and build enduring investment franchises that create long-term value for clients and shareholders. We are now applying that same long-term approach to Grandview Property Partners. Like EMsights, Grandview expands our platform into an attractive area of long-term client demand while preserving the autonomy that allows great investment talent to thrive. Since completing the acquisition of Grandview earlier this year, the investment team has maintained their distinctive investment philosophy, process, and leadership. We are laying the foundation for Grandview's next phase of growth. We are making good progress on the launch of their new flagship fund, including advanced discussions with an anchor institutional investor and active engagement with many of the limited partners that supported Grandview's prior funds.

Speaker #3: We are now applying that same long-term approach to Grandview Property Partners. Like MCITE, Grandview expands our platform into an attractive area of long-term client demand while preserving the autonomy that allows great investment talent to thrive.

Speaker #3: Since completing the acquisition of Grandview earlier this year, the investment team has maintained their distinctive investment philosophy, process, and leadership. We are laying the foundation for Grandview's next phase of growth.

Speaker #3: We are making good progress on the launch of their new flagship fund, including advanced discussions with an anchor institutional investor and active engagement with many of the limited partners that supported Grandview's prior funds.

Speaker #3: We recently hired a dedicated business leader to accelerate fundraising and expand institutional investor relationships. While it's early, we are encouraged by the progress to date and are excited for the opportunities ahead.

Jason Gottlieb: We recently hired a dedicated business leader to accelerate fundraising and expand institutional investor relationships. While it's early, we are encouraged by the progress to date and are excited for the opportunities ahead. As we look ahead, we see meaningful opportunities across the investment platform. We are preparing to launch additional vehicles to meet evolving client demands, expanding our credit capabilities, advancing Grandview's next phase of growth, and continuing to invest behind exceptional investment talent. Combined with our strong balance sheet and active pipeline of opportunities, we believe we're well positioned to drive long-term growth. We're excited about the opportunities ahead. I will now turn the call over to C.J. to discuss our financial results.

Speaker #3: As we look ahead, we see meaningful opportunities across the investment platform. We are preparing to launch additional vehicles to meet evolving client demands, expanding our credit capabilities, advancing Grandview's next phase of growth, and continuing to invest behind exceptional investment talent.

Speaker #3: Combined with our strong balance sheet and active pipeline of opportunities, we believe we're well positioned to drive long-term growth. We're excited about the opportunities ahead.

Speaker #3: I will now turn the call over to CJ to discuss our financial results.

Speaker #2: Thanks, Jason. Our complete gap and adjusted results are detailed in our earnings release. Assets under management ended the quarter at $183 billion for record quarter-end level.

C.J. Daley: Thanks, Jason. Our complete GAAP and adjusted results are detailed in our earnings release. Assets under management ended the quarter at $183 billion, a record quarter end level, and an increase of 6% from the March quarter and 5% from a year ago. Average assets under management were $182 billion, flat sequentially and up 9% compared to the June 2025 quarter. Year to date average AUM improved 9% over the prior six-month period. Revenues for the quarter were $308 million, up 2% from the March quarter, primarily reflecting one additional day during the quarter and a modest increase in our average fee rate. Compared to the June 2025 quarter, revenue increased 9%, driven by higher average assets under management. Our weighted average fee rate for the quarter was 68 basis points, up from the March quarter, primarily due to the loss of the U.S. Value team mandates.

Average assets under management were 182 billion flat sequentially and up 9% compared to the June 2025 quarter.

Year-to-date average per month improved 9% over the prior six-month period.

Revenues for the quarter were $308 million, up 2% from the March quarter, primarily reflecting one additional day during the quarter and a modest increase in our average fee rate.

Compared to the June 2025 quarter, revenue increased 9%, driven by higher average assets under management.

C.J. Daley: Adjusted operating expenses declined 1% from the March quarter, primarily reflecting lower seasonal expenses and reduced long-term incentive compensation, offset in part by employee separation costs, including those associated with the wind down of the U.S. Value team. Looking ahead, the September quarter will be negatively impacted by approximately $0.03 per share compared to the second quarter as a result of the wind down of the U.S. Value team. Additionally, fixed expenses are expected to decline in the September quarter due to continued roll-off of seasonal expenses and a decline in employee separation costs. Fixed expense guidance has not changed for the year. Compared to the prior year quarter, adjusted operating expenses increased 7%, driven primarily by higher variable incentive compensation associated with increased revenues. As a result, adjusted operating increased 8% sequentially to $101.4 million.

Our weighted average fee rate for the quarter was 68 basis points, up from the March quarter, primarily due to the loss of the US Value team mandates.

Adjusted operating expenses declined 1% from the March quarter primarily reflecting lower seasonal, expenses and reduced long-term incentive compensation.

Offset in part by employee separation costs, including those associated with the wind-down of the U.S. Value team.

Looking ahead. The September quarter will be negatively impacted by approximately 3 cents per share compared to the second quarter, as a result of the wind down of the US value team.

Additionally, fixed expenses are expected to decline in the September quarter due to continued roll-off of seasonal expenses and a decline in employee separation costs.

Fixed expense guidance has not changed for the year.

C.J. Daley: Adjusted operating margin expanded 180 basis points to 32.9%, and adjusted earnings per share increased to $0.94. Compared to the Q2 2025, adjusted operating income increased 13%. Margin expanded 120 basis points and adjusted EPS increased 13%, highlighting the operator leverage inherent in our business model. Looking at the year-to-date results, average assets under management increased 9% compared to the H1 of last year, driving a 9% increase in revenue. Year-to-date, adjusted operating expenses increased 9% from 2025, primarily from higher incentive compensation on elevated revenues. Adjusted operating income increased 10% to $195.6 million. Adjusted operating margin improved to 32%, and adjusted earnings per share increased 9% to $1.81. In our non-GAAP measures, non-operating income includes only interest income and expense. The balance sheet remains strong with $335 million of cash.

Result adjusted operating increased 8% sequentially to $101.4 million.

Adjusted operating margin expanded 180 basis points to 32.9%, and adjusted earnings per share increased to $0.94.

Compared to the second quarter of 2025 adjusted operating income increased 13%.

Margin expanded by 120 basis points, and adjusted EPS increased 13%, highlighting the operating leverage inherent in our business model.

