Acadian Asset Management Inc.

Ladies and gentlemen, thank you for standing by. Welcome to BrightSphere Investment Group Earnings conference call and webcast for the third 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 this call is being recorded today, November 5th, at 11.30 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 third quarter ended September 30th, 2019. Speaking up on slide three of our new investor deck, before we get started, please note that we may make forward-looking statements about our future business and financial performance. Each forward-looking statement is subject to risks and uncertainties that could cause actual results to differ materially from those projected. Additional information regarding these factors appears in our SEC filings, including the Form 8-K filed today containing our earnings release and in our 2018 Form 10-K. Any forward-looking statements that we make on this call are based on assumptions as of and we undertake no obligation to update them as a result of new information or future events. We will also reference certain non-GAAP financial measures. Information about any non-GAAP financial measures referenced, including a reconciliation of those measures to GAAP measures, can be found on our website along with the slides that we are using as part of today's discussion. Guang Yang, our President and Chief Executive Officer, and Sir and Rana, our Chief Financial Officer, will lead the call. and now I'm pleased to turn the call over to Guo.

Thanks, Brett. Good morning, everyone, and thanks for joining us today. Let me begin on slide five of the presentation by walking through some of the highlights for the third quarter. We reported E&I per share of 42 cents for the third quarter compared to 45 for the second quarter. The three cents difference quarter over quarter is attributable to higher placement agent fees and equity market depreciation across some non-U.S. regions. Our outflow of $6.2 billion for the quarter were largely concentrated in lower fees of advisory accounts with about $2 billion related to victories acquisition of USAA and the related reallocations. and another $2 billion related to continued real allocation from a specific client in the U.S. large-cap equity subadvisory space. Looking forward, with a potent business mix concentrated in high-growth segments of the industry, we remain confident in our organic AUM and revenue growth prospects, particularly as investor interest remains high across many of our quantitative strategies and our alternative strategies approach their next vintage fundraising cycle over the next few quarters. Turning to slide six, we have made considerable and measurable progress in refocusing our business since the beginning of 2019 and returned substantial value to shareholders along the way. Streamlining our central resources has generated $8 to $10 million in annual expense savings. As a result, Brightsphere is now a much more nimble and efficient company with an entrepreneurial and performance-driven culture. Our senior management team continues to be aligned with shareholders through a compensation structure focused on out-of-the-money options that keep related costs low and incentivize us to remain focused on creating value for our shareholders. Turning to capital management, our substantial free cash flow, combined with the new 450 million credit facility, provides us with ample financial flexibility. This quarter, we increased both the size and lender participation in our new facility, which includes a broad range of leading U.S. and international financial institutions. We remain prudent with respect to leverage levels and repaid $35 million of indebtedness in the third quarter bring our net debt to adjusted EBITDA level to 1.8 times. Also, we repurchased 16.6 million shares this year through the end of third quarter, with additional 2.7 million shares fall back thus far in the fourth quarter. We have spent approximately $250 million today to share repurchase, generating earnings accretion of 13%. Going forward, we will remain a balanced capital management approach, focused on growth investments, which I will discuss in a moment, as well as opportunistic share repurchases as appropriate. Our growth strategy is online on slide seven and has four main components. The first is to leverage our high-growth business mix, which provides broad participation in attractive in-demand segments of the industry. We have simplified our financial reporting to align with how we think about our firm, our differentiation, and our growth We believe this approach will further increase the transparency of our business model and better illustrate the underlying progress across our quantum solutions, alternatives, and the liquid alpha segments. A key differentiating factor for BrightSphere and our organic growth outlook is that 66% of our management fee revenue is derived from the quant and solutions and alternative segments, nicely aligning with secular demand trends. Second, we're focused on expanding our capabilities in high demand, higher fee areas. Seed and core investments remain key levers to diversify our affiliate business and provide greater stability across the franchise. while also positioning us to participate more broadly in high-growth, higher-faith segments of the industry. Cited products building momentum, including quantum solutions, single-factor, multi-asset class, and China A-shares strategies, as well as liquid alpha, emerging markets, equity, and leveraged loan capabilities. These and other basic seeded products are expected to generate upwards of 3 billion in gross inflow in 2019 and into early 2020. We continue to innovate alongside our affiliates and have several alternative strategies currently in development as well. In addition to working with individual affiliates, I'm excited to share that we're working with Mercer to develop a series of customized investment solutions to address the long-term return investment needs of institutional investors worldwide. Those bespoke strategies would bring together BrightSphere's highly regarded suite of investment capabilities with Mercer's industry-leading OCIO expertise to provide attractively priced open architecture investment framework. Early reaction among select global clients have been very positive and we're optimistic about the potential for this new alliance. Our business model provides a unique advantage in offering this type of product. as we can bring together the independent investment process and philosophy of seven distinct, highly specialized firms into a single point of access for investors. Moving on, we are actively engaged in cultivating relationships with a range of high-quality teams, platforms, and businesses with complementary investment capabilities including liquid alternative, credit, and infrastructure. We have entered into late stage discussions with several attractive businesses and are pleased with our progress today. As with all elements of our business, we will continue to maintain a strict return discipline in evaluating all potential transactions. Third, we remain focused on increasingly penetrating growing markets in key areas of the world. Our global team has established multi-level relationships with many of the world's largest banks, sovereign wealth funds, and family offices in markets such as China, Latin America, Europe, and the Middle East. In addition, this quarter, we expanded our U.S. coverage to include the insurance general account segments. More and more insurance companies are looking to outsource their investment needs to high-performing specialists like our affiliates. Finally, in everything we do, we remain focused on creating value for our shareholders. Our strong, recurring free cash flow from operations supplemented by prudent levels of leverage, provides financial flexibility to fund our growth initiatives and opportunistic share repurchases. And we have infused the organization with a rigorous expense discipline that is focused on real allocating resources to maximize growth. Thank you once again, and now let me turn the call over to Soren to discuss our results in greater detail.

