Janus Henderson Group plc Ordinary Shares

Welcome everyone. The Janus Henderson First Quarter 2025 earnings call will begin shortly. In the meantime, if you would like to pre-register to ask a question, please press star followed by 1 on your telephone keypad. If you change your mind, please press star followed by 2. Thank you. Good morning. My name is Lucy and I will be your conference facilitator today. Thank you for standing by and welcome to the Janus Henderson Group First Quarter 2025 results briefing. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. In the interest of time, questions will be limited to one initial and one follow-up question. In today's conference call, certain matters discussed may constitute forward-looking statements. Actual results could differ materially from those projected in the forward-looking statements due to a number of factors including, but not limited to, those described in the forward-looking statements and risk factors sections of the company's most recent Form 10k and other more recent filings made with the SEC. Janus Henderson assumes no obligation to update any forward-looking statements made during the call. Thank you. Now it is my pleasure to introduce Ali Dabaj, Chief Executive Officer of Janus Henderson. Mr. Dabaj, you may begin your conference.

Welcome everyone and thank you for joining us today on Janus Henderson's First Quarter 2025 earnings call. I'm Ali Dabaj and I'm joined by our CFO Roger Thompson. In today's call, I'll start with some thoughts on the quarter before handing it over to Roger to run through the results in more detail. After Roger's comments, I'll provide an update on our strategic progress including our recently announced multi-faceted strategic partnership with the Guardian Life Insurance Company which we are excited about and believe will deliver value for our clients and shareholders and Guardian and its policyholders. And then we'll take your questions following those prepared remarks. Turning to slide two, market conditions continue to be tumultuous as changing monetary and fiscal policies, US recession fears, and global trade uncertainty dampen investor sentiment. While Janus Henderson is not immune to the current market conditions, we believe we can navigate this period of market uncertainty given our truly global footprint. We have a diverse and global client base which we are proactively engaging and supporting. It's during challenging times like these our clients and their clients need our differentiated insights, investment discipline, and world-class service the most. Turning to the first quarter, even amidst these significant market challenges, we were resilient and able to deliver a good set of results. Asset center management decreased only 1% to $373.2 billion as market declines were partially offset by $2 billion of positive net flows and favorable currency adjustments due to a weakening US dollar. We delivered our fourth consecutive quarter of net flows. The net inflow results reflect a 44% increase in -over-year gross sales, positive net flows again in both of our intermediary and institutional channels, and we continue to maintain and capture market share in several key intermediary markets. As we stated previously, delivering positive active flows is a key differentiator for Janus Henderson in an industry with well-documented active flow headwinds. Turning to investment performance, despite some short-term volatility which often happens in the industry amidst a fast market dislocation, our long-term investment performance is solid with at least 65% of assets beating respective benchmarks on a 3, 5, and 10-year basis. Against peers, investment performance is even stronger with over 70% of AUM in the top two mortgage-style quartiles over all time periods. The current market dislocation, while challenging, presents unique opportunities. Ties will not lift all boats, and active asset management is critical. In situations such as this, our investment professionals are seeing opportunities to invest in high-quality, innovative, and or undervalued stocks, bonds, and other securities to deliver for our clients. We have always had a focus on quality, and that quality theme is as important now as ever. Moving to our financial results, which remain solid, adjusted diluted EPS of 79 cents is an 11% increase compared to the first quarter of 2024. Our financial performance and strong balance sheet continue to provide us the flexibility to invest in the business both organically and inorganically and return cash to shareholders. Today we announced a 3% increase to the quarterly dividend and a new $200 million through April 2026. We also see many asset managers out there looking for a safer harbor to pull into, and thus we remain active and disciplined in M&A as well. In summary, our net flows are positive. Our long-term investment performance is solid. We continue to exceed our strategy. Financial results are good. We continue to be disciplined and ROI-focused on We have a strong and stable balance sheet, and our truly global footprint positions us well for the future and provides a strong foundation to navigate periods of market uncertainty. I'll now turn the call over to Roger to run you through the detail of the financial results.

