Invesco (IVZ) 25 Jul 232023 Q2 Earnings call transcript

Welcome to Invesco's Second Quarter Earnings Conference Call. All participants will be in a listen-only mode until the question-and-answer session. [Operator Instructions] Today's call is also being recorded.

Now I'd like to turn today's meeting over to your host, Mr. Greg Ketron, Invesco's Head of Investor Relations. you. Thank

begin. may You

and earnings of call. operator, on joining Invesco's quarterly to Thanks, you all us Okay.

to release In website. of provided our by covers plan going a to website, presentation The addition today's can Investor that the press invesco.com. This to topics be available the presentation the are and release, information we've address. on press found we section Relations

the non-GAAP the on the today presentation will of regarding Our Slide measures. disclosures review the appendix to statements and certain include statements Please financial and as X measures appropriate presentation these well GAAP. forward-looking as reconciliations or

are not Finally, on teleconference is guarantee provided our the does of responsible Invesco webcast not transcripts edit The nor located for and parties. by website. earnings our third accuracy authorized only

and and will we will Chief Financial President results morning. for Schlossberg, up call Dukes, CEO; questions. And Officer this Allison open then our present Andrew the

the retired XX Flanagan, like second Marty call quarter into First, to to the years XX results. before after CEO however, as few we to provide get turn I'd comments over a who on Marty? Emeritus, Chairman June

it's better to over continued to Thank a with I has and And an the say call evolve but you, [indiscernible] fascinating pleasure to and the you Allison, participate and want create shareholders. to all been seeking Greg. to Andrew of years. It's work challenging turn exciting, a that industry always I over before outcomes been really for in clients change,

been the of the proud organization around firm all for clients, that talented and the and stakeholders, the immensely years, a opportunity I've analysts in of Invesco of engagement it learned success has you, which the tremendous the what from is. forward. all I'm make going this people with There's Over my world Invesco. shareholders, key instrumental

those firms in the all that conditions. into are market our current future across has effectively reality the separates different. navigating organizations environment. are What is The that right organization cycles team this winners not the can very strategy, leading market a strategies right the execute losers and Invesco while challenging industry and across

the stakeholders. executive the our team, are had. clients accelerating and This talented to team is a well Allison team leadership and and ability I'm Invesco great in seeing and Andrew, forward you. laser knows team very and broader of ever and has the experienced senior leadership the to Andrew's I most firm to of all the look deliver focused the making to shareholders. They the in potential, how and full the prepared ahead. for and execute strategy represent growth team's do benefit necessary the on the for and confident achieve leadership changes Thank years rest things

I'll to it Andrew, over you. turn

innovating everyone. with morning work It's of with and and to potential call. Marty, organization to much, to a focus on today, absolute possesses to evolving while for I value as look management privilege global forward be delivering you to we built meet which a investment all such an good you the speaking solid very foundation client-centered significant Thanks and pleased I'm clients continuing with to on their needs. lead

during the in asset front clients robust growth management change talent, stay strong and and to a of in with in exceptional capabilities, of well deep globe, us and markets key relationships period the positions a investment presence have which across of We lead industry. all

core, investment focused will our our for delivering be excellence we At on clients.

model, our attraction by this advancing simplifying for and we in base, will profitable retention our and pace. top believe at foundation, our future. executing of generate and to have the a our pleased ability an not to client We strategic to growth improving committed satisfied expense of experience, to our are are with aligning all and strengthening we enhanced technology we results agile organizational date strong While at and are focus, talent outstanding use our innovative lead being to performance

experienced Invesco, lie the in be the and industry. and thank team collaborative leadership advantage I that opportunities not confident take that has the to of talented, address clients opportunities his place foundation challenges capitalize ahead. we could to I in want for our on to market have the our more in and visionary Marty confronting again provided the

X and geographies sectors and along. the and significant showed recovery relatively Slide moves with With of were quarter, that, uncertainty. grapple cautious In be to second uneven second was client positive, presentation continue results uncertain environment I'll headline today's following backdrop. indices signs the economic quarter financial to start continues of the even while market for Recovery markets on across those investors underlying the given as

index actions Market Client most equity markets, most resulting in assets narrowly emerging a quarter for broader and increases remained cash portfolios. returns or were flat market on appetite equity risk in June, for technology assets risk U.S. non-U.S. large of account see gains continue some to proportion in notably in historically growth and recovery concentrated We large-cap in bond for stocks, off, optimism while providing investor slower client distributed, horizon. were did a China industry negative. as were as long-term the while well strategies the an uptick long-dated international

global is performance the investment on performance of our investment and team. a capabilities and delivery in for across for me the equity key board. our fixed robust platform, remains steadily key Building remains performance of quality our improving management and the focus several income Across

continues high against quarter, and organic growth From business. with the The largest our first Invesco's $X.X share. than our than in long-term demand. we sustained was client challenges experienced quarter the where of there our business growth the quarter is an billion, industry market driver and deliver capability accelerated market inflows more to in and areas several key clients double in to continued for growth global Net AUM resilient prove asset higher ETF in flow perspective, second the diversified

through the organic demonstrated with growth have past sustain the capabilities XX to cycle market in full ETF quarters. growth of the XX ability Our

the differentiated like a Our of maintains products. profile including alternative maturity business and concentration strategies, with loans beta, revenue that things senior competitors laddered commodities, from is

I'm China that returned also net long-term this with business growth in quarter Greater note inflows. organic to pleased to billion in $X.X our

sent income new this the levels redemptions experienced has the higher industry While their industry asset raised since across this assets abated, by and fund XXXX. earlier the slower fixed year have far overall China's lowest in growth so management organic launches industry to remained year

well billion number that XX ranked all which amongst market. us Great our ranking $X.X Despite quarter, this, which from the asset Invesco above second overall six in product fifth in Wall China, is in raised launches new managers

preferences As China funds capture risk-off asset our share retail in extremely channels, additional are the recovers, economy the institutional we well continue fastest-growing market. to Client SMAs. world's management including to benefit mutual fixed did assets franchise and for and income across positioned market both

billion $X net positive income flows a consecutive this streak generated flow our We quarters. in fixed quarter, extending XX long-term positive to

and Our money U.S. this continues share net show billion in strong of $XX brought into the channel. We we've top managers growth money business gains. XX market market the moved market assets quarter, in to of institutional and new

we our coming quarters. from greater clear fixed as overall interest horizon picture and to expect clarity rate the We continue investment on benefit income in expect strong and performance the franchise becomes grow to our the more

