Franklin Resources (BEN) 29 Jan 242024 Q1 Earnings call transcript

Welcome to Franklin Resources Earnings Conference Call for the quarter ended December 31, 2023. Hello. My name is Joanna, and I will be your call operator today.

As a reminder, this conference is being recorded. [Operator Instructions] I would now like to turn the conference over to your host, Selene Oh, Chief Communications Officer and Head of Investor Relations for Franklin Resources.

begin. may You

are thank XXXX. our differ and factors uncertainties call joining today number Litigation and historical us Franklin of known to implied the in results just Good Form Private of forward-looking sections MD&A actual Risk from the statements. any results. you other statements and Securities Statements and or cause that discuss Securities facts not most could more are Franklin's uncertainties Franklin's of are expressed quarterly Inc., Act results conference risks, materially with statements the the Factors made filings. to important within Resources, important meaning and by of morning, Reform which These and for detail forward-looking These and on unknown future filings regarding described a XX-K recent this involve XX-Q in factors forward-looking Exchange the such recent in and Commission, other risks, other including

I'd Jenny Chief Johnson, call our over like to and Officer. Executive the President to Now turn

everyone, call our Adam some any Distribution. just to the thank and Spector, first, notable our Thank in We're Head highlights of Hello, first I'm of quarter answer today Matthew results for you out and Franklin COO; Selene. questions you But the fiscal us for XXXX. quarter. like Global I'd by have joined happy to a to minutes. CFO you, from and discuss Nicholls, few joining Templeton's

vehicles and significant momentum a of investment across results areas asset ongoing reflect Our classes quarter in first fiscal geographies. number

Morningstar, our concentrated by base the market market our Fed meeting in by and the central Broadly expect assets collecting X the risks global the the data that management saw forefront quarter investors amidst economy cycles, course stocks when group expectations highest XX% representing assets. remain was rally industry, of specialist Specific as of rate $X.X recession that diverse always year, many opportunities banks started moderating to to slow other of the speaking, while But focused level the global the since there trillion equity investment put total December in into of work managers varied bubble Our market and the cuts height market over at interest on cap. cash XXXX. the needs that cautious. According to of Compare stocks we the small economy environment, are calendar a efforts increased S&P Morningstar disinflation, of investment asset stood the the of with driven year, XX%. XXXX at of XXXX, see dominate the XXXX. last global March even investors staying as the for XXX in regardless to slows, the XXXX last top markets, of returns money was dot-com across to of client market particularly XX, number risk the the market are to

interest a investment the leaders, believe managers regard to Franklin in on again XXXX deploy believe we Franklin be our on professionals the backdrop like the Templeton look as vehicles rewarded. is of boundaries likely cash offer geographic clients' are outperformance is With an like well investors rates and in in balance to investment range Magnificent market markets, of created and as year diversification XXXX, which likely choice. positioned. In once spanning greater clarity these level active Templeton that unsustainable. We for is and short, sidelines, stocks full our has While opportunity companies across this a relative X for public private of that capabilities

all our recent During saw and which equity, multi-asset flows. SMAs, towards alternatives, quarter, ETFs net gravitated clients most positive the long-term

market led private alternative in for interest managers. net Continued X to inflows client our largest strategies

Additionally, we regions. non-U.S. continue in see positive flows net aggregate to

We to track acquisition $XXX record billion investment X, Putnam performance. of of Putnam strong that in with a on assets investment January closed Investments adds announce our and complementary are capabilities pleased under management.

XX% AUM AUM outperformed and X, of The brings presence a fund peers our higher, markets. The also $X.X insurance in attractive X Putnam's approximately trillion. Franklin fact, over In mutual X, the and or retirement enhances transaction periods. the Putnam XX-year Templeton's addition to

Resources of consistent In has addition, the Corporation shareholder in Power member long-term ongoing of a to a asset commitment companies management. with group Great-West Lifeco, its become Franklin

the team join key at Putnam a have stakeholder. and as are We have delighted to Great-West talented us pleased to

outperforming interest performance quarter, AUM forward trillion X% X% XX-year equivalents. resulted quarter from composite performance the to appreciation. the on and of of Notably, specialist X% competitive our declined return continue from their results to by levels, $X.XX trillion period. to in Ending option total market increased and from and X% quarter, AUM for provide and prior the increased quarter. due more considered going income XX% a this quarter management. AUM the returns current high-yielding investment benchmarks income XX% in under prior may managers quarter to Turning fixed for recent are X-year Investment year the from increased year the Average produce at to better a prior prior taxable fixed X, by With quarter primarily rates now certain to XX% investment XX%, jumped by opportunities XX%, X, the over a respective now the starting from prior with attractive array quarter, primarily strategy strategies. cash period XX% across in X and assets broad strategies. our $X.XX specific due to investment by

