Operator: Ladies and gentlemen, welcome to DWS Q3 2026 results with investor and analyst conference call and live webcast. I am Sergen, the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it is our pleasure to hand over to Oliver Flade. Please go ahead.
Oliver Flade: Thank you very much, operator, and good morning to everybody from Frankfurt. This is Oliver Flade from Investor Relations, and a warm welcome to everybody to our earnings call for the third quarter of 2026. Before we start, I would like to remind you that the upcoming Deutsche Bank analyst call will outline the asset management segment's results, which have a different parameter basis to the DWS results we are presenting now. I am joined by Stefan Hoops, our CEO, and Markus Kobler, our CFO. Stefan will start with some opening as well as closing remarks, and Markus will take you through the main part of the presentation. For the Q&A afterwards, please could you limit yourself to the two most important questions so that we can give as many people a chance to participate as possible.
Oliver Flade: I would also like to remind you that the presentation may contain forward-looking statements which may not develop as we currently expect. I therefore ask you to take note of the disclaimer and the precautionary warning on the forward-looking statements at the end of our materials. With that, I will now pass on to Stefan.
Stefan Hoops: Thank you, Oliver. Good morning, ladies and gentlemen, and welcome to our Q3 2026 earnings call. Greetings from Abu Dhabi, where I am joining you from today. As many of you know, we consider ourselves paranoid optimists. We are confident in the direction of our business, but we are never complacent about where we stand or what still needs to improve. This mindset also shapes how we look at our third quarter. I could spend time dwelling on our record inflows, record assets under management, and our best-ever nine months financial performance. To be fair, we are operating in a growing market where almost everyone seems to post about new records. Today, rather than adding to this concert of records, I want to give you an honest assessment of what we like about the quarter, where we are not yet satisfied, and what we are doing about it.
Stefan Hoops: Let me start with the numbers. Client momentum does look strong. Our total net flows were in fact our best ever. Total net flows reached EUR 30.9 billion, and assets under management rose to around EUR 1.22 trillion. We generated EUR 16.6 billion of long-term net flows, up from EUR 11.6 billion in Q2. Revenues amounted to EUR 784 million, with management fees increasing by 5% quarter on quarter. Total costs were EUR 459 million, down 2% quarter on quarter, reflecting our continued cost discipline.
Stefan Hoops: Overall, this translated into profit before tax of EUR 325 million, up 6% quarter on quarter, and earnings per share of EUR 1.15. This brings EPS to EUR 3.66 for the first three quarters of the year and moves us closer to our short-term target of 10% to 15% EPS growth per year. Those are solid numbers, but headline figures alone do not provide the full picture.
Stefan Hoops: The more relevant question is what sits behind these numbers and how much they reflect our own execution. We would like to think of this as a more distinct assessment of where we stand and where we believe we need to do better. You may recall that at the beginning of the year, we mentioned continuing to grow revenues and improving the composition of our fees is our key challenges for this year. This meant that our recurring management fees needed to grow strongly to offset performance fees normalizing from last year's elevated level. With an increase of management fees by 14% year on year to EUR 745 million, we demonstrated the strength of our core business, enabling us to grow revenues despite the as expected lower performance fee contribution. We are also encouraged by the continued strong investment performance of several of our flagship active equity strategies.
Stefan Hoops: This positions us well to capture future retail flows, particularly in the German market, where long-term investment performance remains a key driver of client demand. Turning to Xtrackers, we are pleased with the business's continued growth. While some may say that we simply benefited from a growing market, let me offer a different perspective. The European ETF market continues to grow and attract new providers. Yet despite this increase in competition, we have maintained our high market share. In an increasingly crowded market, holding your position is not a given, which we see as evidence of the strength of the Xtrackers platform. We are also pleased with our continued cost discipline. Our cost-income ratio improved by 1.9 percentage points quarter on quarter to 58.6%. As I said last quarter, our controllable costs remain flat despite continued investment in our strategic growth initiatives.
Stefan Hoops: This means that we remain on a good path towards our 2027 goal of a cost-income ratio below 55%. Turning to areas where we are not yet satisfied, our institutional and alternatives businesses continue to punch below their weight. We have strong capabilities in both areas, but we are not yet translating them into the scale and growth we believe should be possible. We are working hard to change that, and the actions we took this quarter show how we are addressing both areas. From November, Deutsche Asset Management will be becoming our new global brand identity. The new brand has immediate international recognition and clearly reflects what we want to be, the gateway to Europe for global investors. This is particularly important as we continue to expand our international and institutional business, while DWS, Xtrackers, and RREEF remain our established product brands that our clients know and trust.
Stefan Hoops: As an important step in strengthening our alternatives platform, we announced the acquisition of Peakside Capital Advisors earlier this month. Peakside manages EUR 1.7 billion, and it expands our value add and opportunistic real estate capabilities, particularly in Germany and Central and Eastern Europe. Its founders and senior team will remain with the business, and we expect the transaction to close by the end of the year, subject to regulatory approvals. We will also support Frankfurter Leben's planned acquisition of Athora Germany. The transaction would create a growing insurance platform with around EUR 17 billion in assets and provide an opportunity to become the preferred partner for managing the group's alternative investments. The strategic collaboration is another concrete step towards strengthening both our institutional insurance business and expanding our presence in alternatives, an area where, as I said, we are not yet where we want to be.
Stefan Hoops: These are concrete steps in the right direction, but we know there is more work to do. After Markus has taken you through the financial results, I will come back to where we see further opportunities for growth and how we intend to capture them. First, let me hand over to Markus in Frankfurt for a closer look at the numbers.
Markus Kobler: Thank you, Stefan, and I hope all is well in Abu Dhabi. Also good morning from my side, ladies and gentlemen. Highlighted, the headline figures tell only part of the story. Let me turn to our financial snapshot and walk you through the key drivers of our Q3 results and the opportunities we see across our business. Total assets under management increased by 16% year on year, and 3% quarter on quarter to EUR 1,221 billion. Total revenues stood at EUR 784 million, representing a 4% increase year on year, and 1% increase quarter on quarter. Total costs were EUR 459 million, up 6% year on year, and down 2% quarter on quarter. This resulted in a cost-income ratio of 58.6% for Q3 2026. Our net income reached EUR 230 million, up 5% year on year and down 3% quarter on quarter.
