Virtus Investment Partners Inc (VRTS) 2020 Q4 法說會逐字稿

Good morning. My name is Joel, and I'll be your conference operator today. I would like to welcome everyone to the Virtus Investment Partners quarterly conference call. The slide presentation for this call is available in the Investor Relations section of the Virtus website, www.virtus.com. This call is also being recorded and will be available for replay on the Virtus website. (Operator Instructions)

I will now turn the conference to your host, Sean Rourke.

Thank you, Joel, and good morning, everyone. On behalf of Virtus Investment Partners, I'd like to welcome you to the discussion of our operating and financial results for the fourth quarter of 2020. Our speakers today are George Aylward, President and CEO of Virtus; and Mike Angerthal, Chief Financial Officer. Following their prepared remarks, we'll have a Q&A period.

Before we begin, I direct your attention to the important disclosures on Page 2 of the slide presentation that accompanies this webcast. Certain matters discussed on this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and, as such, are subject to known and unknown risks and uncertainties, including, but not limited to, those factors set forth in today's news release and discussed in our SEC filings. These risks and uncertainties may cause actual results to differ materially from those discussed in the statements.

In addition to results presented on a GAAP basis, we use certain non-GAAP measures to evaluate our financial results. Our non-GAAP financial measures are not substitutes for GAAP financial results and should be read in conjunction with the GAAP results. Reconciliations of these non-GAAP financial measures to the applicable GAAP measures are included in today's news release and financial supplement, which are available on our website.

Now I'd like to turn the call over to George. George?

Thank you, Sean. Good morning, everyone. I'll start today by giving an overview of the results we reported this morning as well as an update on the AllianzGI partnership, which has been finalized, before turning it over to Mike to provide more detail on the quarter. Then before taking questions, I will make some comments on our announcement yesterday of our agreement with Westchester Capital Management.

Turning to the results. We are pleased with the continued strong financial and operating performance of the business, which for the quarter included positive net flows representing an annualized organic growth rate of more than 9%, our second highest level of quarterly sales; our highest level of AUM revenues and earnings per share; continued excellent investment performance; and consistent return of capital to shareholders and debt reduction. We are especially pleased with the trends over the course of 2020, which was a challenging year in many ways. In spite of that, we reported record earnings, generated positive net flows for the year with an organic growth rate of nearly 5% and increased sales by more than 60%.

We have reported positive organic growth in 4 of the past 5 quarters, with the favorable trends reflecting the differentiated nature of our investment strategies, strong investment performance and effective distribution. In 2020, our free cash flow supported continued return of capital to shareholders and debt reduction, including the $32.5 million to repurchase stock, representing 3.6% of beginning-of-period shares, increasing the quarterly dividend by 22% and reducing debt by 28%. At December 31, our cash balance exceeded gross debt by $41 million.

Turning to a review of the results. Long-term assets under management at December 31 reached their highest level, increasing sequentially by nearly $16 billion or 14% to $130.7 billion as a result of both market appreciation and positive net flows. Total assets under management at December 31, 2020 were $132.2 billion.

Sales momentum continued with $8.6 billion of inflows, representing our second best quarter of sales with significant increases in open-end funds, retail separate accounts and institutional. For the quarter, we had $2.6 billion of positive net flows with sequential increases across product categories. Open-end net inflows were $0.7 billion, which included positive net flows in both equity and fixed income.

Retail separate accounts continued to deliver consistently positive net flows reaching another high of $1.3 billion. Institutional net flows were $0.6 billion, an improvement from the net outflows in the prior quarter, which included one large redemption. For the year, institutional generated $1.5 billion of positive net flows, organic growth rate of nearly 5%, with contributions from existing mandates and new accounts across multiple affiliates reflecting continued traction in distribution.

In terms of what we saw in January from flows, there was a general continuation of the trends from last year, but we are seeing an increase in demand for our fixed income strategies, and we were pleased that mutual fund gross sales in the month of January are higher than any month in 2020.

Our financial results for the quarter reflected positive market returns, strong organic growth and ongoing expense discipline. Operating income, as adjusted, of $61.9 million and the related margin of 40.3%, increased from $54.1 million and 39.3%, respectively, in the third quarter. Our earnings per share, as adjusted, reached its highest level, increasing 15% sequentially to $5.15 primarily due to higher revenues.