beat the quarter-over-quarter groups side, in periods. their percentile peer X, and improved mutual rankings the XX-year and of fund On majority AUM the X

for was the One decline of driver our largest of X-year funds managed the in yield performance. primary

of private in prior Reinvested billion and were partially $XX billion $X.X Long-term billion of net compared quarter. prior distributions $X and outflows nearly quarter Alternative $XX $XX in $X which were $X almost liquid in net into growth the driven flows. inclusive market were billion strategies, net to to the to the of prior Turning outflows in distributions the reinvested net by strategies. were year outflows billion in by prior billion quarter quarter. alternative compared outflows billion, offset inflows year

XX Benefit Partners platforms Clarion of the largest the Client by alternative a alternative wealth among and capital a combined of date a Lexington to XX quarter Lexington's Partners in billion. Franklin insurance closed each $XX.X funds across ranks its fund, managers, the wealth with channel closing billion X Street partners, Templeton significantly raised the including diverse of strong commitments. and attracted wealth which inflows brand Partners, companies Fund $X.X and distribution Our announced with on U.S. Earlier month, Lexington the alternatives total XXX of largest number funds, net over had flagship global secondary XXXX. with corporate public sovereign fund management and under strategies exceeded group this billion investors, secondary current of partners in in interest pensions, $XX Fund was prior total globally. latest

shareholders million has We between immediately target. Franklin of have coordinated believes fund the delighted of that generalist specialist total are be for advantage. fund flagship closed which provides successfully fundraising management capital and alternatives also environment. and We demonstrates together with transaction which exceeded We BSP structuring that announced Franklin the our capital Reflecting from and of the companies. BSP Street Partners the the opportunity completion expertise backdrop leveraged power of into Franklin origination BSP believe expertise the channel, raised lending very its brought merger the our private billion its Corporation, of to direct by development and for capital business loan distribution significant and accretive across unlock BSP the Templeton our current relationships underwriting credit nearly us $XXX who this a network. a can the on global asset and attractive due focus significant class, Capital Benefit came be U.S. sales Corporation approximately experience, team Lexington $X.X is with deep and alternatives adviser wealth team of attractive strong BSP fifth this the sales market commitments. the deep month, market. Also demand XX% competitive deployed in will Lending diligence, BSP its

further months. now XX% AUM our total comprise our of XX of for alternative XX% For approximately last adjusted represent context, investment and the assets management fees

each of areas more close other custom quarter indexing and has net of multi-asset than Canvas since net the September launched $XXX since approximately $X billion million, Franklin acquisition. has during in achieved terms the Solutions. were AUM inflows platform of inflows Canvas, by the activity and Templeton Investment In the XXXX, to doubled quarter, solution our driven platform

active equities growth, net smart channels. Equity and we be million cap strategies, and client distributions the net billion, all-cap including and risk-off of of garner generated saw institutional beta, net million, inflows retail industry-wide inflows $XXX Canvas core value into interest quarter, were impacted income, This among all $X continued while small-cap continues value, large-cap to equity reinvested others. by environment flows across positive to $XXX approximately

to focused were flows positive we securities benefit a regionally into non-U.S. opportunistic third perspective, net a distribution fixed outflows net Client mortgage-backed tax-efficient continue regional aggregate for from in quarter. regions net Although positive consecutive From interest the in which income $X.X billion. resulted model, global and drove strategies. flows multisector

markets, are grow. including For manage that context, in now to billion we non-U.S. approximately $XXX emerging poised markets

see long-term our improved U.S. gross the net Although we U.S. XX% sales, by to excluding the are approximately distributions, pleased from saw prior quarter. reinvested outflows,

ETF investment offering increase net year inflows approximately flows billion. to benefit XX% Including quarter over Putnam, a ETF $X is $X of consecutive see from ETFs, continue resulting a AUM in the of approximately instance, strategies approximately of prior investors generated the We AUM $XX for vehicles. billion, with in the billion, fifth quarter. representing net in range of

investors offer industry's managers, from the the has Templeton to dozen different of ETF, portfolios. consistent trillion we bitcoin staying offer on with customize According are to truly Earlier by expected Cirelli emphasis in continue SMAs ETFs month, best and as one and $X XXXX. look SMAs grow launched their market. first now disruptive to ahead we industry-wide bringing popularity a specialist our reach to innovation to the about investment Franklin assets trillion Importantly, individual in represent this $X.X to Associates, of technologies.

the net third positive ended for billion consecutive $XXX Our and at generated SMA quarter flows AUM quarter. a