Thanks, Ali, and thank you everyone for joining us on today's call. Starting on slide three, an investment performance. As Ali mentioned, despite some short-term volatility, our medium and long-term investment performance versus benchmark remained solid with at least 65% of AUM beating their respective benchmarks over the three, five, and 10-year time periods. Overall investment compared to peers continues to be competitively strong with at least 70% of AUM in the top two Morningstar quartiles over all time periods presented. Active management in portfolios is essential during times of disruption. Times such as these and our over 350 investment professionals are intensely focused on differentiating between the good and the bad companies, separating the weak from the chaff, and positioning us to deliver the best possible investment outcomes for our clients and their clients over the long term. Slide four shows total company flows by quarter. Net inflows for the quarter were $2 billion compared to net inflows of $3.3 billion last quarter and a significant improvement over net outflows of $3 billion a year ago. The -over-year improvement was primarily driven by a 44% increase in gross sales and marked the best quarterly gross sales result in over four years. The increase in gross sales compared to the prior year is across a broad range of regions and strategies including ETFs, absolute return equity, our biotech hedge fund, US mid-cap growth, balanced, global small cap, multi-sector credit, and asset-backed securities. Turning to slide five and flows by client type. Please note that beginning in the first quarter of 2025, ETF gross flow activity is reflected in the applicable client type that generated the activity. Access to improved data transparency enabled us to make this change. For periods prior to 2025, all ETF flow activity is shown in the intermediary channel. This change better illustrates the wide range of clients investing in our suite of active ETFs from supermarket clients in the directed channel, advise clients, and model portfolios within intermediary, and larger sophisticated clients within our institutional channel. The intermediary channel net flows were positive $1.5 billion. In the first quarter, the US and Asia-Pacific region experienced net inflows with net outflows in EMEA. In the US, net flows were positive for the seventh consecutive quarter. Several strategies contributed to the net inflows in the first quarter, including most of the active ETFs, multi-sector credit, and US mid-cap growth. US intermediary is a key initiative under our protect and grow strategic pillar, and we're pleased that we've delivered net inflows in the first quarter and are gaining market share against a challenging market backdrop. Under our amplify strategic pillar, we've talked about amplifying our investment and client service strengths using various means, including vehicles through which we deliver our products. In addition to ETFs, flows into CITs and hedge funds in this channel were positive in the first quarter. In APAC intermediary, net flows were positive for the third consecutive quarter and the best intermediary net flow result in the region in over three years. Net inflows in this channel demonstrate our truly global investment capabilities, which included global technology leaders managed by our Edinburgh team, tactical fixed income managed by our Melbourne team, and a balanced strategy managed out of our Denver office. Institutional net inflows were $800 million compared to net inflows of $900 million in the prior quarter. Institutional net flows include $600 million of ETF net inflows. We're pleased to see increased interest and utilization of our high quality, highly liquid and stable securitized fixed income ETFs from institutional clients. Elsewhere, we're continuing to work to create a sustainable pipeline and we're encouraged by the leading indicators and the increasing number of opportunities across all of our regions. Our pipeline is growing and it's starting to mature, but there's still much more to do. Net outflows for the self-directed channel, which includes direct and supermarket investors, were $300 million. The first quarter includes approximately $700 million of ETF net inflows from our supermarket clients. Excluding ETFs, self-directed net outflows were roughly flat the prior quarter and the prior year. It's good to see self-directed clients taking advantage of the opportunity to invest directly in our ETFs. Slide six shows flows in the quarter by capability. Equity flows were negative $4.2 billion. A challenging environment for active equities was exacerbated during the quarter with the market dislocation and risk off sentiment. First quarter net inflows for fixed income were $5.6 billion compared to $5.2 billion of net inflows in the prior quarter. Several strategies contributed to the positive fixed income flows. Active fixed income ETFs delivered strong positive flows of $5.7 billion in the quarter led by flows in JAAA. Other strategies contributing to positive flows were multi-sector credit, asset-backed securities and Australian fixed income. Net outflows in the multi-asset capability was $600 million primarily due to net outflows in the balanced strategy. Despite net outflows in aggregate for balanced, several regions were net positive including EMEA, Latin America and Asia Pacific. And finally, net inflows in the alternatives capability were $1.2 billion driven primarily by absolute return equity and pulled hedge funds. Moving on to the financials. Slide seven is our US GAAP statement of income and on slide eight we explain the adjusted financial results. Adjusted operating results are lower compared to the prior quarter