Markus Kobler: The sequential decline reflects the positive one-off tax effect recorded in Q2. Our underlying operating performance improved, with profit before tax increasing by 6% quarter on quarter. Moving to our client dynamics during Q3. Q3 was characterized by strong underlying client activities across the platform. We generated total net flows of EUR 30.9 billion, including EUR 16.6 billion of long-term net flows, making another strong quarter for DWS. We are particularly encouraged by the breadth of these flows as client demand became more diversified. Looking at our client segments. Private wealth contributed net flows of EUR 21.9 billion, continuing its strong development. Xtrackers remains the key growth driver. Digital distribution continued to scale as an important channel, with cash solutions also gaining traction through digital platforms. Institutional clients contributed EUR 8.9 billion of net flows, with momentum improving compared with previous quarters.
Markus Kobler: Mandate wins across insurance clients and renewed demand for fixed income was partly offset by anticipated redemptions. The client sentiment remained constructive, supported by ongoing demand for liquidity and income-oriented solutions. Clients remained selective and decision-making cycles stayed extended. At the same time, discussions around strategic asset allocation increased. Turning to the regional picture. Germany, UK, and EMEA reported net flows of EUR 18.2 billion. Private wealth remains the main source of growth, with strong ETF momentum more than offsetting outflows in the institutional business. Americas contributed EUR 10.5 billion of net inflows. Flows were driven by institutional clients with particularly strong allocation to cash solutions alongside continued interest in passive and alternative strategies. APAC delivered net flows of EUR 2.2 billion, supported by sustained ETF net flows across both client segments and continued institutional commitments to alternative investment capabilities. Moving to the quarterly highlights within our active business.
Markus Kobler: Active assets under management decreased to EUR 484 billion, mainly reflecting adverse market movements in fixed income. Flow trends were mixed across asset classes. SQI maintained its momentum, generating net flows of EUR 1.1 billion. Flows remained primarily driven by retail-oriented products, including DWS FondsAgent Premium and StepIn Global High Conviction, while institutional demand benefited from several mandate wins across Europe and the US. Multi-asset generated net flows of EUR 0.2 billion. Mandate wins across Europe were the main driver, alongside continued demand for Concept Kaldemorgen.
Markus Kobler: Fixed income reported net outflows of EUR 0.3 billion, including EUR 1 billion of anticipated client redemptions. Excluding these redemptions, client demand was positive, particularly in private wealth, where DWS Floating Rate Notes attracted around EUR 0.9 billion of net inflows. Active equity net outflows amounted to EUR 1 billion. The underlying business remained resilient, with continued inflows into retail products in Germany, supported by good investment performance.
Markus Kobler: This was more than offset by a specific institutional mandate redemption and moderate outflows in US private wealth. Moving to our Xtrackers business. Xtrackers delivered another record quarter, with net flows of EUR 15.8 billion and assets under management increasing to EUR 475 billion. One observation, at the current growth pace, Xtrackers is approaching active in terms of assets under management. This demonstrates the successful scaling of the platform and the increasingly balanced composition of our business. Turning to our flow picture. Starting with our European ETP business, which generated net flows of EUR 13 billion. Demand remained high for core portfolio building blocks. Clients allocated to broad equity exposures such as the S&P 500, World Ex US, and emerging markets, while demand for euro overnight products remained strong. Within mandates and solutions, which generated solid inflows of EUR 1.4 billion from both new and existing mandates.
Markus Kobler: This business line is complemented by ETF-as-a-Service, which is an important growth area for us. We continue to see interest from partners across both institutional and private wealth channels. Our current pipeline also reflects the opportunities we see from the upcoming implementation of the German pension reform. Our US domiciled ETFs delivered another positive quarter with EUR 1.2 billion of inflows. Demand was primarily driven by high yield and ESG products. We continued to build our active ETF franchise. It still remains a relatively small part of the business, with around EUR 3 billion of assets under management and EUR 2 billion of inflows. However, targeted distribution initiatives and a broader product range are supporting its development. We further expanded our digital distribution partnerships across EMEA, strengthening our access to European retail investors. The digital distribution channel is already a meaningful contributor to flows and continues to grow in importance.
Markus Kobler: We now have 46 partnerships and a strong pipeline to support further growth through the remainder of the year. At the same time, we defended our position as the number 3 provider in the highly competitive European ETP market, where we maintained a market share of 10.1%. Record inflows demonstrate the strength of the Xtrackers franchise and the relevance of our product range. Let me turn to our Q3 highlights for our alternatives platform. In the third quarter, assets under management remained stable at EUR 105 billion. The business generated net flows of EUR 0.8 billion. Looking at the asset classes in more detail. Infrastructure generated net flows of EUR 1.3 billion, reflecting strong demand across both equity and debt strategies. Fundraising for PEIF 4 is progressing well and continues to target the final close in Q4.
Markus Kobler: On the debt side, we continue to see strong interest in our infrastructure debt opportunities fund franchise, particularly in the US, highlighting the breadth and attractiveness of our infrastructure debt offering. The interest rate environment continued to weigh on liquid real assets and real estate. Liquid real assets recorded net outflows of EUR 0.1 billion, with outflows from our real estate products being partly offset by allocations into more defensive products, including precious metals. Real estate reported net outflows of EUR 0.4 billion, primarily driven by the Grundbesitz funds. The interest rate environment continued to weigh on real estate transaction activity and investor demand. For one of the Grundbesitz funds, Grundbesitz Europa, we have decided to implement a temporary redemption restriction. While this was not a decision taken lightly, we believe this measure is necessary to support orderly portfolio management and to safeguard investors' interests over the longer term.
Markus Kobler: At the same time, we are mindful of the impact this measure can have on investors. On the other hand, we continue to see attractive opportunities in selected parts of the market. Our value add strategy remains well-positioned, supported by continued investor interest in our affordable housing focus direct real estate strategy. The recently announced Peakside acquisition is intended to strengthen our capabilities and broaden our offering in this market segment. In private credit, our focus remains on fundraising, and we expect the first closings and deployment of capital in the fourth quarter. With that, let me now move on to our revenue development. Total revenues reached EUR 784 million, up 4% year on year and up 1% quarter on quarter.
Markus Kobler: Management fees increased to EUR 745 million, representing a 5% increase quarter on quarter and a 14% increase year on year, mainly driven by higher average assets under management and strong organic growth. Performance and transaction fees amounted to EUR 7 million. This reflects the anticipated cyclicality as well as lower transaction volumes in real estate. Let me reiterate some key statements around our performance fees. For 2026, we continue to expect performance fees at the upper end of our 4% to 8% guidance. The main fourth quarter contribution is expected from Concept Kaldemorgen. As of Q3, Concept Kaldemorgen had accrued approximately EUR 50 million in performance fees. For 2027, we expect performance fees to be at the low to mid end of our guidance range. This reflects the maturity profile of our infrastructure fund cycle, including the last asset sale of PEIF 2. Other revenues contributed EUR 32 million.