Franklin and Canvas, ladder SMA strategies positive quarter. Income We continue flow for a to strategies, progress in make territory with each platforms across muni the with

but saw over $XX level diversified our remains specialist this quarter, to Our institutional class across and pipeline asset mandates pipeline by The funding bringing of increased one managers. billion. unfunded investment

Turning financial $XXX XX.X% increase from by Adjusted results. by quarter, to quarter. declined year from the X.X% an the million briefly prior operating income to prior

employees. cash invest for strong to and us allows discipline focus position investments to the on We and continue innovation clients, to benefit continue of expense growth and our and shareholders net in

of Franklin the recognized of world December, hard all recognition work in clients. pension to them our to and the source by our on for tirelessly and dedication money was in as to of who worked investments. behalf Templeton places Finally, sincerely management for a of credit one pride and around the to organization. their This I'd thank our best employees is like us work

questions. Now let's to up it your Operator? open

[Operator First from Alex Instructions] from Sachs. Blostein Goldman question comes

the to So Putnam get accretion management fee, Putnam some numbers off of items, this on but kind the us couple broader of Matt, just first with and way, year obviously, maybe, this fees and contribution maybe first and see for of closed, quarter, the the where I of calendar one, jumping update, just of quarter maybe can for do catch-up an give year. guess, you excluding performance update for fees questions point you of out

Okay. give the the into Alex, things Putnam through put to that I you forward also. just mean that perspective, should will probably help update get guide

XX.X Lexington little the of We X.X point XX I for to expect up terms catch effective bit The about or at mentioned points was around the ended basis remember, points with a quarter, in actually previous reason higher. So with up last be basis that we is consistent fees. do rate, basis fee it X quarters. or to

previous catch-up management again consistent to think high expecting episodic the presented other fee second quarter, that these basis quarters we're you episodic and or that second we but consistent events about guide, the the any XX points, other fee high that So to if fiscal excluding about be XX, with quarter recently. for so quarter

the the guide EFR. in which terms Putnam. I'll second, of EFR give annual that's includes in So

on January closed Of Putnam we X. course,

between Franklin disciplined would will expenses And and around be will actually I'm you of Franklin being provide so the and fiscal components. this the second it additions. now. I guide be that out quarter Putnam, quarter, our Putnam, to full can inclusive I call transparent about but for the the you thought see difference we're Putnam individual first giving useful expenses guide with our being and

So of being one-off the any high XXs episodic in excluding I the revenue. already mentioned EFR sort

fee comp compensation benefits, a including for This $XXX Putnam. terms approximately In quarter, and includes benefits we'd and million. of of to million million benefits performance $XX Putnam, assuming $XX be comp expect total and

the going consolidation Putnam. of office based the call, further that I how $XXX $XX we're bring X we to have months, of we includes bring out a to Just year. we time Technology, X million by quarter $XX $X optimization. And we're the the yet Systems on the to down expect long City perspective, down for expect includes million rent million for approximately double rent. context. Putnam million to performance between we to guide in fiscal I be only to mentioned and for This million York fees. Information million last to Occupancy, this million, the was expect double period for of short for to $XX and by million have of $XX fiscal which million. year. million. wouldn't million New estate rent assumes working amount for for $XX because time, $XX on Last terms G&A, a mentioned and that the that $XX for consolidated which of the expect months this Putnam, end to for I $XX still X about reach be be double real $XX Recall quarter, million $XXX million the to able down we for we're of in that $XX is of space we the $XX end our expect our be million million this we of in $XX but $XX quarter, Again, million, and

at We our expect we time reached this to of end down by the about the year. fiscal to come $XX million end the

fees In in of of but to total that means X% to and I gave, year, fees, revenue of at now -- would performance -- New Putnam all be I anticipate and billion to billion. is $X.XX million $XX excluding flat City, but be higher, XXXX, guide you'll to that our including X% that expected then because this what of fiscal be expenses in rent. million. Putnam, for the excludes currently expect guide assumes addition perspective, we markets we terms from expectations revenue X% about that any that's higher else to the operating would York for $XXX million We including the this double performance annual levels And and excluding excluding and about for would amount, which Putnam $X.X $XXX expenses for excluding this Putnam about recall was adjusted 'XX guide, to the last the fiscal XXXX rent now to double the about mentioned to

inclusive the brings fee about In back down Putnam amount -- slightly the EFR, effective down to the for rate, question, has because terms of lower basis it X.X a overall year, Putnam first your points. of to

it number fees fees, So to mid-XX. the slightly catch-up mentioned for guide excludes at the as brings fees, the beginning. the any mid- mid-XX, performance about episodic better for the I than year on This to

Great.