$X.X equities, and equity active in billion Within strategies, outflows negative. to long-term net we market outflows. XX% slow emerging quarter, client been industry demand equity net our experience active of accounted for second recover, flows the global nearly where and remain did has This of

with class, these our and asset but outflows $X.X in the net last strategies developing performance stabilization I'm persisted to While lower optimistic client last headwinds in experience for further as have investment quarter, continues were markets Invesco is in flows key returns. assets This risk meaningfully net demand on consistent than for improve when for of year. billion.

in positioned an earnings we real capture are private during due management discussed this well second U.S. experienced we excellent and asset headwinds, wealth more sectors, long-term underpenetrated both conditions, the we has the areas record have $X.X and private Despite net both overall markets these track particularly in challenging growth and these on in channels to estate private outflows classes, in quarter. in to our the globally. year credit in in As we the been near-term last and growth market billion call,

and is going capabilities Allison We years to expect comments. more to an private be markets our engine our on provide and future alternative that much color in of in her growth later business

inflows. institutional a in client channel quarter, where quarter modestly first From billion an especially had in strong the and in $X.X quarter net following comes this flows we fundings is quarter, years. and of had positive management channel the $X.X the wealth were net for And This in our billion outflows. while outflow three first perspective, second retail

higher pipeline mandates discuss alternative in will robust our portion of Allison As later, a yielding equity our and strategies. remains one-not-funded and significant are

The testament many longer-term our that client built we institutional strength have business and over growth that our of the depth to relationships of years. a is our channels of

am caution this Building growth continuing as across capital client industry. in to priorities part in strength, shareholders abates I invest and begin to to such, will as for areas and the we confident us. see As channel again returning key robust this that balance top occur growth reallocations are of sheet

To half that million the $XXX that repurchased in end, first common to we note June, of I'm pleased in stock.

to sheet an the the attractive position able balance has of firm hard last We to build over on the capitalize are valuation years. several because worked that strong

determined to are progress. build that continue We to on

a are performance of financial high Invesco. We to committed in also level driving

front striving profit clients and our keep will We service also growth. while for center accelerated and levels

position quarter. we related continue in and changes the announced The changes opportunity to to for leadership February more have firm, a second us put organizational unlock in in the implement we

in are today. may that sources but the be of appropriate action company were necessary to eliminate the simplify We complexity past, and no longer taking

the scale. strategic will will investment we growth us The growth are of these primary clients taking of our same actions ensuring recovers receive an to one our be savings. our as changes we benefits will to cost the and quality our areas the shift that's service investment have priorities Invesco. profitability seen identified This exceptional and set continue hallmarks while of of of help of over advantage further At near-term take and time initial enhance that time, revenue and

additional continue efficiencies and Allison Work an opportunities going on further is detail identify to provide action, shortly. and enhancement to those efforts will

advantage Invesco. opportunities take work we be not challenges in created CEO more to on confronting well the in years of of to do, the is I team opportunities over have lots XX execute of is there positioned could the Marty as marketplace. the Although confident place that address and Invesco that to his

going forward to Allison for at our that, the turn I look I'm and your to results, over closer a With call look to questions.

both Slide on appreciation I of my performance joining an begin everybody for Thank basis. want the today. of X. convey with from quarter top a both leadership. actively improved a investment three-year to his also to benchmark This frames the Overall on the going you, second beating Andrew, managed improvement funds in quarter. XX% is I'm for XX% time in to half morning Marty Good peers and us five-year or to in first and

in have improvement markets benchmark equities Performance headwind, this nearly fixed emerging been has all funds. a We we and gross and and certain global core equity excellent performance income in encouraged horizons. steady meaningful but emerging capabilities Performance to lagged see in class. U.S. asset are in time across and

as AUM $XXX Market to billion, further increases was management quarter, and first as Technology $XX and by of than and exchange a the $XX $XX to the $X.XX of an compared second stock higher AUM movements assets the trillion surged products, X. end Slide quarter. quarter. reinvested second combined QQQ foreign to billion end additional increase under of a at in last was quarter, the increase reached billion. the dividends the result, which Turning billion

quarter, money net outflows inflows Net the after outflows billion. $XX long-term quarter Despite exited for $X market than more June. the products and with of the of inflows the in billion we long-term were $X were net billion, strong net momentum the month for

environment difficult asset another on demonstrating data outperformed basis, of the our in growth. value breadth We peers point of most expect net a flow for we capabilities our organic a that

favored billion a $X.X garnered we outflows net Client of strong. demand as capabilities in and active net in inflows And in of are Greater Through and ETF business led our demand capability we our growth capabilities moves second quarter. for Offsetting $X.X as long-term growth the key client the growth result, quarter in this to areas, was in passive China. was by recapturing it billion asset strategies.