Soren. Thanks, Guang. Turning to slide nine, we provide an overview of our three segments, which we believe best reflect the three distinct parts of our business. This enhanced segment disclosure will provide investors more transparency on our differentiated business mix and better identify the growth drivers going forward. It also allows the investors to see the progress across each of our key business lines at a more detailed level. As an aside, and in case you're wondering, we will continue to provide asset class level AUM disclosure that we have provided historically, and you will see it in the 10Q. So turning back to the segments, the Quant and Solutions segment shown on the left-hand side on this slide, includes strategies where we are leveraging highly sophisticated proprietary technology to process vast amount of data to deliver strategies and solutions to our clients that are tailored to achieve their specific risk and return objectives. For example, our affiliate Acadian has consistently invested in its technology for decades to allow them to isolate and deploy a multitude of factors across asset classes, geographies, and currencies that can best produce the outcomes sought by the client. We see strong secular tailwinds supporting this segment as clients are increasingly seeking differentiated capabilities. This segment should also benefit as clients continue to ask for highly customized solutions for their target outcomes instead of prepackaged offerings. The strategies in this segment such as low volatility, multi-asset class, multi-alpha single factor, multi-asset income are all highly scalable and provide tens of billions of dollars of capacity to meet the growing global demands. Our alternative segment in the middle column primarily comprises private market strategies like private equity, real estate, and real assets such as forestry. Most of our revenue in this segment comes from stable management fees from long-term committed capital and not performance fees. These strategies continue to enjoy strong demand from institutional investors, which we believe will drive meaningful organic growth for us going forward, particularly as several of our strategies approach their next vintage fundraising cycles over the next few quarters, which will grow our AUM in this segment between 2020 and 2022. By way of reference, we raised approximately $12.5 billion in our alternative strategies in 2016 to 2018 fundraising cycle. The liquid alpha segment on the rightmost column includes a diverse mix of fundamental long-only public security investments across a range of asset classes, geographies, and capitalization ranges. In this segment, we have proven track record of our performance across market cycles over long periods of time. While we have seen elevated outflows in this segment from low fee U.S. equities of advisory area, we continue to develop and feed higher fee, higher margin strategies, such as emerging markets, global equity, and leveraged loans. As a result, our margins in this segment continue to be healthy. So looking at our three segments and the fact that quantum solutions and alternative segments that together comprise two-thirds of our revenue are enjoying strong secular tailwinds, and our liquid alpha segment nicely complements our overall business, It positions the company very well to produce strong organic growth. We would expect quantum solutions and alternative segment to account for more than 80% of our business in the coming years and generate strong revenue and earnings growth for the company as a whole. We also continue to seed and are also open to acquiring new in-demand strategies, particularly in those two segments, which we expect to generate additional growth on top of our current positioning. And we're taking these in-demand strategies to new geographies, such as Asia, and new channels, such as insurance, as Guang earlier mentioned. So this diversified business mix and our suite of 100-plus strategies across these three segments enables us to offer to our clients comprehensive products like Total Solutions that Guang mentioned. And these kind of products show the true power of our multi-affiliate model. And also, this diversified business mix produces very strong cash flow, which we can continue to use to repurchase our shares and generate additional EPS growth. So to summarize on this slide, our comprehensive and differentiated business mix is well-positioned to produce organic growth and we continue to invest in new products in these two areas, which we expect to generate additional growth. Now, turning to each of the segments individually, on slide 10, we show the results for the quarter from our quant and solution segments. This segment continues to generate positive flows, given the trends favoring differentiated strategies and solutions that I touched on earlier. And while there could be inter-quarter movements from time to time, this segment should continue to generate strong long-term organic growth. The adjusted EBITDA in the segment remained consistent as