Markus Kobler: The quarter-on-quarter decline mainly reflects the elevated Harvest contribution recorded in Q2. While share price development remained positive in Q3, the increase was less pronounced than in the strong Q2, leading to a lower contribution from the share price hedge. Before moving to costs, let me highlight a crucial development in our revenue mix. in 2025, total revenues benefited from record performance fees and exceptionally strong other revenues. As contributions from our infrastructure fund family and fair value of guarantees are not expected to repeat at the same level in 2026 and 2027, growth in recurring management fees becomes increasingly important. We delivered management fee growth of 5% quarter on quarter and 14% year on year, supported by strong organic growth and market appreciation.
Markus Kobler: This growth helped us further expand our overall revenue base and demonstrates our ability to drive earnings growth from more predictable revenue sources, and this supports our ambition to deliver annual EPS growth of 10% to 15%. Let me move on to our cost development. In Q3, total costs were EUR 459 million, down 2% quarter on quarter and up 6% year on year. Compensation and benefits decreased to EUR 229 million, down 1% quarter on quarter, mainly reflecting lower share price related retention costs. General and administrative expenses were EUR 230 million, down 2% quarter on quarter. I am particularly pleased that our general administrative expenses declined despite higher volume-related costs. This reflects our ongoing efforts to proactively manage discipline-based costs. At the same time, these efforts help fund investments in our growth areas while maintaining strong cost discipline and efficiency.
Markus Kobler: This supports our expectation that the full year 2026 cost base will remain broadly in line with 2025. Our cost-income ratio improved to 58.6% in Q3 and amounted to 57.7% for the first nine months. Therefore, we continue to target the cost-income ratio between 55% and 57% in 2026. With that, let me hand over to Stefan.
Stefan Hoops: Thank you, Markus. Let me provide with an update on one of our core growth levers and certainly the one most within our own control. Our partnership with Deutsche Bank is already a significant source of value creation. Today, we collaborate successfully across a range of areas, including the Private Bank's role as our number 1 distribution partner and joint product initiatives related to Germany's pension reform agenda. At the same time, we should be candid. For a number of years, much of our focus was on establishing DWS as a standalone asset manager. As a result, we have not yet fully leveraged the unique strengths that come from being part of Deutsche Bank Group. Looking ahead, we have an opportunity to combine the strength of a leading European asset manager with the capabilities of one of Europe's premier banking franchises. We have all the key ingredients in place.
Stefan Hoops: A leading European asset manager, a leading European corporate bank with a global network, the leading European FIC franchise globally, and the largest global private bank in the Eurozone. Taken together, these strengths provide a powerful foundation to deepen collaboration, close capability gaps, and unlock additional growth opportunities across Deutsche Bank Group, and specifically for DWS. We are already actively progressing on several opportunities. Firstly, creating a more integrated institutional client coverage model, combining DWS and Deutsche Bank capabilities to deliver a coordinated approach for key client segments such as insurance companies, pension funds, and sovereign wealth funds. Second is building a Deutsche Bank private markets hub, bringing together origination capabilities, investment expertise, and distribution strength across the group to provide clients with enhanced access to private market opportunities while improving the scale and reach of our alternatives platform.
Stefan Hoops: This is where we are most advanced and are expecting our first fund closings in Q4. A third opportunity is the creation of a portfolio solutions platform within DWS. By bringing together portfolio construction, product capabilities, and investment solutions from across DWS and the private bank, we are building a single investment and product engine for Deutsche Bank Group while enabling the private bank to fully focus on client relationships, advisory, and distribution. We are also exploring a centralized fiduciary overlay solutions capability, bringing together expertise from DWS, the private bank, and the FIC franchise to deliver institutional-grade fiduciary overlay solutions for clients. Collectively, these initiatives have the potential to expand our addressable market, enhance our product offering, and strengthen our competitive positioning across key client segments.
Stefan Hoops: By broadening our solutions capabilities, providing institutional clients a more comprehensive product offering, and creating a much closer link between the private bank and DWS, we can generate additional client flows, support revenue growth, and create long-term value for both DWS and Deutsche Bank. Importantly, the opportunity today is different from the period prior to the IPO. The increasing relevance of private markets, portfolio solutions, and overlay management has made the benefits of closer collaboration between asset management and banking more compelling than in the past. At the same time, our history demonstrates that combining capabilities across Deutsche Bank and asset management can create substantial value. A pertinent example is Xtrackers, which originated within Deutsche Bank's equities franchise before evolving into one of Europe's leading ETF platforms. The opportunity is significant. Deutsche Bank already possesses a number of highly competitive businesses.
Stefan Hoops: By connecting these strengths more closely, we can create a powerful growth flywheel that benefits clients, DWS, and Deutsche Bank alike. To conclude, the key message from the third quarter is straightforward. Our record total net flows, growing management fees, and continued cost discipline demonstrate the strength and momentum of our core business. At the same time, we see many opportunities for additional growth. One of the most significant is the closer connection between DWS and Deutsche Bank. As paranoid optimists, we remain fully focused on creating long-term value for clients and shareholders alike. Thank you. We are now happy to take your questions.
Oliver Flade: Thank you very much, Stefan. Operator, we are ready for Q&A now. May I please remind everybody to limit yourself to two questions, please. Thank you very much.
Operator: Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and then one on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Anyone who has a question may press star and one at this time. We have the first question come from Hubert Lam from Bank of America. Please go ahead.
Hubert Lam: Hi. Good morning. Thanks for taking my questions. I have two of them. Firstly, can you give us your latest thoughts on the German pension reform opportunity, especially now that we have seen the pricing of the new private pension products at the platforms where fees seem to be pretty low. How should we think about the potential revenue contribution from this? Second question is on passive. Stefan, you mentioned that flows have picked up dramatically over the last couple of quarters, showing strong momentum. What have you done differently? Have there been any changes on the sales process, teams, use of rebates or discounts? What has changed since the start of the year? Thank you.
Stefan Hoops: Perfect. Thank you, Hubert. Hopefully everyone can probably hear. As you have heard, I am in Abu Dhabi, so I feel lonely to be here with Markus Kobler next to me. Hopefully it is going to be okay. Hubert, on your two questions. Starting with the pension reform.