Okay.

of up I'm it, or follow-up my as that all and got I other I guess folks for only will sure you. follow think most I of well.

$XXX around run asset is we the think Putnam where of about as an number be exit Obviously, still update on the a fiscal million of million little I is but get a now? rate, stands operating can about should talked end just well, we want the to sense rate contribution to thinking kind base by $XXX run we their bit being whether just that higher get income year. your

Yes.

little this So break these so bit just down to start down But I'll call all that break to the further, just further. with a numbers.

revenues obviously, that, the fiscal and to we of be but again, would about in normally So modeling the fiscal at stand-alone million million want of fiscal, our second for quarter, in for translates This the be revenue, expense useful between operating This savings terms through income from Putnam $XXX we $XX terms quarter, million yes, second of other revenue, the year, end X, XXXX $XXX million question guide be for in purposes million. would don't least full probably so of months, translates revenue of the the Of XXth expenses And your specifically is $XXX management operating have that's $XXX million to end Alex. $XXX said income $XXX We and the get into X would million $XX by $XXX revenue contribution item, the $XX million. million transaction. we first our million. between reach in fee basically. our to is of time and TA addition, [ ] around At the to

for of terms we single a accretion away. reach a digit on but translates we centers and it's it's have into the accretive, accretion it's Remembering line, to of that. one the that that's near things Putnam quarter only in that's accretive high slightly we parts lot expect this cents second of months right the full full quarter, by how very below dilution, that into. translates Putnam fiscal And so X probably year X% first there's think time year, accretive where the how 'XX. situation about be. about just Obviously, moving the translates this In we'd maybe into fiscal probably

and where Assuming they so today, and today markets is on. stay stays where are it revenue

next America. from Bank from comes question The Craig of Siegenthaler

flows X large months. XX flow have would Lexington net to out the net last been and XX at Benefit over alternatives swing trajectory. flagship the the we My there fundraises a If question is Street, in on back

your wanted terms I you trajectory net on of perspective from up kind fill alts. that and in flows And funds other are So to gap? in of expecting the step

Craig. Thanks,

years, liquid this that the a We had And alternative would $XX perspective growth between $XX alternatives. That fundraising of for our in by in at billion to last billion the of environment there. have the markets. That just expect private in net billion private billion asset a $XX X revenue in mid-single have we anticipate offset bit that's digits. in in into bit gives markets. was So about fundraising year translate and $XX this you little the I outflows

QX, probably that liquid $X and the raised net alts. in in closing far, same we seen flagship outflows the had of in Lexington's you've between In and we So billion the billion markets period, in about $X.X that private BSP. fund

in credit to just for where areas both credit, respect just be secondary, of think can't lot and raise, flagship is that the does like industry strong strong alternative funds. There's special that strong that think in than that distributions reminder, that having XXXX deployed been continues specialists billion think raise being secondary $XXX Europe. XX high, GPs debt demand. capabilities a of say, Just have where in LPs as issue liquidations supply wealth in you equity largest as -- just and the to of their channel the portfolios regional wealth Lexington, retracted you had in they estate to the client consecutive And both Europe. the our where space. wholesaling fund to an the and there look in co-invest how the distribution third less academy there's a where their just on the in that keeps to a of middle then to X $XXX With XX-plus incredibly But specific years assist And XX% we of our billion up of Clarion alternative built had feeds and space, And year the the see again, see the Lex demand deployed we as the specifically success just U.S. market We've surpassed that our expand fund alternatives banks on in secondary in opportunistic we our with well there's educate real year, see at was rest funds trillion being less because to think own fund portion continue came We in and specialists, secondaries more there down lending, CLOs. And about demand fundraising. offerings. a $X channel. that, very interest both do help and down has team. this perpetually we direct private up. With we about advisers kind the by offerings offering, situations, very forward a we're picked team to have to opportunity our of interest educate Lexington from the excited estate of respect talk about we their opportunities the the only, interest we in as and real and real with building are point, our well estate, debt strong and FT of also leveraged but not this. for, help to to only to opportunities partners

so both well is lot as private come same of it in and very we're that together real credit be estate. And really a to fundraise. to helpful in as going the see But this excited expertise making, with years it's

the our helps many our the distribution a the future, products. had And time, position distribution want product meaningful At of momentum in where with co-create more really terms same conversations launches. quarters Jenny, calendar to our to we've now partners wealth partners placement channel. work us success which in to to plan about now the we're into us that things with have with we're is like One add things had the date I able in would X we've mean Lexington,

So the in date that their to market success been final needs. is item the channel together are U.S. wealth meeting to doing come that with in so on lot the has our that we're The we a out management working our our of a outside education, specialist there. now channels have markets we of U.S. the hope et wealth to terms cetera, success market management academy, capabilities, similar management, building of and the of where in level we're in wealth our products in

Bill The Katz TD comes next from from question Cowen.