Turning now to capital. Our approach to capital management remains consistent, to invest in the growth of the business, return capital to shareholders and maintain appropriate levels of debt. During the quarter, we reduced gross debt by 8% and we closed the year in a net cash position. We also returned capital to shareholders through our common dividend, which we increased as well as with the repurchase of approximately 40,000 shares or 0.5% of common shares outstanding.

Turning to AllianzGI, or AGI. As we announced yesterday, we have finalized our partnership, which adds $29.3 billion of assets under management, for pro forma AUM of $161.4 billion at December 31 as well as $3.6 billion of other fee-earning assets. We are excited to welcome NFJ, a global value equity team to Virtus as a new affiliate and to begin our relationship with AllianzGI, representing their compelling strategies in the U.S. retail market. The partnership adds scale, diversifies our assets with complementary strategies, including multi-asset and thematic equity and provides incremental growth opportunities.

We will largely be leveraging our existing strong retail infrastructure, but we are pleased the relationship has provided us the opportunity to enhance our business intelligence, digital marketing and distribution resources by adding select talented individuals from AGI. Regarding the financial benefits, we continue to expect accretion to earnings per share, as adjusted, of more than 30% on an annualized basis.

With that, let me turn the call over to Mike to provide more detail on the results. Mike?

Thank you, George. Good morning, everyone. Starting with our results on Slide 7, assets under management. At December 31, long-term assets were $130.7 billion, up 14% from $115 billion at September 30. The sequential increase reflected $13.4 billion of market appreciation and $2.6 billion of positive net flows. All asset classes contributed to AUM growth during the quarter, led by domestic and international equity, which increased 18% and 17%, respectively, with fixed income up 2% and alternative assets higher by 9%. Assets continued to be diversified by product type, with open-end funds, institutional and retail separate accounts representing approximately 38%, 31% and 23% of long-term AUM, respectively.

In terms of asset classes, equity assets represented 73% of long-term AUM, with 78% of that in domestic equity and 22% in international. Fixed income assets as a percentage of total assets declined to 23% due to the rise in equity markets during the period.

Regarding the AllianzGI partnership. The assets under management totaled $29.3 billion at December 31, having increased $3.6 billion or 14% from September 30 due to market returns and positive net flows. As mentioned, the partnership includes an additional $3.6 billion of assets for which we do not serve as the investment adviser, but do provide services for asset-based fees. The average fee rate on these assets is approximately 10 to 12 basis points and will be reported in other income and fees as adjusted.

With the addition of the complementary AGI strategies, we've also taken the opportunity to refresh our AUM reporting. Beginning in the first quarter, we will present a new asset class category, multi-asset, which is comprised of strategies that include concentrations in at least 2 asset classes. In addition, liquidity strategies currently reported on a stand-alone basis will instead be included within the relevant product categories and in the investment-grade fixed income asset class.

To further aid in transparency, we are also expanding the asset class subcategories we provide in the financial supplement. As an illustration as well as for modeling purposes, we've included a page later in the presentation with assets by product and by asset class, pro forma for the AllianzGI partnership, with relevant fee rates on a combined basis.

Turning to investment performance. We continue to generate strong relative performance across our strategies. As of December 31, approximately 83% of rated fund assets at 4 or 5 stars and 99% were in 3-, 4- or 5-star funds. We currently have 9 funds with AUM of $1 billion or more that are rated 4 or 5 stars, representing a diverse set of strategies from 5 different managers. In addition to very strong fund performance, 93% of institutional assets and 100% of retail separate account assets were beating their benchmarks on a 3-year basis as of December 31, and 64% of institutional assets and 85% of retail separate account assets were outperforming their benchmarks over 5 years.

Also, 89% of institutional assets were exceeding the median performance of their peer groups on the same 5-year basis. I would also note that performance on the AllianzGI assets continues to be very strong. And on a combined pro forma basis at December 31, 83% of Morningstar rated AUM would be in 4- or 5-star funds, the same as we currently have. And the number of funds with over $1 billion of AUM with 4 or 5 stars would increase to 12.

Turning to Slide 8, asset flows. Net inflows of $2.6 billion in the quarter represented a 9.2% annualized organic growth rate. For the full year, net flows were positive $5.1 billion, or 4.7% organic growth. In the fourth quarter, net flow contributions were diverse by product with net inflows in retail separate accounts, open-end funds, institutional and ETFs as well as by asset class with positive net flows in both equity and fixed income. Notably, this marked the eighth consecutive quarter for net inflows in equity.

