Sprott Inc (SII) 2016 Q3 法說會逐字稿

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Sprott Inc.'s 2016 third quarter results conference call.

(Operator Instructions)

As a reminder, this conference is being recorded today, November 11, 2016. On behalf of the speakers that follow, listeners are cautioned that today's presentation and responses to questions may contain forward-looking statements within the meaning of the Safe Harbor provision of the Canadian Provincial Securities Laws. Forward-looking statements involve risks and uncertainties and undue reliance should not be placed on such statements. Certain material factors or assumptions are implied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. For additional information about factors that may cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements, please consult the MD&A for this quarter and Sprott's other filings with the Canadian Securities Regulators.

I will now turn the conference over to Mr. Peter Grosskopf. Please go ahead, Mr. Grosskopf.

Good morning, everyone, and thanks for joining us today. On the call with me today is our Chief Financial Officer, Kevin Hibbert; and John Wilson, the CEO of Sprott Asset Management. Our Q3 results were released this morning and are available on our website, where you can also find our financial statements and MD&A.

I'll start on Slide 3, with an overview of our assets under management. Our market positioning was finally rewarded over the first nine months of 2016 with our AUM increasing by 35% to CAD10.1 billion. The key drivers of this growth were the strong performance in sales in our precious metals and energy strategies, the Central GoldTrust transaction early this year, and the continued expansion of our specialty credit franchise.

For many reasons, we expect this trend to continue going forward.

First, the overall case for gold and silver investments is stronger than ever, especially in light of this week's US election result. In this environment, we expect precious metals to ultimately serve as a safe haven from unpredictable outcomes which have created difficult conditions and potentially bubbles in the credit, equity, and other asset markets globally. Second, we expect to keep growing our own strategies and maintain our top line growth due to our marketing and sales efforts, and the introduction of international and institutional investors to both our actively managed and exchange listed products.

Looking now to Slide 4. Our Q3 adjusted base EBITDA was CAD0.03 per share, while net income was CAD0.05 per share. Our book of proprietary investments continued its strong performance during the quarter generating CAD6.8 million in gains. On a year-to-date basis, our prop investments are up by over CAD35 million. We continue to maintain a strong and debt free balance sheet, with more than CAD312 million in investable and unlevered capital. In that regard, today we also announced that we intend to initiate a normal course issuer bid pending receipt of necessary approvals. Sprott has a strong balance sheet and it is our view that it is advantageous to the Company and its shareholders to repurchase our shares when they are trading at prices, which reflect discount from their value as perceived by Sprott. In tandem, I would note that our employee trust program continues to purchase shares in the open market.

With that, I will pass it over to John Wilson for comments on our asset management business.

Thank you Peter. As most of you know, the last four of five years we have been focused in the asset management business on pursuing our positioning related to alternative asset management across both the passive and active areas. Within actives we call it our barbell strategy, where we are offering leading alternative solutions for people looking to invest in the resource asset class, as well as leading alternative solutions across the more diversified space.

Our growth objectives were to build on our Canadian base in retail, eventually grow into the institutional market, and then lever our global reputation as we expand into the US and beyond. The US is an area that has gained more focus for us over the last year, year and a half both on the passive and active side with the addition of Whitney George, and we continue to grow our AUM across both the active and passive asset classes.

The quarter -- and really the year this year it has been quite different than the last four years. We had very difficult resource markets for the past four and that has flipped around this year. I think it is important to note that in our active space for our resource strategies, not only are we showing very good performance results, in fact, industry leading performance numbers, but we are back to positive net sales in that category, and we are focused now on increased product launches and we are seeing a lot of activity and interest around that set of products.

In our diversified business, it has been an incredibly difficult market in the active management industry. We see that certainly in Canada across the whole industry and particularly in the United States, but we continue to grow our business. It is up year-to-date and year-over-year both in terms of net sales and market value and we have diversified that business fairly meaningfully over the last three years, and we continue to see a lot of activity and growth, as Peter mentioned, particularly in our alternative credit franchise. We launched another new product, actually two new products in August and September related to that, the latest one being a new alternative income fund that we launched in September. And those products we feel are going to be key growth drivers for us as we look into 2017.

Kevin, I will switch it back to you.

Thanks John, and good morning everyone. I will start on Slide 6 with a look at our AUM roll forward. AUM as at the end of the quarter was CAD10.1 billion, which was up CAD288 million from June of this year and up CAD2.7 billion from December 31 of last year. The increase in AUM during the quarter was mainly due to the performance of our precious metals and energy strategies, as well as good sales momentum in our alternative income products franchise.