So maybe up little just talk the conversation question, capital. first bit, switch a about

a announced issued consent that repurchase equity ] transaction pretty the in you have some You [ Putnam. sizable have with authorization, of

balance you're looks sort cash debt. like should the of of X be for if or net we the buyback or of it saying sheet, thinking your we pacing tempo about year? capital maybe [ you as of ] How sort deployment at Looking about adjust think through the

then, Yes. Thanks, also. that. take comment Bill. to I'll And you'd like Jenny, maybe

usual, we're the that trajectory Bill, making been maintain XXXXs. same on dividend on since we as So our focused and sure that's the

you We growth investments. are a There is a all investments. growth organic there's know, going and as projects for lot capital internal and the industry. internal of ton And on very on in call on, focused

sure can share in between the hedge So becomes our we explain. And as perhaps X priced if then always like debt of Obviously, right on as our to means institutional in bit. it And M&A X able so we've the with quarters, got. down, got absolutely know, debt But years and we've a repurchases. you've of transactions market terms repurchases. done year be terms at up cash. shares to stuff us, which most we've and next And got done the things. much when you say is We've X on Life, service be that once position the it's reasonably they're at quite few at we got our globally terms access But share to important interplay more debt, certainly even M&A been we've smaller Then we for fill with X picked X Putnam, strategic a and obviously, backdrop and that's retail make But more look down we've we've we'll that. couple markets we M&A Great-West market's want end gaps is last gaps, or that as this in of the $XXX that to payments like the slows going involving that very example, coming from complicated, of with this we million. involving the more or opportunistic volatile -- or that ourselves M&A. pay of up discussed active, that debt little are to the influences be seen that M&A strategies for to is and extensively. more employee has grants market. I'd sort the much is done, going we both of And in We're what lot to a in the our year as in

as constantly just But we're very equal focused So position much the demonstrated, M&A. of we capital assessing in both on that being last say backdrop. future more dividend we've versus else couple remaining share would what that a hope the return into of I with would move quarters to and rebudget over

as -- the is for helpful. follow-up, an there. how a Okay. on Matt, or are sense or the momentum insurance And yourself can building super perhaps update That's you give or Any us Jenny, Adam. just mandates

that was some in. flow think should billion I there $XX-odd

been discussions deal And that has you then the is what completed, transaction about the complete? backlog the think maybe the opportunity question So with is behind the now that? are that how distribution underneath once the and early broader enhanced stage

income with it to the of Western, in mean, through but about with of SIMs fixed going that actually of acquired Well, we Great-West that we've the in there. well goes the as billion talked come Life, it multiple mix have $XX kind And and so has bulk a alternatives it's -- our year. obviously, we as you I will been And about But that Adam, some to expertise that talk is of because going leverage we're space, And seeing. a we broadly. understanding things sub-adviser want And equity. in be announced to additional to able that the you're more real part we we've capability and Western, when and acquired that insurance [indiscernible] -- we

the would power-related that's our $XXX business insurance including terms of the we've is not billion now, companies. about I about Okay. just flows from in say and scale, talked

So it's a very significant business.

the expertise, there them on to us the And in only a As The We're successful in products been a of insurance, expertise, think well. we you've sell has has but and insurance. of be need seeing account the to one as of also with marketplace, now wider really area, both have to DC those. successful our the will investment hockey allowed salespeople of there successful combine we that we not Corp. stick domain-specific that well our think Jenny they team with as lot really Power Putnam to have co-create been to firms you're some will -- said, compliance. as to think in few there the be channel general And as then launches has partnership efforts in products array very team those very bringing technology well.

on a bit, be perspective now, and really clear. have But for all not that have just right don't purposes, modeling we we nothing's the $XX yet. it's little And I hit a bit purposes, revenue mean really any intents more the Bill, for little billion, just but of to line in.

broad market investment specialist grade kind We managers. Jenny range of and X/X about mentioned, of emerging expect, credit as our bit this a corporate other be across and a investment little to of

effective As it's fee the about probably I about think to modeling, being in mid-teens. you think appropriate rate think the

that mentioned now. this that I begin will earnest quarter in whole. This likely to later in Jenny on think we're as a

beyond in. But and thing. of have large March, we about March transparent we're sure that update of provide sort we that make we And kind this, with you when associated inflows of maybe context just that will course, with will to when you So comes we April, have alongside with important time, billion, $XX to companies. a we're of asset $XX also this, to even managers the group of that the beyond [ expect ]. grow with clear, opportunities Power billion grow other there's And lot -- the be relationships just

we're the So should We're size of them. our what alongside market with aligned share, we it be just capabilities frankly, the franchise. increasing regarding where --