Stefan Hoops: Our view hasn't changed, that it's going to be substantial from a volume perspective, but less unclear how this is going to translate into revenues in the first couple of years. What you will have seen is that for the standard offering, where you simply have two funds, there's really a race to the bottom. That's where the new brokers, the platforms are fully focused. People have been offering zero fees, at least in the beginnings for the first few years. I would imagine that this is going to lead to substantial inflows and potentially revenues down the line, but not in the first few years. Then there's also what people call comfort or more advisory-related insurance wrapper.
Stefan Hoops: Not everyone just wants to have ETF, but there's plenty of people that also want to have the insurance wrapper, and we will also contribute to that market. You may have seen that we just extended our partnership with Zurich until 2042, so for quite some time. We will also be a product provider for Zurich and other insurance companies. I think that we will be contributing quite broadly to the whole German pension reform, really across channels and across types of products. But unfortunately, it's too early to really be specific on revenue contribution. Again, I'm worried that it's not worth it. I expect this to be substantial from flow, but not initially substantial from a revenue perspective. On passive, a couple of things, and thank you for praising our improved flows. We've actually just grown with the market in Q3.
Stefan Hoops: I just want to be honest, fact-based. A couple of observations that I found interesting. When you look at the market, the market has been growing substantially. Last year we had, I think, about EUR 330 billion in the European UCITS market. Let's call it EUR 30 billion, just under EUR 30 billion a month. This year it has been EUR 40 to 50 billion a month. So it's a substantially growing market. At the same time, you have a bunch of new entrants. Year-to-date, it seems that we have about 25 new providers. So it's a great market, growing faster than the past, but also more competition. When you look at the top seven, so those providers with more than 5% of market share, our share has dropped from about 82% to 80%.
Stefan Hoops: That means that there's a 2%, let's say, leakage or flow from the larger providers to some of the new entrants. When you look at within the top seven, there are some, let me just mention the one that's not publicly traded, Vanguard, which is phenomenal, and FTSE All-World, which has been a big success last couple of months. So within the top seven, there's always a little bit of, I wouldn't call it randomness, but company-specific strength that then contribute to relative flows. That's just market backdrop. When you look at our performance, we grew with market in Q3, much faster than market in July, and sort of in line with market in August, bit slower in September. Some of that is simply luck that the respective campaigns work out better than others.
Stefan Hoops: In some cases it was improvement, some fee cuts that we spoke about last quarter that played out then in early Q3. It is a variety of things. I think, as I said in my prepared remarks, I am actually quite pleased that we have been able to keep our market share in a massively growing market, meaning that the new market entrants are sort of growing at the expense of other folks. Yeah, and so therefore, quite comfortable with our position and full confidence in the team continuing to deliver.
Hubert Lam: Great. Thank you.
Stefan Hoops: Thank you, Hubert.
Operator: The next question comes from Oliver Carruthers from Goldman Sachs. Please go ahead.
Oliver Carruthers: Hi there. Morning, team. Thanks for the presentation. I have two questions, please. First question, just broadly on capital allocation, including the potential return of excess capital through the extraordinary dividend next year. Just how are you thinking about that also alongside any opportunities for inorganic growth here, any kind of new larger opportunities that you are thinking about in this context? The second question, really to pick up on a comment that you made, Markus, in your prepared remarks. You talked about how cash solutions were gaining traction with digital platforms.
Oliver Carruthers: I think this is a really interesting development that broadly in the market, I think there is quite a strong debate at the moment as to just the future of how retail investors are behaving with rising rates, but also as financial literacy improves with AI, what they are going to do with some of their deposits and uninvested balances. Could you maybe, I do not know if you have any more color around what kind of what particular cash solutions that you are seeing kind of a pickup in traction with? I noticed the flows were really strong in Q3, but just any more color around that remark that you made would be very helpful. Thank you.
Stefan Hoops: Perfect. Thank you, Oliver. I suspect you are asking the first question on behalf of the excellent bankers at Goldman Sachs that are showing us interesting opportunities. However, so far nothing which is, let us say, transformative and therefore would deplete our excess capital. I think you have seen us do pretty much exactly what we have outlined, meaning if there are capabilities that we think would be a good fit and would be credible for us to have them, and we cannot do it organically, then we are adding it inorganically. There was the acquisition of Peakside, if anyone has questions, happy to go into detail. You would potentially see us do similar things where we add capabilities. But these are acquisitions which do not sort of break the bank. I think when it comes to transformative, I just do not see massive consolidation in the market.
Stefan Hoops: This would be me speculating, but I do not see anything substantial. It seems that everyone of a certain size would potentially be willing to combine, but wouldn't want to sell. I cannot see any insurance company selling, I cannot see any bank selling. Meaning when it comes to what potentially transformative things, I do not think that it would actually cost capital, it would just be some sort of other structure. Which is why I think so far we remain committed to potentially half an extraordinary dividend unless we see better use over the next few months. Secondly, on cash. It is interesting question that we spent quite some time on over the last couple of weeks. I would say that there is probably three key observations.
Stefan Hoops: Number one, I think that we will have structurally higher inflows and cash balances because folks that previously would have put deposits into banks are now leaving deposits with new brokers and platforms. But they do not just keep it on their balance sheet, they put it into money market funds because there is sort of nothing else they can do with it, right? Because they are not in the lending business. Therefore, a portion of normal deposits where folks think, "Well, I am just leaving the deposit with somebody," is now showing up in money market funds, and that is structurally higher, and I think that this will continue. Second, there are certain aspects which I would say are cyclical. Right now the yield is actually quite attractive.
Stefan Hoops: Therefore, I think people, if they have a choice between buying fixed income, and just putting it into money market fund, given the curve is not that steep, it is cyclically interesting, which I think is also going to prevail for some time. Then thirdly, we will always have people that are just parking it, waiting to deploy, for which you probably need some market correction or some of the maybe peace in some of the more problematic parts of this great planet. Which I think you have always had, maybe more now because there is some nervousness than in the past. But I definitely think that structural and cyclical increases because of what you just described will lead to higher money market balances for us in the future. By the way, it is a great scale of the business. What the fees are, whatever, 5 basis points.
Stefan Hoops: So it is obviously amongst the lowest parts of our product offering, but highly scalable. So the margin cost-income ratio is very close to zero, which is why we still view it as a good business, and we try to grow as much as we can.
Oliver Carruthers: Got it. Thank you. Thanks a lot. Cheers.
Operator: The next question comes from Jacques-Henri Gaulard from Kepler Cheuvreux. Please go ahead.