last quarter at 35.9 million. And the drop in EBITDA compared to a year-ago quarter was driven by 4Q18 market decline. Turning to the alternative segment on next slide, slide 11, This segment has produced strong growth for us, generating 12 and a half billion of high fee flows between 2016 and 2018 that I touched on earlier. So coming off of that strong AUM growth, 2019 has been primarily focused on deployment of capital. And as I mentioned earlier, we would expect to get back to growing our AUM in this segment between 2020 and 22. as multiple strategies are nearing their next vintage fundraisers. And our track record continues to be very strong. As you will note from the pie chart on the left, most of our AUM in this business is invested in private market strategies, in private equity, real estate, and real assets. Relatedly, the pie chart on the right shows that most of our AUM in this segment comes from long-term capital, either in commingled funds or separate accounts. Additionally, 90 to 95% of our revenue in this segment comes from management fees and not performance fees. The adjusted EBITDA for this segment came down from $12.1 million last quarter to $8.8 million, primarily due to the timing of the outsized placement agent fee that Juan mentioned earlier. And the revenue and EBITDA versus a year-ago quarter are lower due to absence of catch-up fees. As we have mentioned in the past, the funds raised in 2018 generated catch-up fees accruing from the time of first closings of those vintages, which were in 2016 and 2017. This year, we do not have any catch-up fees as we completed the fundraising of those vintages in 2018. Having said that, this dynamic will reverse in 2022 between 2020 and 22 when we start fundraising with new vintages. Turning to our third segment, liquid alpha segment on slide 12, this segment has generated and maintained strong long-term investment performance for clients over long time periods through high-quality teams and disciplined investment processes. As we touched on earlier, we saw elevated flows this quarter of $6.8 billion, of which approximately $2 billion was related to Victory's acquisition of USAA, and $2 billion was from continued reallocation by a specific sub-advisory client in the U.S. large-cap strategy. While the Victory USAA transaction was episodic in one time, we do expect to see more outflows from the client in U.S. large-cap strategy for next several quarters. So while the latter issue is not one time, it is a finite issue given that it's only one client. And having said all that, these outflows are generally, as we have mentioned, from low-fee strategies. And we continue to see inflows in higher-fee strategies. As a result of this diversification into high-fee strategies and continued expense discipline, our margins in this segment continue to be very healthy. Moving to slide 13, where we compare our key metrics for Q319 to prior quarters on a consolidated basis, I want to call out on this slide our weighted average fee rate on the bottom left-hand side, which decreased from 37.5 bps in Q219 to 35.9 bps this quarter. This decrease was mainly driven by market depreciation in higher fee asset classes, such as emerging markets equities, along with the increase in placement agent fees that we touched on earlier, which directly reduced the management fee as a contra item against revenue. These two factors primarily led to the decline in our EPS from 45 cents to 42 cents. The next slide, slide 14, shows our net client cash flows and revenue impact of flows by segment. The chart on the left-hand side shows the net flows for our quant and solution segment and alternative segment have generally been positive, with negative net flows concentrated in the liquid alpha segment. For this quarter, quant and solutions and alternative segment had 0.6 billion of positive net flows, while liquid alpha segment had 6.8 billion of negative net flows. Total net client cash flows was negative 6.2 billion. Our gross sales declined slightly quarter over quarter from 5.1 billion to 4.6 billion, while gross outflows weakened from 7.8 billion to 12.1 billion, which included the $2 billion we mentioned from Victory's acquisition of USAA, and the $2 billion from the subadvisory client. Inflows were at 34 bps, while outflows were at 30 bps, again highlighting the concentration of outflows in lower-fee products and our continued migration toward higher-fee strategies. Please note on this page that our NCCF and revenue impact of NCCF now includes income and distributions reinvested by clients and excludes realizations to more accurately reflect sources of recurring flows and to provide more granularity on our flows. Now, I also point your attention to slides 23 and 24 in the appendix where we do provide additional granularity on our key segments. Note that the other column here primarily reflects the headquarter expenses and corporate level items such as interest and taxes. Now I'd like to turn the call back to the operator and we're happy to answer any questions you may have.