Daniel The Jefferies. next from from question comes Fannon

performance [ that $XXX full million [ XQ a I million around want [ to Matt, clarifications. contribution? guide $XX a I just Did $XXX ] fees. the guide that for of performance of couple A ] was, million $XXX assume believe, the year confirm $XX comp quarter included fee million ] of million the to

[ in quarter. $XX -- we Yes, this that ] first plus had the million the

$XX million, ]. [ $XX $XX $XX million it's million, So million,

Yes. Got it.

helpful. numbers quarter just then of what's of flows then last, in to And That's terms but here round in -- and in fees the we've for that Lexington quarter? seen now for given another final got catch-up catch-up close and happened I'd this like what's of fees, the the the we in XX/XX. terms we on January, March Okay. just AUM should clarify of assume And disclosure the as

out all there's indicated AUM. So fund the to And that's additional release have in press more this when we that of reported catch-up that's our The fees its included at book the point. in they sent that and had no $XX.X fundraising last XX/XX numbers. billion

And there would BSP's the be in well? fundraise as XX/XX?

No, not yet.

Hawken question next from comes UBS. from Brennan The

are and you duration So short about income of you shift And client RFP their base? attractiveness investments. from and as What could as and their far with cash earlier engagement about Western specifically level activity? and talk seeing fixed spoke the you a demand and

Yes.

market the X in money retail going spend then money we little of be build in first and and the meaningful Having And quarters. the don't have in a Brennan, business. talked just a color market to bit trillion institutional kind presence X of about and transferring and is into industry tend the to that, quarters So first cash other primarily from money said in fund on market funds all, second institutions maybe what's of Western's investments. everybody the $X.X

have to that's where capture we the with you're we those do going transition. distributors, However, obviously, which relationships

mean So you doesn't don't it [indiscernible] market get have transition. you even the money if the

in categories ETFs masked. good actually flows vehicle strategies. standpoint, our XX of funds flows half space. And positive in mutiladder some actually, and gross and masked interest in had by income Over a bit it's core Unfortunately, performance income. fixed top SMAs. in are in had the It's challenges our we've we've selling So a were the positive some fixed from

up important represent actually and as they of X%. it's income So sales high-yield, income vehicle-agnostic. largest question multisector about global are credit, about portion really And greatest Western, gross portion institutional the this Western, We've our of our pipeline the to your had to in fixed being think that. fixed income is

have performance ultrashort been clients strategy. think back I But -- efficient, intermediate securities. their tax very the well. Western in as like -- brings obviously, and is performance in the duration of Global [ conversations most ] by -- well products but in additional in global [indiscernible] really have things having Putnam lot mortgage the fixed core or good struggled, as way, core performing and So strategies munis and stable really top-performing things a plus value, positive income good like opportunistic,

And you X% view the there. yield, in cash as incredibly see private well you And as just cuts cash to yielding it able people think think still want this. would you're until reward, anything? we traditional risk we positioned to rate some you rotation we're frankly, seeing the well going that fixed So is well And income public see as don't X.X%, we're demonstrates [ ] be to is argue and some high just not add full same income, if to I positioned, is credit to attractive. opposed our got yielding both fixed that know, capture Adam, what peaking. we're

and the you're add that around. Plus spot seen of Core was I I some on strength Core really Jenny, fixed the and by areas that Core Plus. of Core just in would income masked that of a think performance in outflows turned Yes. number But in we've

If in after hiking. year, the very take stops Fed the index, end points very, the products strong up a the get traditionally, basis of Core those Core is inflows XXX. look Plus at you And XX

products do a those in position poised are well So now cycle, to the rate from we're standpoint performance in well. quite the where as as

Matthew, the lot the be Do quarter speak to to $X.XX [ past from as And also some it you -- quarter $X.X ] then include times Great. this double the the of well have few that Putnam. just, next months because expected fiscal when X the wanted as performances ex like correct? rent the of speak I inclusive actual and expectation billion would billion sounds reconfirm a the I it of plus to [ ] for XX would the items, but you expenses,

of to the something -- it's assume higher But that out want like that up to I year-over-year. on revenue. X% why guide, if is about reason -- that you because went And guide are through normally talk Yes. I as clear again, from -- And the the like just take does know. very expenses don't because a Putnam right. our equation, almost X% That's to impossible detail that's we be and only you revenue perspective, or

to you level. to foundational reducing we're Putman. the So put X%, acquisition. us we And system in margin, the expenses and if leverage operating and in if Putnam can that ask about -- when $X.X just to these $X.XX a addition and process get you often together, of between only when the X% all expenses up well billion all on you to to expect X% expect our that, adding see in the you relationship go -- then expenses of course, you But revenue the that leverage we're go people revenue we up and around to That's billion. between get

be in actually you for from we $XXX for dollar-for-dollar Next a year, expenses, to expenses Putnam mentioned for savings million for realize Putnam, for down million I we XXXX. that expense expenses. we reduction of of the I expect a further that the months $XXX that to come to basis to transaction. X expect year, million on $XX expect to said

a in savings, addition. $XXX least million and million full to about into that's that's million $XXX what For expense $XXX income of operating at translates year,

run $XXX basically you Yes. that your million, fiscal exit -- rate the when That's year that's right?