Jacques-Henri Gaulard: Yes, good morning, gentlemen. I had many questions, but I limit myself to two. I get the message on the flows, and it is indeed remarkable, but it is the second quarter in a row you are missing on earnings versus consensus, really. Obviously, the market was not exactly there on your 10% to 15% EPS growth. It is unlikely it is going to be there further on the back of the results you published this morning. Is it really the flows and the sheer volume of assets making you confident that you will basically get there, essentially? Or if you can run your why you really feel that comfortable so that you have slide 10 to show for it? First question. The second question, I was actually quite surprised and actually pleased because they are great professional people, about your love letter to your parent company.
Jacques-Henri Gaulard: Hearing you, Stefan, I was really wondering whether it made sense to keep DWS or Deutsche Asset Management as a standalone listed company. Considering also the fact that the, I would say the free float is also one of the big impediment when you want to broker the stock. I know I might as well ask that to your parents, but is there a very strong pitch to keep DWS as a standalone listed entity? Thank you.
Stefan Hoops: Thank you, Jacques-Henri. I think I will spend more time answering the first than the second question, for obvious reasons. Look, I think everyone likes to read headlines which are, "Well, great job. You beat consensus." Obviously that is preferred to missing consensus headlines. However, to some extent, when we look at what we can control, what we cannot control, I am quite pleased with us delivering on the stuff we can control, right? On cost, we have absolute cost discipline. I think we can reconfirm that we expect cost to be flat to last year, which I do not think you guys are believing us yet, but you will see that it is three months, right? On cost, we hit consensus and I am more optimistic than consensus for the full year.
Stefan Hoops: On management fees, which we can sort of control because that's momentum and inflows, obviously there's some market appreciation, but that's also something which we view as controllable. We are bang on consensus and quite pleased with the growth, and I'll come back to how we look at it in a second. The things which are more difficult to control are other revenues because it includes stuff like accounting items for our Riester product hedges, which are exposed to swap spread. It's very difficult for us to influence the spread between, I don't know, 30-year Bunds and 30-year swaps. So there's some randomness in the other income. Performance fees, I think we've been consistent in saying that this year we would expect substantial performance fees in Q1 and Q4, but not in 2 and 3.
Stefan Hoops: I think you thought that low teens is very low and it was still higher than what we ultimately delivered. I think when you look at where we missed and will we hit what we promised? Hopefully, you would agree that everything in our control is a more substantial number, meaning management fees and costs. We have done exactly what we've told you. On EPS, I don't know in what level of detail I should go at this point in time. Maybe I will just leave it with what I just said. If one of you has more specific questions on outlook for next year, then please ask the question, but I don't want to be accused of running out of time by taking a lot of time to answer questions.
Stefan Hoops: If there's a question on next year, then please ask it, but that will be my answer on the missed earnings alert headline. The second question. It's my 17th earning call, and I don't want it to be my last. Therefore, this is obviously a question which Deutsche Bank would have to answer if there's any answer. There's nothing at all that would lead me to believe that we would change our status as a listed company. That's probably all I can say. Otherwise, it's a question for the majority shareholder.
Jacques-Henri Gaulard: Thanks a lot, Stefan.
Stefan Hoops: Thanks, Anthony.
Operator: The next question comes from Arnaud Giblat from BNP Paribas. Please go ahead.
Arnaud Giblat: Yeah, good morning. So two questions, please. Firstly, if we focus on management fees, there is a 20 to 30 basis points reduction quarter-on-quarter. I am just wondering, clearly there is a bit of a mix shift, but even if I look at constant mix, there seems to be a bit of a decline within categories. I am just wondering if there are specific categories to call out here where you are seeing a bit of margin pressure. Second question is, you have highlighted during the call your capital raising efforts are happening in private credit. Just any more color you can give around that in terms of fund launches and then potential sizing. Thank you.
Stefan Hoops: Thanks, Arnaud. So the reduction average margin is entirely because of flow mix. If you dig in, if you actually go through asset classes, then in equities, fixed income, and alternatives, the margin is flat. So there has been no dilution. When you look at equities, for example, we have had EUR 600 million of inflows year to date in Top Dividende, one of our highest fee products. Also when you look at equities flows in Q3, we actually had outflows in lower margin and inflows into higher margin. Therefore, for equities, fixed income alternatives, it is completely flat.
Stefan Hoops: For multi-asset and SQI, we have actually seen an increase in average margin because we have had some outflows in lower margin institutional mandates. But for example, they have seen EUR 400 million of inflows year to date into Concept Kaldemorgen. Just since you bring up money market, I am a bit surprised.
Stefan Hoops: When I look at the mix in regions, it seems like a lot of the money market flows come from German retail. I would have expected that to be at a slightly higher margin, actually. If you could also talk about the fundraising efforts in private credit. I will. Sorry, I just wanted to see if there was a finish on the first one. You will always see some mix between the regions. But really, when you break it down by asset class, where we see outflows is fortunately in US retail, but this is not fee or margin related, but just because of shift from active into passive. Again, for the underlying asset classes, very little compression. It is really more the dilution because of inflows into Xtrackers and cash.
Stefan Hoops: Now for private credit, we expect the closings of two funds in Q4. One is a direct lending collaboration with Deutsche Bank's investment bank, our European Direct Lending Fund 2. That is looking very promising, so we expect first close November. Then something which I am actually quite excited about, which is a growth debt fund, which is German companies, German mid-caps, that have developed first of a kind technology, and it is scaled enough that after Series A and B, they now need proper growth capital. So we are setting up a fund in collaboration with KfW, where we are lending essentially growth capital, so mezzanine financing with warrants to German mid-caps that Germany considers the champions of tomorrow. That is in collaboration with Deutsche Bank's corporate banking investment bank. So first two.
Stefan Hoops: On asset-based finance, that is something which I would expect the first close maybe probably more Q2 than in Q1, but before the summer next year. So overall, there are fees which arguably took us some time, in collaboration with Deutsche Bank, getting people over, having agreements, doing fundraising and so on. It took a while, but it looks promising. Look, part of the reason why I am here in Abu Dhabi is because of a bunch of meetings on these funds and PEIF 4 and other things. Feedback is quite promising because people are still optimistic on at least Germany and parts of continental Europe, and feel that we have pretty differentiating origination capabilities in that region.
Arnaud Giblat: Perfect. Thank you.
Operator: The next question comes from Pierre Chédeville from CIC. Please go ahead.
Pierre Chédeville: Yes, good morning. First question, asked by a French analyst in banking industry. We can see that French banks, and particularly Crédit Agricole and BNP, are very aggressive regarding German markets in the future, and particularly on the savings side, where they say that there are a lot of opportunities in Germany to capture some savings which are unemployed in this market. I wanted to know, how do you see this new competition? If you feel that it could be something that you have to consider or if it is just anecdotical? First question. Second question is, I would like to come back a little bit on Peakside, even if you have already talking a little bit. We can be quite surprised by your increase in the real estate activity, considering the global environment on this.
