Franklin Resources (BEN) 30 Jul 192019 Q3 Earnings call transcript

Company Profile

Participants

Gregory Johnson	Chairman and CEO
Jennifer Johnson	President and COO
Matthew Nicholls	CFO
Glenn Schorr	Evercore ISI
Craig Siegenthaler	Credit Suisse
Ken Worthington	JP Morgan
Patrick Davitt	Autonomous Research
Daniel Fannon	Jefferies
Bill Katz	Citi
Michael Carrier	Bank of America Merrill Lynch
Alexander Blostein	Goldman Sachs
Brian Bedell	Deutsche Bank
Brennan Hawken	UBS
Robert Lee	KBW
Michael Cyprys	Morgan Stanley

Call transcript

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Operator

Good morning, and welcome to Franklin Resources Earnings Conference Call for the Quarter Ended June 30, 2019.

Statements made in this conference call regarding Franklin Resources, Inc., which are not historical facts, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a number of known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from any future results expressed or implied by such forward-looking statements. These and other risks, uncertainties and other important factors are described in more detail in Franklin's recent filings with the Securities and Exchange Commission, including in the Risk Factors and MD&A sections of Franklin's most recent Form 10-K and 10-Q filings.

Operator

Good morning. and your Kevin, operator is name I'll call be today. My conference As recorded. a Instructions] is reminder, [Operator this being

At this Mr. time, call Johnson, over I may would like Franklin you Chairman to Resources and CEO, begin. Greg Mr. to Johnson. turn the

Gregory Johnson

conference to quarter Hello, and third call. welcome our

volatility expenses simultaneously making the announced our to research, organizational teams please investments deliver a market focused additions management, data result we portfolio investment wirehouse trends changes both and the senior-level are necessary with despite overall to month, designed [ph] analytics business performance, improved the while our channels. managing very in report encouraging to to on sustained We certain quarter. strong the We and momentum, performance. several Sales recent enhance investment some during as remain institutional again and This in capabilities.

been With have Officer, Operating CFO. first call and us. business. is me Matthew for to immersed We're months in already Jenny our very with Johnson, has us President is our his today joining us now and earnings with glad Chief Nicholls, is him for three our and Matthew

now I'd open up line your Thank to you. the questions. for like

Operator

is Thank Our Instructions] first from question from you. Glenn Schorr today Evercore. [Operator coming

live. now is line Your

Glenn Schorr

I'm sales maybe the environment. and flow kind could talk Thanks you a assuming two-thirds-one-third. are about that were forward. the just what's very complex, is curious U.S. the this do of you between a inside what outside like driving in rate mix but be if basically little much. And might sales could implications and split AUM balanced XX-XX free more going And while more the flat

Gregory Johnson

think seeing that of movement seeing draw of in certainly sales is from statement I on retail so where kind moving the kind move of a not that. have retail would here a that from mean at lot to the was the of general the would pressures things, of there side Yes, that I globally. And just and We'd -- the look percentage you're stay. to and -- take a and you're that around channel some I much think first, conclusion much number a I I passive U.S. as institutional to really

think you pressure you do. don't -- that I So that that like have

So I those would retail and numbers increase. on global side of sales, channel more overall, think probably the the the should that in that pretty just do some continues last the U.S. relies And outside quarters especially few to over bond well, global of

Jennifer Johnson

some add some maturity just plans, selling we Asia in and both had have fixed success in And I'd Europe.

Glenn Schorr

Okay. And I it? one the in pipeline, not but -- funded take that's yet yet

Gregory Johnson

funded during quarter. that the No, one

that quarter think that I that $XXX was a the was total funded. million during -- one

Glenn Schorr

then doing is more of products and And how then just on more broader talk about to platform? Benefit maybe performance their Street, their both and across importantly, capabilities going, what leverage you're one just to distribute your

Gregory Johnson

going. mean think I how pleased with very Yes, it's we're I

for but more to As as well whether those you BDC building the having success going the sales and different to progress, making a the like it public retail then funds private to we're get and platforms kind they're cycle, there. products, be know, it's of the into management great leverage we're new wealth channel, equity market, with as interval REIT working retail -- are

had feel I in and and both meetings And think over the months like globally, strong So channel. in we're optimistic we the retail XXX getting reception very we're last five institutional about that.

I'll the Matthew anything to on very BSP. far add wants as as business ask of growth. pipeline forward optimistic or stable and if terms right report now still And AUM the very in to at profitability, on we're Nothing and looking going Jenny

Jennifer Johnson

to and comments it does add I'd million both and side. the $XXX in on interest, interest funded on strong bit in but the take say the quarter, with little pleased market. the been retail and just the response to There's institutional -- Greg's the would a We CLO longer very just we've globally, sale, I on

Glenn Schorr

Okay, you. thank

Gregory Johnson

first -- And close second-half targeted the next fund. opportunities first XXXX to I -- the think large is their of the fund senior in

Operator

Thank you.

from next from Our question coming is Credit Craig Suisse. Siegenthaler

Your line now live. is

Craig Siegenthaler

Thanks. Good morning, everyone.