Looking at the year-to-date results. Average assets under management increased 9% compared to the first half of last year. Driving a 9% increase in Revenue.

year to date adjusting operating expenses, increased 9% from 2025, primarily from higher incentive, compensation on, elevated revenues,

Adjusted operating income increased 10% to 195.6 million adjusted operating margin improved to 32% and adjusted earnings per share, increase 9% to 1.81.

In our non-GAAP measures, non-operating income includes only interest income and expense.

C.J. Daley: During the Q2, we redeemed approximately $20 million of seed capital, reducing seed investments on the balance sheet to approximately $100 million. Proceeds from seed capital redemptions are included in cash available for corporate purposes, reinvestment, or potential return to shareholders through our year-end special dividend. Consistent with our dividend policy, our board of directors declared a quarterly dividend of $0.80 per share for the Q2 2026, representing a 4% increase from the prior quarter and a 10% increase year-over-year. After funding the quarterly dividend, we retain over $180 million of excess capital to support organic growth initiatives, evaluate potential M&A opportunities, or return to shareholders. That concludes my prepared remarks. I will now turn the call back to the operator.

Our balance sheet remains strong with 335 million dollars of cash.

During the second quarter, we redeemed approximately $20 million of seed capital, reducing seed investments on the balance sheet to approximately $100 million.

Proceeds from seed Capital redemptions are included in cash available for corporate purposes, reinvestment or potential return to shareholders through our year-end, special dividend.

Consistent with our dividend policy, our Board of Directors declared a quarterly dividend of $0.80 per share for the June 2026 quarter, representing a 4% increase from the prior quarter and a 10% increase year-over-year.

Quarterly dividend. We retain over 180 million dollars of excess Capital support, organic growth, initiatives evaluate potential, m&a opportunities, or return to shareholders.

That concludes my prepared remarks. I will now turn the call back to the operator.

Operator: At this time, we'll begin the question and answer session. To ask a question, you may press star and then one using a touch-tone telephone. We do ask that you please pick up the speakerphone. Please pick up the handset if you are using a speakerphone to ensure the best sound quality. In the interest of time, we do ask that you please limit yourselves to two questions. To withdraw your questions, you may press star and two. Once again, that is star and then one to join the question queue. We'll pause momentarily to assemble the roster. Our first question today comes from Kenneth Lee from RBC Capital Markets. Please go ahead with your question.

And at this time, we'll begin the question and answer session to ask a question. You may press star and then 1 using a touchtone telephone

We do ask that you please pick up the speakerphone. Please pick up the speakerphone. Uh, please pick up the handset if you are using a speakerphone to ensure the best sound quality.

In the interest of time, we do ask that you please limit yourselves to two questions.

So, with all your questions, you may press star and 2.

Once again, that is star and then 1 to join the question queue.

We'll pause momentarily to assemble the roster.

Our first question today comes from Kenneth Lee of RBC Capital Markets. Please go ahead with your question.

Kenneth Lee: Hey, good morning, and thanks for taking my question. Just from a high level, during the quarter, as you've been talking to the clients, wondering if you could just characterize overall client appetite for emerging markets and global risk assets more recently. Thanks.

Hey, good morning. Thanks for taking my question.

Uh, just from a high level, um, during the quarter as you've been talking to, to, to the clients wonder, if you could just characterize overall client appetite for emerging market. Uh, and and Global risk assets, uh, more recently, thanks.

Jason Gottlieb: Hi, Ken. Yes, we have seen a really strong demand for EM. They're looking for not only access to the asset class, but certainly they're looking for differentiated capabilities, and we're seeing that flow through more specifically to our Sustainable Emerging Markets team. They've had a couple of good quarters of strong net new inflow growth. I believe for the quarter, they were up about 235, and for the year, they're sort of double that. The pipeline of activity specifically in EM is robust. Pipelines need to be crystallized, we are happy with what we're seeing there. I'd say more generally across global risk assets, specifically equity, there's maybe a slightly more cautious tone. We've seen a fair bit of rebalancing. I look at the top separately managed accounts, which are institutionally focused, just to see what kind of activity we're experiencing.

I can, uh, yes. Uh, we have seen

A really strong uh demand for em. Uh they're looking for not only access to the asset class but certainly they're looking for differentiated capabilities and we're seeing that flow through more specifically to our sustainable Emerging Markets team. They've had a couple of good quarters of of Strong, net, new inflow, uh growth. I believe the the for the quarter they were up about 2:35 and for the year they're still double that. Um, and, you know, the pipeline of activity specifically in in EM is, uh,

Uh, is robust, uh, you know, pipelines need to be.

Crystallized. But we are. We are happy with um uh with what we're seeing there.

You know, I'd say more generally, across global risk assets, specifically equity, there's maybe a slightly more cautious tone. Uh, we've seen a fair bit of rebalancing. You know, I look at the, uh,

Jason Gottlieb: Naturally, there's benefit payments and adjustments, we saw a pretty broad-based rebalancing activity across a number of our largest relationships. Nothing meaningful on an isolated basis, when you add it all up, it becomes relatively meaningful. We are still seeing good opportunities in international. David and the International Value pipeline continues to be quite robust and strong across our global franchises and global strategies. We're seeing good interaction with clients. I think where it tends to push people is they're tend to looking a little bit more across credit. They're tending to look for more goal or income-oriented strategies, and they're tending to focus a little bit more time and effort and attention on alternatives where they can get, again, a differentiated return that might complement their current or existing equity portfolio that's done obviously very well coming out of COVID.

The top, uh, separately managed accounts, which are institutionally focused, just to see what kind of activity we were experiencing, and you know, naturally there's benefit payments and adjustments, but we saw a pretty—

National value pipeline continues to be quite robust and strong across our Global franchises, uh, and Global strategies. We're seeing good interaction. Um, with uh, with clients

Um, but I think we're at, we're, at tends to um, you know, push people as their their tend to looking a little bit more across credit. Uh they're tending to look for more goal or income oriented strategies and they're tending to focus a little bit more time and effort and attention on Alternatives where they can get a again, a differentiated return that might complement their current, uh, or existing Equity portfolio, that's done. You know, obviously very well coming out of, uh, coming out of Co

Kenneth Lee: Got you. Very helpful there. Just one follow-up, if I may. I wonder if you could share your latest thoughts around any kind of outlook around potential platform expansion opportunities. Thanks.

got you very helpful there.