Looking at open-end funds. Net flows were positive $0.7 billion, up from $0.4 billion in the third quarter. By asset class, domestic equity open-end fund net flows were positive $0.9 billion for the quarter. For the full year, they were $2.6 billion, representing a 15% organic growth rate. Flows are positive across large, mid, SMID and SmallCap. Fixed income open-end fund net flows turned positive this quarter at $0.1 billion, a continued improvement from prior quarters that included elevated bank loan redemptions and the first net flow positive quarter for fixed income funds in 3 years. International equity funds had net outflows of $0.1 billion as positive net flows and developed market strategies were offset by net outflows in emerging markets.

Total sales for the quarter continued to be strong at $8.6 billion, up $1 billion or 13% sequentially. For the full year, sales of $32.3 billion were up 60% over the prior year, led by growth in open-end funds, institutional and retail separate accounts.

For the quarter by product, fund sales of $3.9 billion increased $0.2 billion or 5% sequentially due to growth in both equity and fixed income funds, particularly sales of large and SmallCap domestic equity strategies and credit-sensitive fixed income.

Institutional sales of $2.3 billion were up 9% sequentially and represented the second highest quarterly level with broad-based flows into both existing and new mandates across multiple affiliates. Retail separate account sales of $2.2 billion were up 26% sequentially, led by particularly strong growth of small and SMID strategies.

Turning to Slide 9. Investment management fees as adjusted of $136.8 million increased $14.5 million or 12% sequentially. The increase reflected 7% growth in average assets due to market appreciation and positive net flows as well as $3.7 million in performance-related fees, up from $2 million in the prior quarter. I would note that for the year, we had $6.8 million in performance-related fees, an increase from $2.8 million in the prior year. The average fee rate on long-term assets for the quarter was 48.8 basis points, up 1.8 basis points sequentially.

With respect to open-end funds, the fee rate increased to 60.7 basis points from 59.5 in the third quarter, reflecting the significant market-driven increase in equity assets and the ongoing positive fee rate differential between sales and redemptions. This quarter, the blended fee rate on fund sales was 63 basis points, while the rate on redemptions was 58 basis points. For modeling purposes, the schedule we've included on Page 17 of the presentation outlines fee rates by product on a pro forma basis, net of revenue-related adjustments consistent with our disclosure in the financial supplement.

Slide 10 shows the 5-quarter trend in employment expenses. Total employment expenses, as adjusted, of $73.5 million increased 11% sequentially, largely reflecting higher profit-based incentive compensation. As a percentage of revenues, employment expenses were 47.8%, relatively unchanged from the third quarter.

Looking ahead for 2021, we believe a reasonable quarterly range for employment expenses, as adjusted, would be 44% to 46% of revenues, as adjusted, which is subject to variability based on markets and sales. As always, in the first quarter, we will be above this range due to the seasonally higher levels of payroll taxes and other benefits we incur. Last year's first quarter employment expense ratio of approximately 52% of revenues, as adjusted, is reasonable.

Turning to Slide 11. Other operating expenses, as adjusted, were $17.1 million, up sequentially from $16.3 million, largely due to modestly higher professional fees. The fourth quarter level of other operating expenses continued to reflect the operating environment as travel and related expenses remain muted. Going forward, we believe a reasonable quarterly range of other operating expenses, as adjusted, would be $19 million to $21 million. In the first quarter, we would expect to be at the lower end of that range due to the current operating environment. For modeling purposes, keep in mind that the second quarter includes the annual equity grants to our Board of Directors.

Slide 12 illustrates the trend in earnings. Operating income, as adjusted, of $61.9 million increased $7.8 million or 14% sequentially due to the increase in revenues, partially offset by the higher employment expenses. The operating margin, as adjusted, of 40.3% increased by 100 basis points from 39.3% in the prior quarter.

Noncontrolling interest, as adjusted, increased by $1 million sequentially to $3.4 million, largely due to performance-related fees at our majority-owned affiliate.

The effective tax rate, as adjusted, for the quarter was 27%, unchanged from the prior quarter and we believe that is a reasonable rate going forward, all else being equal.

Net income, as adjusted, of $5.15 per diluted share increased by $0.66 or 15% sequentially, primarily due to higher revenues.

Regarding GAAP results. Fourth quarter net income per share of $5.40 compared with $3.71 per share in the third quarter had included the following items: $1.96 of realized and unrealized gains on investments and $1.56 reduction reflecting the increase in the fair value of the minority interest liability.