Gregory Johnson

Morning.

Craig Siegenthaler

Of raise? would comfortable any into an cash the discretionary before $X considering deploying investments level billion what debt and acquisition this in of feel you

Matthew Nicholls

morning. Good

in result always us quite means most using which for all series single terms I probability that low. conservative outcome, for is of balance conservative is of of a way use going likely The transaction to cash of cautionary that answer would or the stock. I we're in are any transactions transaction our an for of and sheet. acquisition, point remain of we'll structure the a pro larger how think cash of that a we that a that to we're much cash forma would to in combination consideration any to terms flexible but the make and transaction And use

Craig Siegenthaler

follow-up Thanks, Matt. commentary a wealth as And just managers. on M&A the saw here. I on

thinking businesses of are targeting you DXC for what I'm So type acquisition? a potential

Jennifer Johnson

is Fiduciary think Trust, and obviously, we we that think we a from and business that's one So scales. benefit great have,

one. multi-generation. we acquisitions be a type that kind have interesting So so don't think be the looking strategic you would and of a you're high-net-worth some in we'd enhance big for have can acquisitions We high-net-worth dealing there's with business, fintech when where that of markets presence,

younger more often self-service some more in capability interested So interesting that buying in that have and technology us. startups is so to is the generation

Matthew Nicholls

to have Trust a Fiduciary foundation build business, and And is a we upon. great good

why the managers that concentrated in in the know pronounced roll-up managers the very And frankly, different with of more marketplace. all And transactions into wealth investing significant. not and be no is think net there active that equity, is wealth transaction being strategic activity that reason in could amount isn't any very flow. private equity is integration activity in private particular and across management around wealth I

Craig Siegenthaler

you. Thank

Operator

Thank you.

Worthington next Morgan. is Our today from coming Ken question from JP

now Your live. line is

Ken Worthington

redemption it's just first your Maybe since size. business business, $X seen on a on billion asset equity been in Hi, $XXX class. global you've years four-and-a-half then quarterly about that's good billion Since last into that inflows about the morning.

if can problem upside. those as equity issues the would where you today, global And of then, of Maybe the leading you outflows? there's seem in So do the sort it And that help to stop turn you or biggest to team, joining franchise two next could maybe more here, steps the might lot Matthew a the asset the think side the see solve the there tide here? contributing with you're strategic to that be as about might three slow what are years, or losses. M&A the something considering on though

Gregory Johnson

-- I And at without if you'd say, look No, right. just think absolutely flows, in you you're all overall right, Yes. be probably look positive category and and that even this the flows. that that at quarter

it a have So Templeton, we've have XXX performance about for your the us series all differential in of style between it's basis that growth talked of mutual and points about and every MSCI really continued. that where we call. trend a deep has to But on XXX and just value you indices, quarter another value

is to attention reverses value it's very to stuck So Templeton manager, get knitting -- difficult has and back. and just it's that a core lot until deep a its of

channels, the is pressure the the passive. have and active which retail in you then And

build group the more of flexibility I allows what our think do solutions is to the have core managers mandates. cycle that. us successful had through That's this

years successful five-XX a It's record $X.X global inflows, its have fastest billion just platforms We now. with one manager. funds. today growing -- with very past getting getting But our growth long-term on of and it's and with

So but that doesn't make it's a up have other franchise been deep side, any value manager when as very powerful difficult. as the you on Templeton

So that I needs think change. to that

some a for us say We a have offering you bound strict minute. within the not it's the manager continue active to organization, or do and and to that. of -- in that really, that can when be But make we I out will future, think do speak is to important how changes and Jenny to you discipline and an there at flexibility by

growth of capability within core to we that's successful value. the with have capabilities and build and of things. And those SMA assets have solutions are very and sleeves the very of We all accounts we successful some global our doing managing what

specifically changes we to Templeton that have… speak can just the with Jenny But some of maybe

Jennifer Johnson

announced And Europe. when have acquired brought recall Templeton's we big in been relationship Alan CIO. the probably of two him has known who hires global had working he and in Sandy Asia. excited the at as been John a bit better team and And you the of he and equity Dr. Partners so then was we the in. long key year may Nairn Alan But end very back little Peter the is Bartlett he of the working bring has to Sandy Norm there Yes, chairman Boersma closely. just Edinburgh And coming hires and Director there; as very And is with group. Alan Sartori a in retires Research.