Jason Gottlieb: Yeah. I'll highlight a few areas of expansion. I think there are two clear initiatives that we have. The first one is we're going to continue to focus our time, effort, and attention in the areas where we see that overlap between asset allocation demand where we believe alpha is prevalent and where we think the talent is available. Where we're really seeing a good source of opportunity and pipeline is certainly in credit. We think that there's good possibilities and opportunities for expansion more globally to our credit platform and franchise. The second is within alternatives. There's a couple of areas that we've talked about in the past, I'll highlight one maybe that we spent a little less time on in the world of hedged equity long-short in particular, with a more of a focused bias to it.

Yeah, I I'll uh I'll highlight a few areas of of expansion. I I think they're they're too clear initiatives that we that we have, uh, the the first 1 is, you know, we're we're going to continue to

Focus. Our our time effort and attention in the areas where we see that overlap between asset allocation demand, uh, where we believe Alpha is prevalent, where we think the, the, the talent is available and where we're really seeing a good, um, source of opportunity in pipeline is, is certainly in credit. Uh, we think that there's good possibilities and opportunities for expansion more globally, uh, to our credit platform and and franchise. Uh, the second is

Jason Gottlieb: We've been sourcing and identifying really interesting talent within that sphere of the market, we've seen a pretty meaningful uptick in the demand for hedged equity, which for the first time in a long time, is starting to bear itself out in terms of actual implementation and allocations. Those are two clear areas that we're focused on. As we've discussed in the past, areas in private markets such as equity secondaries and real assets via either infrastructure or even a more global real estate to complement and sit within or alongside the Grandview Property Partners are also areas that we've been active in.

Within Alternatives. Uh, and there's there's a couple of areas that we've we've talked about in the past, but I'll just I'll highlight, uh, 1 maybe that we spent a little less time on, um, in in the world of hedged equity, uh, Equity long short, in particular, with a more of a focused bias to to it. We uh, you know, we've been sourcing in identifying really interesting Talent within that, uh, sphere of the market. And we've seen a pretty meaningful uptick in the demand for, um, hedged equity, which for the first time in a long time as um, is starting to Bear itself out in terms of

Uh, actual implementation and allocations.

Those are, those are 2 clear areas that we're focused on.

Jason Gottlieb: They're coming, as you would expect, in both forms, so certainly willing and interested in looking at lift outs, which is our bread and butter, but we're also considering inorganic opportunities for growth where we see that really first or second generation of talent that we can partner with and align ourselves and the firm alongside our clients to potentially bring a new team on. The second piece that we talked a little bit about that's been a strategic initiative is just the broadening the aperture of the vehicles. Trying to get in between and find the intersection between where and how our clients want to implement some of our existing strategies and provide them the easier way to access that. That can come in many different forms. We've talked about SMAs. We've talked about models.

And then as we've discussed in the past um areas in private markets such as uh Equity secondaries uh and real assets via either infrastructure or even a a global more Global real estate to complement and sit, um, sit within or alongside the, uh, the Grand View Property partners are also areas that we've been, um, we've been active in and they're, they're coming as you would expect in in both forms. So, you know, certainly willing and interested and looking at Lyft outs, which is our our bread and butter. But we're also, you know, considering inorganic opportunities for growth, where we see that, uh, you know, that really first or second generation of talent that we can partner with, in a line ourselves in the, in the firm to, uh, alongside our clients to, uh, uh, to potentially bring a new, uh, new team on. And then the second piece that we, we talked a little bit about, that's been a strategic initiative is just the broadening the aperture of the, the vehicles.

uh, so trying to

Get in between and find the intersection between where and how our clients want to implement some of our existing strategies, and provide them with an easier way to access that. And so that can come in many, many different forms—we've talked about SMAs,

Uh, we talked about models.

Jason Gottlieb: There's likely going to be something that we can envision an interval-based or oriented product that gives us the ability to do a hybrid between public and private securities, and certainly, more private funds. As I'm sure you've seen, we did file for exemptive relief in the world of ETFs. We've received that relief. We have not announced, or we haven't determined when or what we are going to be launching within ETFs, but we certainly recognize that is an area that many of our clients are focused on implementation. We need to be thoughtful about how that would work with our existing investment teams and strategies and franchises.

Um, you know, there's likely going to be something that, you know, we could, we could Envision and interval, uh, based their oriented product, that gives us the ability to do a, a hybrid between, uh, public and and private Securities and certainly, um, you know, more private funds. And as as I'm sure you've seen, we did, uh, file for exemptive relief in the world of ETFs

and so we've received that relief, we have not announced or we haven't determined

Jason Gottlieb: That's clearly an area and a path for us to continue to broaden out the aperture and utilize our existing platform in a way that I think our clients are more increasingly looking to access us. Great. Very helpful there. Thanks again.

Um when or what we are going to be launching within ETFs. But we certainly recognize that um you know that is an area that many of our clients are focused on implementation. And so we need to, you know, be thoughtful about how that how that would work with our existing investment teams and strategies and franchises but that's clearly an area and a path for us to continue to, you know, broaden out the aperture and utilize our existing platform in a way that I think our clients are, you know, more more increasingly looking to uh, to access us.

Great very helpful there. Thanks again.

Operator: Our next question comes from Bill Katz from TD Cowen. Please go ahead with your questions.

Bill Katz: Okay. Thank you. First one's really just a set of clarifications, just want to make sure I understand the math. You mentioned that the wind down will cost $0.03 sequentially. Is that related to the fundamentals of the business and that's just the timing of that? Does that also include the wind down that you're expecting for the remaining assets? You also mentioned that your fixed expenses would be down sequentially, reflecting both seasonality as well as less severance costs. Can you just sort of quantify the severance costs in the quarter so we have a better sense of that? Thank you.

C.J. Daley: Yeah. Sure, Bill. On your first question, the $0.03 is the delta between the Q2 and what we expect in the Q3. We had a slight accretive nature to the U.S. Value team in the Q2, given the wind down started midway. In the Q3, we expect a very minimal loss before it evens out. That $0.03 is the differential between the Q2, this quarter's results, and what you would expect next quarter. With respect to the costs, in the Q1, we have larger number of seasonal expenses, which the decline in the Q2 was partially offset by the costs related to the wind down of the U.S. Value team, including severance, as well as some other expenses related to the wind down.