Pierre Chédeville: Arguably, we could have think that you wanted to develop in private debt, which is a little bit more private equity, which is probably also more challenging. We can see that we have jumbo funds that are working very well. I think of Invest, for instance, or Ardian, that are very successful. I wanted to know a little bit better, what is your reason why increasing your share in real estate business for the current times? Thank you very much.
Stefan Hoops: Great. Thank you, Pierre. I did have high school French. I have always liked France, and therefore I think on behalf of Germany, we welcome any French competitors doing business in Germany. It is like the more products, the better for the German client base. Look, I would say that BNP has been in Germany for a long period of time. Amundi has a strong standing in Germany, if you are referring to the asset management arms of both. Therefore, I do not think that they have just woken up to the opportunity set in Germany. There are some other foreigners that are new to the market. I do not see it applies to the two of them. They are formidable competitors. Just like we are trying to compete with them in France, they are doing a great job in Germany. I think that is good for the Germany economy.
Pierre Chédeville: Stefan, if I may. I was not talking about Amundi or BNP AM. I was talking about the banks. Not in the asset management business, but in the term deposit business. I wanted to know if the competition from term deposit business in which they want to develop is something that you see. I was not talking about the competition from other asset managers
Stefan Hoops: Understood
Pierre Chédeville: but from banks trying to capture term deposits.
Stefan Hoops: Understood. Okay, now I get it. Specifically to weekend, I suspect, because both, I mean, BNP has a really strong corporate bank where they obviously also compete for term deposits. Look, I am not quite as familiar with essentially how private banks think about it. What I noticed is that people seemed more worried about Chase market entrants, what the new brokers are doing. I think the French are viewed as pretty sensible, experienced folks that are not trying to buy market share with an unprofitable offering. Otherwise, my suggestion would be, Pierre, that we get back to you via investor relations after having spoken to the right folks at Deutsche's private bank. I want to go on record with having a big-picture knowledge only.
Stefan Hoops: On Peakside, look, when we look at the real estate market, it is quite interesting because you actually have quite strong fundamentals, meaning you have big demand for real estate overall and very little new supply for a variety of reasons. At the same time, it is a complete buyer's market, which we suffered from in our open-ended retail funds. At the same time, we are benefiting from for institutional mandates. So one anecdote or one case in point is that when you look at our outflows in real estate in Q3, they are entirely because of the open-ended retail funds. We have actually seen inflows in some institutional mandates. Now, when you look at Peakside specifically, they are a great addition. They are very complementary skills. We did not have a value add and opportunistic capabilities to the same extent they have.
Stefan Hoops: They are a great complement for our European real estate platform. They are really good in Germany, in Central and Eastern Europe. We have known the founding partners for a while. They have been doing it for 20 years. As I mentioned in prior calls, for a few quarters, we assessed how we can build those capabilities organically, hiring teams, buying somebody. In the end, we find the market so attractive that we really want to compete for the playoffs from day one, which you can only do if you buy somebody and benefit from their track record. That is why we have done it. Again, we like the fundamentals in the market, and we think it is a great buying opportunity for specifically institutional clients that are putting money to work.
Pierre Chédeville: Thank you very much.
Operator: The next question comes from Nicholas Herman from Citi. Please go ahead.
Nicholas Herman: Yes, good morning. Thanks for the presentation, and thanks for my questions. Two from me as well, please. Firstly, just circling back on the targets, and then the second one on Peakside. On the targets, my understanding is your EPS growth targets were intended as in-year growth. Would you still see the targets being met if you delivered the 10% plus on a compound basis, even if it meant dipping below that in any particular year? Secondly, on Peakside. We obviously talked about your intention to acquire and value-add real estate last quarter. You have done that now. So that is pleasing. I guess my question here is why was Peakside the right acquisition? You clearly do need to pivot your business more towards value add. That is clear. Given its scale, I am just not sure I see how this deal achieves that.
Nicholas Herman: I guess relatedly, they have been doing this for 20 years. But equally, given their size, what gives you the confidence that they will be able to deploy at the scale that I am sure you want and need? Thank you.
Stefan Hoops: Perfect. Thank you, Nicholas. Just to be clear, the first question was on our 10% CAGR alternative target that we mentioned at our capital markets day in 2022. Was that the first question?
Nicholas Herman: Sorry. No, apologies for not being clear. No, the 10% EPS CAGR. My question is-
Stefan Hoops: Sorry
Nicholas Herman: Would you be happy if you achieved 10% plus EPS CAGR on a compound basis rather than in every single year?
Stefan Hoops: Yeah. Okay. No. For EPS, we want to get to 10% to 15% every year. There will be years in which we will be at the upper end. This year is probably going to be, with the tax benefit, mid of that range, and maybe this again, which is at the lower part. For the record, if we only achieved what is currently the consensus for 2027, 2028, I would be disappointed. I think it is always dangerous to debate the market. You guys have done your job for many years, therefore, who are we to challenge consensus? I think where we are probably more optimistic than you is on cost. I do not think that cost will go up next year. Because there was a question last earnings call, we are approving every sense of the growth investment. Do not worry about us starving anyone.
Stefan Hoops: There are plenty of businesses that have a carte blanche of hiring any good person that we can get on our platform. At the same time, we see plenty of levers to continue getting costs down. Our internal fill rate outside of India is up 20 percentage points year on year. Markus and the team continue to come up with new things. We feel on cost, we are more optimistic. Honestly, on management fees, I think our logic is in order to get to 10% EPS growth next year, and the investor relations can break it down in more detail. We probably need to get to EUR 3.1 billion of management fees, and then you can have assumption in a low to mid part of the range for performance fees, EUR 40 million a quarter for other EUR 40 million to EUR 45 million.
Stefan Hoops: We probably need EUR 3.1 billion of management fees at the current margin of low 24 basis point range, which would require AUM of roughly EUR 1.275 trillion on average in the course of 2027. Being at EUR 1.235 trillion today, so went up a little bit in October, we feel quite comfortable that if you believe our flow targets, that we would then reach that average AUM, which would get us into this EUR 5.60 EPS for next year. Therefore, no, every year we want to get to at least 10% and then to the upper end of the range if the market does better, certain things play out better or performance fees are higher. On Peakside. Look, I do not want to pretend that we spoke to every single boutique out there. But we spoke to quite a few.
