Acadian Asset Management Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the BrightSphere Investment Group earnings conference call and webcast for the first quarter 2019. During the call, all participants will be in a listen-only mode. After the presentation, we will conduct a question and answer session. To be added to the queue, please press the star followed by one at any time during the call. If you need to reach an operator, please press the star followed by zero. Please note that this call is being recorded today, May 2nd, at 11 a.m. Eastern Time. I would now like to turn the meeting over to Brett Perryman, Head of Investor Relations. Please go ahead, Brett.

Thank you. Good morning, and welcome to Bright Spheres Conference Call to discuss our results for the first quarter ended March 31st, 2019. Before we get started, I would like to note that certain comments made on this call may constitute forward-looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Forward-looking statements are identified by words such as expect, anticipate, may, intends, believes, estimate, projects, and other similar expressions. Such statements involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from these forward-looking statements. These factors include, but are not limited to, the factors described in Bright Sphere's filings made with the Securities and Exchange Commission including our annual report on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 28, 2019, under the heading Risk Factors. Any forward-looking statements that we make on this call are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events. We urge you not to place undue reliance on any forward-looking statements. During this call, we will discuss non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in today's earnings press release, which is available in the Investor Relations section of our website, where you will also find the slides that we will use as part of our discussion this morning. Today's call will be led by Guang Yang, our President and Chief Executive Officer, and Sir and Rana, our Chief Financial Officer. I will now turn the call over to Guang.

Thanks, Brett. Good morning, everyone, and thanks for joining us today. After my first full quarter as CEO, I'm pleased to share our results and update you about our progress. Brightsphere is a strong, diverse business comprised of leading asset managers who offer a wide range of investment products that are in demand globally. We are optimistic about our growth prospects. Our business produced stable results for the first quarter as we benefited from improved equity market conditions and net client cash flows. And our assets under management increased 8% to $222 billion. Looking at the right side of page two, we see many opportunities for growth and expansion within our business. While we currently serve clients across 30 countries, you can see in the first chart that our client base is still predominantly US-based and 76% of assets, compared to 9% in Europe, 5% in Asia, and 5% in Australia. with a tremendous opportunity to grow our client base in key global markets. Similarly, while our revenue mix is both highly diversified and fairly well distributed across asset classes, we believe there is also opportunity to expand our alternative offerings, which currently contribute 21% of our management fee revenue. Quant solutions are an area we believe are particularly in demand in the coming years. We have roughly two-thirds of our revenue coming from alternatives and quant strategies. Turning to slide three and continue on those themes, let me stay back for a moment to discuss the progress we have made so far and where we are positioning the business. As Sura and I discussed on the last quarter call, given the understanding of BridesFair that we brought to our current responsibilities, we are able to hit the ground running in terms of implementing changes that would reposition the business for the next phase of growth. On one hand, we have eliminated a number of positions at the center that we believed were not critical to our mission. On the other hand, we have added team members and resources to areas of growth, which I will talk more about later. As a result of this process, we have built a nimble, efficient structure that is based on an entrepreneurial culture that encourages employees to identify and pursue opportunities to create shareholder value, whether it is by expanding our global sales presence, considering a new platform or product, or finding further efficiencies in how we manage our business. We have also enhanced shareholder value through the repurchase of about 30 million shares and highly accretive prices. We're also in the process of simplifying our business structure by re-domestifying to the US, which should be completed in the next few months. Looking ahead, our business is now better positioned to respond to the growing global demand for solutions, quantitative, and alternative-based strategies. And we will focus on our efforts on enhancing our capabilities in those areas. We believe that investors in international markets like Asia, Europe, Latin America, and the Middle East will increasingly look to us for those type of products. We have added several experienced senior professionals to our global team who have already begun to cultivate relationships with investors, and also to seek partnership and joint venture opportunities in key markets. We're also considering a range of seed capital and emerging manager opportunities in alternative and solution-based areas. And these growth initiatives will become a greater focus of our capital allocation. Turning now to slide four, our financial results for the quarter benefited from a strong market environment, improved NCCF and a fee rate, positive impact from share repurchases, and continued realization of central cost savings. GAAP EPS increased 145% from Q4 2018 as the landmark earn-out was completed last quarter. EMI per share decreased 7% from Q4 2018, impacted largely by a seasonal reduction in performance fee relative to Q4. Market appreciation drove the 8% increase in AUM I mentioned earlier to $222 billion, and while our NCCF on the net best net basis were negative 1.8 billion, producing an annualized revenue impact of negative 5.9 million for the quarter. Our Q1 NCCF improved from the prior quarter, driven by an increase in client inflow of 6.9 billion in Q1 versus 4.3 billion in Q4, and a decrease in outflows which were 8.6 billion in Q1 versus 9.9 billion in Q4. Moving to performance, for our liquid investment strategies, our long-term performance remains strong and consistent with strategies representing 59%, 72%, and 66% of revenue outperforming benchmark on three, five and 10 year basis respectively. Short term performance is little behind as growth outperform value style and our low volatility strategies underperformed in a strong market as they usually do. Our balance sheet is strong and we're actively returning capital to shareholders. We repurchased about 13% of our outstanding shares during the quarter at an average price of $13.28 for a total cost of $179 million. Our 10 cents per share quarterly dividends reflect a consistent dividend policy. And now Soren will provide additional commentary on our financial results. Soren.