Our strong growing annualized net global at X% a with $X.X ETF growth quarter, organic franchise delivered billion rate a inflows. of

posting less to Weight strength the the the which billion launched QQQM, top-selling $X.X million ago, now in was Our which over in ETFs $XX lineup. ETF the AUM key this our grew QQQM, largest included remains than representing three after a XXX net S&P Equal Innovation fifth years in area, and influx.

our net outflows million in alternative inflows second More ending retail delivered Japan class an in quarter, A specifically, Asia growth billion was and quarter. billion Currency quarter We part growth. the commodity for the $X.X several quarter. the second $X.X experienced net asset the rebound of ETFs, improvement from outflows of the of quarters strong Pacific $XX during of billion driver in clients net primary of $XXX net prior in in now, we've experienced with from AUM. flows

basis. selling inflows fund clients, Fund billion in of Henley Income retail a it and from both year-to-date $X.X Our Global net Equity on garnered the and Japan Japanese top making quarterly

are this constructive many of well forward, positioned on experiencing markets for Moving are conditions some assets risk Japanese important in market most and the years. we in

$X.X retail channel was pipeline. long-term in year-to-date we institutional growth net the billion quarter. in the and $X.X first a inflows have in diversified The one-not-funded Offsetting primarily after of outflows channel, of Further, net the in net robust Americas. inflows in remains channel the billion

in Net and X. our long-term quarter negative outflows second to in net Asia discussed the in $X.X Pacific Net joint with Japan rebound Slide to EMEA. venture. in inflows growth I to due resumed modestly in Americas billion a the and Moving were in the China inflows just

billion. Looking asset income XXth with net capabilities class. straight the quarter inflows at flows Fixed by $X experienced for

markets income we market product Net of ETFs. to a emerging from year. net in last outflows, experienced headwind quarter global outflows tax-managed our of the outflows market the launched $X.X fixed institutional emerging included EMEA below Drivers and China, second capability, continued by where our including quarter net net and quarter this from last billion and to spot. SMA rates with growth experienced an redemption the billion outflows offset partially in this Encouragingly, is emerging $X in be similar equities we

headwinds optimistic emerging to that are We diminishing in further be appear markets.

for Private Alternative out second $X.X estate accounted net billion in markets across net $X.X currency $X.X the outflows in $X.X the ETFs outflows commodity have in direct commodities recent billion alternatives as in billion were inclusive net been billion, concentrated with of strategies. of quarters. industry were Public favor and of $X quarter. billion real outflows

June billion our which take platform, minutes a to to management X, I'd in of move Slide under XX. like assets we As to alternative few highlight global had $XXX as

of high Although of asset in market have conditions that a it alternatives challenging for success. year be our made organic growth the key pillars class, one conviction long-term we will the have

we range real the direct the spanning billion alternatives, in strategies, alternatives macro quarter. at in private estate investing strategy. originating with platform, the by second AUMs billion $XX debt. direct competes end largest and Invesco throughout real capabilities, of of of listed alternatives, of Within public estate estate stack real including capital and have is real component estate hedged $XX our a diverse estate commodity Real and

core funds real core as offers of well return strategies. a with strategies higher direct including plus business investment range styles, as and estate Our

platform credit anchored that is business of our private and holds European assets by private with in under alternatives component $XX securities. bank Our capability second loan billion management, our the U.S.

direct have over of managing More recently, We began lending and in private distressed and XXX investments loans, companies as to more equity offer opportunistic years situations middle-market over corporate X,XXX we XX unique as with relationships credit. than well firms. companies senior special experience to

of behalf provide we our XX experience we Slide of investing real portfolio, a direct worldwide. On have our deeper look X, want at on estate where clients to years

Apartments industrial XX% properties property of specialty properties, and direct And XX% account XX%. type. office XX% of approximately developments, Commercial share our residential by and other medical. for mixed-use at about and is are our the of including properties of diversified product quarter. the estate invested AUM the about end comprise holdings second Our The sectors, retail final real AUM AUM. in well self-storage

XX% office direct of funds was work. the the been our of with approximately since of real XX%, in was of XX, specifically, measured Americas AUM managing comprised the down, open-end of and was our use exposure the Several properties it our pandemic, plus EMEA traditional the core of market quarter approach office properties. COVID-XX about as XXXX. and was towards across estate our and quarter, and as direct exposure core first shifted the At Americas dynamics remote XX% second institutional were funds in reduced end our of on In XXXX, March Focusing loan-to-value attitudes the one-third. but particularly beginning the have by deliberately strategies in our real average we've estate leverage and

best These go and a while serve by fund. accounts open-end and our funds the redemptions queue investors range We preserving fund AUM The funds. open-end several quarters strategies specific requests Approximately across in a clients of figures of into each is half bylaws that met take highly performance basis. investors down through the vary queue manage with of effort work in may our liquidity institutional in investors. accordance redemption in established on fluctuate manage with all are vehicles over closed-end separate predetermined time to our a are a In mainly sophisticated our open-end remainder for types the funds, vehicle life. institutional that into may redemption it understand fund. Investors a and net or

business to recently. market in experiencing to X% higher would we've redemption full NAV. a of been cycle, average X% fluctuate funds can of expect our of Of times we This queue like volatility

have market slower four to positioned during successfully estate quarter, Real end real would the has the near open-end In that according navigated until half demand investor that first will second the and redemption been improve. normal operating market the were activity all teams the and capitalize to of private decades. of on significantly, be for our for cycles funds in of expect XXXX, estate As conditions expect of our growth. capabilities long well activity grow run, muted term and we to we're we protocols market

move Let's X. to Slide all

last pipeline consistent with was quarter Our institutional billion quarter. $XX end, at

we inflows new remains Although net we to in the experienced and in business quarter, continue net year-to-date, second mandates. for win the outflows our institutional

in running late been mid-$XX billion to have back range, pipelines XXXX. Our to mid-XX dating the

in and our on been the is lower We market of this that in $X.X range. the view billion quarter. strong So given experiencing that volatility inflows as the occurred the first end we've pipeline net

taking to estimate market in cycle we fund quarters downturn. previously, funding environment, we've to some are pipeline prior the range mandates to our longer As the running quarter this of three to noted four three versus two would the in is

solutions a the increased with our for accounting pipeline last and solutions from total of opportunities. pipeline interactions, see We new Our XX% reflects global quarter. share associated this to enabled into ongoing diverse equity client The second institutional business active XX% we pleased embed about and quarter capability of in we're assets. XX% alternative and engagements the have mix