primarily due to the significant annual performance fees realised in the fourth quarter of 2024. More relevantly compared to the first quarter a year ago operating income and EPS are up 22% and up 11% respectively as a result of higher average AUM and operating leverage and improved three-year investment performance leading to better mutual fund performance fees. Looking at the detail, adjusted revenue decreased 14% compared to the prior quarter primarily due to those lower seasonal performance fees and increased 14% compared to the prior year primarily due to higher management fees on higher average AUM and the improved US mutual fund performance fees. Net management fee margin remained relatively stable at 48.5 basis points which remains the differentiator for Janice Henderson. I want to remind you that as part of the announced strategic partnership with Guardian, Janice Henderson will manage the $45 billion investment grade public fixed income portfolio for Guardian's general account and we expect that our aggregate net management fee rate will be approximately five to six basis points lower once the assets are fully onboarded which is expected to be at the end of the second quarter. First quarter performance fees of negative $4 million primarily consist of US mutual fund performance fees whilst negative US mutual fund performance fees have improved significantly compared to the negative $13 million a year ago. Continuing on to expenses, adjusted operating expenses for the first quarter decreased 9% to $330 million compared to the prior quarter. Adjusted employee compensation expense which includes fixed and variable costs was down 13% compared to the prior quarter primarily from incentive compensation on higher revenues in the fourth quarter of 2024. Adjusted LTI increased 21% compared to the prior quarter largely due to seasonal payroll taxes triggered by annual Vestings in the quarter. In the appendix we've provided the usual table on the expected future amortization of existing grants for you to use in your models. The first quarter adjusted comp to revenue ratio was seasonally higher at .8% which is down from .2% in the first quarter of last year and .1% two years ago. The higher rate in the first quarter is primarily due to the payroll taxes on annual LTI vesting and the beginning of year reset of payroll taxes and retirement contributions. Adjusted non-comp operating expenses decreased 12% compared to the fourth quarter primarily from lower marketing and J&A expenses. With respect to 2025 expense expectations we are navigating an uncertain operating landscape. We remain committed to strong cost discipline ensuring we manage our cost base while continuing to support the long-term growth objectives of the business. Our previously stated expected compensation ratio in 2025 remains unchanged at 43% to 44% assuming 31st of March AUM and a zero market assumption for the remainder of the year. For non-compensation including the non-comp related to the new Guardian business and the single digit growth guidance due to the investment supporting our ongoing strategic initiatives and operational efficiencies, inflation and the fleet impact of the consolidation of VPC, NBK, Tabular and now Guardian. If the market deteriorates further and that decline is prolonged we have expense levers and will actively manage our cost structure allowing us to maintain financial discipline and the flexibility to continue to invest strategically in the business where it is most likely to be a problem. Finally our expectation of the firm's tax rate on adjusted net income attributable to JHG remains unchanged at a range of 23 to 25%. Our first quarter adjusted operating margin was 32% an increase of 220 basis points from a year ago demonstrated the leverage our business. Adjusted diluted EPS was 79 cents up 11% from the comparable Q1 2024 period. Skipping over slide 9 and wrapping up on slide 10 with a look at our liquidity profile. Our balance sheet remains strong and stable. Cash and cash equivalents were $1.1 billion as of 31st of March which is lower than the end of the year primarily due to the payment annual variable compensation. The first quarter cash position is typically our lowest given seasonal cash needs. Compared to the same period a year ago our cash and cash equivalents are 19% higher. During the quarter we funded our quarterly dividend and repurchased 0.6 million shares for $27 million. Shares repurchase were lower this quarter as we paused our share buyback during lead up to the Guardian strategic partnership announcement and through today's release of earnings to the market. As Ali discussed we are committed to returning cash to shareholders and are pleased to announce that the board has authorized a new share buyback program of up to $200 million to be completed by April 2026. We will start this in short order. The board has also approved a 3% increase in our quarterly dividend to 40 cents per share to be paid on the 29th of May to shareholders of record as of the 12th of May. The buyback program and the increase in our dividends do not alter our ability to invest in the business organically or inorganically and return cash to shareholders. Currently our liquidity profile allows us to do both. Our return of excess cash is consistent with our capital allocation framework. We'll look to return capital to shareholders where there isn't an immediately more compelling investment in the business. In summary, we have a strong liquidity position and we continue to balance the capital needs and the investment opportunities of the business with returning capital to shareholders. With that I'd like to turn it back over to Ali to give an update on our strategic progress.