Moving on to Slide 7, you will see a breakdown of our third quarter revenues. Net fees were CAD18.3 million on a three months ended basis, reflecting an increase of CAD3.6 million or 24% from Q3 last year. The increase was largely due to higher average AUM in our exchange listed products and diversified alternative asset management funds, partially offset by a slight decrease in the average AUM of managed companies in our private resources businesses. Gross management fees as a percentage of average AUM were 1%, largely unchanged from last year.

Gains on proprietary investments were CAD6.8 million for the quarter, contributing to our CAD36 million in total gains so far this year. These gains were due to market value appreciation and resource and precious metals focused seed investments of our diversified alternative asset management business, and private resources business, as well as on equity holdings in the corporate segment. Interest income was CAD2.8 million, reflecting a decline of CAD1.2 million or 30% from this time last year. The decrease was due to a combination of lower interest income accruals resulting from last year's impairment designation on a specific loan, coupled with lower average loan balances stemming from the launch of the Sprott Private Resource Lending fund. As we have mentioned in the past, we expect our on balance sheet loan book to be lower over time, as these loans are repaid and new ones are originated through our lending LP.

Commission revenues were CAD5.3 million for the quarter, up CAD3.4 million from this time last year. The increase was largely due to improved private placement activity in our US broker dealer. Other income was CAD3.6 million on a three months ended basis, reflecting a decrease of CAD7.4 million from the prior period. The decrease in the quarter was largely due to lower foreign exchange gains year-over-year.

Turning now to Slide 8 for a look at our expenses in the quarter. Compensation expense was CAD10.7 million, reflecting an increase of CAD2.8 million or 35% from the prior period. The increase was primarily due to higher salaries and benefits expense in our diversified alternative asset management business, and the higher commission expense due to improved client trading and private placement activity in our US broker dealer.

SG&A was largely flat year-over-year. However, it did decline by CAD500,000 or 6% from Q2 of this year. The quarter-over-quarter decline was largely due to reductions in marketing and sales, regulatory and fund Opex costs. New for this quarter, we have added an SG&A expense ratio to both your presentation deck and our third quarter MD&A. This new key performance measure is an important tool we have been using inside the Company this year to monitor and manage our SG&A spend relative to the top line revenue growth that we ultimately hope that spend will achieve.

Moving onto stock-based compensation; that was CAD1.4 million during the quarter, reflecting an increase of CAD600,000 from this time last year. The increase was largely due to the amortization of stock-based compensation attributable to the new long-term incentive compensation plan we adopted in the first quarter of this year. Finally, other expenses were CAD500,000 during the quarter, reflecting a CAD2.7 million or 84% decrease from the prior period. The decrease was primarily due to lower operating expenses and depletion charges incurred in certain seeded energy assets held as part of the proprietary investments holding of our Private Resource businesses.

As noted, Slide 9 provides a summary of our SG&A expense ratio since Q4 of 2014. What is important to note here is that our SG&A expense ratio began falling at the end of last year due to both rising AUM and the early effects of cost containment efforts on our part.

Turning now to Slide 10. Net income was CAD12.5 million during the quarter, reflecting an increase of CAD62 million from Q3 last year. On a three months ended basis, excluding all of last year's impairment charges and provisions on goodwill, intangible assets and the loan portfolio, higher net income was due to higher net management and performance fees, higher commissions, and higher gains on proprietary investments. These higher net revenue items were only partially offset by higher compensation expenses and lower foreign exchange gains in the quarter. Adjusted base EBITDA was CAD8.4 million in Q3, reflecting an increase of CAD6 million from this time last year. Higher adjusted base EBITDA in the quarter was due to improved net management fees and commission income coupled with lower specific loan loss provisions, which more than offset lower interest income and higher compensation expense in the period.

In conclusion, Slide 11 provides a snapshot of our current capital position. As Peter noted, we continue to enjoy a strong balance sheet, no debt, and over CAD300 million of investable capital.

I'll now pass it back to Peter for a look at our loan book and some closing remarks.

Thanks, Kevin. On Slide 12, you can see an overview of our lending book, which has a current carrying value of just over CAD82 million. We are pleased with the performance of the resource lending business, as Kevin noted, with the launch of the new Private Resource Lending fund any loans originated by Sprott lending going forward will go into this LP and generate a new revenue stream for Sprott rather than being carried exclusively on the balance sheet.