Okay, thank you. Uh first 1's really just a set of clarifications. Just want to make sure I understand the math. Um, you mentioned that the wind down will cost 3 cents sequentially is that related to the fundamentals of the business and that's just the timing of that is that also include the, the wind down that you're expecting for the the remaining assets. And then you also mentioned that your, uh, fixed expenses would be down sequentially reflectable of seasonality, as well as less, um, Severance costs. Can you just sort of quantify, the difference cost in the quarter? So we have a better sense of that. Thank you. Yeah, yeah. Sure. Bill. So, on your first question, uh, the 3 cents is the, uh, the Delta between, uh, the second quarter and what we expect in the third quarter. Um, so we had a, a slight, um,

you know, a slight, uh, a creative nature to the US value team in the second quarter given, um, you know, the wind down started, uh, you know, Midway and then, um,

In the third quarter, we expect, you know, a very, very minimal loss before, you know, it evens out. Um, so so that 3 cents is a differential between the second quarter, this quarter's results and what you would expect next quarter. So, um, and then um,

C.J. Daley: In the Q3, we would expect to see the absence of those separation costs and wind down expenses and continued roll-off of the seasonal expenses. There is still a little bit more to go. All of that we'll see compared to the Q2. We'll see a benefit in fixed expenses related to those items. Our guidance for the year, mid-single digits is what I said it in January, excluding the addition of Grandview and the long-term incentive comp expense we guided for the year. We still expect that to be mid-single digits, even with the additional costs of the wind down.

With respect to the costs. Um, you know, in, you know, in the first quarter. Um, you know, we have uh, you know, larger number of seasonal expenses, uh, which the decline in the second quarter was partially offset by, um, you know, the wind down of uh, the cost of related to the wind down, the US value team including uh, Severance, um, as well as, um, you know, um, some other expenses related to to the wind down and then in the third quarter, we would expect to see, um, you know, the absence of those separation costs and wind down expenses and continued to roll off of, um, you know, the, uh, the seasonal expenses there is still a little bit more to go. Um, so, you know, all of that will, you know, we'll see compared to the second quarter. We'll see a a benefit in fixed expenses, uh, related to, uh, to those items.

But our our guidance, for the year, you know, mid single digits, is what I said. It it in January excluding the addition of Grand View and uh the long term incentive comp expense. We got it for the year. Uh we still expect that to be uh you know, mid single digits, even with the additional costs of the the wind down.

Bill Katz: Thank you. That's very helpful. Maybe a big picture question. You mentioned in your prepared comments, just the opportunity to leverage the EM platform and then sort of turn that to Grandview as well. Could we click in a layer deeper and just sort of say, okay, can you give us a sense of some of the initiatives you might be getting toward? Then on Grandview, you had mentioned some early success in the conversations. I'm sort of wondering if you could just remind us how big the prior flagship fund was, where are you in terms of invested, and then what the timeline might be for the new fund. Thank you.

Thank you, that's very helpful. Uh, maybe a big picture question. You mentioned in your prepared comments just the opportunity to leverage the, um, the EM platform, and then sort of turn that to, um, Grand View as well. Can we click in a layer deeper and just sort of say, okay, can you give us a sense of some of the initiatives you might be getting toward? And then on Grand View, you had mentioned some early success in the conversations. So I'm sort of wondering if you could just remind us how big the prior Flex Fund was, where you are in terms of invested, and then what the timeline might be for the new fund. Thank you.

Jason Gottlieb: Yeah, sure, Bill. I'm going to have you repeat the first part, but I'll tackle Grandview. Fund III was about $150 million in committed capital. That's small relative to what they would've expected. They chose to stop taking commitments, recognizing that an opportunity to partner with us was on the horizon and really preserve the return capability that was put in the ground, and is to be put in the ground for those that were the early adopters so that we could focus on ultimately the launch of Fund IV. Fund IV, their flagship fund, we expect will be launched sometime later this summer, but likely early in the fall of this year. We're obviously having conversations with that one anchor, as well as many of the existing LPs that have invested with them along funds one through three.

Yeah, sure. Bill I'm going to have you repeat the, the first part, but I'll, I'll tackle. Uh, tackle Grand View. The, the fun fun 3, uh, was about 150 million in committed capital.

Uh, and you know, that was small relative to what they would have expected. They, um, you know, they chose to—

Um, stop taking commitments. Recognizing that the that uh, an opportunity to partner with us was, was on the horizon and really, uh, preserve the, uh, the return capab the return capability that has that was put in the ground, uh, and was, and is to be put in the ground for those that were the early adopters so that we could focus on the the launch. Ultimately, the launch of of fund 4, uh, fund for their Flagship fund. We expect will be launched, uh, sometime later this summer, but likely early in the the fall.

Jason Gottlieb: We're feeling pretty good about where we're at with the anchor and the ability to get out there. It's important also to have some opportunities to share with clients that might make their way into the portfolio. They're working aggressively to identify and solidify those that will help us with the marketing campaign. Fund III was $150, and we expect that Fund IV will be multiples of that. As I'd mentioned in my prepared comments, we hired an institutional business leader that we expect to be helping us in a very meaningful way to help us grow the business. That's where we're at with Grandview.

Call of, uh, of this year, and, um, you know, we're obviously having conversations with that one anchor, as well as many of the existing LPs that have invested with them along funds, you know, 1 through 3.

And so, we'll, uh, you know, we're, we're feeling pretty good about where we're at with, uh, with the anchor and the ability to, to get out there. It's, it's important also to, um, have some, uh, some opportunities to share with clients that might make their way into the portfolio. And so we're, you know, they're working aggressively to, uh, identify and solidify. Those that will help us with the, uh, the marketing campaign.

But then, you know, fund three was $150 million, and we expect that fund four will be multiples of that. Um, as I mentioned in my prepared comments,

Away uh, to help us grow the grow the business. So that's um, that's where we're at with Grand View.

Bill Katz: Okay. Just to clarify, sorry to ask five questions in one. Just on, you mentioned that the opportunity to maybe expand vehicles and capabilities in some of the teams, I think you sort of highlighted the EM platform. Just wondering if you could maybe give us an update on what kind of vehicles, what kind of incremental distribution partners you might have on the horizon. Thank you.

And just to clarify sorry to ask 5 questions in 1 just on you mentioned that the opportunity to maybe expand vehicles and capabilities in some of the teams I think. Yeah sort of highlighted uh uh the EM platform. Um just wondering if you could maybe give us an update on what kind of vehicles. What kind of incremental distribution Partners? You might have on the horizon. Thank you.