sequential Now second or million XXXX quarter of million the decline revenue of mix partially Slide in management and due quarter quarter driven was largely than performance higher $XX higher favoring in offset turning a $X.XX $XX quarter the X% year Net of second in fees quarter. second from The to billion due lower the XX. the the to revenues $X million last by was strategies. first than real decline lower was mandates, investment increase estate fees, performance private to fees. other increase primarily on asset earned The lower-yielding

across money on A risk including with $X.XX investor as trillion, for X% for uneven mix AUM for products. performance due billion and has the or market to than average of quarter preferences indices Total passive $XX market well the first meaningful second of quarter. asset revenue a shift impact in had the demand higher as strategies, key our

million which of AUM. was for $XX increase in the billion increase QQQ $X However, market not in we management was do earn average money A the AUMs further fees. of

ex-QQQ $X active AUM AUM billion up quarter. was flat was average Meanwhile, and average to passive last

the average increase second of XXXX, Average As was market total billion of than increased $XX $XX QQQ higher quarter of a the quarter months. investor the money past The billion in XXXX. driver XX of risk billion compared to average X%. second assets sentiment or the primary the AUM given in AUM were by $XX

improve. shift by passive portion preference Qs, billion We base is greater asset passive key X%. that sentiment, a conditions in cost to preference movements That long-term in AUM, risk by should as reposition areas. Average occurred AUM $X align those solutions excluding of and has meaningful believe a our scale continue secular average active and and assets, changes exposure risk declined and returns abate while is trend, to with investor as capabilities capability product of the a that we build our in growth and said, market increased of the mix business mix pressures we for for

our executive and the expenses the Total adjusted quarter of higher XXXX first prior to performance this by compensation incentive organizational We $XX higher in second not decline were expenses. included $XX as included of the second quarter Also in payroll expenses quarter in compensation XXXX. quarter expenses related pay of retirements taxes. in Included quarter. quarter operating increase of expense operating million recognized on our were transaction, second non-GAAP million, of In $XXX of fees of and than an and the quarter seasonal impacting changes. second expenses with offset results integration in a partially expenses such XXXX were restructuring million second million $XX the were of from million they million $XX $XX nature in

to The we retirements As for taken result balance a Andrew the base. the mentioned the we other firm $XX revenue our executive of compensation the simplifying profitability grow million quarter. greater actions was position organizational as the and expense related of of to was scale majority and are I in noted, organization

and these the benefits decisions our $XX further action The the time this over to approximately as we expense XXXX have recognize beginning recovery. annual quarter. million to associated XXXX. run $XX will adjustments of with would the To of be and expect third operating We rate savings from seen in we generate remainder full identified growth over point, model million of will realized of efforts be that margin by our will revenue costs additional simplification

is to action and and will keep progress. quantify on informed ongoing we Work our you opportunities, additional

of we Historically, to to the competitive industry a and As net compensation in practices. end periods range, ratio end when discussed, range to and in to levels, we with changes. current our excluding we've trending revenue has would decline. organizational compensation full-year the of or line performance At range upper be the the other managed at outcome variable retirements revenue the to cost ratio continue expect XX% XX% to XXXX, AUM high towards executive company slightly that above of and pertaining the for been

costs, $X million, lower $XX as of quarter, the offset Marketing expenses office were seasonally first higher quarter. million of indicative than this than the second last we new higher rent the higher primarily in expenses Property, see managing due the quarter partially were spend tightly we our expenses higher than second the activity headquarters. move of typically software are environment. quarter we discretionary technology million that Atlanta now prior $X have Marketing overlapping million and by $X year the completed to in to revenue of end

from of million expenses million prior G&A the $XX $XXX increased quarter.

which was our included expenses. Alpha spending expenses included in on NextGen transaction, approximately restructuring integration quarter Second and program, previously in million $X

level quarters. the average quarterly costs few to on NextGen these the would spending be forward, same at next We remain our Going non-GAAP Alpha will for in expect reflected results.

see increase we first last our a mentioned reduction ongoing related from normal tax on spending The after well quarter, improvement expenses as As for remaining million G&A to received the benefited that as call, lower credits credits in to in period period QX. increase we $X fluctuation in relatively indirect a spending can project higher in G&A initiatives drove we in expenses quarter-over-quarter. technology in

makes second the expect programs while limiting in do and to also key our growth we where spend, areas lower technology balancing the modestly increasing discretionary quarter We're hiring growth cost and of G&A investment continued be so. and critical to lower key are flat Looking quarter. to our We've expenses we it to positions. ahead, managing diligently in use locations areas than been third sense

are team, committed quarters. coming the executive an driving leadership we to As growth profitable in

XX. included costs Moving second was XX.X% $XXX to operating Slide to quarter, changes. in retirements related Adjusted income second million other the for organizational the the operating and was Adjusted quarter. which executive margin

to and would other related operating retirement the org points second quarter been higher. changes, have margin basis XXX Excluding costs

was been the second per quarter, rate effective estimate was nonrecurring to XX% income quarter may for our of and effective would same earnings changes, actual to XXXX. impact second non-GAAP effective the in this tax higher. tax due tax rate $X.XX have of between share We to be and XX% items the on from The the third excluding vary Earnings in discrete estimate pretax rate and second XX.X% executive those share expenses quarter The organizational $X.XX related retirement per quarter. items.

to of in Building million. I'll achieve we balance with of less $XXX We debt stock been that debt our years opportunity. ability billion, net quarter, to sheet several occurred I'm priority, common very buybacks able $XXX than advantage in increased $X.XX lowered equivalent also that shares, outstanding in XX. balance an note which our and the and million pleased net reduction to strength our unwavering X.X the outstanding. Slide quarter viewed to second repurchasing on shares of to $XX.XX, we that average this share facilitated the of or a past balance at The the have an the improvements X% on as in this The million to were sheet opportunity. billion take debt price total of while has made common finish cash $X.X attractive

under defined the second last X.Xx as quarter ratio, lower quarter. leverage Our was at facility of the our credit modestly end than agreement

zero excluding building goal debt and to down are sheet, balance preferred is in an committed net XXXX. even We to the to bring stronger our shares

conclude nothing the organic an have quarter the outstanding firm's at progress second with in on ended while resiliency stronger quarter, opportunity flows capability with We with a our simplify is of notes our of we're $XXX continuing invest again further revolving debt and the and end We senior difficult the sheet evident the credit for To drawn performance address January. this to in balance the the to market facility. I'm maturity making pleased build a of to in million key net growth organization areas.