Thank you, Guang. Looking at slide five, we compare our key metrics for 1Q19 to the prior four quarters. On this call, I will primarily focus my comparisons on this page and elsewhere in the deck to the prior sequential quarter Q4 2018. And that's to draw your attention to what's different this quarter since we discussed our results in Feb and implemented some of the plans we had mentioned then. Our quarter end AUM increased 8% from Q4 18 to 222 billion, primarily driven by the market recovery. Our average AUM for the quarter was 216 billion, 1.6% lower than the prior quarter. And that was because we started the quarter at a lower base due to the market decline in December. Looking at our fee rates down below, our weighted average fee rate increased from 36.9 bps in Q4-18 to 39 BIPs in Q1-19, which was driven by a higher mix of higher fee global non-US and alternative strategies. And that, in part, was driven by the impact of market appreciation in higher fee asset classes, such as emerging markets equities. Looking at revenues, our management fee revenue increased by 1.7%, from $205 million in Q4 2018 to $209 million driven by the higher fee rate I mentioned. Total revenue decreased 3% from the prior quarter, driven by lower performance fee of about $10 million. And that's typical because typically we would expect higher performance fee in fourth quarter. Our operating margin reduced from 36.6% in 4Q18 to 33.3% this quarter, and that was a result of the lower total revenue due to the lower performance fee. So excluding performance fee, the operating margin declined from 35.1% to 34.5%, and that was driven by the seasonal expenses this quarter, like payroll, taxes, foreign currency, et cetera. We would expect the margin to be 36% on a full year basis. Looking at pre-tax ENI, while the market appreciation increased our management fee revenue this quarter compared to last, our pre-tax ENI reduced from $61 million in 4Q18 to $52 million, and this was primarily driven by the $10 million reduction in performance fees that I mentioned earlier. Excluding that, our pre-tax ENI reduced from $58 million to $55 million, and that was driven by the seasonal operating expenses I mentioned. So looking at EPS, our ENI EPS was helped by the share repurchases we did in 1Q19, though it helped this particular quarter only partially due to averaging of the share count. Our quarter-end share count after the repurchases is approximately 91.9 million shares, whereas our average share count for the quarter was 97.8 million. Our E&I EPS is at 40 cents, down 7% from 4Q18. Excluding the impact of performance fee, it is up 2.4% from 41 cents to 42 cents. So, in summary, in the coming quarters, we would expect fuller benefit of the lower share count, though there may be some movements from options, et cetera, at higher prices. And in the coming quarters, we would expect operating expenses and performance fees to normalize. Moving to investment performance, slide six shows the performance of our liquid strategies, which excludes our alternative strategies like the ones we have at Landmark, Campbell Global, and some at Acadian. As Guang noted earlier, we continue to see strong and consistent long-term performance in both our liquid strategies and illiquid strategies. On the liquid strategies, strategies representing 59%, 72%, and 66% of revenue outperformed their benchmarks on a 3-, 5-, and 10-year basis, respectively. Note that we have now added our 10-year performance and swapped out one-year performance. We find that our clients have long-term horizons, so long-term performance is more meaningful for our business. We have footnoted one-year performance on this page for reference, which, as Guang mentioned earlier, was impacted this quarter due to value and low vol styles underperforming broad market benchmarks. which is what you would expect in a quickly rising market. If we move to slide seven, we show our net client cash flows and revenue impact of those flows, which improved significantly from Q4 2018. Our growth sales increased from 4.3 billion