Yes. right. exactly That's

think little than savings very when day, [ last least. be last the on we number could XXX year, better So least ] on the by on bit But at times the a $XXX at day, this. it's that the I you of the million --

Cyprus Morgan question next Stanley. The comes from from Michael

ask think to accelerates you strategic wanted you're and I Great-West retirement steps capture over could channel. take you some growth Maybe as which push retirement opportunity of on XX hope could the the taking might this relationship, and about with you products the months [indiscernible] to elaborate talk your that you resonate most. may next about the the I that as well Putnam see.

want to you Adam, that? take

Yes.

gave target So Putnam all, those like stable things ultrashort there's first are of and $XX billion of really where terms important acquisition us date. I value think in And capabilities. capabilities assets, the in

right billion historically. in play to really segment had date, can third able now you now, effectively We $XXX year. a been look haven't net If DC flow take AUM target at in a it's play of we where industry last that

within when areas a folks So from say much sales a channel position, insurance in somewhat retirement stronger also a of and we added significantly we're in standpoint, I as where from we would well. Putnam, the position. product most from force X took in that that the

have So larger much, field a much we just force.

that with It's in that products be bringing into together allows just DNA AUM. benefit which important the we now the retirement can will Empower We're field are but partners So it's relationship of mention we a stronger overall insurance partner, power-related stronger with partners. one market go those And that partners lets force, with multiple across the strength us think to expanded really we a custom this to to leverage. about of really I will expanded products. think real what's be about and real us the because board. Putnam's that's the insurance being us the better both forces can better is DC have just just being build products, both us assets that with in with is XX% gives not Franklin about our things, in win companies, of sales all help same some selling

follow-up a on Great. front. And just the question technology

the improving from to of to opportunities multiple and how might about on have evolving Just the you could of data sort speak you tech have, thinking from opportunities you're front what the front. from And consideration? outsourcing others that curious go some see maybe might here. systems stack back across externally into any learned integration that take partnered factors lessons you away you that this sort of

decisions very we're take maybe for like because very these Yes. that and then critical the all involved in Jenny, company. to Thanks, Mike, comment would I'll

investment platform. outsourced be I'd to you takes that all of this parts provider investment partner that undertaking us, fund as on close it's the for for amount say long on process that through opportunity then just on partnering huge beforehand. technology months So with to specialist to and to is we to a complicated wish the to we've effectively time one #X that say and understanding important agency, potential that described administration candidly, as investment What go be. It's going platform. technology very done a of our is on I'd board going single years deciding the we and process. and year, analysis. a I We've XX most That's a We know, technology, transfer implement. was to slower. of but to huge It's moving a faster, long something probably are our it with should implement. a who point like X work, single is are to moved teams all take a We're

savings and by what stage. in So be think and to can so. teams with savings achieve candidly, process you we a time, this we long-term to to those or announce be from while we'll really the coming X it's see we to meaningful industry. going we share other reductions got expect give into. lot at partner are or But that leading is we guide what here things the artificial again, of we're in you we've additional that expense there's to over transaction. resources so premature quarter other demands circulate that that internally expect we when require through the with intelligence, the But many to invest they applied encouraged to this and But on data, be how like

the of add sort want that's to Jen, update you whether do and that? to So anything

No, Matt, that perfect. was

comes question next Patrick Autonomous. The from from Davitt

set picture try update to as reinvested level quarter we from without our dividends. expectations. Could the and model kind Putnam, the flow with of First, give you through an net December tracked on how on announcement

Yes.

that closed slightly and know, we on the excluding January it's it's quarter as before now, period dividends, say, reinvested I'd kind obviously, Patrick, flattish, the the Excluding you dividends. No, X, of positive. transaction, in reinvested we're in

So slightly positive.

mean thing are AUM got X their and XX% in. mutual X- beating X-star all XX% ratings. are rated funds in XX% just I'm their going mutual funds -- or periods. I And to throw peers Putnam's of time of

the equity on fixed got phenomenal they've both and income, So performance.

it billion-ish item. And week, Great-West billion? me to consider but should one incremental? the announced last $XX you clear $X.X the we from wasn't housekeeping Or Great. of then earlier this, win that when were It part about talking is a

Incremental.

