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 second 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 1 at any time during the call. If you need to reach an operator, please press the star followed by 0. Please note that this call is being recorded today, August 1st, 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 BrightSphere's conference call to discuss our results for the second quarter ended June 30, 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 provision under the Private Securities Litigation Reform Act of 1995. Forward-looking statements are identified by words such as expect, anticipate, may, intends, believes, estimate, project, 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 BrightSphere'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 under-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 Cern 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. We are pleased to share our results for the quarter and to update you on our progress in executing our long-term growth strategy. My initial focus as CEO was to quickly resize and refocus the business. That critical work was largely completed in spring. Since then, our team has spent significant time realigning our business strategy with the opportunities we see in both expanding distribution in key global markets as well as increasing our product offerings in high demand through safe investments and acquisitions. Our board is supportive of and excited about our growth plan, and we're making good progress in executing it, as I will share with you today. Turning to slide two of our presentation, Our assets under management grew to $225 billion this quarter as equity markets produced solid returns despite some volatility during the quarter. The breadth of our product offerings, which includes over 100 investment strategies, is receiving increasing interest in the global markets we're targeting, including China, Latin America, and the Middle East. The chart on the furthest right of the page provides a breakdown of our management fee revenue by asset class. We are diversified in terms of sources of our revenue. At a higher level, given the types of investment strategies our affiliates employ, Global investors we're speaking with appreciate our affiliates' long-term track records of alpha generation in quantitative solutions, alternatives, and liquid alpha investments. About two-thirds of our revenue currently comes from quant slash solutions and alternatives, an area we think will continue to be in strong demand globally. We see significant opportunities to increase those segments through adding sales as well as product development and acquisition. According to slide three, as I mentioned, BridesFair has made significant progress in simplifying and streamlining our business, including our governance and operations. which was a key goal for us this year. We are also pleased to return significant capital to shareholders during this time as well. Today, Brightsphere is more nimble and entrepreneurial as a business and in the execution of our growth strategy. Our global distribution team has been very active in cultivating relationships with investors in a number of international markets. While the US-China trade negotiations have slowed execution in China, it is widely reported that China has a strong interest in opening its asset management sector over the near term. Our team has met with senior executives at many major Chinese financial institutions. We're optimistic that once greater political uncertainty is achieved, we will be able to execute on a range of new business opportunities, including investments, partnerships, and potential joint ventures. Similarly, we have added senior distribution team members in Latin America and the Middle East. They have relationships with the sovereign wealth pension and corporate investors in those regions. Our meetings have been productive and we're seeing interest in a range of affiliate products, particularly in the solutions and alternative areas. We're also looking at a number of ways to expand our U.S. distribution capabilities, particularly in the insurance segment where we believe there is a demand for our offerings. From a capital management standpoint, we're committed to allocating our capital to maximize long-term growth for our shareholders. We're focused on enhancing our investment capabilities in demand, particularly solutions and alternatives-based strategies by developing them internally through seed and co-investment, and acquiring new capacity as well. Brightsphere has a strong track record of using our seed capital to leverage our affiliates' investment expertise into new asset classes, geographies, and clientele. We have helped affiliates build strategies to address clients' needs in a range of market environments. including quantitative and solution-oriented products such as multi-asset costs, China A-shares, and low volatility strategies, as well as other illiquid alternative strategies. Currently, about $30 billion of our assets under management are in seeded and co-invested products. which have also contributed approximately 2.8 billion to gross sales for the year to date. We are currently engaged across the Freelance Group on continued innovation in a range of areas. We also have an active pipeline of acquisition opportunities. Our flexible and opportunistic approach has enabled us to engage with a range of high-quality asset managers, from potential standalone affiliates to smaller organizations or teams that could be housed at the center or one of our affiliates. We have met with a number of managers with strong track records in high-demand alternative and solution strategies, including liquid alternatives, credit, and infrastructure. These opportunities range in size and clientele, including institutional and retail in the US and internationally. Turning now to slide four, our financial results for the quarter benefited from a strong market environment, positive impact from share repurchases, and continued realization of central cost savings. Our ENI per share increased almost 13% from Q1 2019. Market appreciation drove the 1.2% increase in AUM to $225 billion. Our net client cash flows were negative $2.9 billion, producing an annualized revenue impact of negative $14.4 million for the quarter. While we're encouraged to say our growth outflow declined from Q1-19, we also saw slower sales and affiliates continue to rebuild their pipeline after a strong first quarter. Moving to performance for our liquid investment strategies, our long-term performance remains strong and consistent with strategies representing 65% 69% and 77% of revenue outperforming benchmarks on a 3-, 5-, and 10-year basis, respectively. In addition, our illiquid strategies maintained strong and consistent performance. Our balance sheet is strong and we're actively returning capital to shareholders. We repurchased approximately 300,000 shares for about $3 million during the second quarter, bringing our total for the year to 13 million shares, or about 13% of our shares outstanding. We will continue to opportunistically repurchase our stock as appropriate as part of our overall capital management strategy. we will continue to return value to the shareholders through consistent quarterly dividends of 10 cents per share. And now Soren will provide additional commentary on our results. Soren. Thank you, Guang.