Thanks Roger. Turning to slide 11 and a reminder of our three strategic pillars of protecting grow our core businesses, amplify our strengths not fully leveraged and diversify our clients give us the right to win. We are in the execution phase and we believe this strategic vision has us on the path to over time deliver organic growth consistently. In protecting grow we've talked previously about the importance of protecting and growing our U.S. intermediary business and the progress we've made in capturing market share. With an amplify we've talked about our institutional business, our product development and expansion efforts, the acquisition of tabula and the partnership with Animoid Centrifuge. We also recently announced our partnership with Guardian Life which I'll discuss in more detail later in the presentation. Under diversify we expanded into differentiated private market capabilities for clients with the acquisitions of NBK Capital Partners and Victory Park Capital and we established our joint venture Privicor focused on the democratization of alternatives. We've spoken about M&A quite a bit so how does M&A and partnerships fit into our strategy? Recall that for us at least M&A is a lever to deliver all three elements of our strategy and not a strategy unto itself. On slide 12 we outline how M&A and strategic partnerships are contributing to our strategic vision not yet to protect and grow but so far to amplify and diversify the business. We've followed a targeted approach. We won't be all things to all people but have placed measured bets on growth vectors that have the potential for significantly higher growth rates over the long term compared to our existing business. As I said previously, we want to skate to where the puck is going on behalf of clients and shareholders and we believe those with whom we have partnered are uniquely positioned to help us grow faster. Asset-back lending has emerged as a significant and differentiated market opportunity within private credit and we believe it will remain appealing to clients as they increasingly look to diversify private credit exposure beyond just direct lending. Victory Park Capital specializes in asset-back lending and has differentiated origination. We believe that despite all the fervor regarding asset-back lending out there, there are actually only a handful or less of asset management firms who have proven track records of doing asset-back private credit well and have been doing it for decades. We are fortunate to be a leader among that select group with Victory Park Capital that has been doing asset-back lending way before it was the cool thing to talk about. Others are tempting asset-back with a handful of hires, but our scale platform of 30 investment professionals, a high quality technology platform to manage risk of smaller balance credit and a history of relationships in the sector is unmatched. In active ETFs, the European ETF market is undergoing a significant transformation, growing considerably and mirroring trends observed in the US market where active management is increasingly incorporated in the market. This shift represents a considerable growth opportunity for asset managers seeking to broaden the way in which clients access their investment capabilities and capitalize on evolving client preferences in the European market. The acquisition of Tabula allows Janice Henderson early access to this growing market and builds on our extremely successful suite of active ETFs in the US where Janice Henderson is now eighth largest provider of active ETFs and third largest provider of active fixed income ETFs. We've quickly moved to leverage the business launching four active ETFs in the last six months with more to come in 2025. In emerging market debt, we've addressed both the private and public markets. We expanded into differentiated private market capabilities for clients with the acquisition of NDK Capital Partners which allows Janice Henderson early entry into the rapidly growing emerging markets private capital space. On the public side, we brought in well-respected emerging market debt team. This team is a key component of a global fixed income platform that supports single strategy and multi-sector portfolios. Provocor seeks to take advantage of and be the leader in the democratization of private alternatives into the private wealth channel. Alternatives as a category represents a several trillion dollar market today with asset growth expected to continue. I Net Worth investors command 80 trillion dollars of assets globally and are expected to account for much of the growth in private markets. Provocor is selling on three warehouse platforms and expect to add another this year. They also are expanding into RIAs and broker dealers. Provocor has more products coming online in the coming months and they're working with Victory Park Capital on innovative solutions for the wealth channel. In September of last year, we partnered with Animoid Centrifuge to manage Animoid's liquid treasury fund, a fully on-chain tokenized fund issued on Centrifuge's public blockchain that provides investors with direct access to the short-term US treasury bills. Blockchain readiness and tokenization are key pillars underpinning Janice Henderson's innovation strategy and the decision to partner with Animoid Centrifuge in this way reflects the firm's commitment to digital assets and our desire to embrace disruptive financial technologies. The partnership has already begun to demonstrate success with initial 200 million allocation now funded as we were one of three firms selected from four B submissions in the largest tokenization RFP ever conducted. This early validation is very rewarding and we will continue to expand our offering where tokenization can provide real-world benefits to clients today while we also keep an eye on the potential benefits to a broader range of clients in the future. Finally, most recently, we further solidified our presence in insurance with the announced strategic partnership with Guardian, which we are very excited about. On that, turning to slide 13 for more background on the multifaceted strategic partnership with Guardian announced earlier in April. Guardian is one of America's largest and most well-respected life insurers and a leading provider of employee benefits. Guardian has a history of profitable growth, 172 billion dollars in assets under administration, and a 7% annual growth rate since 2019. We are extremely energized to partner with Guardian. This partnership was founded on a shared set of client-focused values, leverages our complementary strengths, creates alignment for mutual growth, and intends to achieve mutually beneficial outcomes for policyholders, our clients, shareholders, and employees. Through the partnership, Janice Henderson will manage the 45 billion dollar investment-grade public fixed income portfolio for Guardian's general account, expanding Janice Henderson's pro forma fixed income AUM to over 30% of pro forma company-wide AUM. On a pro forma basis again, Janice Henderson will manage over 100 billion dollars for global insurance companies, greatly expanding the firm's institutional reach and insurance presence and positions Janice Henderson as a top 15 unaffiliated insurance asset manager. In addition, Guardian will commit up to 400 million dollars of sea capital to help accelerate Janice Henderson's continued innovation in secure-tie credit and high-quality active fixed income products, as well as other fixed income capabilities. One opportunity area is the further expansion of our ETFs. This would build on the success of Janice Henderson's active fixed income ETF suite, which includes JAAA, the largest CLO ETF, JBBB, which provides exposure to floatering rate CLOs, generally rated BBB, JSI, which invests in opportunities across the U.S. secure-tie markets, JMBS, the largest actively managed mortgage-backed securities ETF, and VNLA, an active global short-teration income ETF. Guardian and Janice Henderson have agreed to pursue a strategic initiative to co-develop proprietary multi-asset solution models for Guardian's duly registered broker-dealer and registered investment advisor Park Avenue Securities, or PAS. As a key partner to PAS, Janice Henderson will develop investment solutions for PAS clients, bringing together Janice Henderson's full suite of global investment allocation solutions capabilities, including Janice Henderson Edge, the firm's award-winning proprietary analytics platform for its portfolio construction and strategy team. Guardian will receive equity warrants and other economic considerations designed to support a shared goal of accelerating growth and driving value creation. On a standalone basis, excluding other upside potential from the partnership, the Guardian IMA contributes positively to Janice Henderson's operating margins and is creative to earnings upon full integration by mid-2026. As previously mentioned, Janice Henderson's aggregate net management fee rate will be approximately five to six basis points lower once the assets are fully onboarded, which is expected to be at the end of the second quarter of 2025. Wrapping up on slide 14, we believe we have a strong foundation as a truly global asset manager, enabling Janice Henderson to navigate periods of market uncertainty. We have a diverse global client base that we are proactively engaging and supporting, and we have a broad offering of investment strategies and styles for global and regional focuses. Despite some short-term volatility, our long-term investment performance is solid. This structure creates opportunity for active managers like Janice Henderson to look at a wider spectrum of companies that we think will outperform over the longer term. Flows were net positive for the fourth consecutive quarter, resulting in a 2% organic growth rate over the last 12 months. Organic growth is a key differentiator for Janice Henderson in an industry with well-documented active flow headwinds. We announced a multifaceted strategic partnership with Guardian, amplifying several areas of our business. Importantly, this partnership demonstrates that we are a home for some of the most sophisticated clients in the world. Great deals are still going to happen even in this uncertain environment, and we will find ways to win and grow. In that vein, we continue to look actively to buy, build, or partner to further diversify the business where clients give us the right. We have a strong balance sheet and good free cash flow generation, which enables us to return cash to shoulders and reinvest in the business. Looking ahead, in this period of uncertainty, we'll focus on what we can control, including cost discipline, investment in the business, client outreach, and investment performance. Let me turn the call back over to the operator to take your questions.

