景順投信 (IVZ) 2014 Q4 法說會逐字稿

This presentation and comments made in the associated conference call today may include forward-looking statements. Forward-looking statements include information concerning future results of our operations, expenses, earnings, liquidity, cash flow and capital expenditures, industry or market conditions, AUM, acquisitions and divestitures, debt and our ability to obtain additional financing or make payments, regulatory developments, demand for and pricing of our products, and other aspects of our business or general economic conditions.

In addition, words such as believe, expects, anticipates, intends, plans, estimates, projects, forecasts and future or conditional verbs such as will, may, could, should and would, as well as any other statement that necessarily depends on future events are intended to identify forward-looking statements. Forward-looking statements are not guarantees and they involve risks, uncertainties and assumptions. There can be no assurance that actual results will not differ materially from our expectations.

We caution investors not to rely unduly on any forward-looking statements, and urge you to carefully consider the risks described in our most recent Form 10-K and subsequent Forms 10-Q filed with the SEC. You may obtain these reports from the SEC's website at www.sec.gov. We expressly disclaim any obligation to update the information in any public disclosure if any forward-looking statement later turns out to be inaccurate.

Welcome to Invesco's fourth-quarter results conference call.

(Operator Instructions)

Today's conference is being recorded. If you have any objections, you may disconnect at this time.

Now, I'd like to turn the call over to the speakers for today, Mr. Martin L. Flanagan, President and CEO of Invesco, and Mr. Loren Starr, Chief Financial Officer. Mr. Flanagan, you may begin.

Thank you very much, and thank you, everybody, for joining us. Today we're going to review the business results for the fourth quarter, we'll included some highlights for the full year. Then Loren will go into greater detail on the financials and then we'll open up to Q&A as been our practice. And if you're so inclined, the presentation is posted on the Web.

So let me begin by hitting the highlights of the operating results for the quarter, and if you are following, I'm on page slide right now -- slide 3. Long-term investment performance remained very strong for the quarter, 81% of actively managed assets were ahead of peers over five-year period. Strong investment performance combined with the comprehensive range of strategies and solutions we offer helped plan to achieve the desired outcomes and contributed net long-term inflows of $2.5 billion during the quarter.

Adjusted operating income was up 7.5% compared to fourth quarter of the prior year. And a continued focus on the disciplined approach to our business drove improvement in our operating margin to 41.2% from 40.5% in the same quarter a year ago.

Assets under management were $792 billion during fourth quarter, up from $789 billion in the prior quarter. Operating income was $373 million versus $382 million in the prior quarter. And earnings per share were $0.63 versus $0.64 in the prior quarter. The quarterly dividend remained at $0.25 per share. And we returned $158 million to shareholders during the quarter.

Now let me take a minute to look back over the achievements over the past year, which will provide some insights into our longer term plans also. First and foremost, we remain very focused on delivering strong long-term investment performance to our clients, which continue to drive growth in the business. 77% and 81% of the assets were ahead of peers on a three-year and five-year period, respectively, at the end of 2014. By delivering strong investment performance and focusing on client needs, we achieved further growth across our global business.

Our US business achieved net flows of $3.6 billion, excluding the Qs in 2014. IBRA flows are stabilizing with continued strong performance garnering attention among clients and advisors, we continue to gain strong shelf space support for our broad product range. We currently rank number three among peers in the industry for the number of mutual fund placements on broker dealers recommended lists.

Our Canadian business continues to strengthen it's retail presence, capturing greater share of the whole service broker channel. Institutionally Invesco's direct real estate capabilities is fueling institutional asset growth in the defined benefit segment.

Our Asia-Pacific business continued to grow. We saw strong inflows into our Japanese, Greater China, Asia and European equities, as well as real estate strategies.

Our EMEA business continued to grow and become more diversified with significant flows into fixed income, non UK equities, real estate and multi-asset capabilities. In particular, we should note the UK retail business achieved record gross sales across a range of capabilities. And UK equity redemptions normalized in the fourth quarter, demonstrating the strength and resilience of our business.

We continue to invest in capabilities where we see strong client demand for future opportunities such as ETFs, multi-asset strategies, fixed income and alternatives. By extending the teams that we have, we are hiring talent where need be, also upgrading the technology platforms and launching new products and providing additional resources where necessary. The ability to leverage the capabilities developed by our investment teams to meet client demands across the globe is a significant differentiator for our Firm and we'll continue to bring the best of Invesco to different parts of our business where it makes sense for our clients.

By delivering strong investment performance, Invesco global target of return achieved strong inflows in it's initial year of offering with assets under management passing $3 billion at the end of 2014. GTR's strong performance positions us well heading into 2015 and we think this will continue to be a strong growth story. Additionally, I would highlight the other range of alternatives that we introduced a year ago have very strong one-year performance.

Based on our continued efforts to take a disciplined approach to running the business, the Firm was upgraded to A/Stable and A2/Stable by both S&P and Moody's. We continue to make progress strengthening our operating margin to 41.4% while returning nearly $700 million of capital to shareholders during the year.

Before Loren goes into detail on the Company's financials, let me take a moment to review the investment performance during the quarter. Turning to slide 8. Our commitment to investment excellence from our work to build and maintain strong investment culture help us maintain long-term investment performance across the enterprise during the quarter. Looking at the Firm as a whole, 77% of assets were in top half on three-year basis and 81% were in the top half on a five-year basis.

Turning to flows on page 9, you'll see that passive flows out paced active during the volatile quarter and again demonstrated the benefits of broadly diversified range of investment strategies. This is also coming off a very strong active organic growth rate we saw in the third quarter.

We also saw renewed strength in institutional flows during the quarter. The figures on slide 10 reflect the broad diversity of flows we saw across the global business during the quarter, which included strength in real estate, fixed-income, GTR, quantitative equities amongst others. The institutional pipeline of one but not funded mandate continues to look strong.

We feel good about the quarter results and the full year. We're pleased with the progress we've made in delivering strong investment performance and meeting client needs with a range of strategies and solutions throughout 2014. We believe our achievements and the continuing efforts to deliver great outcomes for clients positions us well as we head into 2015. And I'd like to turn it over to Loren to review the financials.

Thanks, Marty. Quarter over quarter, our total AUM increased $2.8 billion or 0.4%. This is driven by market gains of $10.5 billion and long-term net inflows of $2.5 billion. These gains were partially offset, however by negative foreign exchange of $7 billion and outflows of the QQQs of $3.2 billion.