Slide 13 shows the trend of our capital position and related liquidity metrics. Working capital was $172 million at December 31, up 8% sequentially as operating earnings more than offset debt repayments and return of capital. Gross debt outstanding at December 31 was $206 million as we repaid $17.5 million during the quarter. Over the past year, we have reduced gross debt by $80 million or 28%. With our strong cash generation, we ended 2020 in a net cash position of $41 million, providing for continued flexibility to invest in the business and return capital to shareholders. Gross debt-to-EBITDA was 0.9x at quarter end, down from 1.4x in the prior year. And regarding return of capital to shareholders, we repurchased 40,076 shares of common stock for $7.5 million, resulting in a 0.5% reduction in common shares outstanding.

With that, let me turn the call back over to George. George?

Thank you, Mike. Before we take your questions, I'd like to comment on our agreement with Westchester Capital Management, a premier manager of event-driven investment strategies with $4.3 billion in assets at December 31. Westchester Capital has a 30-year track record in merger arbitrage with category-leading investment performance, delivering attractive returns across market environments. The firm is a pioneer in the space, having launched the first merger arbitrage fund in 1989.

We are excited to add Westchester Capital to our family of affiliated managers. Their noncorrelated alternative strategies invest in publicly announced event opportunities such as mergers, acquisitions, takeovers, spinoffs and other corporate reorgs. With the addition of Westchester Capital, we would further diversify our investment strategies and nearly double our assets under management in alternative strategies.

There are funds which are already available across top platforms, will become available to a broader retail base through our robust distribution capabilities. In addition, consistent with our overall product strategy, Westchester Capital event-driven strategies could be leveraged into other product structures. Like all our affiliate and managers, Westchester Capital will continue to operate as an individual boutique, retaining autonomy over its investment process and maintaining its independent structure, culture and brand identity.

Under the agreement, we would acquire 100% of the equity interest from the principals and third-party investors. The transaction structure includes an upfront payment as well as potential contingent and future earn-out payments based upon the growth of the business. The closing payment for the transaction is $135 million, which given our balance sheet and strong cash flow can be funded without additional financing. We anticipate closing in the second half of this year, pending customary fund shareholder approvals.

The structure of the transaction provides for a strong alignment of interest in the form of employment agreements and participation in the profit pool, and the principals are reinvesting a significant portion of transaction proceeds into their investment strategies. We expect the transaction to be immediately accretive to earnings, as adjusted, by approximately 6% based on run rate earnings on a pro forma basis for the AllianzGI partnership. We look forward to providing more details as we get closer to closing.

The addition of Westchester Capital's boutique affiliate and the partnership with AGI is illustrative of our multifaceted approach to inorganic growth and underscores a key element of our value proposition. Our long-term growth is not dependent on M&A. However, our model allows us to partner with distinctive boutiques and support their growth by offering their strategies through our broad distribution platform and into additional product structures. Our model also allows us to selectively partner with distinctive firms for a particular investment capability or capabilities. Both of these provide for further diversification of our strategies, product lines and clients and gives us potential for greater opportunity through changing market cycles.

With Westchester Capital, we added a targeted private capability that leverages our strength as a multi-boutique in our value proposition that is attractive to boutique firms that can focus on managing their clients' assets, while getting the benefits of scale, distribution and the resources of a larger organization. With AllianzGI, we significantly increased our scale with compelling and complementary products in a thoughtfully structured partnership to provide significant financial accretion. We believe our multifaceted and flexible approach to inorganic growth, combined with our ability to generate organic growth as we did in 2020, demonstrates that we are well positioned to execute on our long-term growth strategy and create shareholder value.

With that, we'll now take your questions. Joel, would you please open up the lines?

(Operator Instructions) Our first question comes from Jeremy Campbell with Barclays.

George and Mike, just I wanted a quick clarification on the AGI accretion comment. It's the -- at least 30% would be on this quarter's $5.15 quarterly EPS run rate, correct?

Yes. So again, we're -- it's at least 30%, and it has taken into account the fourth quarter and our pro forma view of things going forward. Right, Mike?

Yes. That's correct. It's on this quarter's result.

Perfect. And I guess, when we're talking about AGI, George, maybe you can comment a little bit about the underlying flow trends there right now. And now that the deal is closed, how quickly you think the sales force can really kind of get this in their hands and potentially accelerate that flow trend?