Stefan Hoops: What we liked about Peakside is firstly, their client base actually a decent overlap with our client base. We are able to check, obviously, with their permission, but check with people beforehand. We have known the key players for quite some time. They live in our neighborhood. Their office is not far away from ours, at least one of the offices. There was a lot of being simply familiar with the folks. Now, every time you integrate a boutique, that is difficult. I can tell you that I was in a town hall an hour after we signed the contract, like a town hall at Peakside, and it was not the warmest reception I have received in my life because people had just been told that they would now be part of a larger organization.
Stefan Hoops: But I think when we explained why we like them and why we like their DNA and their history, their approach to business, I think people got comfort. So we are quite excited and think that we can scale the business better than they could have done themselves. And it was obviously a thesis both for them and for us.
Nicholas Herman: Can I ask if you are willing to provide a little more color on scale of scaling ambitions? Considering that the current flagship fund is EUR 400 million, how quickly can you scale that?
Stefan Hoops: Honestly, we will spend more time on alternatives in the next quarterly earnings call. This still needs regulatory approval. I think they will be part of our franchise as of 1 January. But I think it probably would not be good style if I already gave them targets before they are officially part of our franchise. So allow me to do that next quarter, please.
Nicholas Herman: That is fair. Sorry. Good point. Thank you.
Stefan Hoops: Thank you.
Operator: The next question comes from Laura Gris Trillo from Jefferies. Please go ahead.
Laura Gris Trillo: Morning. Thank you for taking my questions. Just one from my side, please, on the Deutsche Bank collaboration. Could you help us understand a bit better how should we think about the scale and the timing of the opportunity on this? Across the different areas that you mentioned before, including the integrated institutional coverage, private markets, and portfolio solutions, which initiatives do you see already as being already operational and which remain to develop? Which ones should we expect to contribute first? Can you help us understand how should we think about the revenues and commercial implications of deepening this relationship with Deutsche Bank? Thank you.
Stefan Hoops: Perfect. Thank you, Laura. Let me just see quickly how. If you just go through it, I think Deutsche Bank, and I looked after sales in investment bank globally and looked after the corporate bank before I joined DWS, so I feel I have decent understanding of the divisions. However, one of the constant challenges that everyone is sensing is to get everyone to collaborate frankly in line with what some other banks are doing. There is still lots of area for improvement, which Christian Sewing is also constantly pointing out. So in line with what everyone is saying. Now, to be specific, when you compare our setup with that of, let us say, a Goldman Sachs Asset Management, J.P. Morgan Asset Management, or some of the other bank-owned competitors, they have a much, much closer collaboration between the respective wealth management and asset management.
Stefan Hoops: That is one key part of what we currently focus on. We currently have similar capabilities. We do third-party manager selection. Private bank does that. Actually, the Investment Bank has it to some extent. We have basically three parts of Deutsche Bank Group having similar capabilities. If you combine that in DWS, obviously you need to go through a bunch of compliance questions. It becomes a fiduciary offering. But many other competitors are doing a very good job in having the product engine sit in asset management, and then the rest of the firm distributing it. That is one. That would include people moving over, and we would not be speaking about it if this was not imminent. These are things that are in the working.
Stefan Hoops: For institutional clients, let me just speak about Abu Dhabi, like the sovereign wealth funds, they view us as being part of Deutsche Bank. They would be surprised if they had different coverage for us. When it comes to sovereign wealth funds, large insurance companies, large pension funds, whether it is the supers in Australia, Canadian pension funds and so on, we have not had an integrated coverage for them. Something which I tried when I went sales globally, back in, what? 2017, 2018. We are now making proper progress, which I think is going to help us simply have better access to parts of the world where our institutional coverage could have been there. When it comes to overlay, so far, Deutsche Bank does not really offer a fiduciary overlay capability or product. Again, something which we are now combining across different structuring functions.
Stefan Hoops: Based on the first closings, which we expect for private markets in Q4, we can materially deepen the collaboration with Deutsche Bank's Investment Bank. Deutsche Bank is a big issuer of SRTs, for example, which they are currently doing with our competitors, but there is no reason why that should be the case. I think that the four things I mentioned, they are very specific and things which are in motion. I would expect us to be able to give specific targets probably in 3 months or 6 months after those things have been completed. But they are substantial.
Stefan Hoops: I think when I look at our growth levers, then I think that this could be bigger in the next couple of years than the German pension reform, and probably bigger actually making, bringing to life the gateway to Europe that we have discussed in the past, where you have global investors that want to invest in Europe, want to invest in infrastructure, in real estate, in private credit. Some of those origination channels sit in Deutsche Bank. By combining, we can now deliver on that promise.
Laura Gris Trillo: Thank you. That was very clear.
Stefan Hoops: Thank you, Laura.
Operator: The next question comes from Russell Quelch from Morgan Stanley. Please go ahead.
Russell Quelch: Well, good morning. So two questions. Firstly, one on the growth opportunities in fixed income, and second on the gatings in the open-ended real estate business. Firstly, Stefan, you mentioned in your opening remarks further potential synergies with Deutsche Bank and their strength in fixed income. And obviously with the higher rates environment, this asset class is now more in focus for product development in asset management. There has been a few mentions of this on the call already. So can you elaborate more on the product outlet for DWS here in fixed income? Are you thinking about expanding into new solutions such as retirement decumulation and active fixed income ETFs? If so, what would be the expected timing and the impact of that product innovation on the fixed income flows and the revenue margin? That is my first question.
Russell Quelch: My second question is, do you see any risks that you need to gate other open-ended real estate funds? If you do, what does this mean or what would be the impact, I guess, on your relationship with distributors? I know some of the other alternative asset managers, where they have had gating issues, have talked about that impacting their relationship with their distributors. Just wondering if you have seen that same change in the relationship. Thanks.
Stefan Hoops: Perfect. Thank you, Russell, and welcome to this earnings call, in the sense of you just having taken over.
Russell Quelch: Thank you.
Stefan Hoops: On fixed income, I think my reference was more to generally speaking, the fixed income business of Deutsche Bank rather than specific what we would consider the fixed income asset class. What I mean by that is private credit at Deutsche is part of the fixed income currency franchise. We just covered the overlay business that is currently offered in a non-fiduciary format by the Investment Bank, by the fixed income franchise, that we could do a better job in coordinating. That was also related to that franchise. You just asked an interesting question on ETF, on wrapping. Yes, there seems to be a trend from going to what investment banks previously did as structured product certificates to make it ETF-able. You do not have that many banking groups that have a strong ETF platform and a strong structured product business.