this while and sure growth average portfolio And building to XX.X this risk. and XX. there a People outflow, things of been times. hedge underperforms that are it about got it's say a value one through full who is Templeton were reality make versus the we've at fund cycle is take obviously of you want the at PE the SMP when they the But is look the few

the And there. and when would to this with be great focus great back And good think But make have franchise. in we to give still rewarded people a in meantime, sure we invest continue business so that this. we is a things value, shift and talent

Gregory Johnson

group bigger with you felt that the say Mark some need we more flexibility a And when also markets and the there. we flexibility I portion add where Mobius make emerging style would become did would successions I in look Templeton, and of just markets and And emerging has IT we in changes the indices. team with at

a group. the opportunity through performance we And and far quality We the And in that group. process have is the for institutional think first for changes also time side that it's that managed change. on real excellent many as with the

it. suddenly think to figure we to. the but RP efficient are new ways hard very something out more how we large flexible base, more it's I be value are institutional say year in committed is going to it's growth to very examining be out think the But more [ph], space become I to with Templeton's in flexibility So, think we figure I just how to to

Matthew Nicholls

withstanding to we a Greg, respect not have both would on asset your say growth very M&A Jenny management. by With have to all and internal I proactive referenced wealth the in going approach great as M&A question we and organic management

We transactions growth large those to and but not diversification of really handful of frankly sense. small our only scale create business, of are a shy much specifically promote make

demographics the objectives on think of those acquisition are as expanding the where we Benefit growth are business international focused believe Street turn in certain upon second make strategic investment is asset would us. Amongst makes to because we very win locations of our activity,and and I we scale can globalizing, important trust. other We to of tremendous on make We very and Institutionally sense. A and countries. our accelerating business build things, then expanding big sense subscale sense. a focus on wealth fiduciary mentioned we ago, and certain

Ken Worthington

you channel. Okay, the And time insurance, then your months? insurance business, the outflows remember Could on a bit foreshadow opportunity out on as little thank you you. outflows we more? the good over number play this the there next And asset anything highlighted DA in of to the well, quarters. -- comments cop last flesh maybe in any quarter just you had up allocation does following for a side XX for I the just had

Gregory Johnson

pressure it's are Yes, under next that assets a all of list. But, to of continue or traditional transitioning passive in anything mean to I models, any do significant put still mutual I whether those you be from standpoint to or under allocation occurring the a don't we assets fund volatility there watch asset continue flow lower is quarter. the and that.

forecast to report have we these insurance new we that replace models companies, growth. lowball next that as to say would new is allocation I new think have within for we as new and hopefully, can said and a area. and is the this but far had continue in what hard that's plenty competitive of generally, as that on one always flow I that, of build be and a interest us this lot think teams to to And older for what quarter, a nothing wins allocation And we, asset There of from as pipeline just before suppose do. quarter. and we and mandates you see kind we

also fee we Canadian a that they're in Canada moving fee, low we've all, fix out in wins. KX significant big ones lower couple equity of big the that side. mandates a we had know but think ones, seen have relatively some But Canadian I big one, the few specifically, and in a and but win very were we

kind X wins those and and billion So say billion of losses. and look that we in at between have X just we out

And some it's somewhat can't look that next kind don't will we dates that. for come so wash at beyond But know, come the We a of of quarter. those the will are pipeline best quarter think, in when I And now. can next mandates. some out color I funding in specifically of as right we give give of much we

Ken Worthington

much. Okay, Thanks great. very

Gregory Johnson

Thanks.

Operator

you. Thank

Davitt from is question coming next Patrick from Research. Autonomous Our

line Your now is live.

Patrick Davitt

months, over you've in you with year more you what you. you also three morning, the how And think be at bit and may good next around that the two or a frame evaluation targets? any Hey, and key for for Matt, the I theme, see potential potential because guys. priorities another, position guess, M&A the been about opportunities as looking parameters changes you within of

Matthew Nicholls

as to have get as group. speed the priorities been finance my on to possible So up quickly

of across that's doing big here group lots things different a countries. all, First of XX

So is thing I've that. the first done

on more focus centralized working thing level we on corporate groups been form corporate the that. function the more across a centralized and the Second in on firm different have is to development that all strategy

to can select across lots strategy. in as time wealth classes, focus different geographies, asset Third where do on There's and we is to I've things and want of asset different management, referenced. really we our

without So on management biggest committee we executive to and very going what focused is those where of both expeditiously panic make I've important focusing with difference on to been a me few think been is here. our and the to team firm,

So primary that's focus. my been

to in ability some I to making will, we going is the if about obviously, beginning. talk remarks flexibility fair the our to and that's of top as a focus we change retain our mind our then, you capital structure not in And of on strategically. financial that referenced But amount have we sure the willingness, or that that the cash certainly today deploy prepared

main parts So that's the my to with. begin --

Patrick Davitt

And all on you moving to potential that kind Thanks. expense number and thoughts Okay. one timers the adjustments that BSP of and change through you if fall size make including you year-over-year and that change? when any XXXX, that could XXXX lens, what then, reporting could including and the guidance, on think updated is make the be of do the non-gap of

Matthew Nicholls

Yes, so XXXX, on is XX% to that. no XXXX about net and and S&D from BSP to XX% XXXX adjustments fiscal fiscal plus including items of non-recurring

So that's correct. What's your second question?