Our average AUM for the quarter was $789.8 billion, that was down 1.5% versus the third quarter. Since our retail related average AUM is calculated on a daily basis, the volatility in the equity markets during the quarter resulted in a lower average AUM while the period end AUM was actually higher.

Our net revenue yield came in at 45.9 basis points, which was up 0.3 basis points versus Q3. Let me decompose this a bit. The negative impact from FX on product mix, as well as the market impact on equities during the quarter reduced our investment management (inaudible) yield by 1.1 basis points. And this was offset, however, by higher performance fees and lower third-party distribution service and advisory expense which added 1.4 basis points.

Next I'm going to turn to the operating results. Our net revenue yield decreased $7.9 million or 0.9% quarter over quarter which -- to $905.8 million. That included a negative FX rate impact of $19.8 million. Within the net revenue number, you'll see that investment management fees declined by $38.1 million, or 3.6% to $1.03 billion.

This was a result of the lower level of average AUM in the quarter and the 1.1 basis point drop in management fee yield that I discussed on the last slide. FX decreased investment management fees by $25.3 million.

Service and distribution revenues declined by $4.4 million, or 2%, also in line largely with lower average AUM. FX decreased service and distribution revenues by $0.3 million. Performance fees came in at $19 million, that was an increase of $8.7 million from Q3.

Real estate accounted for roughly half of the quarter's performance fees while the other half was driven by a variety of other investment capabilities including bank loans, quant equity and global asset allocation. Foreign exchange decreased performance fees by $0.4 million.

Other revenues in the third quarter came in at $34.1 million, that was a decrease of $0.4 million. FX decreased other revenues by $0.6 million. Third-party distribution service and advisory expense, which we net against gross revenues, decreased by $26.3 million or 6.2%. This decrease was largely the result of lower average AUM and foreign exchange. FX decreased these expenses by $6.8 million.

Given the impact on our AUM mix and management fee yields resulting from the continued strengthening of the dollar, we thought it'd be useful at this point to provide you with some guidance on our net revenue yield for 2015. Based on current FX rates and AUM levels, we expect our full-year 2015 net revenue yield, excluding performance fees, to be approximately 44.2 basis points, or 0.6 basis points lower than last year.

Moving on down the slide, you'll see that our adjusted operating expenses came in at $532.7 million. And that grew by $0.9 million or 0.2% relative to the third quarter. Our foreign exchange decreased operating expenses by $9.8 million during the quarter.

Employee compensation at $347 million decreased by $2.5 million or 0.7%. The impact of headcount growth and higher incentive compensation related to performance fees were more than offset by foreign exchange. FX decreased compensation by $6.3 million.

Looking ahead to 2015, seasonal payroll taxes and a one month impact from base salary increases will lift Q1 compensation by approximately $10 million. Compensation will then decline by approximately $5 million in Q2 and remain largely flat through the rest of the year. Note that all of this guidance assumes flat assets from year end.

Marketing expenses increased by $5.6 million, or 20.4% to $33 million. This is driven by advertising expenses, particularly in EMEA. FX decreased these expenses by $0.9 million. We would expect that marketing expenses would average approximately $30 million per quarter in 2015.

Property, office and technology expense came in at $75.6 million in the third quarter, which was down $1.7 million. FX decreased these expenses by $1.3 million. We'd expect property, office and technology expense to be approximately $80 million per quarter in 2015, the result of continued technology investment to support our fixed income and alternatives business, as well as due to increased property related costs.

G&A expenses in the quarter came in at $77.1 million, that was down $0.5 million or 0.6%. FX decreased G&A by $1.3 million. Looking forward, we'd expect G&A to average approximately $75 million per quarter.

Continuing on down the page, you'll see that non-operating income decreased $6.3 million compared to the third quarter. The decrease was primarily caused by lower equity in earnings from unconsolidated affiliates. As you'll recall, this line item is a function of the co-investments we have made in our private equity and real estate partnerships and these investment valuations are booked on a quarter lag. Given the quarterly lag and the somewhat negative markets we saw in Q4, we may see this line item decline from the Q4 levels in Q1 of 2015.

The Firm's effective tax rate on pre-tax adjusted net income in Q4 was 26.1%. Looking forward in terms of guidance, we'd expect the effective tax rate to remain between 25.5% and 26.5%. Which brings us to our adjusted EPS in the quarter of $0.63 and our adjusted net operating margin of 41.2%.

So before finishing on the slide, I'd like to do a couple of things. One, I'd like to take a moment to let you know that this month we took some tactical steps to protect our P&L against further negative FX impacts in 2015. As you all know, a strengthening US dollar has a negative impact on our fee rate and revenues. Invesco's most significant foreign exchange exposure is to the pound sterling.

In fact, based on our calculations, a 10% decline in the pound from current rate would result in approximately $0.05 to $0.06 decline in annual EPS and an erosion of about 10 to 20 basis points of operating margin. So given this exposure, we entered into a series of out of the money put option contracts, which will protect about 75% of our sterling pre-tax income and this is at a strike of 1.493.

And this will be in effect through the course through 2015. The premium cost of these options, of course, there is some money involved here. We'll reduce our full-year 2015 EPS by approximately $0.005. Under US GAAP accounting rules, these options will be mark-to-market below the line in other gains and losses. And we believe this hedge will help reduce the bottom-line financial impact of any further significant strengthening of the dollar.

And finally, before I turn things off to Marty, I know there's always a question about how things are going on flows. And I would say they we're off to a good start in net flows in January. We've seen about $2 billion. About half of that is in the passive category and the other half is in active.

We continue to see Europe grow quite strongly. There's about an 18% organic growth rate just based on January, again this is one month, so take that with a grain of salt. But we're continuing to see strong growth there. And our traditional PowerShares products are growing about 15%, which again seems like a pretty good rate.

Overall, based just again -- just based on January what we've seen about 3.5% overall organic growth rate on long-term AUM. So again we are not quite done with the month, we may see -- actually see some more month end institutional flows coming in. Marty mentioned we have a very strong pipeline so we could actually see that number improve from here. And so with that, now I'm going to turn it over to Marty.

So we'll open up to questions.

(Operator Instructions)

Your first question comes from Michael Kim, Sandler O'Neill.

First, curious to get your take on some of the trends you're seeing across the institutional landscape in terms of potentially derisking or moving into passive from an asset allocation standpoint, either here in the US or outside of the US. And related to that, are you still seeing decision-making processes delayed, given the environment?