that we're strategic financial driving so. committed of to mindset talent, performance, to growth confident the positioning a do and As have and level and right profitable high a firm, we're we

the And to up ask with I'll open line to Q&A. that, the operator

question first Our Instructions] comes [Operator Glenn from Evercore. Schorr with

open. Your line is

Hi. Thanks. it. Appreciate

on question real follow-up estate. a Just

Invesco, areas unique but you mentioned. not across low and demand of obviously long-tail as just problem rate, estate real given workouts some is So to higher parts

do So you message more overall that curious like the sum tell the extra get Because good. to look big need comment disclosure importantly, could two that. if us improve? there. could But you And put driver we up what for the real just on I think current demand does health I think to all would of it's wonder products what's to just you that portfolio? if you for a when for estate the related environment growth be

challenging we us, activity is return – transactions, and caused profile, as health a message And these Why start. in increased, it's lot that's I'd of just the have slowdown I don't a That's ability leverage the to market which has difficult. on more of perspective, that from yes, the do on terms it's transactions, to a as rates Sure. good. with where of slows up, overall. the backup is, some some are in a say overall some in a said, to transactions not put it's down the of back the cyclicality Look, of been you it that the portfolio the unique and environment.

we we've positioned a exposure we very performing is and very That good especially the of of diversify feel year, like last portfolio, this. managing of down we strong some decisions that made the And to of where detail about in our to lot I in overall. expect And as downturn advance office as some think are optimistic we're good portfolio would said, tried the performing one long-term, the we of how provided, highlight would an is about well. positioned. everything environment we we're say And

in you see the back back and has and normal wasn't some with We'll as does up? normalization and first conviction the level. helpful. rate challenges bank that activity pick at That in definitely of stabilize pick around markets quite help But second see, progressed think, into more to will environment up. see it to banks obviously, started What leverage start a quarter the bit. I That to see think I a some markets performing the quarter. been, the start take leverage activity you

strong. be And – remains would over real some thing overexposed relates institutional I and that's we be it saw going markets there some last for demand past fixed improve, significantly fixed pipeline. saw certainly, the year the in markets allocations pretty line I to to portends challenges of institutions back and concern, and declined the with is as is, estate to effect equity a income that lot future I the expected. of When income less guess what's markets denominator markets well that of in come the a say think equity as you cause allocations.

just Glenn, our portfolio And global. opportunities, as add to we I'd forward that look is fairly recall

say So something debt for increased to have say hearing opportunities it's different and U.S., market. is real like side the and while the and U.S. portfolio see things United U.S. as than management then market assets wealth we're national is, globally there, real are at less is where in the moment. are in to institutional fairly I'd focus capability the in demand the the opportunity X% allocations outside we footprint dynamics to the well we're the penetrated, States. continue thing on debt the tremendous Also a than is And last and the well diverse of pretty going pretty the I'd estate markets

quickie. I appreciate Allison, other all that. one

on the by line you're On the the the $XX investments comments bottom falling of Should million the and quarter savings. million effect and the to that you. it ongoing like for is Thank end of or terms a that XXXX be efficiency in making? thinking is third in there identified – netting all $XX we

Thank net costs expect quarter in $XX realized you. that the of realized third incur question. $XX little million to with Good in be a in up let that that to expect the million additional Sure. of end. the beginning not And clean me savings we we bit. XXXX,

that would so tax savings line fall yes, be would your net affected, to that to we question, to answer expect course. And bottom of

Thank you.

from with next And Hawken question our you. Brennan comes Thank UBS.

Your line is open.

Good morning. a I'd Thanks to for my like high level Andrew. question. taking touch sort on at here, of

But the additional either added of changes this make a some we And context approach seat? to this reference is to an get You – could simplify to organization. and and updates in maybe of you is frame around as color years. you should on you organization. you of something salvo intend your your settled wanted get And Allison maybe think Thanks. costs. how the like give you the help around the could the referenced many to over hands us about think what course opening incremental into approach simplify

high to Sure. of start Thanks, level to at Brennan. Good questions. achieve. a just trying Maybe we're what

generate of scale So We organization, it's obviously, simplifying and we we quality to better execution, use more the performance. so able profit we investment growth, our the the simplify to that to strategic be to to can want improve quickly streamlining accelerate want aim is our have and organization of business. leverage in also and but

around This going on. examples some investment improvement. started going where what for of forward. we And continue that So course and we've through things to working this process continue quality business continue this answer to to it's A to was year One to of reposition is client earlier and is. team simplification and demand our this an been we year. work your effort question, few will on ongoing did is the

three platform teams for further around and multi-asset So together structure brought we equity. bringing one. leadership our instance, income co-CIO global together fundamental We've fixed into We're our with leadership, enhanced strategy world. the

on. like things engagement we'll simplification, We're around elements delivery. to to looking client and of team our client that focus continue also core investment globalize So

in Americas leadership EMEA. the and combined we So

we're single a products. our and XXX out in We established We and our line marketing custom and organization. taking We're platform. complexity reduced our combined and over by globalizing product digital index product SMA ETF leadership platforms,

lots those side. and to enterprise front-end operating reviewing models move and the more for sort be And and going delivery them ways in client looking our through simplifying changes we're on efficient. base of So take of cost the then advantage and end-to-end

And continue going then the last thing I'd what going say, culture. is to which forward to do the to I evolve think we're speaks

And to organizational started, growth. and to going execution we've to accountability our operating edge so which we're our team. and the a profit We're models, going be we're enhance as be going simplifying tightening around

So hear you me and should continue these to Allison about expect to updates regularly from efforts.