in Q4 2018 to 6.9 billion, while our growth outflows also improved. producing from $9.9 billion to $8.6 billion. The revenue impact of the flows is also better than last quarter at $5.9 million, or 0.8% of our revenue. On slide eight, we show breakout of our flows by asset class. Our higher fee global non-U.S. strategies, and this is on the left side of the slide, showed positive flows in 1Q19, and alternatives continue to have positive flows. Our U.S. equity net outflows improved, too, with more inflows and lower outflows than last quarter. In 4Q18, U.S. equity flows were impacted by the industry-wide retail outflow, which impacted our subadvisory business. Now, as Guang mentioned earlier, growing our net client cash flows is the area where we are focusing our resources and energy on going forward. We're adding sales and product development resources in key growth markets like Asia, Middle East, Latin. We're discussing potential partnerships with key clients and new channels. And we're continuing to further develop the products that we have seeded at our affiliates. In 1Q19, we saw meaningful sales from a solutions-driven strategy that we had incubated and that's getting great traction from our clients, which in part drove our higher inflows this quarter. And finally, we are working on adding more in-demand products that our clients are asking for, like quantitative strategies, solutions, and alternatives. So to summarize the thought here, as Guang mentioned earlier, more than two-thirds of our AUM is already in high-growth segments, that enjoy secular tailwinds. And we're looking to increase this proportion by adding more in-demand products and selling them deeper in more markets and more channels. Moving to slide nine, we show the breakup of our management fee revenue and fee rates by asset class. The overall trend was a continuation of the positive mixed shift toward higher fee assets driven by, in part, market appreciation in those assets. Our ENI management fee revenue increased 1.7 percent from $204 million to $207 million. On slide 10, we provide perspective regarding ENI operating expenses. Total ENI expenses increased by $2.4 million, driven by the seasonal payroll, taxes, and currency, et cetera, that are one-off for the quarter. We have continued to invest in affiliate growth initiatives and projects like technology upgrade at Acadian and adding talent at our other affiliates. This investment was offset by lower costs at the center. The center savings remain at the 8 to 10 million annual run rate we mentioned last quarter. We are adding more growth resources in global distribution and business development at the center, but that investment is coming from continued reallocation from other areas. The ratio of operating expenses to management fees was relatively stable at 42.7%, and we expect this ratio on a full year basis to be around 42%. Moving to slide 11, we show the next driver of profitability, which is variable compensation. We expect this ratio on a full year basis to be around 40%, while there may be some end of quarter noise. On slide 12, we show affiliate key employee distributions, which represent the share of affiliate profits owned by the key employees at the affiliates. This ratio is primarily driven by the mix of where our earnings come from as affiliate distributions are formulated. For full year 2019, we expect this ratio to be 19%. Finally, on slide 13, we present a summary of our balance sheet and capital position as of March 31. Some items I will point out are our cash reduced and our third-party borrowing increased, to account for a few items. One, the payment of landmark earn out, which was an expected line. The share repurchases that we did of about 180 million this quarter. And we paid out the accrued variable comp. We have drawn about 235 million on our revolver and have 115 million available. Our net leverage ratio which is net debt to adjusted EBITDA ratio, was 2.1x as of March 31. Now, I'd like to turn the call back to the operator. We're happy to answer any questions you may have.