Patrick Davitt

type you do be adjusted number? non-gap to your reporting What to one-timers where a XXXX adjustment? of of scale number. think the earnings reported a out Thoughts change a lot be extent would And the you about would these to the such moving of an make

Matthew Nicholls

staring at see it intend our We at take Accounting way with try it the in adjustments as And right we reporting table financials. we have just at think gap cleanest the helpful we the to we obviously sure us But me in highlight complexity, our who to I Yes, is remarks. we is we until prepared have report that step make Gwen is the Chief prepared keep as also one have moment, remarks is from the do our way further and and Officer [indiscernible]. as the possible.

yes, are GAAP we finance. with So sticky

more something complex. do we So

Patrick Davitt

Fair enough. Thank you.

Matthew Nicholls

you. Thank

Operator

you. Thank

from coming is Fannon question Jefferies. from next Dan Our

line now live. is Your

Daniel Fannon

for fully clarify XX BSP loaded expenses, that's the on going that guess it's number on flat? inclusive XXXX to be fiscal a follow-up just I Thanks. on to or here of question just to

Gregory Johnson

yes. Correct,

Daniel Fannon

of you've follow-up anticipate income And I Okay. curious side the on the also commentary around should any back with or talked of changes some kind made, of just in changes then so at global obviously these from about see terms you bit detail bigger you guys actually consultants you kind the fixed you of changes. it's of little probably much done a kind on these prepared changes flush I'm what remarks is some are hard the doing there push to you see if so because in a a externally of guys a know more kind beginning equity intermediaries changes around out deal, any of internally are of the what little sure just but some the are have

Jennifer Johnson

people, of that. a retire been is thing these always Templeton long kind and I and while bringing choose Global think on they're the I say of around feedback, people wait having so do has that put mean takes surprise none people sort see the tenured a changes. Equity on a own come that the Naren process going on new CIO, the to as a to say Having the in and Sandy stamp puts have to as investment to I of investment the end Group as the process their one and and of firm a said it career and you

We proactive team out we institutional that in reaching Templeton think were over to the and feedback clients very had on the changes. good explain I XXX

actually acquired of obviously leverage is income, to across and that, had when our Forest the to came while incorporating creating some continue Dr. to income quantitative groups, On science fixed-income opportunity Random we're she the but there very somewhat decided data was addition we've is we Selma the fixed that. teams recognizing had [ph] in Group in in do Insights there broadly that internally, what it more opportunity to fixed Group this

Fintech the have it as new sure strategies, focus well of having that that. make And firm, science really opportunities we the as just really data on focused highlights by Roger quantitative and a investment based kind and so, on as

evolution data the think the process, view strong in sit they're their but that not available we out investment information that to really see it a things and to as a we as quickly. I it are now where investment time anybody technology evolve in process in evolution, So is with natural really going and could this there way until don't evolve think incorporate evolving

to been received, these for -- it's little far time it takes but things always So well time settle.

Gregory Johnson

these at it it's And of cautious. think more little me [ph] end Mark it are some could some I think day are And right to change, put going it's positive you the it's question Twain think a I way, the some on strongest the reminds And think but footing recognize take we the we line your business. of progress have cost like. I these that look don't the term, very short a forward for that the that's business, moves the way mall old to are I in a right, and we us at

Daniel Fannon

Great, thank you.

Operator

Thank you.

next Bill from from question coming Citi. Our is Katz

live. Your line is now

Bill Katz

for much very you taking already. the my been Most questions. questions asked thank Okay, of have

moment, for class on made the the for institutional wondering speak you could or Just if and month on to staying seen retail flows a ins by what side by of the asset in on just appreciate you've sort outs geography.

Jennifer Johnson

business. positive So we partnership Trust. the U.S. quarter fixed on, in a Franklin in the the are side progress the talked traction Exchange it we're personnel -- we had retail think on the and see a retail to global in asset wins investments to We've uptick have trusts and there. flows XX% that investment fixed from The progress there channel tax made equity on we've I with big I some New on and on in seeing international the income, free, Wilmington the sales mean we're that seeing last good the about our some side, with collective We're the areas of had on SMA sort an side, focus income. and on class, positive continuing York Stock

as in that process, new is still good had we hires good I have of is yet some think X, the decile seeing that you -- flows… having fund, areas focused it's quarter traction we're and it really its year and on which net course then greatest seeing but with X Dynetek So traction, X, we're there and XX early know some our in personnel, far as top

Gregory Johnson

Was or that the about talking question, quite… closed July couldn't you I Bill? I were this mean

Bill Katz

answer more a how I strategic appreciate tactical hoping but the about to July on of a was was update net gather maybe looking I basis.