As an update on the business, we have a strong lending book after initially dialing risk down at the beginning of this year and having reduced commitments due to both repayments and having less capital committed, which initially reduced our contributions from the business. It left us with a diversified, well performing book that had reasonable upside potential. We now have a robust pipeline with over CAD300 million in potential term sheet signings and after a lengthy process we have raised over CAD250 million US year-to-date with expectations for another CAD200 million by year-end. So the fund-raising process has really kicked in. We are in a good position to grow the business going forward, and we are very happy with carrying values, and actually think there is upside to the current book.

I will just take a break from the slides and comment on our private resource businesses because they are not specifically mentioned. And that is only to say that we have over CAD1 billion in private resource strategies. Their contributions, which were four or five years ago in the multi-tens of millions of EBITDA, had been drawn down to the very, very low single digits in aggregate late last year and early this year. I'm talking now about the global resource business in San Diego, Sprott Resource Corp. contracts, our mandates in Asia, our lending business and Sprott Trust Canada have now shown convincing signs of having bottomed, are showing reasonable EBITDA growth going forward, and increased client commitments to the businesses. So finally we have a noticeable turnaround in private resource strategies and very good growth prospects there.

And then finally just in terms of our business outlook, we have a robust pipeline of opportunities going forward. We are committed to remaining at the forefront of precious metal investments, and we recently completed a strategic investment in TradeWind Markets, which is a new venture and a spinoff of IEX Group with the goal of modernizing the trading, settlement and ownership of physical gold. It will be operative within both the financial system and within the blockchain delivery mechanics and we are playing an active role in the early development of this project.

We continue to launch new products in our diversified business. We focus on our core competencies and resources, private credit and others, and we have also expanded our service offerings with the launch of Sprott Capital Partners, which is in the process of being established as a boutique merchant bank. And the objective of this new division is to provide some capital raising and advisory services to existing clients in the resource sector and other sectors.

Just finally on our outlook turning, to the conclusion. As John mentioned, the asset management industry is undergoing dramatic shifts, and is dealing with somewhat of a perfect storm, and the reason we have bucked the trend is that we have highly differentiated alternative strategies. So we have not been as affected as other asset managers and we are in a good position within the industry. We are focused on maintaining our top line growth, while improving profitability. We are in the early stages of rebuilding our resource investing strategies, and we are gradually rebuilding our performance fee exposure and performance fee book. So our outlook in a summary word is good. We feel very strong. We are in a strong position right now.

With that, I will turn it over to the operator and start to take some questions.

(Operator Instructions) Gary Ho with Desjardins Capital Markets.

Maybe first question perhaps for Peter or John. Just on the close, you are seeing good momentum in the exchange listed products and alternatives but a bit softer in mutual funds in the quarter. Just wondering if you can give us some more color on those three buckets specifically and within mutual funds the softness is at mostly industry, I kind of missed that in your comments?

So first of all, I know that traditional sort of fund packaging separates things into these buckets, but the vast majority of our mutual funds are actually alternative investment strategies; they are just packets in an 81-102 perspective fund, but they still fit in the alternative category. So when we look at our business internally, we think about what we do in this alternative in the active space, and then we separate that between diversified and resource.

Now in terms of flows, our flows this year -- and if you start in exchange traded products have been very good on the physical side. It looks smaller, we talked about this before. We had a large redemption in January that came on the heels of the closing of the GTU transaction. But since then we have done an issue with the PSLV in the early summer, and we have initiated the at the market strategy for all of our physical midyear, and that is starting to pick up momentum as we enter the year. So we feel very good about our positioning in that area and the growth potential we have there just on the business we currently have.

Related to the mutual funds, again, our funds are largely alternatives; they're there -- meant to compliment to what we call the plain vanilla business, the rest of the industry offers traditional long only benchmarked equities and bonds. The industry is challenging on a net flows basis, so there is this general movement out of active strategies into passes, so we get hit a bit by that. And the other element is some of our strategies that are defensively oriented -- and this always happens at the peak or at the end of a long bill cycle. Oddly, people tend to move away from those strategies, looking backwards in times thinking what work best just to own long only. And so, we do see a bit of that type of behavior.