Thanks appreciated. for color that Much all Andrew.

on following question estate, follow-up question. on Glenn's my of For sort to real

you in what assets? office the down break the office, the XQ Americas difference sorry, nontraditional three-year then those And that to price what over to much to How from versus traditional XX% But were And guess? which traditional office, allocation when of – that do you would would traditional XQ the disposals in in numbers? XX% at XXXX declines U.S. how So great. XXXX. I – office defined out to we is look that

would there. first. Let be that The not that dispositions. primarily choices be declining maybe values vast asset made, second of majority deliberate me one That were take would the

to but one it's a portfolio. terrible not exit that reposition So rocky try an entirely to been and environment

and able very to, think show in So I results think, of was I lot think a ways, we quickly. timing been were we I good our we've moved quickly, the

good there, a story. bad news So news that – story not there's a

question terms your sure versus traditional of traditional In office followed I not I'm not in – office. on what's

actually traditional the I what was define the just you just I just term sector Or like traditional? than – guess just I broadly? office use the is yes, office guys trying understand was define you overall as office exposure larger to did to

what No. than define. larger would not It's we

think would about things truly would medical outside consider consider we buildings If than things like kind of office we mid-rise, traditional exposure. what's different to office high-rise be and what you that of

it. Got

Okay. Thanks that. for

And you. Deutsche Bedell Thank next with our question Bank. Brian from comes

open. Your line is

my Thanks Thanks. Good question. taking folks. Great. morning, for

Just about theme. bigger drivers this platform alternative just staying private within the a we of I with couple guess look the forward, potential some of sort of as bucket.

that for you you if just maybe that particularly strategies about the running then And going in forward, the open-end could direct opportunity at in real talked redemptions So estate. you're size currently the lending, do to you given something development or near-term to can pullback more longer term? banks? is potential more strategies what expand And that a really of in that's think extent these you

as to down say was is open-end strategy. again, strategies. And on an of first the that narrow varies though kind portfolio the X%. the we'd above that. rates normal be And would be one. do percentage the of take it through of cycle side quite range. be that, to noted, the it with I'd higher in bit redemption different the I'll open-end and the X% tried Yes, across varies would that we rates redemption And And what a products. we We our

it's are a average, where today. on So touch we higher than

we've Operating years the over normally like business. cycles in consistent very this XX experienced though in very what with and

manageable. So want Andrew, funds. think And say and issues normal any of I lending. you individual quite those it's take there I'd more what hope maybe, direct anything, to concerns to are is quite than across convey or we no liquidity

emerging few wealth and worth or lending. credit, our we've distressed institutions – capabilities out to retail both private and In from it. And management demand, in been in last Yes. continue to net building years direct over from the we continues see high

raises in We have continue asset in focus both and U.S. the and to Europe.

say private I estate our that entrant take will like We but you enterprise reasons it and some a to I'd franchise space, for see think, meaningful to be new we're driver, it a of building markets, private continue that for expect our real to time we're will be, into relatively the the part that reputation demand is. described. given it

longer number longer like come of term? rate that cost considering a with a initiative $X from that run savings? you but just cost be can completely have any side, That's And as and of on Allison, Got cost idea I to sounds like term what number, do yet that cost I of on color. is integrated great we net then to Alpha, should guess maybe AlphaGen we guess, – get the any is it. million And sense it's sizing it potential savings – program, the on that that platform be sort

Brian. the for Thanks Great. Yes. question,

fully So integration our transaction first we've in with our restructuring changes we discontinued as incurring last said for on do with I've base are organizational-related GAAP cost one well. and that the costs now you through thing for cost of loaded And the some reminder A&G A&G, expense. these you a of our just year plus the see had that NexGen after and that, quarter, financials Alpha

cause it that that to was be changes base next the would difference a for million quarters. our quarter we few level I expense it expect in in it the about that at $X and that So is does about second noted overall operating

and XXXX. work will on hard Alpha We at NexGen be really through into XXXX

So for we reasonable will cost updates, right that's be providing the I a ongoing expectation but now. think

some savings we to In of side time. then come once will other terms are will in we go able running will occur live. going of do on we not that. we be savings, not we then are something really the until and – rationalization XXXX. live And would parallel savings And And that for be is

to closer get we XXXX. as So

to over on expense quarter do could cost focused some entirely and improve But right remain on execution for successful base expect in execution now, off a as our we how the are we here. base the So time. we're time on from really estimates focus saw second we ways in that cost providing our you the we

color. Thank you. It's Yes. great

Thanks.

you. Thank

with Our Bank comes Siegenthaler America. Craig next question of from

Your line is open.

Thanks. was the Buyback in quarter. activity Good morning, everyone. strong quite

of earnings power. think XXX% in out most came month of paid June. You buybacks the I your just And the of

repurchase than consistent share And or will to be past more it should your effort more how we So the forward going episodic? expect in trend.

Craig. Thanks,

sheet all us the and and And really had been in on we've quarter opportunistic priorities working capacity progress improving the gave several execute hard has of be balance to the overall. is on parallel which buybacks. we've on that we've noted as the one making sheet look, what think, second been flexibility improving balance and the those I along,

debt and to to so pleased our manage we net our do credit on additional were without And and do borrowings any facility that able continuing down. we were so to

our in not We are pleased see to something those opportunistic – us $XX. at the started So going types forward. when of were we to need that to price a staring particularly with were we position be put with things

well. to should disciplined there. to we so to did shareholders, But the our I have going And in see improve opportunities and time quarter and be some progress you balance we expect And do as that going continuing where make to so sheet. think the we're second over diligent return we're opportunity to to capital

Allison. you, Thank

Just follow-up, my as money flows market to continue be strong.

update sorting this drivers? in can And slows? cash just overall three like doubled on You've you this years. business less broker the us Can if trajectory trends than continue even