Thank you. To ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. In the interest of time, questions will be limited to one initial and one follow-up question. Our first question comes from Ken Worthington of AP Morgan. Ken, your line is now open. Please go ahead.

Hi. Good morning. Thanks for taking the questions. Maybe first, I wanted to dig into CLO ETF capacity. Given the size of money coming in over a short period and the risk that in poor market conditions, money might be possibly flowing out as quickly, how are you thinking about the ETF franchises ability to navigate CEO liquidity, particularly in times of stress? Are there any lessons maybe learned in April that confirm or alter your views on the build-out of this product suite?

Hey, Ken. Thanks for the question. We've been quite fortunate with the CLO franchises that we've created up to an ETF form, preferentially for clients. In fact, -to-date flows are positive $3 billion, which is more than peers combined. Effectively, we are the category. We're about 80% of the market share in this category, and we've created this category. Effectively, we are the market. What we've seen mostly is that investors in this ETF and in the franchises that we brought on board, even on ETFs, are medium to long-term type investors. Sometimes that does mean some investors have taken it from a shorter term perspective, and that's where you get the uncertainty in the marketplace, create the volatility that you're exactly asking about. We were watching this very, very closely, as you can imagine, and what we've seen consistently, particularly in a quite volatile time in the early couple weeks of April, since then it's been pretty stable, but in the early couple weeks of April, that the redemptions have been absorbed completely as expected. Very little impact on the CLO market, on the portfolio. Again, these are underlyingly quite liquid. There's an in-kind element, obviously, given the ETF piece to it as well. We've seen no dislocations, no surprises. In fact, we were quite pleased with how the market reacted in a very measured and disciplined manner, again, exactly as we'd expected, even given our size.