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

Hey, good morning, Young. Good morning. Coming back to the commentary you guys had on acquisitions, How do you think about buying an in-demand business in quant or alternatives, but if the valuation is much higher than your current five times B multiple?

Yeah, hi, Craig. Yeah, look, as we've said, everything we do, there's an intense focus on EPS and the return on the capital. So any acquisitions or SEED, seeding any new strategies. We compare all of those things to what we can get from repurchasing our own stock. And thankfully, it is a high bar. As you noted, repurchasing our own stock at six to seven times PE is highly accretive. And we've noted that and have repurchased every quarter a meaningful amount. So we essentially, that's how we look at M&A, even though we are looking at in-demand strategies. While it may not be comparing to repurchase on the same quarter right off the bat, we look at the overall level. It has to be more accretive than repurchases for us to do something on the acquisition side.

Craig, let me just add to that. The teams we're talking to, they're happy with our model, so it's not necessarily just the price or the valuations, the owning consideration. And our model allows them to continue to have ownership in their firm, the foundation, or even keep their name. But more importantly, we will be able to help them to grow globally, and we can provide sick capital. So for us, it's really looking at some of those in-demand strategies and how can joint forces together to grow the pie bigger, rather than just outright acquisition of 100% of the interest.

Got it. Yeah, and in the quarter, it was great to see all the buyback activity, just taking advantage of the stock at these depressed valuations. My second question is, as I look towards next year, 2020, and I think about the very large illiquid alt fundraising potential that could be coming, and I know you sized the last one, I think, was $12.5 billion. How do you think about timing, when this could start, how long this could go on? You know, how long could we see chunky, high fee inflows continue for?

Yeah, hi, Craig. This is Saran. Yeah, so as you would have seen in the last fundraising cycles that lasted, you know, two and a half years, from back half of 2016 to end of 2018, On the alternative side, the fundraisers can be episodic. They are not smooth every quarter. But essentially, over time, we're looking at it much more from a multi-year perspective as opposed to a specific quarter. But I did provide the reference point of how much we did last cycle, and that's useful to note. Got it.

Thanks for taking my questions.

Your next question comes from the line of Kenneth Lee from RBC Capital Markets. Please go ahead. Your line is open.

Hi. Thanks for taking my question. Just wanted to see if you could just further expand upon the opportunity for developing the customized investment solutions with Mercer. You know, wondering if you could just give a little bit more detail as to what types of clients you're aiming for and perhaps give us an idea of how the economics would work for BrightSphere. Thanks.

Thanks, Ken. If you look at our business model, we have seven highly respected affiliates offering independent investment process and philosophy. At BrightSphere, we can provide those strategies with a single point of access for some of the large clients. So we're really talking about some of the biggest institutions globally. And in terms of working with Mercer, as you know, Mercer is really a leader in asset allocation and portfolio construction. So the early feedback from a group of select global institutional investors has been very strong. So we're very optimistic about the potential for that offering.

Gotcha. And then just one follow-up, if I can. And it's great that you broke out the different categories between the liquid alpha, the alternatives, and the quantum solutions. But just looking at the operating margin within the liquid alpha category, specifically, they look pretty high, 48% within that range. Wondering if you could just give a little bit more insight into the dynamics there, maybe just, you know, tell us why it's so much higher than some of the other categories and whether it has something to do with just the whole dynamic with the sub-advisory mandates. Thanks.