We continue market institutional. is be drive don't to on we really we to the make to couple paid important then remember, I high to We've there. top time, don't some Allison can money maybe and cash in. management, $XX and quality in pleased this mean pricing, We're I'll yields to it's to that And think quarter. saw a of expect very comments, off. client share. focused and in expect demand, for with continuing into XX, change. business we're know. a it of growth continue and share side, strong It's moved and the I billion We're market we jump XX% taking the on inflows going Allison, it our I take and deliberate. engagement was with

it. Got

you, Andrew. Thank

No problem.

with Thank Goldman you. our Alex Sachs. Blostein from question And next comes

open. Your line is

Good everybody. Thanks. morning

next take of that wrap a when it's areas, look contribute. credit lending the we growth and private there whether facing time can you of of estate quarters. the bit distressed direct to of challenges over a point, questions private to of and real your several and the it's here. newer, at guess strategy them a you I are some highlighted in couple business, up for or just credit, opportunistic through little kind kind going to number growth the are of markets maybe So

into positive thinking flow to you over will do it you this the are Or breadth as think add inorganic a near turning net product business well? organically mode how term? opportunities So more about require some

Yes.

by start private the organically. I'll places in, think we're focused markets We and to our we're And debt in want we're look that be. to the side of estate now the saying So to We'll of continue real the we spaces in things are present them private – attention. right organically. But off we'll time, pay to if growing extend that, organically. obviously, focus is over grow themselves very

on side some the to which on time. institutional – the of already things will will addition happen covered of we Allison in that the think In things, recovery

strong And wealth and for estate effort real in management The continue nontraded is going market as mentioned, the take ago. be We've expectations with is real the penetration XX%. our and to strategies for debt be going getting started the management through That several than less the some driver real like wealth for our We with estate. years be industry business most to channels. that seen REIT it to in those, I X% placements we're to growth side on to including will strategy, XX% of time.

the we offering with in combined that in have U.S. be strength those we amazing that's wealth invested distribution our an to We've an a pedigree, So going with in think areas and already. Europe, opportunity. in like management

the the to So think couple and us to we years, next in be going could come is it growth of meaningful.

addition to areas space. on be the institutional So that the to going those we're focused are in

think the taking it's to fact wrong? on kind that's negotiate longer. end of Thanks. fair. you transaction right, Allison, longer expectations? that, you of this you given a NextGen, fees Why so Thanks. been going expected? than just original for end there's And guys it. to that Alpha of ultimate It's what of be my down longer do think than has Got the other do transaction, But And room taken it's has obviously, gone all follow-up, for the at what it's gone game sort taking complicated around

responsive been Well, closely strong last say, State have on sides. look, as involved parties to and this the this, both been say around an here. of We've both the is that's partnership thoughtful And negotiating for important of and the would have the with both I and we worked Street. would and so cost years, it I partnership been a it's couple execution time cost the ultimate of on

So end. not happens the you should that on expect something back that's ongoing,

in What's is wrong? that's I for And it say, I to I large parties. and respects, think unturned gone would answer. is or many right a harder it bit both guess

we've together in our working to looking And so for, been benefits very provides the that's this to we're and thoughtful do for way a business. try

everything would So I anything, in think could implementations. say I I going harder say longer probably than large-scale if and expect you technology

is work as it's both I something We And I our of about certainly both one feel don't the good the think good attention now. expected. way through. feel are we parties that that a we we see don't along are that's teams negative, The that's one about underway. huge and where little unusual, right longer We but making but all from we're about taking that fact it as sides. than a figuring we on just that go

– get from heads and to and related and commitment done, obviously, execution that. parties Yes. high down both that from is are working good about we're trying really The other feel the implementation on parties we it,

it. Got right. much. All very Thanks

comes question from The you. Mike KBW. Thank Brown next with

is line open. Your

Or limit like Great of just it to looks quarter, to Great. much. takes In X.X%. for next fee here on something is Has rate, products a fee maybe the the kind that will? about already you that the of year? there very mandate Wall? And you Thank later that been you and this that will if we think you begun expand to through China, quarter, there's maybe consider puts China, some then rates we come look fee impact can as regulatory to next should rate when exit for

Sure.

couple just China. so in was weeks That early ago. of me announced July, Let start just a with

So we right for our are evaluating what now. that means portfolio

the $XX of will of is our in perhaps between now terms quarter, revenue still we fourth a anticipate on the billion we right there. early, of basis but of lot and somewhere being impact. are and as a third about per It's into million estimates AUM, quarter $XX cuts net timing certainly lower, that in through million overall quarter. XX% both Our $X portfolio timing fee those this and about is here so The impact working

compensation also we changes the with share JV. And that's But all XX% of of with that a come Now of it. for that lower lower course, there's own that. revenue,

And the be net able we'll ultimate of the that. So quarter. of think will impact all around at much clear guidance lower end I be that provide income to than third to the

well Overall, positioned market we with that positioning are just overall. say really I'd in actually China our mature given more change

manager is As think we're there, a really – to actually the a have industry serve reform celebrated there. mutual to reminder, asset this And we the accelerate needs. facilitate our we very foreign just mature China, just largest really serve of development investor XXth largest that's the fund business, and XXth going in having anniversary and going better and growth high-quality overall to

seen the the sentiment our we mix for there function that while revenue quarter. means, into uneven that's to revenue definitely the our near-term portends some of growth yield. lot that third impact around and We of actually from positioned gave in remarks just around an the overall the China prepared exit dynamics. on well particular question a rate the net and asset fee we shift your off in across the in are in overall To that we growth. impact, this declines color of capture yield, of and is and perspective continued So overall classes expect a industry risk going what recovery what that think We've of well really a net

fee our some seeing there. We demand fee our fee high assets. within some of I'll passive of are for see are pressure, lower not say capabilities demand even assets our but we we high lower seeing for

in second our fee on ETFs our end the And those the Equal QQQM range both quarter Weight an selling lower two XXX. the our the As would example, kind capabilities. were of largest of for be S&P passive and

the incredibly demand. and hand, that of capture positioned So we we're client areas pleased on flows we're one in to well continue