Okay, perfect. Thank you for that. Then just maybe quickly on the institutional channel, second consecutive quarter of positive flows, that part of the franchise continues to perform better. Can you talk about next steps in terms of where you're going to drive better results from here going forward? What's next in the pecking order priorities to continue to drive even better results as we look forward?

On institutional specifically,

Ken? Institutional specifically.

Yeah. Look, you're right. It's now a couple consecutive quarters of positive flows. You've seen some in the past, but we're starting to get a little bit more steady in that way. The pipeline is building. Set aside the one not funded $45 billion from Guardian. That's obviously a big pipeline win that we're very proud about. If you think about some of the leading indicators, for example, in the US, we're seeing an RFP activity that's up about 100% support across the board. In fact, we had a very big firm watch flag that was on us for many years, removed from us just this past quarter, which opens up, as you'd imagine, many more doors globally. We're continuing to see opportunities up and being in kind of late stage opportunities and finals and all this sort of stuff in the kind of 20 to 30% range year on year again in the US. And EMEA and the rest of the world do the same thing. There we're seeing opportunities increase by around 60%. So things are, as we said, it would take some time, but playing out as planned as we'd expected. And part of that is not just because of the products that we're certainly bringing to bear already, but also some of the new products that we brought to bear, whether it be emerging market debt or NBK or Vipri Park Capital or things that we can do with Guardian. So we are seeing a broad-based interest with the products that we already have and have for quite some time. We're seeing a lot of interest in some, what we call them, immutable thematics like tech and healthcare and smaller cap equities with those opportunities and absolute return equities and high conviction equities. In Europe, we've recently seen a lot more interest in investments, I think, given all the headlines around investing in Europe. And gladly, we're a global firm and can offer great European investments and global investments. Multi-asset is coming up on the radar screen. Secure ties, obviously. Our balanced fund is showing some progress because people want the balance of fixed income and the yield of fixed income with the upside potential of equities. So I don't want to give you a big laundry list, I kind of did, but it's a broad gamut of areas where people are really looking to us uninstitutional and the as well.

Excellent. Thank you so much.

Our next question comes from Bill Katz of TD COVID. Your line is now open. Please go ahead.

Great. Thank you very much. Good morning. Congrats again on the Guardian transaction. Maybe starting there, seems like a very intriguing deal on a lot of vectors from my perspective. Can you talk a little bit about where you see the greatest opportunity for incremental growth, maybe just with the Guardian itself? I think you mentioned that business is growing about 7% annually, but also in terms of their incremental distribution platform, what kind of products might you see the early opportunities for wins? Thank you.

Hey Bill, thanks very much for the question on Guardian. As you can probably tell, we're pretty really sharing the same client-focused values, policyholder values, really sharing complementary strengths, and I'll get to some of that on the distribution side for sure, and very importantly, alignment for mutual growth from an economics perspective. We think we can certainly enhance Guardian's both investment and solutions capabilities and benefiting its policyholders and its clients. We're very pleased that this partnership ends up developing a $100 billion global insurance asset manager like us. That's the number for us. That puts us into the top 15 realm, and we think that there is, point number one, really great growth potential to amplify some of the insurance relationships that we can have with others. Indeed, we've had several phone calls and outreaches from other insurance companies really intrigued by this deal, wanting to learn more about this deal and trying to understand why some of the most sophisticated assets in the world trust us and want to come to us, and we think that we're becoming a true global contender to get more insurance assets to your growth question, and we think we can amplify that. Still in the amplify realm, not only in insurance but beyond that, we think we have the opportunity to, again, bring to bear the winning opportunity of getting these great assets with other institutional clients as well, and again, there too we're getting some more intriguing phone calls and outreaches about what other partnerships we can create. We clearly have the seed opportunity of $400 million that we can bring to bear, and I think the team here has shown a track record of growing products. We think we can take that seed and grow them, and of course, very, very importantly, we have a great set of employees that are still currently at Guardian coming over to us, and we definitely want to leverage their skill sets and their expertise. We're very, very proud and happy that they've decided to join us at Janice Anderson and grow their businesses. Now, particularly on the distribution side of things, you're right, they have a great broker-dealer, Park Avenue Securities. It's about $50.5 billion of client assets under management. We have a partnership with them where we're developing a proprietary, both models, diagnostic tools, investment solutions, training modules, etc., really to amplify what we have internally from a broader solutions perspective, our multi-asset business, our adaptive asset business, our portfolio construction business, our quant solutions businesses as well, and we think that's going to be very, very fruitful because we can bring to bear a better investment platform for those 2,400 advisors. We can also bring new products to those clients and grow that business, so we feel very, very pleased about all the different vectors that this partnership can bring to bear to grow the business, let alone the underlying $45 billion that we're starting with.