Jason Gottlieb: Yeah. Sorry if I made it EM-specific, but it's really across all the teams. I think that each team has their own set of clients and distribution opportunities. I would view it as we have the opportunity to launch CITs private funds where institutional clients don't want to access a capability or a strategy that might come in a mutual fund or a more liquid wrapper, but also don't want to deal with a separately managed account, which might require country openings or opening up of various derivative contracts and relationships with PBs and third parties. I think if you look at the totality of it, we would view CITs private funds. There's certainly the opportunity to widen the aperture in UCITS, and we expect to launch a UCITS in the not-too-distant future. We're in some active conversations with a potential anchor there.

Yeah, it's it it sorry. If I made it em specific but it's um, it's really a cross.

All the teams, uh, and I think that, you know, each team has their own, you know, set of...

Set of clients and and distribution opportunities. But I I would view it as

You know, we have the opportunity to launch CITs, uh, private funds, where institutional clients don't want to access.

uh, a capability or strategy that might come in a mutual fund or a more liquid wrapper, but also don't want to

Don't want to deal with a separately managed account, which require might require country openings, or, or opening up of, um, various uh, derivative contracts and relationships with, you know, PBS and third parties. And so, I think, if you, if you look at the totality of it, you know, we we would view, uh, cit's private funds. Um, they're certainly the opportunity to widen the aperture in, uh, in use its um, and we expect to launch, uh, you know,

Jason Gottlieb: As I'd mentioned, we're not quite there yet on ETFs, but there's the possibility of doing ETFs, and that's not specific to EM, but just more generic to the platform.

I use it in the in the not too distant future, where it's some active conversations with, uh, with a potential anchor there.

Jason Gottlieb: As I'd mentioned, we're not quite there yet on ETFs, but there's the possibility of doing ETFs, and that's not specific to EM, but just more generic to the platform.

And, um, you know, as I’d mentioned, we’re not quite there yet on ETFs. But there’s, you know, the possibility of doing ETFs, and that’s not specific to EM, but, you know, just more generic to the platform.

Bill Katz: Thank you for taking all the questions.

Jason Gottlieb: Yeah. I would just highlight that one of the things that we've always said philosophically is that we want to be vehicle agnostic, and we're just really putting our money where our mouth is here. If a client wants to access our IP, we want to do it in a thoughtful way, but in a manner that really helps solidify the long-term relationship.

Thank you. Take a couple of questions.

Yeah, I I would just highlight that, you know, 1 of the things that we've always, we've always said philosophically is that we want to be vehicle agnostic and we're just really putting our money where our mouth is here. If a client wants to access access access. Our IP we want to do an a thoughtful way, but in a manner that really helps uh, solidify the long-term uh, the long-term relationship

Operator: Our next question comes from Alex Blostein from Goldman Sachs. Please go ahead with your question.

Our next question comes from Alex blastin, from Goldman Sachs, please go ahead with your question.

Alex Blostein: Hi, everybody. Good morning. Thank you for taking the question as well. I was hoping to drill down a little bit into any other sizable redemption risks you might see across the equities portfolio. Particularly when we look at the growth team, there's a number of strategies that are still quite sizable and have underperformed. Any concentration risk we should be mindful of when it comes to those businesses, and how you're potentially managing that risk and just navigating this recent performance with clients.

Pull off. Uh, when it comes to those businesses and how you're potentially managing that risk, and just, you know, uh, navigating, uh, this recent performance with clients.

Jason Gottlieb: Yeah. We've done a few things. First and foremost, I'd highlight Mid-Cap Growth as a feature of what's occurred on the team. I think Matt Kamm and the leadership of the growth team thought it was important that they bring on a second key decision-maker in Jason White, who's been a longstanding member of leadership as well. Since we made that change, you can see the follow-through into performance. Mid-Cap Growth, I don't have the numbers in front of me, but they're having a nice year from a relative basis in 2026. They had a great 2025. We now have a strong year-to-date, a strong one-year, a really strong three-year. That's a very large and important piece of the growth franchise.

Yeah, um, so we've done a, we've done a few things. Uh, first and foremost, I, you know, I'd highlight—

Midcap growth as a.

As a feature of what what's occurred on the team? I think, you know, Matt, Matt Cam and the, the leadership of the, uh, the growth team. Thought it was important that they, uh, they they bring on a second key decision maker uh, in Jason White, who's been a long-standing member of of leadership, as well.

And, you know, since we we made that change you can see the the follow through into uh, into performance. So, midcap growth. I don't have the numbers in front of me but they're, you know, having a nice Year from a relative basis in 2026. They had a great uh 2025 and so we're now start, we now have a you know, a strong year to today at a strong 1 year, a really strong 3 year. Um and so that's a, that's a very large and important piece of the uh, the growth franchise.

Jason Gottlieb: Really where I think the struggle is the intersection between difficult and challenging performance and AUM is really in the global segments of the growth team. Global Opportunities. Jim Hamel just recently brought Angela Wu into the mix to help him with the decision-making. We think that that's going to be a key long-term benefit to the business and to the strategy. The second is we've hired a couple of recent additions in the analyst ranks as well as in the associate portfolio manager ranks to continue to bolster and upgrade the talent that we have and they have on the team to be able to access different securities and different opportunities. It's very early days, so I don't want to say that we're through the worst of it.

um, you know, really where I think the

The struggles, the intersection between difficult and challenging performance and AUM is really in the global segments of the growth team.

Jason Gottlieb: I think the team has been willing to disrupt themselves, both proactively and with our help, to make sure that they've got the right resources to help bolster the performance. In terms of client concentration, I think there was a fair bit of concentration that we talked a little bit about over the course of the last several years in the Australian market. It wasn't any one client in particular, but it was more of just the systematic issues and challenges that we were facing in the Australian market. Beyond that, there's certainly some clients that have a higher percentage of the AUM relative to others, but there's nothing that we would look at that would give us pause or concern that there's a brewing or looming cliff of AUM that's at risk that would cause a cascade effect.

Uh, Global opportunities and and Jim haml, uh, just recently, um, brought Angela, woo into the into the mix to help him, uh, you know, with the decision-making. And we think that that's going to be, you know, a, a, a key long-term benefit to the business and to the, to the strategy. The second is, we've hired, a couple of, uh, recent additions on the in the analyst ranks as well as in the associate portfolio, manager ranks to continue to bolster and upgrade uh, the talent that we have. And they have on the team to be able to access, uh, different Securities and and different opportunities. And, you know, it's it's very early days. So I don't want to, you know, I don't, I don't want to say that, you know, we're we're through the, the worst of it. Uh, but I think the team has been willing to disrupt themselves, uh, both proactively and, and with our health, to, to make sure that that they've got the right resources to to help bolster the performance in terms of client concentration. You know, I think there's a there was a

A fair bit of concentration that we talked a little bit about over the course of the last several years in the Australian market. It wasn't any one client in particular, but it was more just the systemic issues and challenges that we were facing in the Australian market.