A good question. So let me -- I've been traveling quite a bit so I can -- just coming back from Asia, and quite frankly, the appetite still seems strong. The asset classes that institutionally people are looking at for us and continues to be our alternatives, which GTR, IBRA, risk parity, real estate, the bank loans. But quite frankly also Asian equities, European equities, Japanese equities, so really continue to be very broad.

Also quantitative strategies are another area that is gaining quite a bit of interest and on the continent the same is happening. I can't speak to the timing, specifically, but what we have seen traditionally is that when there's uncertainly, people do slowdown in the funding. But we don't have that indication right now. But back to the point I made early and Loren, the institutional pipeline really is quite robust. So we don't -- we've not had indications that it's people going on hold yet and derisking.

Okay, that's helpful. And then maybe for Loren, if you could give us an update on where you stand as it relates to excess cash beyond regulatory requirements, seeing capital needs and maybe earmarking some funds to potentially buy in the residual stake in Religare, trying to frame the share repurchase opportunity above offsetting annual grants?

Sure, Michael.

So at the end of the quarter we had about $1.5 billion in cash versus about $1.35 billion last year in European subgroup, which is what we need to keep in terms of regulatory requirements. About $940 million of that is in that group. So we still need to hold a significant amount of cash in our European subgroup, as you all are well aware.

I would say that phenomenon is here to stay and is probably not going away anytime soon. In fact, generally we think just based on the regulatory environment, it's probably only going to get worse from here as opposed to better, so that's a general overarching comment.

With that said though, you should expect us to continue to follow the policies that we've been following. We want to build up some excess cash, about $1 billion over that subgroup level. And it is something that is again self-imposed in the discipline that we're seeking to achieve.

In terms of the seeding and the need for the capital, those are elements that are still very much in sight for 2015. Given the number of opportunities that we have in the space of alternative products and alternative fixed income, which tend to use a fair amount of capital, real estate as well, we see an ongoing trend of some of our cash being dedicated to facilitate those flows and those products.

In terms of the Religare opportunity to complete our ownership, that's as an option that we have. We've certainly have made no decision to do that at this point. But if we were ever to do it, it would be something probably in the order magnitude of $150 million total cash needed. We would need to put $50 million just to have that ownership stake; it's required by India. If you have more than 50% stake, you have to put in $50 million. So anyway, that's something that we can evaluate in the future.

Okay, that's helpful. And then final question on a follow up on hedging, the pound exposure. Any change in thinking as it relates to the euro? I know that's not necessarily as big of a position for you, but any thoughts there?

Yes, so the euro exposure is about half of what it is for the pound, the impacts are about half of what it is for the pound. Something we've looked at, we don't want to get overly complicated and get into a massive hedging strategy at this point. We think that the prudent thing was to put the pound in place and we'll evaluate that. We think that will really do the bulk of what we want it to do in terms of protecting us from a further strengthening dollar.

Great. Thanks for taking my questions.

The next question is from Ken Worthington, JPMorgan.

A couple follow ups on the hedge. First, when did the hedge start? Was it January 1, earlier or more recently, given the currencies have gotten creamed a lot in January so far?

Yes, it was the middle of January, roughly. I don't know the exact date that we put it in place, but think of it mid-Jan.

Okay. So given the pound stills decline and euro decline, et cetera, it would imply still an incremental hit to 1Q. Now if the equity markets got creamed. I would expect Invesco to tighten the belt and look to reduce costs. FX seems different.

How do you, as Managers, think about the business, employees and shareholders in a situation where FX is having a pretty decent impact on earnings? Does it change investment? Does it change the bonus pool? How should we expect that to flow through as we think to four quarters, even with the hedge?

Yes, Ken, that's a great question. And so, our view is just look at the fundamental strength of the business, right? And you were heading that way in that FX is something we can't control, and to the degree other than trying to be thoughtful and reasonable with hedges.

But as I talked about and Loren talked about, if you looked at the fundamental, go back to UK, go back to EMEA, go back to the continent, the business is strong and growing robustly. And I think it'd be an absolute mistake for us because of 4X stop making the investments when we're making such strong progress in different parts of the world that way.

So at the end of the day, we have to direct my clients and do a good job, but be good stewards. And I think we've shown a track record of being good stewards. So we'll see where this goes but I think as you've picked up from myself and Loren, we're on it and we're driving it hard.

Okay, great, thank you. And then changing gears, on performance fees, there's a little seasonality with some of the trusts in 1Q. And we saw a nice pick up. Got a lot of different businesses that charge performance fees. As we think about the rest of the year and maybe even to early next year, what is the view there on performance fees?

It would seem like the Quant business has come back, the Wilbur Ross seems to be poised to harvest. How are you thinking about it and ultimately, if you're getting this cash flow, I consider it found money, what do you do with it?

So in terms of performance fees as we've talked about in the past, it is hard for us to forecast with any great accuracy because of the very strict accounting standards in terms of realizations and when we can reflect those things in our P&L. In terms of overall levels, because the performance is strong in our products relative to what we saw last year, maybe we're in that range again this year. But again, there's a lot of potential change that can come off that baseline based on what happens.

And I do think in terms of the most line of sight, real estate seems to have probably the best opportunity to generate performance fees in some magnitude this year. They, obviously, contributed this last quarter and we would hope to see more of that coming through in 2015.

In terms of the Wilbur Ross, again that is one where is very much tied to end of life of the funds. It's mathematical in possibility of any claw back is the standard with which the accounting holds us to to recognize on that one.

And I could say quite honestly, the volatility around the carry in those funds can be quite significant. So again, that's something that we're going to keep our eyes on. But we wouldn't be looking directly for any realizations from Wilbur Ross in 2015 at this point in time.

But again some of the other parts of the business that we talked about are generating a bank loan in Quant, generating some good consistent performance fees. So, I think they'll be there. And in terms of what we do with that, a lot of that does drop to the bottom line. And so it helps margin, it helps the business.

But one of the things we've often said, is that we don't want to make a business on performance fees and then lock in long-term expenses against the things that are going to be tied to potentially things that won't -- revenue that won't recur. So we're very cautious about capturing that revenue when we think about our plans and think about our opportunities and investments that we tend to not count that in.

In terms of where the cash goes, it'll be part of the operating cash, along with the rest of the operating cash that we generate. So we're going to continue to use it, but we don't hear market specifically for one activity or another, it's fungible in our operating cash.