Yeah, I can. Essentially, The margins that we see, there are many things that go into it. One of which is also the minority interest held by the members of the management team collectively. So it's not necessarily indicative, if you will, of the underlying profitability, but net-net, yes, we do get high margins. And in that business, we do benefit from from teams that have managed money for their clients for long periods of time and can manage more and more capacity. As I touched on earlier, generally most teams have been very disciplined on expenses, and we are migrating towards higher fee strategies. and the outflows are coming from lower fee strategies. So it's a combination of all of the above, if you will. And so we do expect – we do focus on margins a fair bit, and we do try to proactively continue to maintain them. Very helpful. Thank you very much.

Your next question comes from the line of Chris Harris. from Wells Fargo. Please go ahead. Your line is open.

Thank you. So it seems like we're getting closer to getting a trade deal signed with China, at least phase one of a trade deal. So I'm wondering if that does occur, does that potentially open things up for you guys over there? Or do we have to wait until phase three happens before that region becomes a realistic growth driver for you guys.

Thanks, Chris. Yeah, we hope there will be some meaningful, you know, milestone for us once the phase one is reached. We have very focused on their, you know, we have had many meetings at a very high level as well as a working level. So the trade negotiation itself kind of changed the pace of our progress there. But we were very involved there. But the way we look at China is really a long-term. It's going to be a very big market. It's going to be a long-term commitment. Of course, we would like to show some progress near term.

But I think the key is really to focus on long-term there. Okay. In terms of your fee rate this quarter, we know it's impacted by the item that you guys called out. Should we be modeling for or expecting a pretty substantial recovery in the fourth quarter? So, in other words, a $5 million to $6 million uplift in the management fee run rate, or is that not necessarily the case?

Yeah, and as we mentioned, that one item that we call out on the footnote on page 11, sizing the placement agent fee item, which we would expect to normalize in the prior quarter, it was $1 million. So that's the delta. And the mix issue always is an impact on fee rate, which is hard to quantify. Essentially, the mix between our higher fee emerging market strategies and lower fee strategies, that would be another thing that impacts fee rate, and that's the harder one. Okay. Thank you.

Your next question comes from the line of Michael Cypress from Morgan Stanley. Please go ahead. Your line is open.

Hey, good morning. Thanks for taking the question. Maybe just on capital management, you guys have been pretty aggressive on the buyback front. I think you guys had mentioned 16.5 million or so shares repurchased year-to-date, roughly like 16% of share count. I guess if we just look at the share price, it doesn't seem to be having the reward in the marketplace, the intended return. perhaps an intent that you guys are looking for. I guess, at what point do you get to a realization that maybe it's not, you know, working out as well as you guys would have intended and maybe lead to a change in thinking around capital management and perhaps maybe a refocus on the dividend? And maybe you could just update us your thoughts on the dividend policy and how you're thinking about that.

Yeah, certainly, Michael. As we look at our business and our growth strategy, You know, we feel fortunate that there are, you know, a number of levers from a status quo business perspective, but also from a capital deployment perspective that can produce earnings growth and EPS accretion for us, right? And we've touched on the seeding new products, acquiring new products, repurchasing shares, and thankfully, there are good opportunities across all of those areas. We do compare all of these items, as I said earlier, with each other so that the capital is going to the best uses rather than rationing capital for across each of the items. And so we would say that we will continue to maintain that discipline. you know, across these initiatives that whenever the highest return opportunities present themselves, we would execute on them. In the past few quarters, it has been repurchases and that continues to be attractive. So we will keep that in mind. From a dividend perspective, you know, just looking at all these opportunities, it is much more creative and both on as well as value creation perspective to our company and to the shareholders to deploy the capital on those fronts and not dividends.

And then just maybe a follow-up on the inorganic growth. I think you had mentioned you're in late-stage discussions with maybe several attractive businesses. Are these more teams or are they firms? Just if you can provide any sort of color around how you're thinking about adding new relationships at BrightSphere? And if you could just remind us on how much capacity you have today, firepower for acquisitions. I think the cash balance is maybe $116.5 million. Is that all potentially available for deployment? And then also, if you can remind us on the leverage capacity as well.

Yeah. What we can say is they are very highly regarded businesses, not just teams. But the business where the founders would like to team up with a large institution like us to really, for the next phase of growth, particularly globally, they can leverage our global distribution and we can provide with safe capital. That type of opportunities we're really focused on right now.