Jason Gottlieb: The business is pretty well diversified, not only across strategy, but within strategy. It's pretty well diversified.

Um, beyond that, you know, there's, there's certainly, uh, some clients that have a higher percentage of the AUM relative to others. But there's nothing that we would look at that would give us pause or concern that there's a, you know, there's a brewing or looming, Cliff of of AUM, that's that's at risk. That would, you know, cause a Cascade effect, the the business is pretty well. Diversified not only across strategy, but within strategy, it's it's, it's pretty well Diversified.

Alex Blostein: Got you. Okay. Understood. CJ, one follow-up for you, just on the fee rates. With the U.S. Value team rolling off, or strategy rather, rolling off, are the fee rates across both the funds and separate accounts appropriate jumping-off points as we think on the forward basis, or is there any other implications as you think about the run rate fee rates for both of these sub-segments on a go forward?

Gotcha. Okay, understood. Um, CJ, one follow-up for you, just on the few rates, um, with, um, us valid team, uh, rolling off, uh, or strategy rather, rolling off.

C.J. Daley: Yeah. Good question. I mean, we had a little bit of movement this quarter. I think if you look at the year-to-date fee rates for this year, they're pretty good jumping-off points. In the credit space, on a year-to-date basis, we are up a little bit. During the quarter, we did take on a large mandate that was a little lower than the fee rate. In the alternative space, we brought on the addition of Grandview, with a little under $1 billion in AUM at higher fee rates than we were running. That's new this year. We're continuing to win some business in EMsights, and in the quarter, we had a nice win at a really attractive fee rate.

Uh, the fury cross, both the funds and separate accounts, appropriate, jumping off points, as we sort of, think, on the forward basis. Um, or is there any other implications? Uh, as you sort of, thinking about the Run rate for your rates for, for both of these, uh, sub segments, uh, on a go forward?

Yeah, yeah. Yeah, good question. I mean, we had a little bit of movement um, this quarter. Um but I think if you look at the year-to-date fee rates, um, for this year they're they're pretty good jumping off points. Um,

You know, in in the credit space, um, you know, we did on a year-to date basis, we are up a little bit. Um but during the quarter we did take on a large, a large mandate that was a little lower than the the fee rate. And then in the alternative space, we've had, you know, we brought on the addition of Grand View um, with um, you know, you know, a little under a billion in AUM at at higher fee rates than than we were running. Um, so that's new this year and then, you know, we're continuing to win, um, some some business in uh, in M sites. And in the quarter, we had a nice, a nice win at a, at a, at a really attractive fee rate.

Alex Blostein: Year-to-date, decent, like the average between Q2 and Q is kind of like a decent jumping off point to think about for the rest of the year.

Jason Gottlieb: Yeah. Absolutely.

Alex Blostein: Got it. All right. Thank you.

So year to date decent like the average between Q2 and Q was kind of like a decent job at a point to think about for the rest of the year. Yeah, yeah, yeah, absolutely. Got you got it. All right. Thank you.

Operator: Our next question comes from John Dunn from Evercore ISI. Please go ahead with your questions.

And our next question comes from John Dunn, from Evercore ISI. Please, go ahead with your questions.

John Dunn: Thanks. Maybe on the other side of redemptions on the gross sales, could you give us a flavor of where you see your institutional pipeline at the moment and maybe some of the underlying stuff, like what you're seeing as far as RFP activity, win percentages, and composition, and kind of time to funding?

Maybe, uh, on the other side of redemptions on on the, um, gross sales. Could, could you give us a flavor of where, um, you see, your institutional pipeline at the moment and maybe some of the underlying stuff, like what you're seeing as far as our fee activity, uh, win percentages and composition and kind of time to funding?

Jason Gottlieb: Yeah, John, I'll tackle that. I'll break it up between institutional and intermediate wealth, I'll harken back to a comment more generally that I put into one of our earnings conversations, which was, we need to do a better job at selling more and losing less. When we look at our information and our data, this is by no means I don't think of this as a trend, it's starting to feel that way, which is, our gross sales numbers look pretty good. We're not out of the woods, we're feeling a lot better about what's happening, I think that stems from the fact that we had onboarded a number of people, both in the institutional world, more specifically in the intermediate wealth side of our business.

yeah, John I'll uh, I'll tackle that I

I break up the, uh, I'll break it up between in institutional and intermediate wealth. And I'll, I'll hearken back to a

a comment more generally that I, I put put into 1 of our earnings conversations, which was

You know, we need to do a better job at at selling more and losing less.

Um, and you know, when we look at our information and our data—and this is by no means, I don't think of this as a trend, but it's starting to, it's starting to feel that way—which is, um, you know, our growth sales numbers look,

Pretty, pretty, pretty good. We're not out of the woods, but we're feeling a lot better about it.

What's happening? And I think that stems from the fact that we have, we talked about this, where we had on boarded a number of people, both in the institutional world, but it's more specifically in the intermediate wealth.

Jason Gottlieb: However, many of those folks had just sort of been onboarded, and we didn't have full fighting strength. I think we're now pretty close to full fighting strength. We've been onboarding some people in the non-US business, specifically in the UK and EMEA region that are getting up the curve and building their own pipeline. We're just seeing a nice follow-through in terms of the gross sales. I think where we're continuing to experience both redemptions, as well as some select terminations is really what's causing the net to be a little bit more challenged. We feel like we're seeing the green shoots of many of the efforts and initiatives that we put on the distribution effort. We're still continuing to fight the rebalancing, which is natural in a market that continues to produce high teens returns depending on the market that you're looking at.

Side of our business.

However, many of those folks had just sort of been on boarded and we we didn't have like full, you know, full fighting strength.

I think we're now pretty close to full fighting strength. We've been on boarding, some people in the non-us business, specifically in the UK and uh, emia

Jason Gottlieb: When you drill down and you look institutionally, we're also still doing quite well. We had a couple of really interesting wins in Q2. I think one thing I should have highlighted during the prior round of questions was Global Discovery on the growth team just landed a very large institutional mandate. It's funded predominantly in Q2 and will continue to slightly fund throughout the course of Q3. I think that's the hallmark type of client we're looking for. Somebody that sees the quality, the differentiation, the benefit of partnering with a team like our growth team, are willing to look through some of the short-term performance challenges associated with the global platform. We saw a really nice win there. We talked about the Sustainable Emerging Markets team and the pipeline and the path and the pattern that they're experiencing.