I would just add, Ken, to Loren's first point,that we do run the business thinking ex performance fees. I think it can get you in trouble otherwise because the volatility of them. And then secondly, to clarify the second point that Loren made, what do we do with the money. It is part of our normal thinking and we would continue to, as you call it, is it's found money, although I'd say people work pretty hard for it, it would accelerate some of the plans that Loren talked about, ever rising dividend increase or stock buybacks, and while at the same time building that cash build up that we talk about.

Great. Thank you very much.

Next question is from Bill Katz, Citi.

Marty, in your prepared remarks you mentioned you've had good success in terms of placement opportunities and distribution channels in the US. From some experience either from Invesco and other places you've been, how long does it take before you start to see a ramp in related gross sales against that?

Yes, that's a question and I wished I had a very specific answer. I think the main point when you go back a few years ago where that wasn't the case for us and that was part of the effort of building out a more robust retail capability. That is now in place, range of capabilities, the performance, but frankly placement is critical.

And so it's a prerequisite to success and I think it puts us in a position as the retail environment as it gains steam it is going to put us in a very different position and you would hope and expect that our retail results would be that much stronger than what we've seen historically. So I don't have a specific base, but I think, again, the main point is absolutely a prerequisite for success.

Second question I have is, you mentioned that you're seeing a pick up of Quant and we've heard mixed dialogue on that so for those reporting fourth quarter to date. Is that a geographic centric answer outlook what you're seeing? Or is it a market [throughout the term]? Curious what's driving the differentiated opportunity for you?

Yes, interesting. So where relative strength I would say, continental Europe is really quite strong. We're starting to see some traction in the UK, and these are institutions. And again, as Japan, China and Australia and it was topical all -- every area there we're actually seeing some real interest in the capabilities. It also, I think, is relating to the use of institutions using more factor investing or whatever you might want to call it.

And we have such a strong capability there, whether it'd be through quantitative team and within the PowerShares, what was referred to more as smart beta, one in the same. And so it is, I'd say, a growing interest around the world and that's what we're seeing so far.

And my last question, thanks for taking all the questions, I think your January update is probably better than people were anticipating. Can you break that down a little bit of where you're seeing some of the incremental recovery of volumes?

Bill, happy too. So again I think it's in the passive area, it's going to be probably overweighted in the PowerShares traditional products. And we're seeing that -- let me see, I don't have the January numbers. But I think it's some of the smart beta type of products that are doing well.

In terms of UITs are doing well. Those are passive products that get packaged through the broker dealers. We're also seeing, as I mentioned, good strong flows in our cross-border products. And it's the same theme that we're seeing in terms of Euro corporate bond, Pan-European structured equity, GTR, Pan-European high income. Those products are doing quite will.

I'd say institutionally generally is showing up nicely. GTR is really a very bright spot. I think generally, Marty mentioned that it's now at $3 billion and growing. When we last spoke I think we mentioned it was $1 billion. So it's really -- it's ramping up nicely and it's in probably in our pipeline, our institutional pipeline. So again, more to come on that story as we get into the next quarter, but it's looking quite promising.

I think that's the highlights in terms of where we're seeing. IBRA, I'd say also generally it's stabilizing. So some of the things that have been somewhat negatives on the slow picture are beginning to stabilize in the performance. And IBRA is really quite strong now, and so I think it is positioned to do much better. There was one small large institutional outflow in the quarter on IBRA. If you subtracted that one impact, you'd see this trend very clearly in terms of what IBRA is doing. So we're encouraged by that.

And then on the flip side, the bank loan ETF, which I think some people have talked about, that also seems to be generally stabilizing. Still an outflow, but certainly the outflows are nothing that we can't manage and it's been managed quite effectively. And I think there's only about $5.5 billion in that product just so people know.

Okay thanks for taking all the questions.

The next question is from Michael Carrier, Bank of America.

Loren, on the distribution revenues and expenses, it seems like there was maybe, I don't know if it was an offset or something, it just seems like the expenses declined a bit more. So I didn't know if there was anything unusual this quarter or if it was just one off activity?

Yes, I think it's more one off activity, Michael. Again, there's always a little bit of noise and adjustments around some of these distribution things as things get trued up through the course of the year. So in terms of our net revenue yield guidance, that probably will be the best way for you to be normalizing that going forward.

Got it, okay. And then you just gave some color on the January flows. And if I look at the fourth quarter, the whole industry, it was a crazy quarter just in terms of the volatility and the impact that it had on flows. If I look at the categories, so it looks like equity balanced and in Asia were the areas where we saw weakness in the net flows for you. Want to -- when I look in the outlook, it seems like things are pretty favorable. But anything that you saw during the quarter that was not environmental?

It looks like the performance three, five years still good across the board, one year dipped a bit. But anything else that you would say there's more cautious or cautiousness from investors on certain products versus the longer term trend, which had been good and it seems like January is off to a good start?

Yes, I would say -- you're describing this environmental I think is the right way to capture it and again back to your other point. If you look at the depth and breadth of the performance across the globe, it's really strong. And so there was something that to meet investors needs on almost any way that they are looking at how to build their portfolios.

And you're right, in the fourth quarter there's literally, I think it was $4 billion change quarter over quarter just in equities alone because of how people reacted to the volatility. So yes, that was probably the biggest impact overall to us. But again, if you look into 2015, as Loren and I have been talking, it looks like it should be a strong year. I can't speak to what the markets are going to do, but if its sideways to slightly up market, I would imagine a very, very good flow picture for us.

One of the things that if we do continue to get served up in very volatile markets where people are less prone to be putting money directly into active equities, some of our liquid alternative products, they're early days have really strong performance. They are top decile one year numbers, which, again bodes well for the positioning of these products. And again, how they get taken on by the distributors.

There is a lag, it takes a while to get through. But we're probably as well positioned as anybody to be first in line as these things come in. So again, we could probably do quite well under whatever environment comes our way.

Okay. Thanks a lot.

The next question comes from Patrick Davitt, Autonomous.

I have a couple of questions on non transparent active ETFs. More broadly, how do you guys view that product relative to your current product suite in terms of viability and as a competitor to PowerShares? And more specifically, now that Presidian has refiled its proposal, could you update us on the degree to which you think the changes they have made can be approved and what the timeline is for that approval or rejection?

Again, very topical when it came out what, now a couple of quarters ago. Honestly, I think the core ETF and the things that are in place are -- the things that have been driving the industry could over time have some traction possibly, but it's nothing that we're overreacting to at the moment.

So we think there's actually the combination of the existing mutual funds in ETFs; we think they're both great structures and it really gets you to where you need to be. Not so sure what the whole benefit of a non-transparent ETF is vis a vis a mutual funds. So again, as a competitor, product, again I can't describe the future but it's nothing that we see as dominant disruptive technology as people would describe it as.