On does shift continue. What That the the recovery that pressure on dynamics expect fee and I going pleased some we're recover as mix hand, our forward? strategy. said, other diminished we're with seeing it headwinds continue to of in both areas our rates. like equity put in does our developing some market the think to see sales of it we redemptions to relates some and of performance improving strategies, recovery as active we terms mean particularly market in

market modest dynamics dependent continued certainly on recovery here. from you net-net, should So think expect pressure, I

back just I to comments, been just to negative, for market the – a certainly, and more a sentiment couple go can think But a Yes. I China slow. additional has I it's If and mean, been just post-COVID couple of add comments. of little strong the demand I'll And something there position Chinese Chinese come that We're just and our actions said, government's back. which underway. some of pro-growth and that markets Allison policies asset reemphasize starting see growth. conviction reforms and about to is things the management our

coming and to forward moat come. in and management, retirement assets investors' a It's for China, It bit sophistication a position for years is of terms we're in for days our close XX and and being good asset billion early very with $XXX reputation there good early years days a well very in markets to under to bodes in seeing the really that long-term looking competition performance, of in, success around classes.

remarks real follow-up a here the term. interested quarter estate near in view all all near a that the story that kind well. as line know color but on the your as sequentially. this comments prepared on real quarter? And there any just again revenue then of transaction impacted I side, of Appreciate by Was appreciate that kind activity. down in the estate the lower Great. similar other term on there. line I last was And just was

line and Sure. were in that second was was in little line quarter transaction the offsetting a item. negative, lower front-end higher Real But actually a fees that some first what item takes to puts bit estate in Well, as the quarter. fees. compared that

decrease in You really in a by equity fees a just transaction that saw driven were decrease the sales. of some

a in item. takes always lot bit a So puts of line items little and that of discrete

fair quarter maybe or next semi next assume of couple similar would it to be to that quarters that Is Okay. level?

level. that's and kind probably be think look couple it discrete reasonable. It's But that mean I as moves a expectation. I the and down. predict that you modestly of average can reasonable to so that's would quarters, up hard at over last of the

very you Thank fair. That's Okay. much.

Thank you.

Jefferies. question comes Next Daniel from Fannon with

Your is line open.

Thanks for squeezing me in.

are dynamics. So you of take the shift you I happening enough adjusting fee the you little expenses mentioned as effect on some Because there's trend current that lag to over out trend rate. the cost you in you Allison, kind the the for trend? a to wanted on has mix Obviously, continuing? bit year period, time. of longer as multiple side, of been stabilizing, mix do some look announced see accelerating how expense base view then or shift. this with that And been fast clearly, terms the deal But

ultimately, think So beta scale use we excluding margin base, of as appropriate should context. of kind then you that and how about fee expense the in rate the and that think about

the And what quarter, all XX our in about of demand just disclosures. to of fee rate, I which fee a rate. under Dan. in exactly, is higher you know to rates around And abate. decline and time, down in was basis are pointed demand some that in ETF that and basis declined, the those high a you fee growth capabilities. to rates, declined for second point is that our in I do the look let's is the if that of but at has – you are over XX available portfolio I start at in passive point. start our basis think don't look the where where see fee growth the that's because to some points that Thanks, our can again, But just capabilities take that

on off areas last look see that to currency back. we mentality, that you the the be If would more and once a of that commodity capabilities a in in of return ETFs And quarters, would at that our we're to trending around going are risk some of come the expect to of we be higher on side. ETF couple

passive XX-ish So probably think long-term basis points it I is that over horizon. fee I think, our rate, in a look,

there. had has we is just pressure continued in recovers growth some see we and much as side, expect fee to obviously talked firm much economy average, on strong higher but China the given about, that the the the China higher cuts than

Our be the private side, too. capabilities higher market would on

and maybe passive would You to horizon, think our the the start passive out Scale, see be time capabilities longer-term that, and even lot, of second something a something a a all roughly, think talked around and we bit. of our But kind barbelling that. of to continue mix rate even continue bit over to shift, to it part and to time, on scale getting abate you focused starts growth has that, the some see over to diminishes this continue we've our should the more question, take fee and expenses getting of very we about as been we your about to capabilities. out of aligning one yes, a

at organizational how our there structure reposition look garner support can get was we technology it And of of time undertaking work is our continue think support we we eight, some seven, focus methodical marginal to XX continue where an now. and some simplify the the to it's structure are continue takes to business company we It scale the well and base built those to as that years as operational from as to as classes. the scale improvements, years we and organization be will XX think asset the overall can expense now to seven, on who where to we in reposition profitability to and eight, ago really we going part was really

some revenue of Allison alluding to the in on that major impact about was Allison a yield, revenue things are talked those. as which think we and have our of pointed the I the demands two on And broadening and comments markets, yield, client of

the space, the of to our certainly the of terms company, the expense In benefit side. from scale we're scale and going

our from – as franchise obviously private a an versus Allison to be going look required parts standpoint, franchise of alluding was and an what's going we're component are different different. markets think to to expense-base continue the in business I are to, ETF at

just to business our we're look business, scale. by So global to going not continue

that, make our say, our pretty challenge has of The base And tough contend over with. in I we confident think area challenge the been XX sure years. XX and fast making along time, to comments really way, asset At that focus. would operating concluding months, support been well And the really from next repositioned we very changes positioned what is of the we're leverage as operating of the and remixing business that a margin environment I last we deliberate will we the feel structure the to can here. expense we've be revenue remains the to the to few same and improve time, over for improve the think capture start really really to think

Thank you.

I'll over you. back to turn it

All the with a next by we right. of rest speaking Have you, just Well, everybody day. quarter. and great we'll up to forward wrap saying it thank look

you. Thank

Thank you. That concludes today's conference.

at disconnect all may You time. this