Region that are, you know, getting up the curve and building their own Pipeline. And we're, we're just seeing a, a nice, uh, follow through, in terms of the, uh, the gross sales. Uh, I think where we're, you know, continuing to experience both redemptions. Uh, as well as some select terminations is really what's causing the the net to be uh a little bit more challenged. And so we're, you know, we, we feel like we're seeing the green shoots of many of the efforts and initiatives that we put on the distribution effort. Um, but we're, you know, we're still continuing to fight the rebalancing which is natural in a market that continues to produce, High Teens returns, depending on the, you know, the the market that you're looking at. And so, but when you look when you drill down and you look institutionally

You know, we're also still doing quite well.

You know, we had a couple of really, uh, interesting wins in Q2. Uh, I think one thing I should have highlighted during the prior round of questions was, um, Global Discovery.

Jason Gottlieb: The International Value franchise had a nice institutional win and continues to build on their pipeline. We're starting to see a lot of good things on both sides. If markets didn't produce mid to high teens returns, I think the rebalancings would be a lot less, and you'd see a little bit more of a balanced organic growth rate. For now, we're happy with what we're seeing incrementally on the gross inflow side. It's the gross outflows is really where we need to keep our clients a little bit longer than we have.

Uh, on the growth team, just landed a very large institutional mandate, it's funded predominantly in, in Q2. And both, you know, continue to slightly fund throughout the course of of Q3. And I think that's, uh, you know, that's the Hallmark type of client, we're looking for somebody that sees the quality, the differentiation, the benefit of partnering with with a team, like our growth team and are willing to look through some of the short-term Performance challenges associated with, um, you know, the the global platform. And so we saw a really nice win there. You know, we talked about the sustainable Emerging Markets team and the pipeline and the and the path and the pattern that they're experiencing, um, you know, the inter International value franchise had a had a nice institutional win and continues to, you know, build on on their Pipeline. And so we're we're starting to see a lot of good things on on both sides. Uh, if you know, if markets didn't produce

You know, mid mid to high teens returns. I think the rebalancing would be a lot less and you'd see a a little bit more uh, you know, a little bit more of a balanced, uh, organic growth rate. But for now we're we're happy with what we're seeing. Uh, incrementally on the, on the gross inflow side. It's the uh, you know, the the gross outflows is really where we need to keep our clients. Uh, a little bit longer than than we have.

John Dunn: Got it. Maybe just to go back to Grandview for a second. Could you kind of give your thoughts on what you think the demand environment for private real estate is, just given the rates macro and kind of return cycle backdrop and like, you've talked about the fundraising, but maybe also like the deployment. How should we think about deployment once the fund's raised?

Got it and then maybe just to go back to Grand View for a second. Um, could you kind of give it your thoughts on what you think the the band environment for private real estate? Is, you know, just giving the rates macro and kind of return cycle, batch Rock and like you've talked about the fundraising but maybe also like the deployment, uh, how how we, how should we think about, uh, deployment?

Jason Gottlieb: Yeah. I think, obviously deployment can be slow and then speed up really quickly depending on the rate environment and certainly the macro environment. That being said, I think the great thing about Grandview, and certainly this is common what you hear from us quite a bit about our existing teams is, the degrees of freedom that they're able to express their capabilities in, and this comes in the sectors that they're going to invest in, gives them really a lot of latitude to be able to deploy capital in a thoughtful and meaningful way. While Fund IV is going to have some reasonably specific themes that are going to be the hallmarks, there's always going to be dry powder associated with being opportunistic.

Once the funds raised.

Yeah, I think uh, you know, obviously deployment can can be slow and then speed up really quickly, depending on, you know, the the rate environment and and certainly the macro environment.

That being said, I think the the great thing about Grand View and and certainly this is, you know, Common what you hear from us?

Jason Gottlieb: There are, as we've been speaking and spending time with the Grandview Investment folks, they are finding some really interesting opportunities across a couple of more distressed sectors of the market that should prove to be quite compelling. Sometimes the rate environment actually works in your favor. It just gives you great opportunities to buy assets in a cheaper fashion because you just have distressed people in need of refinancing that just need to potentially either refinance at higher rates that aren't going to work for the economic model or, frankly, just sell it at a discount. It's hard to give you a true sense on deployment.

Jason Gottlieb: I would just say that in our conversations with the Grandview folks, they've got a pretty strong pipeline of investment opportunity that they're looking at across the few themes that will be featured in Fund IV, as well as some opportunistic investments that they're, frankly, in the market looking to execute on now.

Really a lot of latitude to be able to deploy capital in a in a thoughtful and meaningful way. And and while fun for is going to have some, you know, reasonably specific themes that are going to be the Hallmarks, um, there's always going to be dry powder associated with, you know, being opportunistic. And there are, as we've been speaking and spending time with the, the Grand View investment folks. You know, they are finding some really interesting opportunities across a couple of more distressed sectors of the market that should prove to be, you know, quite compelling. So sometimes the rate environment actually works in your favor, uh, it just gives you great opportunities to buy assets in a, in a, in a cheaper fashion because you just have distressed people uh in need of refinancing, that just need to potentially either refinance at higher rates that aren't going to work for the uh, the economic model or frankly, just sell it at a, at a discount. So it's hard. It's hard to give you a true Sense on deployment. I would just say that

In our conversations, with the Grand View, folks. They've got a pretty strong pipeline of investment opportunity that they're looking at across. The, the few themes that will be featured in fund for, as well as some opportunistic Investments that they're, you know, in the, in frankly, in the market, you know, looking to execute on now.

John Dunn: Thank you.

Thank you.

Operator: Our next question is a follow-up from Bill Katz from TD Cowen. Please go ahead with your follow-up.

And our next question is a follow-up from Bill cats from TD Cowen, please go ahead with your follow-up.