And I don't think there's the same sort of first mover advantage of being out there first, the first non transparent ETF because it's all very specific to whatever investment team is managing it as opposed to capturing a particular space with an index. So it is one of these things that we'd probably want to remain vigilant, but not necessarily being a first mover.

And let me put it in context, we say that from experience. So we launched, I'm going to lose track of time, maybe five years ago active ETFs. And if there's $4 million in the three funds, I'd be shocked. So it just hasn't really taken hold. Maybe it's different here, but that's been our experience.

Okay and that's great color. Any update on the Presidian product, which I think you are a part of?

I have not heard, only what I've personally read on this thing. So again, don't have any much insight as to what they're doing.

All right. Thanks a lot.

The next question is from Craig Siegenthaler, Credit Suisse.

First, what specific themes is Perpetual seeing in the UK given strong sales activity in 4Q?

I'm sorry, Craig we couldn't quite hear your question.

Loren, can you hear me now?

Better, yes.

What specific themes is Perpetual seeing in the UK given the strong sales results this quarter?

Themes or asset classes, well it's really --

Product themes, distribution trends?

Yes, got it. Okay, the Firm couldn't, it just couldn't be stronger. So if you go asset class by asset class, whether it be Asian equities, European equities, fixed income, global equities, the performance is very, very strong. I think everything is in net inflows, but for the UK equity income capability is actually back to net outflow similar to where they were before the change with Neil and Mark Barnett has done a credible job in his team generating their performance. So really strong.

And that was the point I was making that I don't think anybody would have expected that 2014 would have been a record growth sales year for Invesco Perpetual. And that is really a result of the strength and depth of its teams. And a lot of those capabilities, those teams are -- they make up the bulk of the product range that has been so strong in the cross border area. So again, very, very strong positioning in EMEA for us.

Marty, from the outside here is looks like maybe four drivers are driving the strong sales results. You had a bunch of product launches over the last year and two years, that was probably helpful. I don't know if you reinvested back into distribution, but I thought that might be a lever too. There seems to be more open architecture going on in the UK and maybe RDR is benefiting some of your products like passive. But any of those things do you view as drivers as benefiting our business in the UK?

Yes it's -- again it's a continuation of what we continue to do, right. We do the obvious. We try to understand what clients need and we ensure that we have the capabilities in place to do it.

Probably the most recent areas that of relative greater investment have been in fixed income with multi credit and the like. And again, we look at that as a longer term capability. The performance across fixed income is very, very strong right now. That was an area that we had abroad in which we have done.

We also believe that extending our alternative capabilities into the retail market was an important thing. And that's why the effort at the end of 2013, and as Loren pointed out, the performance has been very, very strong and a second set of launches in 2014. And we looked at that as we told you, we think of it is a three-year time horizon in Invesco. You really need a three-year track record.

Every once in a while there are capabilities that do well sooner than that, historically, we saw that IBRA. We're actually seeing it specifically with GTR right now. And again, I think it's -- we're probably going to be in more volatile markets for a period of time. Investors are looking for a broader range of ways to diversify their capabilities and that was the whole point of taking the alternatives into the retail market also. And as Loren said, it's only one year, but the one-year performances it's very, very strong so it probably bodes well for trends that we see -- that we believe are going to be here for a good long time.

(Multiple speakers) And the only thing I would say is we continued focus on -- RDR is an underpinning for some broader changes within the whole UK environment. The fact that we've gone out with a single transparent fee has been a very positive thing. I think we talked about that before, it affected some of our -- where our revenue showed up.

But we're certainly at the forefront in terms of doing things that we think are going to be quite friendly for shareholders for the IFAs who want to sell our products. And we think we're very well positioned with the brand. And the advertising that we put in place have been really, really helpful for our recognition and it's something that we expect to continue to do in 2015.

And the thing I don't want to have lost in this conversation, though, is we're talking about advancements, if you want to call it that. But let's not lose track of the fundamental core capabilities, the long-running capabilities in this organization are very, very strong. And not just that; I firmly believe that the active management is a very important thing. It's been topical to the contrary; but that said, we're into the markets where they're doing well and you can see demand for them more permanently. And I think it's going to be a time for active managers over the next three years.

Great. Thanks.

The next question comes from Dan Fannon, Jefferies.

My question is on the IBRA franchise and it's been through a little bit of fits and starts. Obviously came out of the gates very hot with good performance and very solid flows. And then we went through the under performance and now performance is good again. Wondering how it's being sold or what change has been made in terms of the messaging in terms of how that product can perform? And do you think you can go back to the momentum it had two years ago?

Good question and so I'd answer it this way. I'd start by the reality and the right way is that clients have a range -- every client has a different set of investment objectives and risk and tolerances, and they build their portfolios with ranges of capabilities. As you know, that's what you do.

But IBRA was always meant to be an anchor in the portfolio, greater diversifier and a risk mitigator. And we always believed and have said, that when you had a very strong equity market, the likelihood is that it would relatively under perform and at the same time you saw the flows happen. So we saw that exactly.

But I would also come back to, if you look at the performance one year, three year, since inception, it's very, very strong. So since inception, 11 -- top 11 percentile, 7 percentile over five years. The three years, 40 percentile, one year 16 percentile. So it's a really strong performer and it is an anchor in a portfolio. And again, I think we have to separate flows from portfolio construction and we think it's really well placed, especially if we're going to be in a volatile market environment.

Great. And a follow up on the January trends that have been so strong. Is this a combination of both lower redemptions and our gross sales or more a gross sales pick up?

I believe it's a combination of both. I think the redemption rate is much lower and sales have come back in January.

Great. Thank you.

The next question is from Eric Berg, RBC.

It feels like that the -- there are not only important product preferences being expressed by investors, alternatives, real estate, fixed income, but it feels too like there's an important difference that needs to be articulated. I'm hoping you can do it for me to sharpen my understanding of investors thinking about investing abroad -- investors thinking abroad versus that in the United States. It seems like they're approaching investing in what they want and what they're doing is completely different in Europe and Asia then in the United States. My question is, is that right and if so, how would you sum it up?

Yes, no I -- look I think you're right and I think that's not a new trend. I think if you look at equity preferences and fixed income preferences around the world, just using those two categories, they have historically been different, they've been different for, I'd say, structural pension reasons is one level. And frankly also people's risk tolerance.