At this time, those with questions should lift their phone receiver and press star, followed by the number 1 key on their telephone keypad. To cancel a question, press the number sign. Please hold for a brief moment while we compile the Q&A roster. Your first question comes from Craig Siegenthaler with Credit Suisse. Your line is open.

Good morning, Guang. Soren. Hi, Craig.

Morning, Craig. First, I just wanted to circle back to the joint venture opportunities. Is the focus here mainly China, where this is still a requirement, or are you searching for partners in other geographies, too?

I think both. I mean, in terms of China, as you know, for the mutual fund business, you have to have a joint venture. The foreigners can own up to 51%, so you still need to have the local shareholders to be that 49% or combined 49%. But if you're looking at institutional business, not the retail business, we could own up to 100%. But for that, we were still likely to partner with someone because it would be very expensive to build a distribution channel ourselves. And so we have been talking to a number of institutions. There is a strong interest to team up with Bridesphere. And actually, we see that same initial interest from other markets as well. other geographies because those institutions are really impressed by over 100 strategies our affiliates collectively offer.

Got it. And just as my follow-up on the global distribution expansion, I wanted to get a better feel for the size. Could you share with us how many senior salespeople you employ today, and what this number was a year ago, and also give us some color in terms of how you're expecting to expand this number in terms of actually salespeople outside of the U.S.?

There are a couple of things I would comment there. One is that we're really looking at building high-level firm-to-firm relationships with some of the large institutions outside of the U.S., As you can tell which is something we as a firm did not do in the past So in terms of you know very high level experienced relationship Team members you're not talking about the quantity. It's really the quality and since since our call February we have been able to implement that strategy and we have been able to identify and be able to bring on board a number of those very senior experienced team members. But in terms of the cost, we're now looking at a huge amount of cost because like we mentioned, We're creating more entrepreneurial structure and culture here. We will try to keep the fixed cost as low as possible, but with very large variable compensation if they can deliver. So for the purpose of you considering our incremental cost, there will be incremental cost. It's not going to be a very big number, and also particularly Like Soren said, for us, it's more like allocating our resources from other parts of the organization really to the growth part.

Got it. Thank you for taking my question. Thanks, Greg.

Your next question comes from Bill Katz with Citi. Your line is open.

Thanks very much. I was wondering if you could just maybe, and maybe I misapologize, it's a busy morning, on the performance fee reversing going negative, and I'm wondering as I look at the performance across your buckets, it seemed like the alternative performance was relatively flat against what's some pretty good comps among many of the peers out there. I was wondering if you could maybe dive into the drivers behind those two elements, if you don't mind.

Bill, you're talking about our alternatives performance? Yes.

We haven't disclosed our alternative performance on a quarter basis, so maybe you could refer me to a particular point.

I'm looking at your AUM roll forward, and you show the component pieces to that, so if I look at the market or the NAV contribution, that was relatively flattish, I believe, and just given just very strong marks in real assets, private equity, credit, infrastructure, among many of the larger players. I'm just wondering what may have happened there, and did that affect the performance fee number in the quarter?

Thanks, Bill. No, actually, the performance fee in particular wasn't landmark related. It's just that in Q4, typically a lot of these measurements happen, and it's more from other affiliates. At our alternative platforms, as you know, in the alternatives business, it's lumpy and the marks may not necessarily track public markets and often don't. So the data that you see there in the flows, I would say, is not reflective of the performance. The performance has been consistent and Landmark has been able to deploy capital in attractive opportunities faster than expected and are getting great appetite from clients for new strategies.

Okay, and this may be one big picture question. So would your leverage ratio now at 2.3 times, maybe a two-part question, What kind of contingencies do you have through the financial statement to the extent we would go through any kind of downturn in the equity markets? And then secondly, how are you thinking about such growth from here? Is there capacity to do more deals or is it more of the de novo opportunity that you were sort of speaking to in terms of developing your sales and deeper penetration outside the United States?

Yes, certainly. So from a leverage perspective, we want to continue to stay in the 1.75 to 2.25 range that we have articulated in the past. And part of the reason for that is exactly that we want to keep some conservatism for downturn scenarios. So in terms of funding the growth, we have cash flows coming – from our business, which is strong, we would look to use that to fund our growth investments. And opportunistically, if you have really attractive opportunities, we may use some more of our revolver on a temporary basis, keeping in mind the larger leverage considerations.

Thank you.

Your next question is from Robert Lee with KBW. Your line is open.