Bill Katz: Great. Thanks for taking the extra questions. Jason, you mentioned a little bit about the deal pipeline. Some of your peers in the old space will still speak to pretty heady expectations from the sellers. I was wondering if you could talk a little bit about what you're seeing in terms of the bid-ask spread. Then you mentioned earlier comments, so just the intersection of demand, good alpha generation, et cetera, and you've done very well on the credit side, but for the last couple of quarters, the credit's rolling performance looks like it's waning a little bit. Just sort of wondering, is there anything to be mindful on there? Or maybe what's driving the underperformance, just so we can think about maybe the go-forward outlook. Thank you.

Great, thanks for taking extra questions. Um, Jason you mentioned a little bit uh about sort of the deal pipeline, some of your peers in the all space. So so speak to pretty heady expectations from the sellers. I was wondering if you could talk a little bit about what you're seeing in terms of the bid ass spread. And then you mentioned earlier, comments are just the intersection of demand. Good Alpha generation Etc and you've done very well on the credit side, but for the last couple quarters, the credits rolling performance. Looks like it's weaning on weaning a little bit. Excuse me, just sort of wondering. Is there anything to be mindful on there or maybe? What's driving? The underperformance? Just so we can think about maybe the goal forward Outlook. Thank you.

Jason Gottlieb: Yeah, sure. Bill, I think this is question seven and eight. We're going to have to cut you off at some point. You're absolutely right. I think there's very heady expectations, and we have been very active in working through our pipeline, and that has included a couple of, as I've mentioned, inorganic opportunities where we presented a proposal that we thought was extremely compelling that didn't make it very much farther than the proposal. As you've come to know us, Bill, very well, we are going to remain disciplined and not extend ourselves in areas where we don't think we can achieve success for not only our clients, but ultimately our shareholders as well. We remain focused on areas of finding inorganic opportunities where these are self-sourced, which is where and how we found Grandview.

Yeah, sure. Um

Well, I think this is question 7 and 8. We're going to have to cut you off at some point. Um, you know, you're absolutely right. I think there's—

There's very heavy expectations. And you know, we have been

very active in, um, you know, working through our pipeline, and that has included a couple of, as I'd mentioned, inorganic opportunities where we, um,

You know, presented a a proposal that was we thought was extremely compelling that, you know, didn't make it, uh, you know, very very much farther than the uh the proposal. Uh, I as you you've come to know us Bill very well. We are going to remain disciplined and not extend ourselves in areas where we don't think, uh, you know, we can, we can achieve success for not only our clients, but ultimately, our shareholders as well. And so, we remain, you know, focused on areas of finding

Jason Gottlieb: Those are going to be great opportunities for us to find teams that maybe the dollar value isn't the only thing that's important. If it's a dollar value that's going to win the day, then it's probably going to be a little bit more challenging for us. We think we bring a total package of business leadership, distribution. Obviously, price does matter, but long-term growth and alignment does as well. For those that want that autonomy and not wind up getting tucked into be a sleeve of a broader platform or have their ideas pulled into other strategies, we think that we are an ideal home for the talent that really wants to continue to invest and grow. We'll get our opportunities. We're just going to have to be thoughtful and deliberate.

Um, you know, in organic opportunities, where these are self-sourced, which is where and how we found Grand View.

Uh, those are going to be great opportunities for us to find teams that maybe the, maybe the dollar value is in the only, um, thing that's important. If it's, if it's a dollar value that's going to win the day, then it's, it's probably going to be a little bit more challenging for us. We think we bring a a total package of business leadership distribution.

Jason Gottlieb: Going back to your other question about the credit strategies, their performance and their underperformance is not dramatic, and it's on the heels of, obviously, multiple years of outstanding performance. The short-term, I think, is somewhat been challenged by the fact that they have not had a ton of energy exposure in their portfolio. These are not errors of commission. Had they known that the war was going to bail out a bunch of leveraged companies that were on their last legs, then shame on them. I don't think that that's something that they could have predicted. Brian and the team have stayed true to their discipline, and they will continue to, what we think, deliver even in the face of a sectoral issue that has caused a bit of a short-term shortfall.

Um, obviously price does matter but long-term growth and Alignment, uh, does as well. And for those that want that autonomy and not, you know, wind up getting tucked into, uh, you know, be a sleeve of a broader platform or have their ideas pulled into other strategies. We, you know, we think that we are an ideal home for the town that really wants to continue to invest and grow. And so we we'll get our opportunities. We're just going to have to be uh you know, thoughtful and deliberate. And you know, when it when going back to

your other question about the, um, the credit franchise, you know, their, their performance and their underperformance is

Uh, quite. It's not dramatic, and it's on the heels of, obviously, multiple years of outstanding performance. Uh, the short term, I think, has somewhat been challenged by the fact that they have not had a ton of energy exposure in their portfolio. So these are not errors of...

Of commission. You know, had they known that the uh, you know, the the war was going to bail out of a bunch of leveraged uh, companies that you know were on their last legs. Then, you know, shame on them. But I I don't think that that's something that they could have predicted. And, you know, Brian and the team has stayed true to their to their discipline.

and they, uh, you know, they will continue to um,

Jason Gottlieb: I should have mentioned, and I will now, that we did actually win an institutional mandate for our floating rate strategy inside of the credit team, $150-ish million mandate that gives, not obviously huge in size, but it's very important in terms of the scale that it brings to that strategy. I think we've talked about scale to get scale. That strategy continues to execute quite well under Brian's leadership, and we're continuing to see the fruits of their capability on the floating rate side, where we see actually pretty meaningful opportunity for growth in that segment of the business.

a bit of a short-term shortfall, I should have mentioned and I will now

That um, we did actually win an Institutional mandate for our floating rate. Um, strategy inside of the the credit team 150 ish million dollar mandate that gives not not obviously huge in size, but it's very important. In terms of the scale that it brings to that, that strategy, I think we've talked about scale b gets scale and so, you know that strategy continues to execute quite well, uh, under Brian's leadership, and, you know, we're, we're continuing to see the fruits of, um, you know, their capability on the floating rate side where, you know, we see actually pretty meaningful opportunity for growth in um, in that in that segment of the business.

Bill Katz: Thank you again.

Thank you again.

Operator: Ladies and gentlemen, with that, we will be concluding today's question-and-answer session and the Artisan Partners Asset Management Business Update and First Quarter 2026 Earnings Call. Thank you. You may now disconnect your lines.

And ladies and gentlemen, with that, we will be concluding today's question and answer session and the Artisan Partners Asset Management business update.

And first quarter 2026 earnings call.

Thank you. You may now disconnect your lines.

Q2 2026 Artisan Partners Asset Management Inc Earnings Call

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