But you also are seeing some changes where if you just go to Japan, Abenomics has -- is making a real change. Where in the pension plans dominated by fixed income, Japanese bonds and some Japanese equities, there is absolutely a movement into non-Japanese equities, non-Japanese fixed income. And so that is a very big change.

But you are also seeing the preference towards equities outside of the States has probably been higher and with active managers in particular and it served them well. So that's what we're seeing and it's a good observation.

One separate question, I noticed again in the back of your press release in the final table, or right around the final table, where you're displaying both your performance relative to benchmark and performance relative to peers, that there are quite a few circumstances, I don't suspect this is distinctive for Invesco and I suspect this has been the case for a while where you -- there are quite a few instances in which performance is below benchmark but quite strong relative to peers.

My question, do you think that the public's tolerance for that sort of performance, strong relative to peers, weak relative to benchmark, is their tolerance is going to become less, it has become less and less and will become even less and less. Do you agree and disagree? And what do you think the implications of that would be?

So tolerance of under performance vis a vis benchmark?

Versus -- yes, in other words imagine a manager who was doing very well relative to peers, in the top quartile or top half or let's say top quartile, but is underperforming his benchmark consistently.

Good question, and what I would say is very hard to draw a conclusion from that. And so here's what I mean by that, again, I don't care if it's an institution or an individual, they're going to have a set of things that we know, set of investment, objective time horizons, risks tolerances, and that benchmark doesn't necessarily represent what they're trying to accomplish with the different investment capabilities.

And I think that's really the very, very important key there. And I think you'd have to look institution by institution and mandate by mandate to come to that conclusion. But -- so I can't give you a broad answer to that specific question.

Okay. Thank you.

The next question comes from Betsy Graseck, Morgan Stanley.

I wanted to follow up on something you mentioned earlier regarding the active ETFs that five years ago you put them in place, there's maybe only $4 million in AUM. Could you give us a sense as to why you think that is? Is it a function of the distribution and what seemingly seems like there's a difference in connectivity between distribution of active ETFs and other products and that needs to be fixed? Or do you think it's a function of pricing or it was just ahead of its day?

Maybe all of those. And I wish we had a specific answer. We've asked ourselves that, and I think probably what it does come back to is how people are using ETFs and mutual funds.

And I think people have generally -- this is a broad statement, if you look what's in mutual funds, they tend to be longer term, time horizon type capabilities that people use. Now that's not to say ETFs aren't, but I think they tend to be used in overall portfolios to modify exposures or get access to an asset class that they might not be able to in a mutual fund. So I think it's really how they're doing portfolio construction and how they're using them. That would be my take on it.

Okay and then separately, you've obviously had great success at taking the ETF PowerShares product and applying it to different portfolios that might not appear liquid but you're providing liquidity, i.e., the bank loan product. Can you talk about what the plans and opportunities are to expand that into other fixed income markets?

Yes. I really am not prepared to describe what we're going to do next, I prefer not to. And that said, what we -- again, the answer is we continue to try and understand what investors are looking for and then we determined the best way to deliver it, whether it's a separate account of mutual fund or an ETF. So, sorry I just don't want to get more specific.

Sure, no, I get that. So then lastly, the lower for longer interest rate structure that we've got does seem like it would provide an opportunity to expand the product set because part of the challenge is the liquidity in the underlying product set versus what you're offering to the client in the ETF. And does -- is that a fair assumption that a lower interest rate environment enables you the opportunity to provide potentially more liquidity than you would otherwise be able to do?

And then separately maybe we could talk to how you're thinking about liquidity for these products in general, given in December we had some commentary from Congress on liquidity and how asset managers are providing liquidity to their investors?

Yes, a lot there, so let me get to the liquidity question. So I think its like this is a new idea that liquidity management is something new to the money management industry. It is absolutely fundamental to how all portfolio managers that manage portfolios for -- probably since inception. And I think that is something that's not fully understood by maybe some of the regulators. And I think money managers do a tremendous job of liquidity management, it's core to their job.

And they all do it in different ways. Whether its keeping levels of cash, having backup lines of credit, if they (inaudible). So there are many different ways to do it. So I don't know that it's such a new idea and topical as others are bringing up.

That said, we continue to do what we've done for decades and just make sure that all the different portfolios have -- the portfolio managers are managing them soundly and appropriately. So that's my perspective and that might be too simple of a view, but that's how I look at it.

Okay, thanks.

The next question is from Luke Montgomery, Bernstein Research.

On the currency translations, I realize it's a crude comparison but we've seen more of a natural currency hedge, I think, between fees and expenses at some of the other firms like the trust banks. Based on the last two quarters, it looks like you have one for two offset from expenses. So perhaps it's an obvious answer, but is the higher margin of the model, or some other issue related to where you keep staff versus where you generate the revenue? I know it'll be changing with the hedge, obviously, but understanding the underlying operating structure and how that translates to the P&L would be helpful.

We tend to because we have fairly large portfolios particularly in the UK relative to the portfolio -- number of portfolio managers, there tends to be good scale there and good scale, better fees, higher fees than other parts, particularly in the US. Similar topic with Europe in terms of the fees. The margins in that region tend to be at the higher level relative to some of the other regions. So I'd say it is a margin topic the way you described it that is causing that ratio.

Okay, thanks.

And then I know it doesn't necessarily apply to your performance, but as you noted, there's been a lot of noise in the press on the poor showing of active management versus benchmarks in 2014. I think the measure of that most often cited leaves a lot to be desired, but to Eric's point, there is a commercial issue here. So I wondered if you could get a little more detailed about what in the investment environment you think it so challenging for active managers and why you feel that outlook for 2015 and beyond is better, as you said?

It's a great question and something that we've taken a look at and I think what's -- what we're reading in popular press by our calculations not exactly correct. And if you look at performance over the last five market cycles, peak to peak, trough to trough, and you look at managers of active share of 60%, so that probably excludes, this is just mutual funds, that probably excludes about 15% of the population. All managers have outperformed during that period, 63%. And that's -- there's lots of detail here but I won't go into it.

My point is -- and that's before you start to pick good managers. And so what it's really saying is you really need to look at money managers through the cycle and what to expect during the different cycles and not some calendar quarter arbitrary date. That's not how the world works. And so I think people could be making bad decisions based on a simple calendar to calendar element.

But if you are ever going to see active underperform it would be from 2009 on when you consider the junk rally off the bottom and three rounds of QEs. So there's never been an environment like this. And I think people could be making bad decisions by drawing the conclusions that they have.

Great, very helpful. Thank you.

The next question is from Robert Lee, KBW.