Gregory Johnson

think market to tax, close so trends that, the with you're mean been seeing emerging it's that's retail that a ago side billion stable through I inflows $X is have uncertainty a continuing in the Yes, few quarters on with I from I has don't the $X are quarter. the and outflows, in billion think one to this gone relatively I

be I retail terms generally bonds But changes little fund with which call and But other out a that's global U.S. So that strong the position I equities continue a that then our in well wouldn't with any had has the a cutting that well short it think as rates so things just drag on rate as I think a nothing been versus of rising multi-asset run to as big think it's bets, balance. big so bit the fund. said may and wouldn't big underperformance, its rates term call really has very pretty I position of of But short not flows. affect Fed anything has the done and big more for reversal nothing fund I perception a in a environment.

Bill Katz

back sort of as look couple Okay, to that's Q&A. in a of maybe were transcript we reread a of today as I for months three bit how XXXX about fiscal dialog for the about the conference think thanks And calls ago. moment, fiscal I where be of does sort the and It at helpful of last versus little XXXX seem difference you to answer. come follow-up of some just a a the and let's expenses combined guess the

to of to your that the ring Is those savings sort highlighted it a a sort of getting timeline fence prepared you that to remarks that is savings? had to in annualized earlier. that within now what's slightly So really you flat tried the lower and as

Matthew Nicholls

Matthew. it's Bill, Hi, Hey.

I of think there. a couple things

the bringing it of a is want our has to that First little of overstate in it down a all bit don't I guidance a changed sense fraction. fraction. really

So I marginally higher talking think it we lower. about now we're were marginally beforehand being

and point. some does on capital the investments it questions by we include includes data, some to referred the business So this on that's make triangulates that management, science organically multi-asset first that meaningful back the That that and way to continue technology so to. Jenny of around

very we we're while our making sure that internally also around have expenses, compromise we So doesn't are around disciplined the growth that strategy capital. our

XXXX So another question you on have Did XXXX? that's the answer.

Bill Katz

No, to guides the gave fiscal a XXXX met that's helpful the it all forward more? that or for and opportunity Is into having tax even is you quarter. look down fourth bring fair an that

Matthew Nicholls

Yes, the actually reports remarks. read there was in the clarify a tax meant what's bit what I was I initial to rate, and this the think of morning of we prepared think confusion I preliminary around just and I all there want so

tax revision our that XX.X% in quarter XXXX to is talked to that that rate That about XX% we would XX.X%. the between XX% will So that XX% be XXXX the onwards. full-year tax quarter, inclusive we fourth XX%, estimate referred between we to and referencing rate this the means be

Bill Katz

guys. That's great. much. you you, That's Thank very Thank perfect.

Operator

coming America. Thank next Carrier Bank our you, of from from question is Mike

live. is Your line now

Michael Carrier

questions. the taking for Thanks morning. Good

focus flow picture, the the the First in time given you over one about that how are just you just just XXXX, your guidance currently? amount trends of and the guys mentioned the bigger on business for efficiencies that margins facing maybe on you in term are some the the thinking making you're investments I on yet of some expenses longer guess

Matthew Nicholls

to being business back obviously be achieve can't But Look running a if that. that you like the about. make around that expenses. or some working we'd guidance we focused that to the need is to we a in new putting as our of to I'm higher just our to have margin investing mean while reported that a Greg about we're on the same investment I should a moment giving making on items and any future right time fairly and guidance into to we that talked strategy long-term process the on I why our dollars go business recirculate at XX% to incredibly disciplined budget that not I that and we top investments is up. very comfortable Well going described now. that we non-recurring is let We things all margins as We're the say early sure we're for XX%, it impact enough and on have We've that focused ago been place the for closer on stay have we're days. making Jenny above with our expenses. obviously through give what it But already company that's of the XXXX. that. as exclude sure we're than

Michael Carrier

just then guys institutional mentioned color side on the redemptions on some the And in growth guys increased $X you side, I flagged in you're few you like maybe the and the then I think and on additional provide Greg seeing demand. solutions just you maybe some known then pipeline July. that Okay, $X helpful. update think platform And flow traction billion range. that's on an where billion mentioned

past it's You've more that there? the you years progress the performance few some given whether the you're seeing you're products where that over made some and of see to traction seeing starting have of or or improvement in the investments