Great, thank you. And then just as a follow-up, I think you mentioned a couple of times in the commentary just around the pipeline for M&A. Can you talk a little bit about where incrementally you might be interested in, and then as you think about maybe the expectation between the bid and the ask, where does that sit, particularly after such a turbulent -to-date market backdrop? Thank you.

Thanks for the question. It's a very, very active M&A environment right now. We will, as always and as you've seen, and I think page 12 of our presentation, that kind of additional page, would support the view that we're always going to be client-led, we're always going to be market-led, and so we continue to look at opportunities to buy, build, or partner across the board. Our balance sheet and cash flow allows us to be a safe harbor, I guess, in these tumultuous times. There is significant interest out there in speaking with us. I wouldn't say, Bill, that on the valuation point there's capitulation in any sort, but there's certainly curiosity, given the volatility in the marketplace and joining forces with a firm that has shown pretty steady, not just revenue growth, but organic revenue growth, pretty steady execution on its strategy, pretty steady growth of businesses that we've brought on board already and want to continue to do that, but we'll continue to be very disciplined on that front across the board, but we see a lot of activity out there. I think you're right, and I would say that the bid-ask spread has come down a little bit, but I'm not sure you're capitulating yet, and some of our peers.

Thank you for taking the questions.

Thank you. Our next question is from Craig Segan-Thaler of Bank of America. Craig, your line is now open. Please go ahead.

Good morning, Ali. I hope everyone's doing well, and congrats on the Guardian Life IM agreement signing. We actually have a follow-up to Bill's question, and I heard your comments on the 45 billion AUM and the net 5 to 6 basis point matching fee rate, but my question is on the organic growth rate. What do you see as the flow trajectory on this 45 billion AUM base going forward, or should we essentially assume it's sort of stable at 45 billion at the 5 to 6 basis point fee rate?

Guardian has had a great growth trajectory historically. One of the reasons that we partnered with them is the like-mindedness about continuing to grow. We certainly would expect and hope and continue to see growth in that 45 billion dollars, given they're such a

great business. Thanks, Ali. Just for our follow-up, when we take a step back and look at the entire 100 billion plus AUM insurance client business, there's lots of partnerships now formed between insurance companies and asset managers, especially in the annuity business. Is there a lot more AUM up for grabs, or is most of it tied up now, either with third-party asset managers or internal CIO divisions, where they're really not looking for a partner?

There's plenty of room out there, actually. And look, I want to underline the obvious here, perhaps, is that this partnership with Guardian was hard fought, and it does suggest that we are a great home for the most sophisticated assets in the world and really true global contender relative to a lot of others who were assets. Again, we're number 15 now in the world, with the real aspiration, Craig, to your question, to continue to garner assets from the insurance clients. That is a growing client base and a growing asset base as a category. So again, as page 12 would suggest, we expect growth not only organically, but for us inorganically there. And there are many more opportunities in the insurance world globally, remember, for us. If you think about it, $45 billion is half that $100 billion, there's another $55 billion elsewhere in the world that we also think has opportunity. So we think there's quite a lot of opportunity out there in partnering with a similar culture, with a growth trajectory, and with the services and investment skill sets and client service that we bring to bear to the insurance client. But we see enormous opportunity there to continue to grow that business. Thanks, Ali.

Thank you. As a reminder, to ask a question, please press star followed by one on your telephone keypad. We have a question from Michael Cypress of Morgan Stanley. Michael, your line is now open. Please go ahead.

Hey, this is Annali Davis on for Mike. You guys talked a little bit about the setup for active management in 2025. Just curious if you could talk a little bit more about how you see the opportunity set, just given continued uncertainty, and also what steps you guys are taking to help your investment teams best capture this.