Great. Good morning. Thanks for taking my question. I guess the first one maybe is following up the bills. Maybe it's a little bit more short-term and tactical, but on the capital front, since you're kind of bumping up against the high end of your targeted range, is it kind of reasonable to assume that – incrementally at this point, you know, maybe cash flow over the balance of the year may be more dedicated towards getting your debt back down towards kind of the midpoint of your range, or just want to think about that kind of in the near term.

Yeah, so we want to use our cash flow primarily toward our growth strategy, and as we've articulated, that about a good chunk of our business is already benefiting from from being in the right growth segments that are seeing demand from clients. And we want to develop that further. So we're looking at adding to our capabilities, adding more alternative capabilities. We're looking at various teams and platforms to bring them on board here. We're looking at our distribution capabilities, both organic and partnership and other approaches. So we would want to deploy capital to that effort rather than paying down debt. We are comfortable where we are on our current debt. And as our EBITDA grows from these growth efforts, we would see that ratio come down. And as I said earlier, we also... I wouldn't say that if compelling opportunities come up, we would selectively consider going above the ranges for the right opportunity.

Okay, thanks. Maybe as a follow-up on some of the growth initiatives, particularly kind of reinvesting back in global distribution in different ways, could you talk a little bit about you know, what the affiliate buy-in may be. I mean, one of my impressions may be incorrect is that I guess in the past, you know, one of the challenges is that maybe not every affiliate, you know, made use of or bought into the global distribution capability as it was, but, you know, maybe to the extent it would have been hoped. I mean, is that the case? Is Arcadian and Barrow and everyone else kind of, you know, all in on this, or is there still some convincing that has to be done with some affiliates?

I would say this. I mean, as you know, we have a very strong collection of very strong affiliates, and some of them already have very good presence in many markets, including some of those markets outside the U.S., and some has less presence outside the U.S. But all together, I think a combined entity which manage over 220 billion U.S. dollars is very important in terms of reaching out and open the door to talk to some of those large clients outside the U.S. So for that, I think we have a buy-in, the term you used, from our affiliates. In terms of exactly how we work with them, it will vary from market to market, but I would say overall, in some of those global markets, there is a strong benefit for everyone to work together.

And I will add one thing. I guess if you look at our business, we have three broad buckets. We have quantitative strategies and solutions, which is largely at Acadian. Then we have alternatives at Landmark and Campbell Global. And then we have some of the active alpha managers. And all three require a slightly different kind of a sales approach. And thankfully, we do have specialist salespeople sitting in each of these three buckets. And as Guang pointed out, we need some generalist salespeople to open the doors for the specialist salespeople. So we do have all of the right pieces of the puzzle, but to really get to the right endgame, you do need the generalists as well as specialists. And that's the model we're working toward.

Great. And maybe just one follow-up. Strategically, a bunch of years ago, the firm made a decision to kind of access U.S. retail, at least, predominantly through sub-advisory relationships, and clearly some of them at Barrow are very longstanding. But given changes in a lot of intermediary distribution and A lot of your peers talk about it becoming a more institutional type sale to head offices. Is there any thought or opportunity that rethinking the retail strategy in the U.S. with some of your affiliates? You could maybe see products at an Arcadian, for example, could have interest in different channels. Is that an area of investment or something not on the drawing board at this point? Sure.

Yes, it absolutely is. Because if you see, if you look at our mix, we have great products in all those three buckets that I mentioned in quantum solutions, in alternatives, and in active managers, but we're selling them almost exclusively in institutional channels. So retail is a relatively untapped opportunity for us, and those products, as we understand from feedback, would be in high demand. But you're right that rather than building boots on the ground army, we are more focused on having partnerships, joint ventures, and the like to access that opportunity. We do, for example, have advisory business to access the retail opportunity. we want to expand that effort and look at other types of partnerships which can give us access to the retail business.

Thanks for taking my questions.

Your next question comes from Patrick David with Autonomous Research. Your line is open.

Good morning. I think this might have come up earlier, so I apologize if you already said it, but were you talking about the potential for some step-out strategies at Landmark coming to the market soon or something else?

As a general matter, we don't comment on fundraisings. But what we've said is that we are pleased with the capital deployment and our clients are pleased. And we're always looking to expand each of our businesses in adjacent strategies that make sense for the client.