It's not concerning to us, it's not overwhelming in any way, we're not seeing collapse of any franchise; it's the start traditional hub and flow of the business and we expect those businesses to get back to grow next year.

And then the US election has been a hot topic on many conference calls, and Peter you kind of alluded to that in your remarks. Just wanted to know your thoughts on the outcome, and we've seen pull back in gold prices last few days. Any color you can provide, maybe any impact on your products.

Well, I'll start with an overall corporate view and then pass it over to John in terms of positioning of the strategies. But we were well positioned for this. I think it opens opportunities on a couple of different fronts; I'll have John speak in terms of how the funds are taking that opportunity. But corporately just in terms of where we're positioned internationally, I mean, these outcomes have all be unexpected, and when people see unexpected outcomes and see bond markets and stock markets starting to move in different ways then they thought, gold and hard asset strategies gain momentum.

So irrespective of the fact that gold's pulled back here because I think we've seen such a strong stock market response and people are not as worried this week as they were earlier in the week, I think the longer term opportunity is from more allocation to gold because of these uncertainties. And just as a macro point, neither outcome in the election was going to solve the mathematical issue; the mathematical issue is the debt is going up, the productive capacity is handled at debt is not there in the long run, and gold is a very good insurance policy for that mathematical equation. So I think it's just more of the same and probably faster for the growth of our business. And then, John, do you want to talk about the funds themselves?

Yes. I think just a follow on Peter's comments related to precious metals, they had been under pressure a little bit in the second half year as people started to discount the rate hike coming from the Fed. The Trump election -- I think Peter is exactly right -- does increase the amount of uncertainty that is out there, but it's been largely discounted at this point by the market as inflationary. If the Fed, as much as we think they will raise in December, appears to be behind the eight-ball in terms of their ability to track rates higher than inflationary environment, that, again, will be very positive for the precious metal space. And I fundamentally think that's what's going to end up happening. So we remain bullish looking at the medium and long term on the dynamics that affect that asset class.

The rest of our funds I think the single biggest thing to recognize coming out of the election night is the real challenge for active management has been the massive correlation of everything to everything based on what a central bank may or may not do the next day. So that fundamentally has made active strategies very difficult to differentiate and to show value because everything is just moving together based on what the Fed may do.

So what has been interesting is the breakdown in that correlation since the Trump election, a very dramatic sector focus shift as people start to actually look at what could benefit or be hurt by his proposed policies. And yesterday was a perfect example of that with the Nasdaq down significantly as people rotated out of what we're seeing as certain growth plays and started to look for areas that could have earnings leverage based on his policies.

We will see where it goes from here; I don't like to make any long term predictions, but if that dynamic keeps up that's the more positive thing for actively managed funds and for our funds in particular.

Maybe somebody just rung a bell for active management --

And then, Peter, if I can just sneak one more in for you. Just the strategic investment in trade win; what do you envision to gain from this investment, because I'm looking out longer term? And second part of the question is, now, does it require capital to grow that venture?

It's early days yet and it's an investment that won't come to the forefront for at least another year. But what we see is we have had a commitment and a proven record at innovating in terms of gold ownership and how gold is owned and how it can be better owned by our clients. And we do think that in the long run there is a very good case for digital gold. And we saw the rushing to BitCoin; we didn't really get it and I don't know why an instrument that trades CAD70 million a day would somehow be attractive against an interim instrument which settled CAD70 billion a day. So gold has an absolutely massive advantage in terms of becoming an alternate currency, and we know it's going to happen and we know we need to be at the forefront and it's a commitment to kind of be a part of that product with the best single partner that we could possibly have in that business. So, I think if we create a hook in, it is going to phenomenally attractive and it's going to be attractive both as a shareholder and as a service provider to that business and being able to sell those gold coins, gold tokens.

In terms of further investment, we don't see the need. I think there are lots of investors lining up for that business if it needs outside capital, but it's very well capitalized now and they run a pretty tight ship. They have advantage of having all IEX's exchange technology already locked up as part of the initial deal. So it's really self funded at this stage.

Does it have capabilities similar to like the gold money type business?

It will be different. This will be more of an exchange created mechanism for owning physical gold, and the gold money business is a vaulting business that is a consumer oriented business; I think the two are completely complimentary and quite different.

Marko Kais with TD Securities.

Just a quick question on the expense imitative. I'm wondering where you and focused and what kind of -- what's the reasonable SG&A ratio run rate to assume for the next couple of years?