Gregory Johnson

there. if think of we market retail of New York year-to-date just the think to I year think six think some market out focused about, I you over despite of and we've mean result think I been the that up a Exchange or of good picked more something U.S. just doing there out and XX% investment made lot in last I share five restructure flow talking about something. seen been numbers Stock that's our quarter of the and we a generalization I that major a Jenny we've pickup like sales investment mentioned some four I we significant categories, pretty I specialization think and that things In look Yes, share at saw or last additional of of four different we've pretty

we I really in solutions all the think right allocation business she the comes traditional to can then now continue business, Jenny than a be the for that for and a think separately that's there's we and big to outside a our that business being strong side to managed business add these the size accounts that anything. into asset wants growth scale if where that very people ask taking capabilities of push think to a that's a I'll only play few real going is do way or and but area in fund

Jennifer Johnson

some both SMA as business firm that can with strategy to our take diligence from funds portion to kind I No, sell fund and through breadth some the is like four strategy of us. architecture be outside having the business a model that we do external that the that an our with got right, area. managers, models, have had we sleeves solutions that advantage It the some type that of think are months we is we've approval internal one of and think I real model in us well advantages and open I has opportunity have as internally channel. it portfolios capability we the due able evaluate in so that's SMA think portfolios for can that on so that given we think and think the completion was allow wins that some last team as income board just a and been And that I

will that that there. pick think we so And up

Michael Carrier

lot. a Okay, thanks

Operator

you. Thank

from Your next coming Blostein Alex Sachs. is question from Goldman

Your live. now is line

Alexander Blostein

everyone. good Thanks. Hey, morning

you for M&A around one guys. another Just

there? products core some it's in market money the side the the still so have some some core product gaps fixed Thanks. or income or products plus traditional kind of whether of of some equity of gaps kind and of the either expand couple last in on your Curious targeting where pretty distribution have deals consistent around your of for you thoughts to the for channels might traditional the been comments alternative products get for the continue to the of space fund, growth on appetites your of quarters. or appetite type most Just

Gregory Johnson

above Yes, all say list. I just of your the

accurately. You hit it pretty, pretty

Matthew Nicholls

made to think Yes, one I I the was certain and going accelerating exactly I on objectives. points of investment earlier was say

practically and them referenced that there you larger be of we some couple areas but have everything much just We there right are in. a should

very very, this. focused we're yes So on

Alexander Blostein

question around payout you're I be your And could release talked side? the volatility curious tactical the income kind so that Is into about income lumpy, some more XXX% pretty given non-operating you GAAP the a plays returns then capital because that just thanks. kind in of the basis targeting net in think just returns, how the non-operating Great, I'm forward. going of capital of on

Matthew Nicholls

XXX%. GAAP income net Yes, target and

Alexander Blostein

so much. thanks Great,

Operator

Thanks.

Your from next coming is question from Brian Bank. Deutsche Bedell

Your line is now live.

Brian Bedell

just thanks more my asked much. maybe M&A. on of Most questions also but Great, one have been very

areas view smart either that scale Some your thoughts, that into other think acquisition. And you any you beta on whether potential quantitative maybe mentioned then do of up a a get smart certain you small just there strategies with and could to your organic traction. get you or answers also acquisitions distribution in also your going lot organization Europe some were beta could where geographies an

there appetite timing pickup deploy that to little do but patient a in the that M&A together always wrapping cash with to the of than with and that to been bit a but have, a be more wrong of urgency with later? word, rather sooner cash look the M&A, you've is through is So you obviously a

Gregory Johnson

various getting we're deliberately, instead we options the on. that very me Yes, that to also I to mean many and objectives the investment assessing exist, word just active a places too those I use confused we're in mean but being of so across down handful, quite action focusing in

it. on focused we're So

on we can We of to time going label a timing, a we're put put on what do really, we that. In even can't terms immediately.

we said prepared Next, I small, medium, and us. a or is, when that is being our in wealth would to be and observation discussed positioned the there very do think activity capitalize we asset that that. well to candidly, a fits are that well These where in lot but our of something transactions large this with that's are complicated find is mistake remarks space that strategic on we've and

would on think secondary mean later, performance if the making will to that thing asset I next add classes. we be when and don't larger I do cycle. that the comment something And rather just upon we sooner exactly is to it. flows I large, act but over right the find net will timing than what it's you're when The markets to over bets on So the,

the So these blowing that sheet that's not by out when want making you just and important, on of it's or segment up expansion. blowing I a hard thing we're big ten to point reserves a capital that's then your of to the bet Matt market think to do to near balance don't anticipate back a but

make you see factors in that one are think bets think I be we a if prudent have about less those of you where one to get and smaller to correlated our get strategic where it equity just well. you I weigh there as new scale would you work quicker to categories little and more could that bit move or a some probably out use in