Okay, thanks. And then the bond outflow accelerated pretty meaningfully in a quarter when most active bond managers have pretty good inflows. Is there something unique to that or a particular product that saw a big outflow?

You're looking at our U.S. equity?

No, fixed income. bonds. Right. Yeah, I mean fixed income is there's no pattern there. You know, just one-off lumpy outflow depending on the specific situation of that particular client. So it would happen every once in a while.

Okay. Last one real quick. You mentioned the one-seeded product traction. Could you update us on the pipeline of other kind of seeded products that might be reaching the point of increased saleability?

There are a few products that we have seeded and incubated and developed that are starting to reach the key milestones. And so I guess solutions, broadly speaking, is an area where either we're providing a multi-asset capability or specific single-factor exposure to clients. So there we are seeing good traction. We've already seen some closings and we have a nice pipeline developing. On the active equity side, too, we're seeing strong interest from clients on emerging markets, equities, on global equities, And we're seeing some green shoots for large-cap value, too, where people think that clients are interested in seeing if that's a good opportunity because it's now been the longest period during which value has underperformed growth. And then we're seeing interest also in our various alternative strategies

Thank you.

Your next question is from Chris Harris with Wells Fargo. Your line is open.

Thanks. So I appreciate all the comments about the strategy. I can't imagine it's all that easy for a U.S.-based manager to grow outside the U.S. It sounds like some of what you're trying to do is through partnerships. So I guess what I'm wondering is how long might it take for some of these partnerships to come together? And then what are some of the other potential challenges you might face trying to drive faster growth outside the U.S., and how do you plan to overcome those?

So on the February call, we told you that that's our focus going forward to build our team outside the U.S. We have done that. The team is actively locking on the door and meeting I would say many large institutions outside of the U.S. Some of those meetings already kind of going on for a few rounds already. And we think we probably will be able to reach some of those agreements that we can disclose within this year. But it's hard to put a time frame on it. All I would say is that For many institutions outside of the U.S., they are quite impressed by the fact that we have over 100 strategies within BridesFair group. And some of those strategies are kind of in the interest where they say they have a demand for. For example, quant, when we talk about alternatives. when we talk about solutions. And just the story was not previously told to those institutions.

So that's what I would say.

Hopefully we will have some milestone within this year.

Okay, very good.

And then sort of another question on non-U.S., Do you guys think that Brexit is a material impediment to your global equity business? And obviously asking that question because I'm wondering if maybe we get a resolution to that that could potentially be a catalyst for your flows.

We obviously, like other asset managers, we have been aware of this for a long time and have done a lot of contingency planning around Brexit. the final shape will eventually depend on what really happens. But we have been prepared and have all the ducks in a row, if you will, for whatever outcome may come.

Well, I guess what I'm asking is, do you think it's had a negative impact on your flows?

No, I don't think Brexit itself has impacted us because in a way it's more... UK itself was never a big part of our business, and we were using UK as one of the bases for our global distribution sales force, which we have workarounds for. So we haven't seen any direct impact of Brexit on our sales efforts.

Okay, thanks.

Your next question is from Kenneth Lee with RPC Capital Markets. Your line is open.

Hi. Thanks for taking my question. Just to follow up on the prepared remarks, wondering if you could just further flesh out how you intend to meaningfully expand the alternatives exposure for the company over the next, call it, one to two years. It's sounding as if it's mainly through organic growth, seeding new products, especially through Acadian, but Wondering whether it could potentially be inorganic opportunities as well. Thanks.

Both. We will continue to see new products in alternative space, in the solution space, through our current failures. But also, we will be open to looking at emerging managers where they They have a good team, have a good track record, but they don't really have a scale. And with our global reach and distribution and plus our safe capital, if we can help them to really grow, that would be something interesting to us as well.

Okay, very helpful.

And just one follow-up on the potential to expand your presence in Asia. What sorts of distribution channels are you looking to gain exposure there? I would presume it would probably be likely the banks channel, and if so, What sorts of JV partner are you looking for right now? Would it be sort of like along the lines of a major bank or another asset manager? Thanks.

Yeah, I would say bank would be very attractive for us, or even their wealth management platform owned by one of those banks would be interesting. Insurance companies would be interesting as well. Pretty much anyone who has the distribution channel or who can allocate a meaningful amount of AUM to work with us, we would be interested.