So, our cost containment initiative really, at a high level, covers really two things. I think first is trying to find ways to permanently remove certain SG&A costs from the system ,and that's the cost married of the subcomponent of our SG&A whether it be fund OpEx, technology, professional fees, marketing, what have you. That's certainly one objective, but the other objective is really to monitor the trajectory, if you will, of our SG&A relative to top line revenue growth, which is why we came up with the - or rolled out, I should say, the whole SG&A expense ratio this year.

So what we're really focusing on is not a specific SG&A category to cut back on, but rather focusing on looking at the overall picture in SG&A and making sure that we're spending makes sense and the contact should be top line revenue growth. And in terms of the sense where we're going to be going forward, that's not something we're prepared to provide at this time. We've just launched this initiative this year and we need some time to I think feel things out, figure things out, balance it with the need to invest in our businesses and that's pretty much it. I'm not sure, John, if you have any added color.

I'm just going to follow on Kevin's comments and say the nature of our business is relatively dynamic. One of the key advantages we have in our industry is, one, we're positioned very differently than everyone else. But secondly, we have the sweet spot in our mind of being at scale in terms of being relevant in the channel but still being small enough to be nimble and quite innovative. So in terms of SG&A we will be very -- if our business shows us more growth opportunity, we will invest in it to get better leverage on that number. And if it shows less upside, then we will adjust SG&A that way as well. So our goal is, to Kevin's point, to get it to a better number as a percentage of our top line.

And just one last one if I may. What drove your strong prop book in the quarter, given that volume was flat and (inaudible) equity was somewhat down?

Sorry, we're having a hard time hearing you. Can you try repeating that question?

Just wondering what drove your prop book in the quarter? Because that was a pretty strong number.

Well, we've had reasonable investments in gold and silver equities; that's been a part of our year. We had some positions in industrial metals, which as everyone knows, have soared recently. And we had some warrants from the lending business which also kicked in. It's really been fairly liquid and it's been fairly diversified. So I can't give you any particular equity or any particular risk or reward that we took there; it's just kind of broad positioning from our seat positions in the funds that have done very well are part of it. And to Peter's point, Marko, if you look at these specific segment disclosures in the MD&A you will see that it's pretty spread out of costs almost all of our segments, including corporate. I mean, even our cash parking, because we do have a lot of cash on the balance sheet, parking the cash in our own fixed income fund was profitable this year.

(Operator Instructions) Aram Fuchs with Fertilemind Capital.

I usually have a couple of constant questions lined up, with one of them being when are you going to start buying back stocks? So I'm happy to scratch that one off the list; I think that [NCIV] is a great idea. On to other questions; can you talk about Sprott's Capital Partners? How does that differ from what Rick Rule's group is doing with private placements and advice for the juniors that he's done for quite some time?

Yes, it doesn't differ a lot. You're absolutely right; we've been doing this activity in-house for the entire time that Sprott has been public and before that, and we've been organizing those types of placements for our private client and others. This is just making it a little more efficient and adding a couple of partners, so it's more or less just -- I mean, there has been a couple of developments in the investment banking markets. There is good talent available and the very small dealers have been punished due to the lack of capital and regulatory capability of getting in the right offerings. So getting into these treasury and merchant banking styled deals is attractive right now; it's had a five year down cycle and now looks like it's posed for up side, and we've had people knocking on our door wanting to join to help us in that area. It really doesn't cost us anything; we've got all the infrastructure, it doesn't even cost us on the fixed cost side because these professionals are used to covering their own costs and then some. So it's just margin for us and it's an attractive business where if you get involved with the right deals, I mean, the margins can be very significant. So we will just see how it goes.

So when you say partners, you're talking about high level deal-making employees, or are they separate legal entities that are partners?

No, no -- high level deal making employees.

And then, Kevin, on the loan loss provision at CAD0.1 million, can you go through how you were comfortable with that? Is that general or specific? Precious metals have re-banded, but base industrial and other commodities are still in the doldrums. Can you talk about your message there?

Yes, sure. To your point, we've got two loan loss provisions; we've got the general and the specific. The number that you're seeing this quarter and that you've seen each quarter this year is not general related; it is actually related to the - and forgive me, I'll try not to be too technical and bore you all. But, it has to do with the non-cash interest that you're required to accrue on a loan that was previously impaired despite it being impaired. So, basically the rule requires that you continue to accrue that non-cash piece, but then you got a contemporaneous we setup a provision against it so that your overall loan balance isn't above what the recoverable amount is. So, we can sit by the campfire at some point and I can explain to you why the standard setters came up with that that odd rule, but suffice it to say that that's all you're seeing now is just the tiny bits of non-cash accrual dripping in, and then we got to apply our provision against it. So net-net, there is zero impact to EBITDA because what you're seeing there is a credit is offset by the income that came in.