Sure. And on the page that we've included, a couple of things I would sort of underscore. Their products are really good, and Mike spoke to some of the specific performance numbers. The other thing that I think it's important to really sort of understand is the complementary nature. So if you look at what they bring in terms of different strategies, they really are very additive to what we have in categories of the multi-asset, some of the sustainability products. It's just a really new addition of very attractive products.

In the update that Mike provided, you can also get an indication that they've continued to grow the assets from both performance as well as continued sales before the changeover to us. So again, these are great products, compelling strategies, well marketed, well supported and we are excited now that we've been working on the integration with their team, which is a great team, by the way, being prepared to hit the ground running.

So I've listened in our multiple video calls as our wholesalers and our national accounts and other individuals are preparing to bring these things to market. And as I sort of indicated as well, we have had a great opportunity to bring in some additional talented individuals, along with the assets under management. So we're really excited about the opportunity. I think the market will tell us what the opportunity will be, but I think we've done everything we can possibly do to be ready to take advantage of these great products.

And then just looking at your Mosaic as a firm now, adding AGI in there, adding obviously some interesting and noncorrelated asset classes with the Westchester deal today, as you kind of look at your product offerings and how you're equipping your sales force to kind of hit the market over the next year or 2, is there anything else that you see that would be an element of white space that would need to be shaded in to kind of further complement your suite of products?

Yes. I would underscore where we're going with Westchester Capital, right? Because in previous responses to that question, I'll generally speak to, we feel very good about our coverage of the traditional asset classes and strategies. I think the AGI partnership then fully expanded that to include multi-asset hybrids, convertibles, sustainability products. And what we've also said is that we thought there were great opportunities for less correlated strategies. So we were always of the view that those strategies were attractive.

I think some of the recent market volatility underscores the need to have a portion of your portfolio in the less correlated strategies. And I think that's one of the places where Westchester Capital's approach to investing fits in incredibly well. So we're very happy to add that to the extension of our products into less correlated strategies, continue to see that as an opportunity, continue to think that there's other opportunities for us to grow our asset base outside of the U.S.

Our next question comes from Sumeet Mody with Piper Sandler.

Sort of a couple of big picture questions. Starting with the kind of organic growth outlook for the year. Now that we've got a little bit more clarity with the kind of new administration coming in and kind of a wider vaccine coming maybe midyear, how do you view this environment? Do we kind of revert back to that trend of late 2019? Or is there some room for more opportunity with AGI and Westchester here to get continued strong organic growth from here across the strategy offerings? Can you maybe touch on some of those different strategies?

Sure. Sure. No, it's a great question. And one of the things we sort of acknowledge to ourselves is since we can't predict the future, we sort of diversify to be successful in all environments. So the primary underpinning of our overall strategy has been to have a broad array of distinctive managers that could represent all the building blocks of a well-diversified portfolio, which may be in and out of favor in different periods of time. So that has generally been our approach that as the investor needs and wants and demand changes that we would then have something that would be attractive in those markets.

So one of the comments I made earlier, we were very happy to start seeing a changeover to a rotation into more of our fixed income strategies, which we have great fixed income strategies. The nature of those strategies were less attractive last year than they should have been. So we're really happy to sort of see that changeover. So I really do feel well positioned because whether the equity markets stay volatile, whether there's some kind of updraw or down draw, I feel we have multiple strategies that could be attractive in each of those environments, which is as we sort of built that out and now with the addition of a noncorrelated strategy. So again, we've tried to make sure that we don't live by feast and famine of any one market cycle or any individual strategy. That is really the fundamental purpose of the diversification of our strategy and why we partner with very different, unique, differentiated managers for different capabilities.

Great. And then just one more high-level question on technology and kind of how you guys think about leveraging that at firm. Can you maybe touch on how you look at it kind of both on a firm-wide basis and then on an affiliate-level basis? And how you think it could kind of best be used going forward, maybe through areas that you're not largely in today like model portfolios or enhancing the distribution platform?

Sure. And for technology, I'll assume you were also referring to data, right? So we sort of -- for us, one of the good thing, bad thing was we didn't have like a lot of archaic technology that was hard to change. So we've been able to sort of kind of build out what we think is right for us as a business. We've been growing, obviously, with a lot of the transactions that we've done. So we're continuing to be very focused on a lot of opportunities that we have. We have good technology. We continue to have opportunities to expand it.