Thanks. Hey, Annali, thanks for the question. So let me maybe divide it into two buckets, talking about the current environment and talking about the kind of what we're hearing from clients in that context. Clearly, there's a dislocation in the marketplace. It happened all of a sudden. It happened quite quickly. It certainly feels like it's stabilizing now. You don't really ever know, but it feels like it's stabilizing now. And certainly, a dislocation may impact some of the short-term flows and investment performance, and it certainly gets better in a second. But also really importantly, particularly for us, offers real great opportunities. We are an active investing shop. We have 350 investors around the world who spent all of their time, as Roger said in the prepared remarks, separating wheat from chaff, finding the good company from the bad company. And now more than ever, our clients need that help, need that help to not just assume an index is going to drive everything, particularly if it's focused on seven stocks that are lagging a little bit. Our clients need that help to figure out geographically where they can distribute their AUM. And that is perfectly falling in our lap. Again, not just with the 350 investors we have around the world, but with the roughly 600 marketing and client service people we have around the world who support that client base. So candidly, dislocation in the short term might cause pause for some others. For us, across the floors, across our offices around the world, we see enormous opportunity to serve clients better given who we are and what we do. Again, an active asset management shop with great client service and a focus on delivering together for our clients. Now, the second part of it is from a business perspective. Again, we are a truly global operation. We are not just U.S. We are global and we can offer that to our clients. And on top of that, we have a very strong balance sheet that offers, I think to Craig's question earlier on, offers us a lot of opportunity to both invest in the business, return cash to shareholders, and importantly, be a safe harbor for asset managers who are a little bit more impacted by this uncertainty. So M&A is part of that. We are also, and to lead to your question, very, very focused on being disciplined on our cost structure. We are looking at always continuous opportunities to improve our cost structure, to become more efficient, become more efficient on behalf of our shareholders as well as our employees and our So we see this opportunity set greater than the risk set in this current environment. Second part, I think to your question, sorry if I've expanded it more than you want me to, but on the kind of client views part of things, again, I would say that there's a subset of clients that are more short-term oriented and I'd argue have been a little bit spooked, for lack of a better word, probably not a technical term, but for lack of a better word in the marketplace right now, but most of what we're seeing is people looking to reallocate to active, reallocate to global, reallocate to fixed income both on the public and the private side, and have had really strong areas of interest across the board for us. And I mentioned some of them, but some of the technology or healthcare areas and thematics, some of the small cap equities, absolute return strategies we have. Some of the contrarian strategies, actually people looking for the opposite bet, high conviction strategies in Europe and around the world, global research strategies, adaptive multi-asset, just go down the list, securitize. We're actually benefiting quite a bit from folks looking for other areas to invest because we're global, because we're pretty broad in what we offer. So hopefully that answers your question, Emily.

Yeah, that's perfect. Thanks so much.

Thank you. Our next question is from John Dunn of Evercore ISI. John, your line is now open. Please go ahead.

Thank you. Could you maybe talk a little bit about the geographic, looking across regions, the kind of color on the different demand, flow demands regionally in the intermediary channel and then separately in the institutional channel?

Sure, just in terms of what products people are looking for.

The products, but also just like the temperature of kind of demand, any differences between the regions?

Yeah, so look, we've seen similar concern in the intermediary channels in particular. Again, that's not atypical. That's quite, unfortunately, for the end client, it is something that often happens when there is a gyration in the market. People seem to kind of freeze this whole money out. I think that certainly happened in the first half of April. Again, things seem to stabilize right now, but I'd say that was broad-based certainly in EMEA, UK, and the US. I think Asia still continues to be quite strong, and Latin America still continues to be quite strong. So folks who have perhaps a little bit more of a longer-term or growth-oriented view of the intermediary channels seem fine there. Institutional is typical, is a little bit more stable, right? A little bit more longer-term focus across the board. We've seen a little bit more stability there and not a lot of gyration in that market,

John. Great. Thank you very much.

We currently have no further questions, so I'll hand back to Ali Dabaj for closing remarks.

Thanks, Lucy. Thanks, everyone, for listening, including our clients, of course, our shareholders, and very importantly, our employees and my colleagues at Janet Henderson, who I hopefully feel that they're individually and collectively across all departments improving the firm. The firm is clearly living its vision of investing in a brighter future together, and I thank my colleagues for their hard work and hopefully continued success. Thanks, everybody.

This concludes today's call. Thank you for joining. You may now disconnect your lines.