Yes.

think I -- that's the from the yes, channel. from retirement

So.

is it incremental. So

Incremental.

the Bank. Brian And Deutsche next Bedell comes from from question

clarification Just one also.

sure the this, not play about think $X the you of billion just or $X I I'm $X markets the current quarter private for but also the of private alternative reported of less market. to mentioned that markets, was them billion I with think correctly, is for billion liquid

so fund quarter. this their -- in BSP so Well, they closed

quarter. those don't last so And in flows you see

about ] what this date quarter. Matt, talking [indiscernible] closed X.X they we're was [ So -- the in the that

charges and does. BSP fees -- they they Lexington so capital, like different just when catch-up call don't the have So

Yes. Perfect.

ETF, mutual total will or -- ETF say, just just That's billion deta. you you in think demand got develop long-term -- clear. strategies want cannibalize about fund sales if a X And you the also Okay. franchise lot of ] into growing thinking growing a the incremental [ the are using vision these the products actually incrementally funds of think top might the includes years your over, mutual But from marketplace ETFs, where course, X can just for or be it this about how that tranches next smart but you're whether ]? on nicely. Matt, for I managers. ETFs, you to broadly, XX Adam -- and then bit [ $XX of your Jenny, guess, Maybe the talk already more semitransparent you've just to active which

Yes.

and distribution growth fee-based moved So I ETFs how paid traditional and fact that driven think things frankly, world think fees lot mutual And tax efficiencies towards obviously, more the the the SMAs about A then the funds. the has and like of with are from key is to and.

risk-adjusted is capabilities, So we view it investment risk-adjusted as -- our our returns. expertise investment

the but to agnostic we have ETFs, active suite We very in are in on that. we vehicle focus small really management. the And which a deliver passive we

discussions as as came So like of And channels. And them. in market. starting to at a to places ETFs, well so growth vehicle I the that look things more wealth had can we in flows quarter channel. great haven't platform. And the Asia, there, tool in but ETFs. to in you're more at a a active where like close internationally in we optimization Canvas the works in ETF seen see just bring growing really tax much then to they're wealth way you it certain SMAs leveraged to in a interested from kind provide the penetration on in side, $X the look very SMA the We've tax-efficient billion to be also the as are

really billion had now think diversifying of we've we're Putnam over have when other I $XX into great added these that our and success types strategies into vehicles.

U.S. now Fund, since well the it the as was outside been we launched has Income-focused have market in which Income well Franklin as again traction really the ETF, the So Franklin received having

ETFs to strong of difference, So benefit of retirement, you're funds. are important where been mutual funds made the ETFs cannibalize the channel. and been us. in that's some where hasn't the it a -- the from areas very our underpenetrated an we case, But incredibly seeing of Yes, in mutual for have area will tax support actually probably to retirement

while cannibalization ETFs. growing grow that to any make able also up of we there, our retirement So in as we're for channel that

you So Adam, do to to add that? anything want

that, just passive, smart point that is being I about some active. beta the XX% ETFs reiterate put not and numbers around vehicle, are Yes. are just of would for about us, the to assets XX% our

it's XX% So passive quarter. of of -- only only only passive our was it flow ETF passive is the was for XX% our XX% business, ETF in our AUM and

a begin wrapper, also cannibalization, funds, more And to would the an ability So board as to the to to actually management to think manage say more threat we that's portfolios active and within where great is active think to our indexing people as there we the direct growth to us. so see us now thrilled Canvas have real that position. consider and in puts see on about ETF well. we're We use point that's Canvas very mutual that to good to

mutual And and is that more the is I to passive ETF. that passive think of threat fund Canvas [indiscernible] has a

another point around question come had performance a We guidance fees. to in on clarify

to the billion I of of just ] of clear, be $XX guide So an $X.XX to fiscal guidance, includes the annual performance that [ assumption The quarter second guide million around fees. gave is billion fees. performance XXX $X.X excluding

be Just on clear as you I want that. but fees. It know, double always the excluding we rent, inclusive includes excludes it our of performance fees. just guide fully performance Putnam. give annual That's to

concludes session. back Franklin's Johnson, the CEO like I now comments. Thank to for and call hand Q&A final you. over This would President to today's Jenny

forward look to today's we participating speaking to all everybody. for to Great. Well, again our to once Thanks, just you, thank work this dedication And And quarter. and hard able thank in be to for I everybody, call. you want again, next employees their deliver quarter.

Thank you. This concludes today's call. conference

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