Appreciate your patience, and I apologize if this may have been asked earlier in the call, but I wanted to follow up. I know you have been, as you invest in products like GTR and whatnot, have been building up your seed capital over time as new product launches have accelerated the last couple of years. How should we -- do you think you're getting to the point and you're near the end of that and be more recycling and harvesting? Do you see much more need to build the seed capital book further? And that's the question.

Yes, I think that we're still a little bit in the bubble of development, particularly as we roll some of these capabilities out to different regions. It may be the same type of capability, but see it in different regions. So I'd say that's a continuation in 2015. I would expect, probably, as we get into 2016, that would begin to slow down, but it is still early days.

There are some things that we did in the liquid alternative world that were launched specifically in the US and we're not fully rolled out everywhere, too. So again, I don't want to get too ahead of what could be the case.

Real estate as a theme though, is as we continue to grow, it's a very, very successful franchise that we've got here. And we think we could do more in there. They're obviously well established in the US, becoming more established outside the US. That will continue to probably demand some amount of capital that is going to be consistent.

Okay and maybe on related topic, you clearly very helpful about a GTR and it's potential on a global basis to gather flows. And Loren you did just mentioned real estate. But are there any other maybe couple of products that you could point to that you think fairly new but that you feel that given seed in different jurisdictions, whether US, UK, Europe, Asia, that there's -- you feel like they have the potential to build what I'll call may be a global scale franchise off of it?

I would say, absolutely. The unconstrained bonds, we think that we've developed some really, really fantastic products with our team. And again, just because of the newness of it, they really haven't been able to get established. So I think there's probably quite a variety of fixed income capabilities that are yet to come and will position us in a very large market. So that's something that's in the future, probably a couple of years away, still, but something that I think will provide a lot of opportunity for flow and growth.

Great and then one last question, this is on PowerShares. I'm curious, to what extent do you think of product development for PowerShares, do you or can you leverage the Quant skills that you have on the separate account side of the business and more traditional side of the business? Is that really -- can you take strategies that you do there and leverage them into PowerShares or are they help you develop when they'd be good smart beta strategies for PowerShares? Trying to get a sense of how they, if at all, work together and leverage each other?

Yes, so that is exactly what has been emerging for us over the last 18 months in particular, where it's factor investing or smart beta or whatever you want to call it is institutions are looking at it. And some institutions want to use the ETFs and they do. But by the way there's others that want separate accounts and utilizing our Quantitative team to do that is something that has been emerging and is a really strong complement.

So it's really -- we look at it we can become vehicle independent in that and do what you really want to do and just understand what the capabilities that clients want and deliver them. So it's really the combination of those two that are really putting us in a very strong position.

Great, that was it. Thanks for taking my question.

Next question is from Chris Harris, Wells Fargo.

A quick follow up on the UK. Was there any negative impact from Woodford this quarter? I know in prior quarters there had still been a little bit of leakage from retail, and I didn't know if there was any modest outflows that hit the UK this quarter as a result of that?

No, as I mentioned earlier, the net outflows and those, they're now back to the same levels that they were when Neil was managing the portfolios.

And (inaudible) and others a natural redemption rate against the large portfolio and so pre any changes, there was always an ongoing outflow in those large portfolios. And it's gone back to those levels, which are really de minimis now.

Okay. The other question I had was on PowerShares, specifically the Qs. I know you really don't have any economics there, but certainly how the Qs do does have some impact on the brand of PowerShares. So wondering if you could comment maybe a little bit on why flows in Qs were so weak in 2014?

Yes, I don't know -- so the Qs do what they're supposed to do, because it's actually a passive portfolio, a typical passive portfolio. But if you're responding to the flows, again, a lot of that is used by institutions wanting access and what you can really see is almost follow investor sentiment is the way I would be looking at that.

When you have strong flows to the Qs, you can sense where people's confidence levels are in the US market and the segment of the US market. And when you see those outflows, that's what you're getting. So if you look at Q4 in particular, that's exactly probably a great indicator of investor sentiment and how they were feeling about the risks they were taking in the market.

Okay, so there's no product switching or anything like that, it's more of like a sentiment issue among investors?

Yes, that's how I --

Got it. Okay, great. Thank you.

Next question is from Brian Bedell, Deutsche Bank.

Most of my questions have been asked and answered, but maybe one further, Marty, on the active and passive side of the story. How has the positioning within your sales force within the retail channels of active versus passive, I guess, changed over the last year?

And as you are thinking and moving in 2015, obviously being bullish on active performance, how are you positioning that versus the PowerShares franchise? I think you talked about retail distribution landscape in that regard in both Europe and the US?

Good question, I'm glad you asked. Again, the way that we look at it is very basic. We absolutely try to understand what clients are trying to accomplish and we'll use a range of capabilities to meet those needs. And so that would include whether it be our passive or our active capabilities. And so we're one of -- one Firm, if you want to say from an economic point of view, we're indifferent.

The good news is because it's so broad, it's so deep, our capabilities we can focus on the clients and that's how we look at it. So we just listen and then lead with whatever capability meet those needs of a client. And to use an analogy that a colleague of mine says, if you're a hammer, everything's a nail.

And so the point is, since we have such a broad range of capabilities, we actually can absolutely focus on what clients need. And so we don't look at them as competing with one another. We look at them as complementaries to one another in helping clients get done what they need to.

And maybe a follow up to that, where are you seeing, maybe again in the last few quarters, where you are seeing that demand change on the active and passive side, I guess. Looking again both at Europe and the US and the financial advisory channels, are you seeing any significant difference in the demand for the PowerShares versus the active products?

No, we're not. If anything, I think PowerShares continue to be strong. And as we're talking a question or two ago, it's -- the factor investments is really taking hold, I'd say probably maybe more so outside of the United States within institutions. And as you've heard Loren and I talk, quite frankly, there is a range of institutional investors in particular, if you want to use them as an early bellwether, that are also very much investing long only equity capabilities, along with fixed income and alternatives. So it's really quite broad environment at the moment. It's -- what the whole year looks like, I can't speak to, but that's just what we're seeing right now.

Perfect. Thanks very much.

Next question is from Douglas Sipkin, Susquehanna.

Two questions. First one, it's follow up on some of the mechanics of the currency, the hedge, I guess. So in terms of the impact on revenues and expenses, that still will be vulnerable or benefit from exchange movements, but below the line -- excuse me, in the other comprehensive income account, the gains and losses from the hedge will show up. So it's still possible -- is it still possible that currency weakness or strength can weigh on the revenues and expenses in the operating income number?