So you're content with having no general provisions in the book this quarter then, is that what --

We do have the provision that was set up in Q4, so that's a contra account to your loan balance. So that hasn't changed, we still have that there and we still have this specific provision. So the issue with this year is more around whether you need more provision -- the answer to that is no. So we've not changed our general provision from the CAD1.2 million from Q4 last year, and the specific provisions are still at CAD8 million with timing increments added because of what I mentioned earlier around that accounting rule.

I'll save you some work, Aram; we don't need any provisions right now.

(Multiple Speakers)

The book is performing nicely is what you're saying?

And we just don't see a lot of risk there.

If you're going to say that, what is your latest on how quickly [Enrenders'] group can deploy that CAD200 million that you've got?

So earlier this year would have been a lot tougher because I think that resource equities were -- resource companies were all in the process of raising equity, and that tends to put their debt raising processes on hold. Now all these projects are going into the serious project financing stage; the project banks have stepped back from the market and due to Dodd Frank, although that might change, never know, but right now we're one of the niche lenders that has the most access to opportunities and we've got a lot of term sheets out. So pretty healthy view on being able to grow that balance.

And maybe we could segway from there into a question I usually have on these calls; is the Asian businesses, you didn't mention it. One of the ideas that you had talked about was working them into this alternative credit. Now that there is deal flow going in there, does this help the Asian business, or is that just the metaphorical toe in the water still?

Still a work in progress. We have some pretty significant initiatives over there to improve the business, but right now it's not contributing much EBITDA, and I'd it is still a business that we believe -- getting it to be part of the lending business and doing deals and joint venture deals with these types of entities is absolutely a possibility and a probability, it's just takes a while. So it's not really in the numbers right now, it could easily be a growing and contributing business going forward.

And then, John, you have the at the market - or I think this question should be for John - you have the at the market programs for the physical trust now implemented. Can you talk -- is this a specific sales call that you're working on the appropriates REITs to remind them of the at the market, or is just something that's not -- the economic stone really work on a specific sales call, but they sort of trickle in with --

No. So, the initiative really was designed with a couple of things in mind, that one of the biggest ones, to be frank, was that we're engaged with a major player in doing these types of at the market issues. They have a very large institutional sales that is engaged, communicating globally to institutions that we would not be able to reach on our own and communicating the value proposition of our physical products. Frankly, even we didn't issue a penny that would be worth while having just multiplying by the couple of orders to magnitude our ability to reach people globally and communicate our products. They obviously get more engaged with that process as they get paid, which happens as we do it at the market issues. So we're really seeing the momentum pick up on that now. We launched it in the early summer, it takes a while for them to get the story down and to communicate it for people understand. And as that feeds on itself, it starts to create more issues, which makes the sales people more engaged and makes them make phone calls. And so we think it's just a great way to grow the business and really to magnify our ability to communicate the value proposition.

Scott Chan with Canaccord Genuity.

Peter, you talked about hiring sales support over the last two years in US and Europe. Perhaps just an update on the traction on that front and where do you see the outlook as well?

Yes. So, we have I think a total of three dedicated and experienced sales professionals, and then a couple of more in Toronto that we've hired to support them or work with them. It's starting to have an impact; it started first with the lending fund, and then more recently with our global gold fund, and it's also having an impact on our coverage of the large wire houses in the US for the physicals and exchange listed products. So I think it's having a noticeable impact; we're not pointing to that in the hundreds of millions of dollars yet, but we intend to keep going. It looks good; we're happy with what they're doing and they're getting message and our relationships are improving and expanding and the money is coming in, so it's good.

Thank you. This concludes today's Q&A session; I'd now like to turn the call back over to Peter Grosskopf for any closing remarks.

Well, thank you, Operator, and thank you everyone else who is on the line for your interest. We look forward to reporting to you next quarter and in between hope you have a happy holiday season. Thanks for your time and interest today. Have a good weekend.

Ladies and gentlemen, thank you for participating in today's conference, this concludes the program and you may now disconnect.