Jennifer Johnson

And beta we that I'd got it's, our the fastest have as as space in our to our ETF well stellar area, been be remiss performance some but in accounts. take because smart plug growth separate opportunity and this of team it's

I have. would We we So not what would that probably from grow buyer. a continue we to think be that

Brian Bedell

on functions one that's your a yes, potentially and fund And change follow-up to just Matthew be as long-term of color, office that outsourcing forward? to know is opposed great other you've the period going view any over view there internally kind and of doing in maybe, of running but scale them the of into some used that, administrative related I maximize and would back potentially

Matthew Nicholls

outsourcing administration second you announced which you cost of of between, I want just we XXXX. be going of million was, announced I to question in we that million I savings achieve answer, fund which and and So as the those think that about clear, answer the Bill we $XX part know back already that of think in our I between was how fact brings Katz's question said didn't to the we and to much $XX

for I fully - that $XX think million that XXXX to is. in $XX is answer XXXX the million about fiscal

reason those that that we takes XXXX around XX expect save missing obviously time the which to the that other is because some with The to XX administration amount is from outsourcing, from fund why associated implement.

else of we going we around continue can. that, But of intend outsource options as further to our anything at this technology than review terms now In course time, to don't we but right to we… efficient be as

Jennifer Johnson

just it many has was you for ways have Well, efficiently that cost it outsourced you say and in-house philosophy providers be it, economically for because cost aggressive we what low that been hasn't that I it as It to to do difficult support was sense locations sense footprint leveraging been it it would were outsource our effectively look as we do in -- is always that historically And - as that global necessarily changing time. at has over didn't business, our it in can. find And the to to business. do. the make evolves, makes this most that we

concluded, times looked is So point. it that But many concluded at And the have where wasn't the something administration, that changed. it and fund that's had now before things at with we cost-effective we we although evaluate.

Gregory Johnson

to that of existed that we earlier that that what be a administrations also, front And in provider serve could for needed Yes. there change. served on wasn't

action we the in same maybe did, the of future, we transparency that that our took that. so happens view So, changes thing with

Brian Bedell

fund looped is in And accounting with fund administration?

Jennifer Johnson

Yes, yes.

Gregory Johnson

Yes.

Brian Bedell

great. okay, It's Okay.

that so appreciate Really detail. all Thanks much it. Okay. for

Gregory Johnson

Brain. Thanks,

Operator

you. Thank

Hawken with is UBS. coming question next Our Brennan from

line Your live. is now

Brennan Hawken

just taking Good my morning. Thanks here. questions, one for

quarter guys have teams? happen overlap a the PM about you to of these with spoken to of strategies and adjustments some and elevated these day staffing organizational Did strategies. flagged redemptions any bit changes the you that So,

Jennifer Johnson

that that's the the no, Did the question, -- the results redemption specifically the have, the -- of If your is question, your did is were redemptions redemption -- organizational changes?

Brennan Hawken

impacted the Or teams overlap PM adjustments? those with that were by did they just

Jennifer Johnson

but overlap, would. did they They

For was to firm business been had example, of a the management them for the a acquired one decision asset large in the that redemptions of result in bring house.

anything the So correlated because the in PM made they I believe, a had was, a to bring It changes? mandate, was house. assets decision while with global really it to or equity strategic wasn't do it

Brennan Hawken

Okay, got it.

Gregory Johnson

were And most of announced recently. changes these just

Jennifer Johnson

Yes, yes.

Gregory Johnson

PM it the on wouldn't So anyway reflected be changes. this quarter in

Matthew Nicholls

-- to referring was I Yes,

Brennan Hawken

saying the were of redemptions? you result that making Oh, changes You're these a that…

Matthew Nicholls

July but color thinking No, I'm was be referring there might I something… maybe, to the that

Brennan Hawken

All All right. right.

Okay.

Matthew Nicholls

we for. that should prep Right,

Gregory Johnson

and end Yes, I some, category, the this underperforming just I expect under core tremendous day, but categories the think at mean, cycle. over devalued the think of I growth we of the pressure

would XX safe is than article, the times positioning I you every active the not in the and Templeton are investors in more common that, who think, today, have earnings are that you've this across about that held where read defensive their protect say today have, to defensive really holdings own markets That's I case and more So with think much fund. XX, where quarter the got top a are. a anything more people the and if way are even believe left that there managers these, portfolio last portfolio stocks like just seen fact never ever, at I you XX the you by

interest they pressure. of or rise when a growths day, under downturn rent at out, the you I have So the stand will rates think end and

Brennan Hawken

can us of commiserate. those to Yes, financials cover

Gregory Johnson

Yes.

Brennan Hawken

Thanks for taking the questions.

Gregory Johnson

Thank you.