Stefan Hoops: So there is something to be done that we are exploring. I think that you will see much closer collaboration across coverage, structuring, and product between the fixed income business of DB, run by Ram, reporting to Fabrizio, and us. On the gating, for reference, we have three open-ended real estate funds, total EUR 7 billion AUM. The largest, with roughly EUR 5 billion, is the one which we had to gate. Clearly, if we had had to gate the other two, we would have done it at this point in time. I cannot say that we will not have to do it in the future. We are actively monitoring it. But needless to say, if there was a reason, and you need to have certain triggers in order to do it, then we would have done it. Overall, it is incredibly painful to do.
Stefan Hoops: It exposes some of the retail clients to liquidity pressure that became unexpected. We feel quite bad about what happened. But at the same time, we think it is in the best interest as a fiduciary for all investors to not sell good assets into a very pronounced buyer's market, but to preserve value and then sell it over time. I think it is too recent to speak about any impact on the distribution partners. We were not the first fund to have to gate. in the US, this has been a feature for the last couple of years. Therefore, I would hope that our very strong relationship with distribution partners will not be impacted. But as you would imagine, it was a couple of difficult days because we were only able to inform people once the respective legal entity had taken a decision on Monday.
Stefan Hoops: Therefore, lots of phone calls over the last couple of days.
Russell Quelch: Super. Thanks very much.
Stefan Hoops: Thanks, Russell.
Operator: The next question comes from Michael Sanderson from Barclays. Please go ahead.
Michael Sanderson: Good morning, Stefan. Thank you for taking the question. Just a couple of quick ones. I suppose following on slightly from what Russell was just asking, the active ETF outlook within your expectations for Xtrackers, et cetera. How important is that for maintaining the margin that is required to meet the various targets, and how quickly does that need to scale from the EUR 3 billion? Or is it not as important as I guess some might think? Secondly, I suppose also sticking on the active side, just understanding. Obviously, last quarter you were quite pleased to see the return to active equity inflows. Obviously, the performance has been good and you are still talking about the piece on the private wealth side.
Michael Sanderson: But these institutional mandates that keep turning up to be unhelpful and bring you a headwind, how comfortable are you are these kind of slow at any stage? Is there any comfort you can give us around those numbers? Thank you very much.
Stefan Hoops: Thank you. Good questions. By the way, somebody needs to ask a tough question to Markus, because the fact that you said, "Good morning, Stefan," implies that everyone is asking me tough questions, and I have been up much longer than Markus given that I am in a different time zone. Please ask me tough questions. Now, on active ETFs, where Markus is actually also quite passionate. Firstly, I am not ecstatic by how late we have been to the party in Europe. Right? Arguably, given that we consider ourselves one of the pioneers in the European market, we also should have been a pioneer in that and shouldn't have left it to J.P. Morgan Asset Management, who has done a very good job in Europe.
Stefan Hoops: Now, I think, as all of you know, the market is much smaller and will stay much smaller because you don't have the tax benefits that you have in the US. A lot of shift into active ETF in the US is simply because it gives you tax benefit when you rebalance. You don't have the same gimmick or advantage in Europe, which is why one big selling point simply isn't existent, which is why I would expect it to remain niche-y. I am, for obvious reasons, not a fan of alternative active ETF. I think the lesson learned from open-ended real estate funds is probably that you shouldn't be mixing long-term, long duration illiquid assets with a perception of liquidity, let alone daily liquidity. But look, we would like to grow our active ETF business in Europe.
Stefan Hoops: I have a few things in the pipeline that we are launching, but I don't think that it is going to be a substantial part of our business. It is still less than 1% to the point you made. Now on the active ETF, we are quite pleased with the large fund. I mentioned earlier that we had EUR 600 million of inflows into Top Dividende this year in line with market reform. Overall, the European or specifically German retail franchise is holding up quite nicely. So when you look at our Q3, and you mentioned the institutional mandate which caused the outflow, almost the rest of the balance came from the US retail business, not quite, but the German retail business, for example, was marginally positive in Q3 in inflows into active equity. So we see that this trend is continuing.
Stefan Hoops: By the way, the much better flow picture in equities this year versus prior years has actually led to a quite interesting observation. We don't disclose yet, but do track internally the net new revenues. The net new revenues from outflows are higher in the first 9 months of the year than 2024 and 2025 combined, specifically because of the much better flow picture in equity. So important part of the franchise, I would expect Q4 to be better than Q3.
Michael Sanderson: Thank you.
Operator: The next question comes from Michael Werner from UBS. Please go ahead.
Michael Werner: Thank you guys for the presentation. Two questions from me, please. First, Stefan, I think you mentioned earlier that this year with the tax benefit, you will be in the middle of the range of the 10% to 15% EPS growth. I know there were some tax benefits earlier this year. I was just wondering if you were anticipating any in Q4. Second, I guess, maybe this ties to some of the recent questions on equities, but any indication in terms of the pipeline redemptions that you anticipate either in Q4 or as we migrate into early 2027 would be helpful. Thank you.
Stefan Hoops: I am almost tempted to have Markus answer the first one, but it is an easy no. We do not expect any tax benefit in Q4. It would be silly to hand over to Markus just for the one question. Yes, you got it right, Michael.
Michael Werner: Thank you, Stefan.
Stefan Hoops: You got it right that we would expect clean growth of 10% or maybe a little bit more of EPS this year. We had EUR 4.64 last year, so EUR 5.10 plus we would have achieved cleanly, and then you have the tax benefit on top. That is our current expectation. In terms of redemption, nothing specific comes to mind. As part of the PEIF 2 asset sales, there is one asset left, but I would expect that to be monetized next year, not this year. Right now I do not see any larger redemption from any alternatives or other institutional mandate beyond the typical flow that you have every quarter.
Michael Werner: Thanks, Stefan and Markus.
Stefan Hoops: Yeah. Thank you, Michael.
Operator: There are no more questions at this time. I would now like to turn the conference back over to Oliver Flade for any closing remarks.
Stefan Hoops: Oliver, before you do it, I will count it as a vacation day for Markus. By the way, Mark, you didn't get a say, you did go to Bloomberg this morning. But otherwise it counts as a vacation day. Greetings from Abu Dhabi. Over to Oliver. At least we don't hear anything, Oliver.
Oliver Flade: Sorry. Thank you very much for listening and all the great questions. As usual the IR team stands ready in case there are any open questions left, and otherwise, we wish you all a fantastic day and talk to you very soon. Thank you very much, and bye-bye.
Stefan Hoops: Cheers, everybody. Bye-bye.
Operator: Ladies and gentlemen, the conference is now over. You may now disconnect your lines. Goodbye.