I think the data side is really fascinating. We pull in a lot of data. We have a long history of data, particularly on the distribution side, where we have been keeping track of our relationships and information that we've learned over the years. So we continue to see that as a great opportunity to leverage that even further. And now you're in the whole digital element, where we have the ability to even bring in more data.

So from the firm-wide perspective, we think there's great opportunities to leverage. We think that, that in some ways helps level the playing field against larger competitors, right, because if you have as good or better data or way to utilize that. And I'd like to think that the success we've had in retail distribution sort of testament. And it's not only a testament, I think, to the quality of our wholesalers, but the leadership, the strategy as well as the underlying targeting of opportunities, which is really important.

And then on the other side, for the affiliates, one of the benefits of our model is making available to affiliates information, data or technology that they might not otherwise have. So we always do look for those opportunities where we can bring value to them to help support them in what they find important and helpful in terms of managing their clients' assets.

(Operator Instructions) Our next question comes from [Gayathri Ramakrishnan] with Bank of America.

This is [Gayathri] on behalf of Mike Carrier. So my question was on your recent deal of Westchester Investment Management. I was just curious in terms of your rationale behind the structure of the deal in terms of acquiring 100% of equity. It was quite different from the last time you did a partnership or a deal with Allianz. And more broadly speaking, typically, we've heard multi-boutique firms say that they'd like to leave some equity on the table to have interest aligned over a long period of time. So I was wondering how you think about that as you sort of integrate more and more partners going forward as well.

Sure. So I mean what I would say is every transaction is a little different. And part of our model is we're flexible and how we partner. We don't want to limit our opportunity set by being pigeonholed in any kind of specific type of a structure. I do think the structure that we have here is very well aligned because it is not the element of equity ownership at the affiliate level or not, it isn't really the only way to have alignment. I mean our structures have uncapped earnings opportunities in the profits they generate.

So no matter what, in our model, even if the equity ownership is more than majority is 100%, there is a significant income participation in that. So I think this deal is structured very well. It's right for this manager. And the objectives that they're looking to achieve, it has the right alignment of interest between the leadership and the next generations as well as us. So we'll continue to sort of be flexible on how we approach. Again, this is a good example of -- I think Westchester is the best in the space that they occupy. And for us, it's more important to partner with the firm that we think is the right firm for the asset class of the strategy as opposed to any kind of specific structure.

This concludes our question-and-answer session. I would now like to turn the conference back over to Mr. Aylward.

Joel, it looks like we have a follow-up question on the queue.

And that follow-up question comes from Jeremy Campbell with Barclays.

Just wanted to get your guys' sense of what demand looks like inside your CLO business. I mean everything we look at in the market wide, it's heating up actively. So I wasn't sure if you guys had anything in warehouse or if there was anything in the pipe that we should be aware of?

Yes. Mike, do you want to respond to that?

Sure. And Jeremy, no, we don't have anything in the warehouse currently. Obviously, our teams stay close to the market and evaluate opportunities and certainly have seen the market strengthen over the last couple of months. And if there is anything that emerges from the teams on that front, we'll certainly make you all aware of it, but nothing to report at this point.

And then is it fair to characterize, I guess, George, you mentioned that fixed income as inflows for the first time in a long time. And we know a lot of that prior headwind was from the bank loan strategy. And I think that's starting to percolate a little bit more in this kind of rate regime, where we're starting to grind higher a little bit. What are you guys seeing on the ground in that type of strategy?

Yes. No, I think you're absolutely right. As we speak to the fixed income, remember, we have multiple strategies in fixed income, the one that you highlighted really the loans have clearly been out of favor. But over the last few quarters, we've seen an improvement and increasing interest in that space, which again is what I'm sort of referring to in January as well as with some of our other strategies, our multi-sector, short-term bond fund, which is a phenomenal product. Very happy to see more interest in those types of products.

Again, all is back to expectations of interest rates and how these things feel. So we've seen that, and we've seen some high yield. So it was sort of nice to see a continuation of some of the strength that we've seen in some of our equity products, but then also seeing a little bit of a rotation more into some of the other maybe more credit-sensitive type of fixed incomes. So I think that is an interesting development. And again, it will be interesting to see how that plays out through the rest of the year.

This concludes our question-and-answer session. I would now like to turn the conference back over to Mr. Aylward.

Okay. Well, I just want to thank everyone for joining us today. I certainly encourage you to call us if you have any other questions. Have a nice day. Thank you.

That concludes today's call. Thank you for participating. You may now disconnect.