Right, and Michael, on the capital question, I would say that the way we think about our capital is really that in terms of repurchases, we would generally think about limiting that to our free cash flow after dividends. So that's a distinct pool of capital, if you will, that we wouldn't really, we don't really look at leveraged repurchases. But we, in terms of acquisitions, we do have cash on hand, and then we have our revolver, which we increased to $450 million from the prior $350 million. So we do have firepower available if opportunities become, you know, if some of the opportunities reach finish line.

How much is that in aggregate? It sounds like it's the $450 from the debt, if I heard you, and then is it the entirety of the cash line, or is it a portion? I guess how much is that the parent versus the affiliates?

Well, of the 450, we do have the revolver. We do have some withdrawn. You know, so we have about $275 million available on our revolver that's yet to be withdrawn. We have cash on hand, and we also have an upside feature on our revolver of $150 million. So we do have the size essentially available to go really up and down the spectrum. We are generally looking at, as Gov mentioned, teams, ambitious teams that really want to grow their businesses much beyond what they could stand alone. Some of them are earlier stage. Some of them are more developed. But none of them are generally outside the you know, the ranges that we just discussed in terms of capital deployment. Okay. Thank you.

Your next question comes from the line of Robert Lee from KBW. Please go ahead. Your line is open.

Great. Thanks. Good afternoon. Thanks for taking my questions. And I apologize if maybe you covered this earlier. I got on a little bit late. But could you update us on some of your global distribution initiatives, you know, maybe give us a sense – So if we look at, you know, kind of new sales, you know, how that's contributing to sourcing of assets and maybe update us on some of the investments you're making or have made on the global distribution side.

Excuse me. Sure, Robert. We have added resources in Latin America, Middle East, in Asia, particularly in Asia, we have added quite a few experienced professionals. And they're working really try to introduce BrightSphere and RFIDs to some of those large institutions there. So we are very optimistic this relationship will come through and not only at the high level with those institutions, but also at the working level. And all I can say is that their working level are fully engaged with us. So we cannot really pin down exactly when those mandates will come through. But I think, again, the focus for us is really try to cultivate long-term relationships with those institutions across different products, not just one product.

Okay. Well, maybe, you know, as a corollary to this and outside of the alternatives business, you know, does it possibly get a sense on in the aggregate pipeline, so to speak, you know, across the franchise? I mean, is there possibly, well, it'd be great if there was a way to quantify it, but at least give us color on kind of the RFP activity starting to pick up, you know, Any kind of color around the health and shape of the pipeline would be great.

Hi, Robert. We do have a very strong pipeline, as we mentioned earlier, on our alternative strategies. We have a very good, strong track record, so we would expect a lot of clients coming back and getting some new clients across those strategies in our quantum solutions segment as well. We have a very healthy pipeline with clients interested in, you know, in different strategies for different reasons. There's a good pipeline of clients for our low volatility strategy, for example. There are clients interested in multi-asset class and single factor. There are also some clients interested in China A shares strategy. Global equity is another strategy, and we're seeing some pipeline pickup for emerging markets equity. So I'm just giving you a flavor that it's basically, it's a very diversified set of strategies that it's seeing demand from clients. And in terms of being that these are all institutional mandates with long gestation cycles, and it's hard to really pinpoint which quarter which specific code or something would materialize, that's why we're not able to provide specific, if you will, specific pipeline to the, you know, at more granular, but we are very pleased with our, with the health of our overall pipeline.

Great. Thank you for taking my question.

Your next question comes from the line of Chris Harris from Wells Fargo. Your line is open. Please go ahead.

So I know it's not showing up in the flows yet, but I wanted to ask you guys if you're seeing really any signs that investors are starting to have increased interest in the value investing style, because obviously a turn in that would be a pretty big deal for you.

Yes, we do see, Chris, we do see green shoots. You know, investors, you know, inquiring about value and there are some searches about value. I would say that there's also, you know, sometimes it's also, you know, one step forward and two step back. So it does change around, but it definitely has been the longest period of time where value has underperformed growth and, you know, and a lot of clients basically would expect the value to come back any time now, essentially. So it's really hard to pinpoint specific timing of when a trickle becomes a stream. Okay. Thank you.

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

Thank you all again for joining us today.