Okay, great. Very helpful. Thanks again.

Your next question is from Michael with Morgan Stanley. Your line is open.

Hi, good morning. You mentioned solutions as one of the areas of growth that you see. I'm just curious if you could talk a little bit about the capabilities on the solutions front that you have today, how much in AUM. I think you mentioned it's part at Acadian. If you can also talk about how you envision evolving your approach to distribution with respect to solutions capabilities. What do you need to do differently in the marketplace today to accelerate growth within solutions?

Thanks, Mike. We've always had strong investment capabilities on the solutions side, particularly at Acadian, for example, but also at our other affiliates. But on the distribution side, it wasn't as organized an effort as it could be. So for example, the multi-asset class product, we have products that are customized for clients to be low vols. So these are products in general that are responding not to be beating a particular benchmark, but essentially to provide a particular exposure that a client is seeking, whether it's through combining different asset classes to provide yield with specific parameters. So we do have that at a number of our affiliates, and as we have spoken with clients around the globe and potential partners around the globe, there is strong appetite there. So it's one of those things where we have both sides, and we just really need to work harder and have the right infrastructure to make the match. But we already have sizable presence.

Got it. Okay, and just maybe peeling the onion back a little bit more on the approach distribution. I think historically a lot of distribution has been done out of each of the individual affiliates with respect to institutional distribution. How do you see that sort of approach? You mentioned maybe doing things a little bit more – maybe more partner-esque, I think, collaboratively, maybe to put words in your mouth, if I may. I think you mentioned the word partner there. I guess just how do you see that approach evolving? Would you see doing more out of the center? And how do you see shifting your approach to distribution of the firm?

Yeah, I mean, as I touched on earlier, we do think that, broadly speaking, we do have some highly customized and specialized products selling which do require specialized approaches. So we do have specialist sales force for our quantitative strategies and solutions. Strategies we have specialist sales force obviously for alternatives and same goes for our differentiated equities. But these specialists don't necessarily have the expertise or focus for the kinds of the general relationship management with a particular client on a broader basis. Similarly, potential partnerships beyond just products. So those are the types of things that we will focus at the center to have partnerships and joint ventures and other forms of cooperation with clients that go beyond one product. to maintain the relationships with the clients at the right levels so that as we have products that are in demand and as we develop more products, the doors are open at those clients to be receptive as opposed to a mandate-driven one-off sale at a time.

Thank you. And if I may, just one quick cleanup question on investment performance. I saw you footnote at the one-year percent beating the benchmark on slide six, 27% on a revenue-weighted basis. Do you have what that is on an equal-weighted basis, an asset-weighted basis in terms of investment performance on the one-year bench?

Yeah, I don't have it handy right now, but we'll get that number to you. But, yes, on the one-year number, because it's directionally probably similar, because in the one year, as we mentioned, that the growth strategies obviously did well in this quarter with a quick market recovery compared to value, and the benchmarks were broad rather than value-specific. Similarly, for a low volatility strategy, even though clients want... longer-term performance on low volatility, as opposed to every quarter, because volatility is the main objective there, the benchmarks were broad. So clients would expect that, and we expected that, that in this kind of a quarter with a quick market recovery, those would be the performances of the strategy. Great. Thanks for taking my questions.

Your next question is from Michael Carrier with Bank of America, Merrill Lynch. Your line is open.

Thanks for taking the question. Given the focus on the international and the institutional distribution, just any color on the institutional pipeline or RFP activity, just any progress being made thus far?

Certainly, there is

There is good pipeline that we have in our strategies, particularly the new products that have, as I mentioned, that have matured and have performance track records that are longer. So we're seeing a good pipeline there that I mentioned, many of them on the solution side, some of them emerging markets and global strategies. And we're starting to see some RFE activity for large cap value, too. So that could be a sign. But overall, it's a very healthy pipeline.

Okay. Thanks a lot.

This concludes our question and answer session. I'd like to turn the conference back over to Wang Yang.

Okay, thank you all. Let me just say this. The bright spirit is we will be very focused on continuing to create value for our shareholders, and we're super excited about our growth prospect. Thank you for joining us today.