Yes, Doug, unfortunately, yes. That hedge is going to be reflected below the line, other gains and losses they'll be mark-to-market. It's non-operating, it'll protect our cash. It'll protect the bottom line EPS.

But the operating will definitely be subject to whatever changes we might see around the yield and certainly expenses will move in line with revenues in the UK and Europe largely. So it will certainly have that natural hedge.

It's really the operating income that is still going to be exposed. And so again as we talked about in terms of the margin impact, a 10% decline is going to have 0.2, 0.3 basis points degradation in margin if you saw a 10% decline. So in any event, it's still on operating -- it was still our operating results will be exposed to FX.

So a little bit more on that. Will it hit the income statement though, the gain from the hedge or when --?

Absolutely. It will hit the income statement and it will offset any operating income. So there'll be an offset that will even out EPS, in fact.

Got you. And then digging in a little deeper, obviously it does create a little bit of noise in your numbers. But, and my math could be wrong, but the actual EPS impact doesn't seem too material. I know you're more vulnerable with pound weakness, but there is some element of matching on the expenses.

So I'm wondering, given looking in the rear view mirror, obviously the currencies have come down a lot. But at this point, I'm just trying to think the methodology. Is it like something you are thinking let's just take currencies out of this; we don't want to make any bets on anything. Because just from that standpoint, I feel like maybe we're past a lot of this currency movement and it maybe doesn't make sense to do it at this time.

Well we certainly would hope that's the case. We put the options, really just as protection against any further strengthening of the dollar. So we're not trying to do anything relative to where we are today.

The floor is at 1.493. I think the pound is at 1.5 something right now. So again, if we see the pound start to strengthen from here, my forecast around net revenue yields ex performance fees would improve, which would certainly help margins and any estimates around earnings.

So it's really, we felt important to protect us against any significant further strengthening of the dollar, which again, I don't think there's anybody who really knows clearly what is going to happen in terms of that story. And so we just didn't want it to be an ongoing concern for our investors for others, so we took that topic off the table.

I've got you. So effectively you're protecting on more downside, but if the pound did change direction driven by whatever, you still are positioned for upside?

All position, nothing lost.

Okay, perfect. And then in terms of investor sentiment, I know it's been very early days with the European announcement. Any preliminary sense that the risk taking in some of the European areas is going to pick up or has picked up already from what the ECB did?

Yes, there's probably two parts to that. I think, no question, I think that ECB move helped sentiment. I think the anchor right now is what's happening in Greece, and I think that's going to keep some volatility in the market until some greater clarity is there. So one is a positive and probably -- you just have to mention that the Greece situation gets into something that's a manageable outcome. But lots of noise in the meantime until that happens.

Okay, great. Thanks for taking the questions.

The next question is from Greggory Warren, Morningstar.

A quick look at your balanced segment over the last year. Organic growth was down about 4% on the year. It's traditionally been one of your better growth areas. Yes I know Atlanta Trust was a big part of that historically, but when you look at where industry growth was for that particular segment last year, wondering what potentially impacted that last year that's different from any other period? Was it performance? Was it distribution, lack of interest? I'm not sure, can you add some color there?

Greg, thanks for the question. It was really two primary things. One you're quite familiar with, I think, in terms of IBRA. IBRA is booked into that category. So we've been seeing some strong outflows in the earlier part of 2014, progressively improving quarter to quarter. So again, we think from trend perspective, that is on a good plane.

We also saw, episodically a lower -- or outflows in an European high income lower. So that was a balanced product. And so that was a one-time thing. So we don't think that there's anything this quarter on the balanced side that's really worth saying that there's something fundamentally shifting, other than we think there's a positive trend and we would expect to see balanced go positive again.

Okay, good, good. And then a quick follow up on what's going on in Canada. You've got a couple of independent providers up there struggling a bit with poor performance, poor flows. The market is shifting somewhat where banks are moving both in the manufacturing and distribution of mutual funds. Curious where you feel yourself positioned? How you potentially get better growth out of the active piece of the business? And what the plan is for PowerShares there?

A couple of things. So first of all, if you go back a number of years, we struggled with performance, investment performance lagging in a period of time. Now we've had it was probably three years of strong growth and that's been really important to get in place.

So again, the first principle in place, have a range of capabilities performing well. So that's been a good sign, and that's been really what moved Canada to almost breakeven last year on the retail channel.

It's also been broadening the retail channel and PowerShares are in Canada, and that has been another thing that is following the play book that was used in the United States, it is broadening the things that we can do for our clients up there. So I think that's going to help a lot in the retail channel.

The other opportunity for us is we think that we should be able to do just much better in the institutional business in Canada. So again a very important part of our business, some real talented people there with some good capabilities. And you are right, Canada, compared to I'd say almost anywhere in the world, maybe Brazil would be about the same, but the dominance of the banks is quite extraordinary.

Is there any key to unlocking that to getting on those platforms? Is it a fee differential? Is it a performance issue? Or is it that they're more hungry for the business?

Well, I think you hit it. It's -- they like selling their products more than selling the other people's products. And it's -- when I got in the business decades ago I thought that would change and it's not changed a bit up there.

So again, you really just have to continue to do a good job and just recognize the strength of the banks. And also you have to expand your range of offerings beyond what they would be doing themselves, and that's what we're doing.

Okay, great. Thanks for the color.

The next question is from Bill Katz, Citi.

A follow up, and I did have to hop off for a second, so I apologize if you did cover this in some of the other Q&A. You mentioned Quant coming back a little bit more, I asked earlier. Can you give me a sense of where the mandates are coming from? Is it replacement to active loan only equity, fixed income, cash? Where are the mandates being funded from, if you have a sense?

Are you talking about the institutional pipeline, Bill?

Well on the Quant equity you mentioned that on factor-based investment, so scientific.

Yes. So it's, again continental Europe is probably the strongest, followed by the UK. And again, Australia and emerging interest in Japan, which is again, I think, relatively new and follow on to Abenomics and some interest in China.

I understand that, but I'm sorry if my question wasn't clear enough. Where do you think the mandates are coming from in terms of from other allocations from equity, within asset class or fixed income, et cetera?

You know what, Bill, I wish I knew. That's a good question, I don't have the answer to it, sorry.

That's okay. Thank you.

And sir, with that, I'm showing no further questions.

Then again, on behalf of Loren and myself, thank you for attending. And thank you very much for the questions and we look forward to talking to you next quarter.

Thank you and this does conclude today's conference. All parties may disconnect.