Operator

Thank you.

is coming question from Lee Robert next from Our KBW.

is now Your live. line

Robert Lee

Matt, patience. Thanks good for Great, And welcome your luck. thanks. and

like question about to of you but quick think real M&A strategic recurring most it, any organic I'm back the a and there been in as in just of growth. change going Just to asked and willingness mine curious terms transaction. I structures. acquirers, your historically, XXX% of do, much treat ownership majority competitors to benefits different of are think some -- pretty ownership then more a mean with willing

that the willingness of of and in landscape, there are alternative to So done you've think space, think place shift different your particularly structures also a maybe historically? you as taking the

Jennifer Johnson

it. better own so to decisions we it's Having capabilities. of get is because some said joint the manager, ventures, real keep that. say the we made I Well, out us we advantage maybe team, take an to that where successful and we acquisitions we XXX% that make than you actually, there's, where the to that, that foreign that's of have have for it's has leverage investment mean, there'll market of all things And scale a I'll support the around, openness is and markets it independence of be one internationally, situations difficult partner

independent you you and the you of obviously you And when benefit. even commitment, alternative on leave around get business get see a with ownership. you compensation you XXX% structure the lack conversation when But investment so distribution focused out managers doesn't as and And there, to it get it the you team. appropriately in don't confusion and have get that have

not is And completely that. manage to if it said, we a so it it, of JV than XXX% made ownership. against to so cognizant it, would we're have more you complicated but when much a I we're So like is try sense do it

Gregory Johnson

the and distribution as and as market probably it very all creating that. global said, think the But side opened and very platform and that is getting somebody complicated. brought you great about and I offer gets own really difficult when a for a from own. side Jenny you on platform to corporate makes culture just stake what we XX% or distribution from integrating leverage the sense XX%, or lot a that's captive a with think a in captive of distribution summary certainly talked up Yes, I And a we've minority servicing

lot You really of not production. are on things spend that that a energy

Matthew Nicholls

financial subscale accretive way, but perspective, any of margin a from along lines And to say to I don't be is us us. in anything this make really those a think sense needless to expect to we would transactions the Yes, M&A, sort at mean all. I around

absolutely M&A obviously but of diversification versus larger driven are very opportunities. margin and we So come improvement the do around by some growth cost transactions significant cutting, with

Robert Lee

Great, you. Thank I appreciate color. the

Matthew Nicholls

Thanks, Rob.

Operator

you. Thank

coming is Stanley. from Our from today next Cyprys Michael question Morgan

now is line live. Your

Michael Cyprys

taking your and Hey, for Thanks clarifications good question. morning. the

as in pace that? growth expense we of you've that the to you structure investing additions cost thinking additional about that, changes you you as from how as growth? potential forward And related what but guess make that sense with should XXXX, envision some senior-level about are organizational making here, thinking optimizing you're I other could would you're focused more line beyond next So hiring being and on look changes. also and for the be made inflation,

Gregory Johnson

a number a made there's start would the think transitions. I on we've big horizon working lot spent on CIO don't any say of norm there with a succession, gap that for mean the Well, and I or think -- anything now and -- of we significant that time think I right I that's here there's hires. I

we the think don't any of in adding people plans I area. have big So senior

part the of to I'll second flip And question, Matthew.

Matthew Nicholls

and in how Yes, growing structure guided and based or we're doing and I on we the we're business how invest, be will to overall, think our not. cost where need

Michael Cyprys

have that flows, I was could can growth I focus that any changes? progress appetite just outside share you a hoping color with or any staffing, more of is understand the Great. talk for around sort China JV a regulatory of you in Is your approach And follow-up, JV there, just any sourcing China. evolving approach the to about recent the and how share? little you you the partner building AUM, could of just JV, in a bit some given

Jennifer Johnson

JV, we're opportunity So the we're and so at -- to that, able excited a that. pace accelerated looking of we to a so about acquire do certainly have XXX%, they've that be and the

great just out a more that as a some difficult as opportunity The are we support side. of think to complicated and in We always is and that a there and own grow market, we it's seen you're have some flows. China. JV well in [indiscernible] continue great of so when It's kind investment where have they've structure, distribution personnel also so JV a try some has investment to good performance, XXX%, there to

Gregory Johnson

$X today, billion, our where is size in so profitable, $X included we'd be. JV the it billion AUM, and the to of not And it it's but not to it's about like

Michael Cyprys

Okay, you. thank

Operator

We've the end further reached question-and-answer or back session. turn our you. closing any to like management the for to over floor of Thank I'd comments.

Gregory Johnson

we And Thank call. the on quarter. speaking look participating for everyone next you you. Thank to forward

Operator

Thank you. conclude That does today's teleconference.

at participation thank line a your day. you disconnect today. have time. And wonderful may your for You We this

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